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Failure To Resolve PPE Supplier Disputes May Cost Taxpayers £2.7bn, Warn MPs

The taxpayer may be on the hook for £2.7bn of unusable PPE ordered during the pandemic due to disputes with suppliers (Alamy)

4 min read

A cross-party committee of MPs has warned a failure to resolve disputes with suppliers of poor-quality PPE could cost the taxpayer £2.7bn.

The Public Accounts Committee (PAC) has identified "significant failings” in the government’s management of contracts that has led to a stockpile of almost four billion items of protective equipment that are not needed, some of which will have to be burned.

In their report out today they say there is little sign of action being taken against potentially fraudulent suppliers, despite the Department of Health and Social Care’s (DHSC) estimate that as much as 5 per cent of PPE expenditure during the coronavirus pandemic may have involved fraud.

The powerful committee, which scrutinises public spending, concludes that “suppliers and intermediaries are likely to have made excessive profits while providing substandard PPE".

They said “insufficient due diligence checks prior to contract agreement have left the department paralysed from acting in some cases".

There are still 176 PPE contracts worth up to £2.7bn still to be settled due to disputes with suppliers, PAC has concluded.

The committee’s chair, Labour MP Dame Meg Hillier, said: "The departure from normal approaches to due diligence, record keeping, decision making and accountability in relation to PPE contracts puts a stain on the UK's response to the pandemic.

"Even if you accept that some proper procedure will have to slip in times of crisis, the complete collapse of some of the most well-established civil service practices beggars belief.

“The taxpayer will be paying for these decisions for years to come."

The PAC concluded that of the 37.9 billion items of equipment purchased to protect health and care workers from spreading Covid-19, the government still holds more than 10 per cent that it does not need.

The 3.9 billion items are spread over 70 locations across the UK and China, however, the department has not set up a system to fully catalogue where they all are.

It is costing an estimated £7m to store the excess equipment, much of which is faulty or past its use-by date and unusable by NHS staff.

The committee is calling on the DHSC to set out how much it intends to sell, donate, recycle and incinerate, and establish an effective stock management system.

The MPs accused government of having “insufficient due diligence checks at the outset of the pandemic to prevent potential profiteering, and to identify conflicts of interest”.

They said they accepted ministers and officials had to act quickly at the start of the pandemic but added they “believe that there was still scope to perform appropriate due diligence, particularly on potential new suppliers”.

In response to the report, Liberal Democrat health spokesperson Daisy Cooper said: “The gross mismanagement of PPE and its procurement during the pandemic is nothing short of appalling and a damning indictment on this government’s abysmal Covid response.

“The complete lack of preparedness for dealing with the virus meant the Department for Health were playing catch up from day one.

“Ministers went headfirst into a blind panic followed by a mad scramble without any semblance of planning or due care.”

A spokesperson for the Department of Health and Social Care said: “Our priority throughout the pandemic has been saving lives. Despite massive inflation in prices and unprecedented global demand, we delivered over 21.4 billion items of PPE to frontline staff to keep them safe, with only 3 per cent of the PPE we procured unusable in any context.

“It is simply wrong to suggest that the department does not know how much PPE it has, or where it is located. We have a comprehensive data system in place to allow us to oversee the storage network and dispose of any excess stock.

"The department also takes fraud extremely seriously and is exploring every available option – including working with law enforcement partners – to bring those who commit fraud to account and seek to recover losses.”

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