Billions still at risk from Covid PPE contracts, says spending watchdog

More than £2bn of British taxpayers’ money is still at risk from contracts for protective equipment hastily concluded at the height of the pandemic, mostly stemming from the provision of substandard goods, according to an independent spending watchdog.

The National Audit Office said the UK health department was managing 176 contracts “where it believes it may not achieve full value for money”. In about two-thirds of the disputed orders, the main reason was the quality of the products supplied.

The remaining disputes were the result of a range of issues including expired products and PPE not being delivered, the auditors said. The department expected fraud and error to account for between 0.5 per cent and 5 per cent of PPE expenditure, it added.

The speed and the scale of government procurement during Covid has highlighted the challenges ministers face in avoiding waste when spending large sums of taxpayer money as they step up measures to counter public sector fraud.

The government’s poor record was exposed in January when Lord Theodore Agnew, the counter-fraud minister, resigned, saying he was “incapable” of doing his job properly and felt unable to defend what had happened on his watch.

Gareth Davies, head of the NAO, said The Department of Health and Social Care was “still dealing with the results of its emergency procurement decisions, some two years after it first needed to rapidly buy PPE in unprecedented circumstances”. An estimated £2.7bn remained at risk, he added.

However, Jacob Rees-Mogg, government efficiency minister, claimed on Tuesday that the government had saved £3.4bn last year through efficiency savings and bearing down on fraud. He claimed losses from “fraud and debt” had been cut by £1.8bn.

DHSC had so far spent £12.6bn of the total £13.1bn it expected to spend on almost 38bn items of PPE, the NAO said. The department estimated about 3.9bn items — approximately 10 per cent of the total purchased — were no longer needed.

A further 3.6bn items were “considered not currently suitable for frontline services”, while some 1.5bn items were “estimated by DHSC to have passed their expiry date and therefore unable to be distributed”, it added.

Meg Hillier, chair of the public accounts committee, described the numbers as “staggering”. “Storage alone has cost over £700mn, with DHSC continuing to spend £7mn a month storing PPE it doesn’t need,” she said.

The department, said Hillier, “must urgently get a grip of its PPE stocks and focus on protecting value for taxpayers. It has to claw back contract costs where it can, get rid of unusable PPE, and cut down on expensive storage”.

Angela Rayner, deputy leader of the opposition Labour party, slammed “the latest shameful chapter in the government’s cocktail of sleaze and incompetence”. 

Rees-Mogg said £138mn of fraudulent PPE contracts had been terminated but he admitted that he needed to “accelerate” progress in rooting out fraud and waste.

Separately Simon Clarke, the Treasury minister in charge of public spending, promised a “quiet revolution” to save money, warning that if colleagues wanted to spend more, they would have to find savings first.

He set out an ambition to cut the civil service headcount to where it was “before the extraordinary events of the last five years”, a reference to Brexit and the pandemic.

The government has set up a new public sector fraud authority to improve public sector procurement, while a new ministerial committee, chaired by chancellor Rishi Sunak, has been tasked with finding £5.5bn of efficiency savings.

Responding to the NAO’s findings, DHSC said it had delivered more than 19.1bn items of PPE to frontline staff. “Having too much PPE was preferable to having too little in the face of an unpredictable and dangerous virus, given this was essential to keep our NHS open and protect as many people as possible”, it said.

Where contracts were in dispute, “we are seeking to recover costs from suppliers and we expect to recover significant amounts of taxpayers’ money,” it added.