NHS supply chain finance

Public Accounts Committee Closed Inquiry
Opened: 20 Oct 2021 Closed: 7 Apr 2022 Parliament page
Prior to its collapse in March 2021, Greensill Capital was involved in the provision of a supply chain finance scheme to more quickly reimburse community pharmacies for dispensing NHS prescriptions. Greensill was also involved in a “payday” scheme that enabled employees of NHS Trusts to access their salaries early. Following … Read more
1 Recommendation
31 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 6 events
28 Apr
2022
Report published
4 Feb
2022
Report published
6 Dec
2021
Correspondence
6 Dec
2021
Correspondence
15 Nov
2021
Oral evidence
15 Nov
2021
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
15 Nov 2021
View on parliament.uk
NHS supply chain finance
Erika Bannerman · NHS Shared Business Services Michael Brodie · NHS Business Service Authority Simon Tse · Crown Commercial Service Sir Chris Wormald · Department of Health and Social Care
Title HC No. Published Items Response
Thirty-Fifth Report - The pharmacy early payment and salary adva… HC 745 4 Feb 2022 32 Responded
Recommendations & Conclusions
32 results
2 Conclusion
Thirty-Fifth Report - The pharmacy…
Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the...
Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. Lex Greensill was appointed as senior adviser to government on supply chain finance in November 2011 and continued to provide advice to … Read more
Government Response
2.1 The government agrees with the Committee’s recommendation. Recommendation implemented 2.2 In 2020, the National Audit Office and the Boardman Review recommended that additional, practical guidance be made available for … Read more
HM Treasury
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3 Recommendation
Thirty-Fifth Report - The pharmacy…
Despite previous experience of contractor failures, CCS and the Department did not act on lessons...
Despite previous experience of contractor failures, CCS and the Department did not act on lessons from previous cases. The Department, CCS and NHS Business Services Authority (NHSBSA) assessments of risks did not flag issues with having a single supplier on … Read more
HM Treasury
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4 Conclusion
Thirty-Fifth Report - The pharmacy…
The Department failed to provide adequate oversight to its arm’s length bodies (ALBs) and NHS...
The Department failed to provide adequate oversight to its arm’s length bodies (ALBs) and NHS trusts. Guidance issued by Civil Service Human Resources in December 2020 to accounting officers warned that novel financing arrangements, including salary advance schemes, required caution, … Read more
Government Response
4.1 The government agrees with the Committee’s recommendation Recommendation implemented 4.2 The Public Contract Regulations apply to all public sector contracting authorities, including NHS Trusts and Foundation Trusts. The Cabinet … Read more
HM Treasury
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5 Conclusion
Thirty-Fifth Report - The pharmacy…
The growth in salary advance schemes across the NHS raises questions about their status as...
The growth in salary advance schemes across the NHS raises questions about their status as unregulated consumer lending. In February 2021, the Financial Conduct Authority (FCA) published the Woolard Review which noted that the salary advance schemes market was predominantly … Read more
Government Response
5.1 The government disagrees with the Committee’s recommendation 5.2 Unsecured consumer credit is regulated under a legislative framework. Where consumer detriment is identified, the government is able to extend the … Read more
HM Treasury
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1 Conclusion
Thirty-Fifth Report - The pharmacy…
Following the Comptroller and Auditor General’s report, we took evidence from the Department of Health...
Following the Comptroller and Auditor General’s report, we took evidence from the Department of Health and Social Care (the Department), Crown Commercial Service (CCS), NHS Business Services Authority (NHSBSA) and NHS Shared Business Services (NHS SBS) on supply chain finance … Read more
Government Response
Thirty-Fifth Report of Session 2021-22 Department of Health & Social Care, Crown Commercial Service, Cabinet Office, and HM Treasury The Pharmacy Earlier Payment and Salary Advance Schemes in the NHS … Read more
HM Treasury
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6 Conclusion
Thirty-Fifth Report - The pharmacy…
The Department’s business case targeted annual savings of £100 million in pharmacy margins through early...
The Department’s business case targeted annual savings of £100 million in pharmacy margins through early payment settlements with drug manufacturers, based on advice supplied by Lex Greensill in his capacity as government adviser. The Department has stated that it is … Read more
HM Treasury
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7 Conclusion
Thirty-Fifth Report - The pharmacy…
We asked the Department that given the pharmacy scheme involved an unusual and novel use...
We asked the Department that given the pharmacy scheme involved an unusual and novel use of public money and in relation to the entire episode with Greensill Capital whether HM Treasury’s initial scepticism about the use of supply chain finance … Read more
HM Treasury
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8 Conclusion
Thirty-Fifth Report - The pharmacy…
The Department told us that the original business case had quite a large level of...
The Department told us that the original business case had quite a large level of projected savings—£100 million as quoted by the National Audit Office. We asked how much of that £100 million quoted in the report was actually realised … Read more
HM Treasury
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9 Conclusion
Thirty-Fifth Report - The pharmacy…
We asked whether any cash analysis was done in 2012 as to whether the proposed...
