Contingent Liability: Ventilator Capacity

Wednesday 29th April 2020 Written Statements

[The Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office (Michael Gove)]

During the course of the coronavirus outbreak, the Government’s strategy to increase ventilator capacity has focused on procuring more devices from existing manufacturers overseas, scaling up production of existing ventilator suppliers, and working with industry to design and manufacture new devices.

The ventilator challenge was launched in March. At present, two devices from the ventilator challenge are ready for use in hospitals, with the Penlon ESO2 device becoming the first newly adapted device to receive approval for use during the pandemic from the regulator, the Medicines and Healthcare products Regulatory Agency (MHRA). A number of other devices are currently undergoing tests for regulatory approval.

Given the unprecedented circumstances of the pandemic, Cabinet Office has given indemnities both against IP infringement, in respect of the designs, and against product liability claims against the manufacturers of rapidly manufactured ventilator system (RMVS) products.

It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Department concerned to present to Parliament a minute giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the minute, except in cases of special urgency.

Unfortunately, due to the urgent need to finalise the deal and the confidential commercial nature of the negotiations, it was not possible to notify Parliament of the particulars of the liability and allow the required 14 days’ notice prior to the liabilities going live. A delay would have resulted in an unacceptable delay in lifesaving equipment being provided to the NHS.

The precise commercial terms which have been negotiated for each supplier are, and will remain, commercially confidential. While it is difficult to estimate the potential liability exposure, it could exceed £300,000. For this reason, I am informing Parliament of these arrangements.

On this basis, I have today laid before Parliament a departmental minute setting out what these indemnities are.

The Treasury approved these liabilities before they were activated. However, if any Member of Parliament has concerns, he/she may write to me and I will be happy to examine their concerns and provide a response.

The Departmental Minute (Departmental Minute-Notification of Contingent Liability.pdf) can be viewed online at: https://www.parliament.uk/business/publications /written-questions-answers-statements/written-statement/Commons/2020-04-29/HCWS216/.

[HCWS216]