Thirty-Fifth Report - The pharmacy early payment and salary advance schemes in the NHS

Select Committee
Public Accounts Committee HC 745 4 February 2022
Report Status Government responded
Conclusions & Recommendations 32 items (8 recs)
Source View on Parliament website
Government Response (AI assessment · 30 of 32 classified)
Accepted 19
Acknowledged 4
Not Addressed 1
Rejected 6
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Thirty Fifth report from Session 2021-22 · published 28 Apr 2022
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Recommendations & Conclusions

19 results
2 Recommendation Accepted
Crown Commercial Service (CCS) failed to sufficiently manage and consider conflicts of interest for the...
Recommendation
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 Summary
The Department and CCS have formalized the process for considering conflicts of interest, including updating templates and implementing PPN 04/2021, to ensure actual and perceived conflicts are managed appropriately, with ongoing reviews and contractor declarations.
HM Treasury
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3 Recommendation Accepted
Despite previous experience of contractor failures, CCS and the Department did not act on lessons...
Recommendation
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
Government Response Summary
The government agrees to robust financial checks for suppliers bidding for CCS contracts, ongoing risk monitoring, information sharing across the Government Commercial Function, and a tiered approach to contract and supplier classification based on risk.
HM Treasury
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4 Recommendation Accepted
The Department failed to provide adequate oversight to its arm’s length bodies (ALBs) and NHS...
Recommendation
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 Summary
The government agrees with the Committee’s recommendation. NHSE&I has a process for disseminating relevant government advice to NHS trusts through their Healthcare Leaders Bulletin, and also has a formal route to system leaders through its Single Point of Contact team for items requiring immediate attention.
HM Treasury
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6 Conclusion Accepted
The Department’s business case targeted annual savings of £100 million in pharmacy margins through early...
Conclusion
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
Government Response Summary
The government agrees with the committee's item and reissued updated guidance (DAO 03/22) in March 2022 to Accounting Officers, reiterating their responsibilities regarding novel and complex financing arrangements.
HM Treasury
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7 Conclusion Accepted
We asked the Department that given the pharmacy scheme involved an unusual and novel use...
Conclusion
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
Government Response Summary
The government agrees with the committee's observation and, in response, HM Treasury reissued updated guidance (DAO 03/22) in March 2022, reiterating accounting officers' responsibilities regarding novel and complex financing arrangements.
HM Treasury
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8 Conclusion Accepted
The Department told us that the original business case had quite a large level of...
Conclusion
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
Government Response Summary
The government agrees with the committee's item and reissued updated guidance (DAO 03/22) in March 2022 to Accounting Officers, reiterating their responsibilities regarding novel and complex financing arrangements.
HM Treasury
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9 Conclusion Accepted
We asked whether any cash analysis was done in 2012 as to whether the proposed...
Conclusion
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
Government Response Summary
The government agrees with the committee's item and reissued updated guidance (DAO 03/22) in March 2022 to Accounting Officers, reiterating their responsibilities regarding novel and complex financing arrangements.
HM Treasury
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10 Conclusion Accepted
Following his appointment as a senior adviser in November 2011, Lex Greensill advised the government...
Conclusion
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 Summary
The government agrees with the Committee’s recommendation to formalise the process for considering conflicts of interest and has implemented Procurement Policy Notice (PPN) 04/2021 covering conflicts of interest in awarding contracts. CCS ensures contemporaneous confirmation is sought and captured that teams have considered any perceived or actual conflicts. The Department of Health and Social Care has completed its implementation of the PPN 04/2021.
HM Treasury
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13 Conclusion Accepted
CCS stated that in terms of procurement regulations, there was no reason to preclude Taulia...
Conclusion
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 Summary
The government agrees with the Committee’s recommendation to formalise the process for considering conflicts of interest and has implemented Procurement Policy Notice (PPN) 04/2021 covering conflicts of interest in awarding contracts. CCS ensures contemporaneous confirmation is sought and captured that teams have considered any perceived or actual conflicts. The Department of Health and Social Care has completed its implementation of the PPN 04/2021.
