The Comptroller and Auditor General (C&AG) and head of the
NAO, , gave a clean audit opinion
on DHSC's accounts for the year ended 31 March 2024, meaning
their financial statements are reasonably stated for that
year.
In the previous two years, the C&AG took the unusual step of
disclaiming his opinion on the UKHSA accounts, because there was
not enough evidence for him to form an opinion, which led to the
Department's accounts being qualified. Improvements at UKHSA have
been made in 2023-24 but extensive corrective action was needed
to produce a set of auditable accounts, masking significant
underlying weaknesses in UKHSA's accounting processes.
The C&AG also found weakness in departmental oversight. This
included several bodies within its group which did not obtain the
required advance HM Treasury (HMT) approval for exit packages to
Chief Executives outside of statutory or contractual
agreements.
Parliament also expects DHSC's accounts to be published before it
rises for its summer recess each year, but this target has not
been met since 2019. Whilst there are challenges in achieving
this goal, the Department has not produced a plan to overcome the
obstacles to achieving this.
The C&AG recommends the
Department:
· Supports UKHSA to
continue to improve its accounting processes and
controls.
· Should better
understand and address issues faced by its group bodies to
improve compliance with HMT's Managing Public
Money.
· Sets out a plan for
laying its Annual Report and Accounts in Parliament before
Parliamentary summer recess.
UK Health Security Agency Accounts 2023-24
The C&AG took the unusual step of disclaiming his opinion on
the UKHSA's accounts in in both 2021-22 and
2022-23.
UKHSA has produced a set of accounts that the C&AG has been
able to audit for 2023-24. As a result, the C&AG has been
able to issue a clean audit opinion on the 2023-24 DHSC
accounts.
UKHSA undertook additional assurance and corrective work using an
external firm, which had a positive impact in supporting the
delivery of better-quality audit evidence. However, the
C&AG's audit still identified a high error rate in the
account, noting that there continue to be significant weaknesses
in UKHSA's financial controls.
Weaknesses in Departmental oversight
The C&AG identified that several entities across the
Departmental Group did not seek approval for expenditure that was
potentially novel or contentious before the money was spent. This
included exit packages to Chief Executives outside of statutory
or contractual agreements. In some instances, HMT has not yet
provided retrospective approval for these severance payments, and
DHSC was not aware of these cases until after the expenditure had
been incurred.
DHSC's 2023-24 accounts have been presented to Parliament a month
earlier than in recent years; however, it is still a long way
from being able to publish before summer parliamentary
recess.
NHS providers and Integrated Care Boards have improved in the
timeliness of reporting their audited financial results. This
improvement meant that the NHS England 2023-24 annual accounts
could be presented to Parliament in October, 107 days earlier
than for its 2022-23 annual accounts. The Consolidated NHS
Provider Accounts 2023-24 annual accounts were presented to
Parliament in November, 60 days earlier than the accounts for
2022-23.
The Department still has considerable work to do to meet its
target to present its accounts to Parliament by summer recess in
2026-27. Currently there is no achievable plan to ensure the
ambition is met.
Financial challenges in the National Health
Service
The scale of challenge facing the NHS today and foreseeable in
the years ahead is unprecedented. The NHS's financial position is
worsening because of long-standing and recent issues, including
failure to invest in its estate, the cost of post-pandemic
recovery, strikes, inflation, and increased sickness absence. In
2023-24, 61% of NHS providers (2022-23: 43%) recorded operating
expenditure greater than their operating income.
These issues, taken together with a one-off adjustment relating
to a new accounting standard that has been implemented for the
first time, has resulted in DHSC writing down its £56 billion of
investments in its NHS providers at the end of 2023-24 by £7.5
billion.
