Ukhsa advisory board: finance report

* UK Health Security Agency Corporate report UKHSA ADVISORY BOARD: FINANCE REPORT Updated 10 May 2023 CONTENTS * Purpose of the paper * Recommendation * Summary of in-year 2022 to 2023

financial performance * Other financial issues Print this page © Crown copyright 2023 This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise

stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or

email: [email protected]. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. This publication

is available at https://www.gov.uk/government/publications/ukhsa-board-meeting-papers-march-2023/ukhsa-advisory-board-finance-report Date: Tuesday 14 March 2023 Sponsor: Andrew Sanderson,

Director General, Finance, Commercial and Corporate Services Presenter: Andrew Sanderson PURPOSE OF THE PAPER The purpose of the paper is to give an overview of the UK Health Security

Agency’s (UKHSA) finances as at month 10 financial year 2022 to 2023 (end of January 2023). At the time of submitting, the month 11 (end of February 2023) figures were being finalised.

RECOMMENDATION The Advisory Board is asked to note UKHSA’s financial position. SUMMARY OF IN-YEAR 2022 TO 2023 FINANCIAL PERFORMANCE At end of January 2023. The table below shows resource

and capital departmental expenditure limits, split by the 3 parts of: * core agency costs * coronavirus (COVID-19) * vaccines and countermeasures, including the Covid Vaccine Unit (CVU) It

shows year-to-date budget and spending for April to January, and budget and forecast outturn for the full year. TABLE 1: RESOURCE DEPARTMENTAL EXPENDITURE LIMITS (RDEL) AND CAPITAL

DEPARTMENTAL EXPENDITURE LIMITS (CDEL) Figures shown reflect millions (£’m) BUDGET (YEAR TO DATE) ACTUAL (YEAR TO DATE) VARIANCE (YEAR TO DATE) BUDGET (FULL YEAR) OUTTURN (FULL YEAR)

VARIANCE (FULL YEAR) CORE RDEL 368 344 24 (6%) 463 416 47 (10%) COVID RDEL 1,493 1,111 382 (26%) 2,086 1,608 478 (23%) UKHSA RDEL 1,861 1,455 406 (22%) 2,549 2,024 525 (21%) CORE CDEL 69 65

4 (5%) 136 97 38 (28%) COVID CDEL (88) (62) (26 (29%)) (140) (136) (4 (3%)) UKHSA CDEL (19) 3 (22 (117%)) (4) (38) 34 (789%) UKHSA TOTAL (EXCLUDING CVU AND VCR) RDEL PLUS CDEL 1,842 1,458

384 (21%) 2,544 1,986 559 (22%) CVU* 2 487 (484 (N/A)) 5 1,022 (1,017 (N/A)) VACCINES AND COUNTERMEASURES RESPONSE (VCR) 497 497 0 (0%) 629 629 0 (0%) UKHSA TOTAL (INCLUDING CVU AND VCR)

2,341 2,442 (101 (4%)) 3,179 3,637 (458 (14%)) *CVU programme budgets and transfer of balances has yet to be finalised. CORE RESOURCE BUDGET The agency’s core resource budget is shown net of

external income. We are on track to generate £160 million of income, which has increased due to higher than expected Dysport royalties from increased worldwide sales in the previous 2

quarters. The trajectory on core spending has continued to be below plan, and this has been reflected in forecast underspends being reported from November. The current forecast is dependent

on recruitment campaigns, which have continued with surge capacity delivered by 3 agencies supporting UKHSA People teams. However, there is a risk that further underspends will emerge based

on current run rates. CORE CAPITAL BUDGET Capital spend was £65 million in the first 10 months. The month 10 position showed a full-year forecast underspend of £38 million (28%) and is

dependent on spending £32 million in the final 2 months. £6 million of capital spend relating to Rosalind Franklin Laboratory has been reclassified as resource in-year as polymerase chain

reaction (PCR) testing there ceased in mid-January and options for the site are considered. Re-accelerating £12 million in-year spend on Science Hub has been approved in order to help make

faster progress in 2023 to 2024. COVID-19 RESOURCE BUDGET So far this year, we have released £375 million of COVID-19 testing budget and handed this back to the Department of Health and

Social Care (DHSC) to help with wider pressures in the health group. This budget was released from the emerging underspend for the year due to lower cost and demand drivers than in the

original assumptions for our testing programmes. As of January, these demand drivers have continued to decrease resulting in a further year-to-date reduction of £382 million against the

revised budget. As of January, we were forecasting an underspend of £478 million by year end. Lateral flow device (LFD) testing demand has continued to fall, with circa 100 million units

removed from the forecast as expected winter pressures have not materialised and asymptomatic testing has not restarted. In addition, the decision to stop processing PCR tests at the

Rosalind Franklin Laboratory from mid-January has presented further savings to be realised in quarter 4. COVID-19 CAPITAL BUDGET The budget and forecast capital spend on COVID-19 is negative

due to accounting treatment, as testing supplies which were purchased last financial year are used in 2022 to 2023. Currently we are forecasting a £4 million pressure as LFD demand has

continued to fall and supplies are not consumed as expected. CVU From 1 October 2022, the responsibility for purchasing COVID-19 vaccines has transferred into UKHSA as the CVU. To date, an

admin budget transfer of £5 million has been agreed. DHSC are finalising the transfer of balances to UKHSA to begin reporting from month 11. VACCINES AND COUNTERMEASURES This budget is

ring-fenced by DHSC and managed on the basis that UKHSA should neither gain nor lose; therefore, the budget is shown as equalling the expenditure. OTHER FINANCIAL ISSUES 2021 TO 2022

ACCOUNTS The National Audit Office (NAO) issued a disclaimed audit opinion in respect of the UKHSA’s 2021 to 2022 Annual Report and Accounts (ARA). This meant they did not have sufficient,

appropriate evidence to form a judgement on the accounts. The NAO’s decision was driven by concern about: * high-level governance arrangements (in particular, the fact that non-executives

had not been appointed in 2021 to 2022 to allow the Advisory Board and Audit and Risk Committee to be established) * the opening financial transfers into UKHSA (for example, UKHSA inherited

pre-existing audit qualifications on inventory) * financial controls within UKHSA (especially relating to UKHSA’s new finance system, which was implemented at the same time as the agency

became operational) While it was no surprise to have a modified audit opinion, and UKHSA had reported since late 2021 that this was inevitable given inherited challenges, a disclaimed audit

is rare and serious. The Chief Executive wrote to the chair of the Public Accounts Committee (PAC) on 23 January 2023, and the PAC will scrutinise this as part of their hearing on the DHSC’s

accounts on 20 March, which the Chief Executive and Chair of the Advisory Board will attend. We have drawn up an action plan to address the issues that have resulted in the disclaimer. The

plan covers a wide variety of areas including systems, finance and business processes, workforce and payroll data, and accounts preparation. The action plan is governed by a new Finance and

Control Improvement Board and will be overseen by the Audit and Risk Committee. There is close work with the NAO on planning the 2022 to 2023 accounts. FUTURE FUNDING There have been

continuing discussions with DHSC Ministers and officials about UKHSA’s future budget, and it is likely that those will lead to decisions shortly. In the meantime, business planning is being

conducted across UKHSA to enable the effective allocation of internal budgets once overall funding is known before the start of the new financial year. Andrew Sanderson Director General,

Finance, Commercial and Corporate Services March 2023 Back to top