We asked whether any cash analysis was done in 2012 as to whether the proposed scheme would save any money—it was assumed by the Department that it might. The Department confirmed that there is no accurate basis for estimating the … Read more
HM Treasury
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10 Conclusion
Thirty-Fifth Report - The pharmacy…
Following his appointment as a senior adviser in November 2011, Lex Greensill advised the government...
Following his appointment as a senior adviser in November 2011, Lex Greensill advised the government on supply chain finance until March 2017. He also founded Greensill Capital, which was a subcontractor to Taulia as part of its November 2017 bid … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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11 Conclusion
Thirty-Fifth Report - The pharmacy…
Three companies bid to be the framework supplier.
Three companies bid to be the framework supplier. One was discarded on failure to meet minimum quality grounds, leaving Citibank and Taulia. CCS’s commercial finance accountant’s evaluation of Taulia’s Dun & Bradstreet score and a review of its accounts required … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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12 Conclusion
Thirty-Fifth Report - The pharmacy…
We asked why there was no discussion about a potential conflict of interest arising from...
We asked why there was no discussion about a potential conflict of interest arising from Lex Greensill providing advice on supply chain finance services and his company, Greensill Capital, then being appointed to supply these services. We asked whether CCS’s … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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13 Conclusion
Thirty-Fifth Report - The pharmacy…
CCS stated that in terms of procurement regulations, there was no reason to preclude Taulia...
CCS stated that in terms of procurement regulations, there was no reason to preclude Taulia based on Greensill Capital being a subcontractor named in their bid. CCS also told us that based on submissions received from the various bidding companies, … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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14 Conclusion
Thirty-Fifth Report - The pharmacy…
CCS knew, before legal correspondence came in from Taulia, that Greensill Capital was listed as...
CCS knew, before legal correspondence came in from Taulia, that Greensill Capital was listed as a financial backer—the guarantor—to the Taulia bid. CCS agreed that if there 11 C&AG’s Report, para 12, Figure 1 12 C&AG’s Report, para 2.21 13 … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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15 Conclusion
Thirty-Fifth Report - The pharmacy…
Mr Bill Crothers was a former Government Commercial Officer and was a director for both...
Mr Bill Crothers was a former Government Commercial Officer and was a director for both Greensill Capital and its subsidiary Earnd (UK) Limited. We asked whether Mr Crothers was using his contacts within the NHS to promote the work of … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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16 Conclusion
Thirty-Fifth Report - The pharmacy…
The Government is currently considering the recommendations from Nigel Boardman’s recent review of standards in...
The Government is currently considering the recommendations from Nigel Boardman’s recent review of standards in public life and we expect that the outcome of those considerations would be far reaching and wide enough to address all of these issues relating … Read more
Government Response
2: PAC conclusion: Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the appointment of contractors. 2: PAC recommendation: The Department and CCS should formalise … Read more
HM Treasury
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17 Conclusion
Thirty-Fifth Report - The pharmacy…
NHSBSA amended PEPS within the existing arrangements from July 2020 at the request of the...
NHSBSA amended PEPS within the existing arrangements from July 2020 at the request of the Department. This amendment allowed pharmacies to obtain funds at the beginning of the month, prior to dispensing, thereby introducing a higher risk to the lender … Read more
HM Treasury
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18 Conclusion
Thirty-Fifth Report - The pharmacy…
On 1 March 2021, NHSBSA learned that Greensill Capital might be unable to fully fund...
On 1 March 2021, NHSBSA learned that Greensill Capital might be unable to fully fund that month’s payments to pharmacies. On the instructions of the Department, NHSBSA took emergency action to make direct payments to all pharmacies within the scheme … Read more
HM Treasury
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19 Conclusion
Thirty-Fifth Report - The pharmacy…
The combined effect of the introduction of an even earlier reimbursement process for pharmacies and...
The combined effect of the introduction of an even earlier reimbursement process for pharmacies and the failure of Greensill Capital placed the Department in a position 15 Q 59 16 Qq 65–66 17 Supply Chain Finance in Government: Boardman Review … Read more
HM Treasury
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20 Conclusion
Thirty-Fifth Report - The pharmacy…
The failure of Greensill Capital resulted in some NHS trusts switching to a paid for...
The failure of Greensill Capital resulted in some NHS trusts switching to a paid for salary advance scheme. When Greensill Capital failed in March 2021, the Earnd UK business (formerly FreeUp Finance Limited) ceased to operate. Wagestream, an existing market … Read more
HM Treasury
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21 Conclusion
Thirty-Fifth Report - The pharmacy…
We further questioned CCS if it was normal when dealing with what is, effectively, a...
We further questioned CCS if it was normal when dealing with what is, effectively, a financial product, to end up with only one supplier, with no resilience built in. CCS told us that it does not like putting single suppliers … Read more
HM Treasury
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22 Conclusion
Thirty-Fifth Report - The pharmacy…
Over the three-year period of the pharmacy scheme with Taulia and Greensill Capital as subcontractor,...
