This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
The Department’s 2020–21 Annual Report and Accounts, published on 31 January 2022, reported the exceptional challenges the Department faced in responding to the COVID-19 pandemic. As part of this response, the Department purchased over £12 billion of Personal Protective Equipment (PPE) in 2020–21. Due to the speed of which the procurement took place and the volumes of PPE ordered, equipment was purchased that did not always meet requirements and much higher prices than normal were paid. The accounts reveal the £9 billion extent of this financial loss including £4 billion of PPE that will not be used in the NHS and needs to be disposed of. The Department has no clear disposal strategy for this excess PPE but told us that it plans to burn significant volumes and will aim to generate power from this.
As a result of its haphazard purchasing strategy, the Department also has problems with a large number of the PPE contracts it entered into. It is currently engaged in commercial negotiations, legal review or mediation in respect of 24% of the PPE contracts awarded. This includes issues with contracts for products that were not fit for purpose, and one contract for 3.5 billion gloves where there are allegations of modern slavery against the manufacturer.
The accounts also reveal that the Department spent £1.3 billion without HM Treasury (HMT) approval and also needed to seek the Treasury’s retrospective approval in many other cases during its response to the pandemic. The Department had a track record of failing to comply with the requirements of Managing Public Money even before the further exceptional challenges of the pandemic response, this has now been exacerbated further as a result of the COVID-19 response.
The Department must learn from its experience of responding to the COVID-19 pandemic and quickly develop clear post-pandemic plans to transition back to business as usual. This should include implementing a robust procurement and inventory management processes and controls to ensure proper financial management and having a clear coordinated strategy for dealing with the significant volumes of excess PPE in the most cost effective and environmentally friendly way.