HM Treasury
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14 Recommendation Accepted
CCS knew, before legal correspondence came in from Taulia, that Greensill Capital was listed as...
Recommendation
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 Summary
The Department and CCS have formalized the process for considering conflicts of interest, including updating templates and implementing PPN 04/2021, to ensure actual and perceived conflicts are managed appropriately, with ongoing reviews and contractor declarations.
HM Treasury
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15 Conclusion Accepted
Mr Bill Crothers was a former Government Commercial Officer and was a director for both...
Conclusion
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 Summary
The government agrees with the Committee’s recommendation to formalise the process for considering conflicts of interest and has implemented Procurement Policy Notice (PPN) 04/2021 covering conflicts of interest in awarding contracts. CCS ensures contemporaneous confirmation is sought and captured that teams have considered any perceived or actual conflicts. The Department of Health and Social Care has completed its implementation of the PPN 04/2021.
HM Treasury
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16 Recommendation Accepted
The Government is currently considering the recommendations from Nigel Boardman’s recent review of standards in...
Recommendation
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 Summary
The government will formalize the process for considering conflicts of interest. CCS is updating templates to ensure confirmation is sought regarding conflicts of interest, and the DHSC has implemented a clear process, with contract managers and contractors completing conflict of interest declarations.
HM Treasury
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19 Conclusion Accepted
The combined effect of the introduction of an even earlier reimbursement process for pharmacies and...
Conclusion
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
Government Response Summary
The government agrees with the committee's observation and, in response, HM Treasury reissued updated guidance (DAO 03/22) in March 2022, reiterating accounting officers' responsibilities regarding novel and complex financing arrangements.
HM Treasury
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21 Conclusion Accepted
We further questioned CCS if it was normal when dealing with what is, effectively, a...
Conclusion
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
Government Response Summary
The government agrees with the committee's item and states it already implements robust financial checks, risk monitoring, and a tiering approach for suppliers throughout the contract life to ensure resilience.
HM Treasury
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22 Conclusion Accepted
Over the three-year period of the pharmacy scheme with Taulia and Greensill Capital as subcontractor,...
Conclusion
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
Government Response Summary
The government agrees with the committee's item and reissued updated guidance (DAO 03/22) in March 2022 to Accounting Officers, reiterating their responsibilities regarding novel and complex financing arrangements.
HM Treasury
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23 Conclusion Accepted
CCS told us that it had put an information notice out to say that it...
Conclusion
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 Summary
The government states that Suppliers bidding for CCS contracts are subject to robust financial checks and regular risk monitoring, including discussions with Taulia to identify an alternative funder and engagement with NHS Business Services Authority.
HM Treasury
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24 Conclusion Accepted
Greensill Capital actively marketed its salary advance scheme, Earnd, to NHS trusts at no cost...
Conclusion
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
Government Response Summary
The government agrees with the implied recommendation to address the perception of NHS endorsement and will update the NHS Identity Guidelines by May 2022 to explicitly state that NHS/DHSC and staff are not permitted to endorse third-party goods or services.
HM Treasury
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25 Recommendation Accepted
Government advised departments not to implement salary advance schemes, but this advice was not cascaded...
Recommendation
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 Summary
The Department, working with NHSE&I, has adopted a formal process for ensuring that government advice is disseminated to NHS trust leadership for consideration and implementation if relevant through regular updates and the Single Point of Contact team.
HM Treasury
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27 Conclusion Accepted
On the basis that there was not a lot of cash to be earned from...
Conclusion
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
Government Response Summary
The government agrees with the committee's item and has implemented Procurement Policy Notice (PPN) 04/2021 to manage conflicts of interest, with CCS updating procurement processes and DHSC introducing a clear process for declarations throughout the contract lifecycle.
HM Treasury
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