Over the three-year period of the pharmacy scheme with Taulia and Greensill Capital as subcontractor, a cumulative transaction value of £3.32 billion of pharmacy loans passed through the supply chain finance. Taulia received in the region of £840,000 over the … Read more
HM Treasury
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23 Conclusion
Thirty-Fifth Report - The pharmacy…
CCS told us that it had put an information notice out to say that it...
CCS told us that it had put an information notice out to say that it was starting to look at the replacement for supply chain finance but the decision had yet to be formalised internally—though it had gone to the … Read more
Government Response
3.2 Suppliers bidding for CCS contracts are subject to robust financial checks as part of each framework procurement. CCS teams also then regularly monitor risk to suppliers and 22 consider … Read more
HM Treasury
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24 Conclusion
Thirty-Fifth Report - The pharmacy…
Greensill Capital actively marketed its salary advance scheme, Earnd, to NHS trusts at no cost...
Greensill Capital actively marketed its salary advance scheme, Earnd, to NHS trusts at no cost to employers or employees. Representatives of Greensill Capital often attended NHS group meetings of trust leadership and senior management to pitch the service. Greensill Capital … Read more
HM Treasury
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25 Conclusion
Thirty-Fifth Report - The pharmacy…
Government advised departments not to implement salary advance schemes, but this advice was not cascaded...
Government advised departments not to implement salary advance schemes, but this advice was not cascaded to the Department’s arm’s-length bodies (ALBs). Guidance issued by Civil Service Human Resources in December 2020 to accounting officers reminded them that novel financing arrangements, … Read more
Government Response
4a PAC recommendation: The Department, working with NHSE&I, should adopt a formal process for ensuring that government advice is disseminated to NHS trust leadership for consideration and implementation if relevant. … Read more
HM Treasury
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26 Conclusion
Thirty-Fifth Report - The pharmacy…
The Department told the National Audit Office that its policy position on salary advance schemes...
The Department told the National Audit Office that its policy position on salary advance schemes is that their use is a matter for individual NHS trusts and for that reason it would not provide advice or guidance to NHS trusts … Read more
Government Response
4a PAC recommendation: The Department, working with NHSE&I, should adopt a formal process for ensuring that government advice is disseminated to NHS trust leadership for consideration and implementation if relevant. … Read more
HM Treasury
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27 Conclusion
Thirty-Fifth Report - The pharmacy…
On the basis that there was not a lot of cash to be earned from...
On the basis that there was not a lot of cash to be earned from this scheme by Greensill Capital, we asked what it was that the company was hoping to get out of this line of busines at the … Read more
HM Treasury
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28 Conclusion
Thirty-Fifth Report - The pharmacy…
Employer Salary Advance Schemes (ESAS, or salary advance schemes) are not regulated by the Financial...
Employer Salary Advance Schemes (ESAS, or salary advance schemes) are not regulated by the Financial Conduct Authority (FCA). These salary advance schemes link an employer payroll process to an employee smartphone app to offer advances of accrued earnings from a … Read more
Government Response
5.2 Unsecured consumer credit is regulated under a legislative framework. Where consumer detriment is identified, the government is able to extend the perimeter of that framework to ensure that there … Read more
HM Treasury
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29 Conclusion
Thirty-Fifth Report - The pharmacy…
The National Audit Office reported that between 1.3% and 10% of staff at NHS trusts...
The National Audit Office reported that between 1.3% and 10% of staff at NHS trusts were looking at using these services, so, clearly, a substantial number of people. We asked NHS SBS what expectations it had of usage of payday … Read more
HM Treasury
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30 Conclusion
Thirty-Fifth Report - The pharmacy…
The Woolard review noted that the salary advance schemes market was predominantly found in the...
The Woolard review noted that the salary advance schemes market was predominantly found in the hospitality, retail and healthcare markets and was still in a stage of relative infancy. It stated that salary advances could result in some users experiencing … Read more
Government Response
5: PAC conclusion: The growth in salary advance schemes across the NHS raises questions about their status as unregulated consumer lending 5: PAC recommendation: The Department along with HM Treasury, … Read more
HM Treasury
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31 Conclusion
Thirty-Fifth Report - The pharmacy…
Greensill Capital’s approach coincided with NHS trusts’ own research into salary advance scheme providers in...
Greensill Capital’s approach coincided with NHS trusts’ own research into salary advance scheme providers in the context of staff financial wellbeing and employee benefits. NHS trust working papers also showed that employers considered the service could provide additional benefits, including … Read more
HM Treasury
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32 Conclusion
Thirty-Fifth Report - The pharmacy…
We asked if there were lessons particularly for the Department about promoting these products that...
We asked if there were lessons particularly for the Department about promoting these products that have no FCA imprint. An employee on a low salary might decide to take some early advance and it is not actually a regulated product … Read more
HM Treasury
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Correspondence 2 letters
6 Dec 2021 Correspondence from the Department of Health and Social Care, relating to NHS Supply Chain Finance, dated 30 November 2021
Parliament page
6 Dec 2021 Correspondence from NHS Business Services Authority relating to NHS Supply Chain Finance, dated 29 November 2021
Parliament page