Personal Protective Equipment: Accounting

Private Notice Question

Asked by

To ask Her Majesty’s Government what steps are being taken within both the Department of Health and the Treasury to account for the £8.7 billion spent on unusable PPE in the course of the financial years 2020-2021.

My Lords, I beg leave to ask a Question of which I have given private notice. I remind the House of my interests as a director of the Good Law Project.

Throughout the pandemic, our absolute priority has been saving lives; £8.7 billion of the personal protective equipment inventory has been written down, not written off. This does not mean that it is unusable. The accounts make it clear that only 3% of the items purchased were not fit for any use. The majority of the impairment reflects the fact that the Government bought in a globally inflated market. It was better to do that than risk running out of PPE and risk lives.

My Lords, I thank the Minister for that Answer. Global inflation was clearly part of this, but of the extraordinary 72% of PPE spend that has now been written down, £670 million was on defective equipment, £750 million was on PPE that was past its expiry date and £2.6 billion was on unsuitable supplies—if you add it all up, that is enough to build more than a dozen new hospitals. Apparently, Ministers now cannot locate a further £3.6 billion in supplies, and a further £1.2 billion is again being written down on advance orders for this year. Can the Minister pledge today to have a full investigation into PPE procurement processes, particularly into how it became possible for some suppliers, funnelled through the VIP lane, to make so much money from the tax- payer for equipment that was not used or unusable?

The noble Lord asks a detailed question, so I hope noble Lords will forgive me if I try to respond in some detail. If you look at the breakdown of the writedown, you will see that, first, about £4.6 billion was attributable to changes in global prices following the point of purchase in a highly inflated market—noble Lords will remember that even toilet rolls went up at one time. As the noble Lord rightly says, the £673 million was for stuff that had failed the quality testing or technical insurance. The £2.6 billion was for stock that will not be used for its intended purposes but can be repurposed. We are also looking at stock in excess of the current forecast requirements, which can be stockpiled, and we are also introducing a tender for testing to see whether the life of some of that stock can be extended.

My Lords, can I press my noble friend a little more closely on one issue? I speak as president of the UK Warehousing Association. I am grateful to my noble friend for his explanation. What timetable do the Government have to remove this redundant PPE equipment from the warehouses in which it is currently situated to enable stock to be stored in those warehouses which really needs to be at this time?

There are different ways; some of it is about stockpiling stuff that is still useful and which we would use in future anyway. We are looking at research into testing whether the life of some of our stock can be extended—we are working with some of the best scientists on that. We are also looking at where we can give stock away or sell it on, as all the stock we are passing on meets WHO standards. To give noble Lords one example, we bought lots of latex gloves; usually we do not buy latex gloves in this country because of allergies and, now that we no longer need them, we can give them to a country such as Syria.

My Lords, those in the VIP lane were 10 times more likely to be awarded a contract, although there was no evidence that they had more expertise than any other company. Of the £8.7 billion-worth of material which could not be used by the NHS, how much went through the VIP channel? What efforts are the Government making to recover public money for material that was unusable for the NHS?

If I could correct the noble Baroness, the £8.7 billion does not refer to material that can no longer be used. As I said earlier, some of it can be repurposed or reused. On the so-called priority lanes, a number of government officials, Ministers’ offices, MPs, Member of the House of Lords, senior NHS staff, departmental staff and others were contacted. They then passed on these emails—I still get emails from people and pass them on to my department. All offers underwent a rigorous financial, commercial, legal and policy assessment. This was led by officials from various government departments as part of the PPE sale. The final decision on whether to enter into contracts sat with the appropriate accounting officer at the Department of Health and Social Care.

My Lords, I think it would be best if the Minister does not try to justify the VIP list, since he was not there. Consider the answer given by the former Minister for PPE procurement matters, the noble Lord, Lord Bethell, to a Parliamentary Question on 1 September 2021:

“As of 27 July 2021, the Department was engaged in commercial discussions (potentially leading to litigation) in respect to 40 PPE contracts with a combined value of £1.2 billion”.

Could the Minister please update the House on the situation with respect to that potential litigation and any attempt to recoup public money in the six months since the date of those official figures? If the Minister cannot provide the information today, could he write to me urgently, and ensure the information is placed in the Library?

The Department of Health and Social Care’s anti-fraud unit has acted quickly to investigate allegations of fraud. Indeed, this question came up when I was on a call with the unit earlier today; I was told that it saved £157 million in prevention and recovery by identifying and preventing high-risk contracts in the early days of the pandemic. There is a single company that is a potential source of loss, where we paid it and then terminated the contract as a preventive measure. I commit to write to the noble Baroness with a fuller answer.

My Lords, on Monday, at col. 650 in Hansard, the noble Earl, Lord Howe, promised to write to me and answer my specific questions about the origins of and deficiencies in PPE, some of which originated at the hands of slave labour in the genocide state of Xinjiang—where the Foreign Secretary herself has said a genocide is taking place. Can the Minister confirm that the reply will be with us before Report stage of the Health and Care Bill, and will he ensure that a copy is placed in the Library of the House? Will the Minister reconsider his statement made to me in reply to a Parliamentary Question that no organisation or individuals will be censured—especially bearing in mind what he has just told the House about the continuing inquiry by the fraud squad into allegations of fraud? If such allegations were found to be true, how can that rule out the possibility that anyone will be censured?

