NHS Supplies Authority: Audit Provisions (Hansard, 25 October 1993)

§ The Parliamentary Under-Secretary of State, Department of Health (Baroness Cumberlege)
Yes, my Lords. The NHS Supplies Authority has appointed KPMG Peat Marwick as its internal auditors and has agreed to establish an audit committee. The authority is subject to external audit by the Audit Commission's district audit service and the National Audit Office. Oversight of the authority's business plans and performance is provided by the NHS management executive.

§ Lord Dean of Beswick
My Lords, I am grateful to the Minister for that detailed reply. Am I right in saying that the latest figures show that that part of the National Health Service had a turnover last year of £4 billion? That is an enormous sum of money. Bearing in mind some of the financial mistakes and blunders that have taken place over the past 10 years involving substantial sums, can the Minister give us an absolutely copper-bottomed guarantee that the audit will take place totally independent of the department? We should bear in mind that five out of six of the non-executive directors are already employed in the National Health Service as chairmen of various component parts, such as the district health authorities and other bodies.

§ Baroness Cumberlege
Yes, my Lords. To take the noble Lord's first point, I believe that he is quoting from an article in the Sun newspaper. I am aware that C. P. Snow (I believe it was) said that comment is free but facts are precious. The Sun newspaper is right to be free with its comment, but I have to say that in this instance it should have been more careful with its facts.
714 The NHS Supplies Authority has a budget of £1.7 billion a year which it contracts with the NHS. The remaining sum of money is contracted directly from hospitals for goods and services that they require.
With regard to independent audit, the noble Lord can rest assured that the National Audit Office, which undertook a study two to three years ago that resulted in the setting up of the NHS Supplies Authority, has now set in train a follow-up study to review the implications of its recommendations. That study will, of course, be absolutely independent.

Lord Bruce of Donington
My Lords, while I do not wish to quote anything that appeared in the Sun newspaper, is the noble Baroness aware that some of the transactions that were reported as being undertaken by this body give rise to some queries as to the application of the term "value for money" as regards this particular organisation? Will she give an undertaking that the audit report undertaken by the private auditor to whom she referred, together with the review by the National Audit Office, will be made public as quickly as possible?

§ Baroness Cumberlege
Yes, my Lords. The National Audit Office publishes all its findings. With regard to "value for money", this organisation has done a great service to the National Health Service. Between 1992 and March of next year, the NHS Supplies Authority will have saved the NHS at least £84 million by better purchasing, and a further £20 million by reducing operating costs. The organisation does give effective value for money.

§ Lord Ennals
My Lords, while I fully understand and support the principle that savings can be made across the board by the purchasing authority, will the Minister say whether the Statement made on Thursday about the further reorganisation at a regional level will in any way affect the task of the supplies authority?

§ Baroness Cumberlege
No, my Lords, it will not affect it in any way. The NHS Supplies Authority is a special health authority, directly accountable through the management executive to the Secretary of State.

§ Baroness Seear
My Lords, will the noble Baroness agree on second thoughts that the axiom that opinions are free but facts are sacred should be attributed to C. P. Scott of the Guardian—in those days it was the policy of the Guardian so to behave—and not to C. P. Snow?

§ Baroness Cumberlege
My Lords, I know the National Health Service brief fairly well; I stand corrected on the literary quotes.

§ Lord Williams of Mostyn
My Lords, bearing in mind the shock that we must all feel at this wholly unprovoked attack on an unsuspecting, unprotected organ like the Sun, will the Minister recognise that there is very deep concern about the scale of waste in these public services: £63 million in the Wessex health authority; and a claimed £100 million in the authority that is presently the subject of the Question of the noble Lord, Lord Dean of Beswick? Accepting what the Minister has said about the independent audit and its 715 publication, is it within the contemplation of the Government that those who mismanage these organisations shall be subject to a disciplinary sanction such as dismissal?

§ Baroness Cumberlege
My Lords, noble Lords will be aware that that is the case. Where there is any waste, we root it out. In the case of Wessex and the West Midlands, action has been taken and people have left their posts.

§ Lord Dean of Beswick
My Lords, I accept the correction that the Minister made regarding the figure published in the Sun; but will she cast her mind back to about 12 months ago, when I put down my first Question regarding this organisation, and when, I believe, her Answer included the fact that then the budget was expected to reach £3 billion in a short time? Does she agree that either she was badly out then, or she has the figure, £1.7 billion, wrong now?

§ Baroness Cumberlege
My Lords, there is no doubt that the NHS Supplies Authority saves the National Health Service money—as I have already stated, £84 million between 1992 and March 1994, and a further £20 million through its better operating cost. I believe that that is a great tribute to this organisation. What is more, the money saved will go towards providing more patient care.