I thank the noble Lord, Lord Alton, for his persistence in asking a number of questions. I think all noble Lords appreciate that we want to recognise the huge suffering of the Uighurs in China, and that we should not do anything that can be seen to support it. I would also like to correct the noble Lord, Lord Alton: it was not the fraud squad; it was the Department of Health and Social Care’s anti-fraud unit, which has been investigating these contracts throughout the pandemic. But I will speak to my noble friend Earl Howe and check when the answer will be available. The normal process is to make sure it is available before the next session of Committee.

My Lords, what lessons are to be drawn from the difference between the fiasco of PPE procurement and the world-beating success of vaccine procurement? The first was left in the hands of the usual administrative state, that of PHE and NHS procurement; the second was deliberately lifted out of the hands of bureaucracy and placed in those of an individual from the private sector. Would the Minister like to extrapolate or infer from that distinction?

It is important to recognise that, throughout the pandemic, people were in a state of panic and there were people dying every day. What we saw was the coming together of the state and the private sector, working in partnership in the best possible way. The vaccines started in university research but were then commercialised and exported by the private sector. People who stayed at home during lockdown were served by Uber and Deliveroo—hard-working people were serving us. This was the best of the public and private sectors, working together for the best of the British.

My Lords, across the Suffolk countryside, vast piles of shipping containers—some up to 60 feet high—full of this PPE are now lodged. Can the Minister say how long people in those areas are going to have to live with these monstrosities, which do not have planning permission? How much are the Government paying for this ad hoc storage on unsuitable sites?

The noble Baroness raises a very important point about storage costs, and we are looking at how we can reduce them. We have managed to reduce weekly storage costs at the moment, but one of the things we are looking at is how we can pass on, donate or sell some of the equipment that is in storage. We have certain standards, other countries have other standards, and we are making sure that we are selling stuff that meets WHO standards.

My Lords, in December 2021, Edward Argar reported that the Government were paying £4.5 million a week for storage costs for PPE. Are those storage costs for stuff which is now unusable?

As I said earlier, a very small percentage was unusable, but we are looking at some of the things that are supposedly past their use-by and sell-by dates—rather similar to food; people know about the debate around food wastage. We have put out a tender for scientists to look at the equipment to see whether its life can be extended or it can be used in a useful way.

My Lords, it is understandable that in an emergency, huge amounts of taxpayers’ money may need to be written off for contracts that were not viable. I commend the Government on all they have done for the pandemic, but would my noble friend agree with me that, given that this was an emergency, and given where we are on the cost-of-living crisis, it would perhaps benefit the Government to rethink the national insurance increase that is coming in April, as the cost-of-living crisis itself is an emergency?

If you consider how quickly the Government, and all of us, had to act during the early days of the pandemic, it was clearly an emergency. Lives were being lost. This is a stab in the dark, but maybe some noble Lords read a newspaper called the Guardian. One of its headlines from April 2020 read:

“Hospital leaders hit out at government as PPE shortage row escalates”.

Everyone knew that it was essential to get hold of as much PPE as you could in an incredibly challenging market.

My Lords, the Minister explained that the ultimate decision on what PPE contracts to issue came from the department, but I think the House would still be interested to know what proportion of the unusable PPE, or PPE that was unfit for purpose, came through the VIP trail.

That seems a reasonable question, but I hope the noble Baroness will understand that I do not have the answer at the moment. This is very much a dynamic situation. Some of the equipment we have may be deemed to be out of date but may be reclassified as usable after scientific analysis.

My Lords, on page 201 of the Annual Report and Accounts of the Department of Health and Social Care, the Comptroller and Auditor-General says that

“I have been unable to obtain sufficient, appropriate audit evidence to support the valuation of the Core Department & Agencies’ and Group’s onerous contract provisions of £1.2 billion”.

Why is the DHSC unable to provide relevant and reliable evidence, and which Minister takes responsibility for this shambolic state of affairs?

Interestingly enough, when I had the briefing with the team from the Department of Health and Social Care, I asked a very similar question about the qualification received from the Comptroller and Auditor-General—the C&AG—on limitation of scope. What it meant was that there was not enough audit evidence available for the C&AG to conclude. This stems principally from the fact that we were unable to perform a full stock-take on all items. So many millions of items were bought at the time, there was so much stock that the department could not yet do a full stock-take. The department does have a robust assessment of the risks, but it was important that we got as much stuff as possible, and it was unable to do a full stock-take of the millions of pieces of equipment.

My Lords, does my noble friend not recognise that some people have very short memories? If we look back, there was huge demand globally for PPE. The press and the public were screaming for supplies to be provided. People worked round the clock, and of course they ended up paying over the odds in such a situation. Politics is fine, but to try to score points against people who did their best in the interests of public health and who were not bean-counters is really unworthy.

My noble friend makes a very important point. We should completely pay tribute to all those who worked as hard as they could during a time of panic. I remember that the leader of the British Medical Association said:

“This really is a matter of life and death. In what is an incredibly challenging time, doctors and healthcare staff should feel as equipped and supported as they need to be able to deliver care for patients.”

You cannot put a price on that. We had to buy equipment from wherever we could to help make sure that we kept our staff safe.