NHS Counter Fraud Authority (Establishment, Constitution, and Staff and Other Transfer Provisions) (Amendment) Order 2020
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Lord Bethell
That the Grand Committee do consider the NHS Counter Fraud Authority (Establishment, Constitution, and Staff and Other Transfer Provisions) (Amendment) Order 2020.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Bethell) (Con)
It is a sad fact of life that the NHS is not immune to fraud. As noble Lords will be aware, this Government have backed the NHS with the biggest cash boost in its history—an extra £33.9 billion by 2023-24. This money will go on investment, recruitment and epidemic response. This is taxpayers’ money and we are determined to get the best return on that investment, so that it makes the biggest difference to the most people. Yet fraudulent activity in the NHS means that the money intended for patient care ends up in the pockets of those who did not legitimately earn it. This is wrong. From a practical point of view, this means that fewer resources are available to be spent on front-line health services such as patient care, healthcare facilities, doctors, nurses and other staff. On a reputational front, it damages trust in the system. From an ethical point of view, it is our duty to fight fraud, because this is taxpayers’ money and we have a duty to spend it appropriately. That is why we have prioritised the NHS Counter Fraud Authority—to ensure that it is an effective counterfraud organisation. We believe it is best that it operates independently as a body which can act without external interference or influence and perform those functions that cannot be undertaken at a local level: serious and complex investigations, such as those that cross borders, and cases of alleged bribery and corruption on a national level.
Since its inception as part of the department in 1998, its function has evolved and in autumn 2017 it was launched as an independent special health authority. As a result, due to the NHS Act 2006, it is limited to a maximum lifespan of three years and so is due to be abolished on 31 October 2020. To prevent this, a statutory instrument was laid on 11 June 2020 to extend the abolition date by three years to 30 October 2023. I will take this opportunity to highlight the important work of the NHSCFA and set out why we need to extend its lifespan for a further three years.
The NHSCFA is a national centre of excellence. Fraud is a hidden crime and to fight it you have to find it. The CFA has done a valuable job in building the right relationships with organisations across the health and enforcement sectors to take that fight to the thieves who seek to deprive the NHS of resources for patient care. The NHSCFA is continually developing its intelligence and investigation capabilities and is breaking new ground in how to detect and prevent fraud. It has also set important national standards for the counterfraud work of NHS providers and commissioners, which apply to independent healthcare providers and NHS organisations. Its work is clearly bearing fruit; the NHSCFA’s latest strategic intelligence assessment shows an overall estimated reduction in losses from fraud of £60 million between 2017-18 and 2018-19. It also shows a £28 million reduction specifically on dental contractor fraud, thanks to a relentless focus by the NHSCFA over recent years, along with an £85 million annual reduction in fraud losses from false claims to entitlement to help with healthcare since 2017.
It is clear that this approach is working and that to change direction now would be a mistake. This concerted approach by NHSCFA to improve fraud awareness and drive up fraud reporting across the NHS is bearing fruit. We need it more than ever, especially when we are in the middle of the greatest threat to public health that we have seen for generations. As part of the government response to coronavirus, the Chancellor has repeatedly said that the NHS will get whatever funds it needs. An initial £5 billion coronavirus fund was established in the Budget in April 2020 and this was increased to £48.5 billion in the coronavirus emergency response fund in the Chancellor’s summer update, of which £31 billion has been approved to support our health services. We are continuing to work with the NHS and HMT to ensure that the NHS gets the funding and resources it needs, so total funding may change.
Although we have seen the nation coming together to celebrate the heroic work of NHS staff, unfortunately coronavirus presents a heightened risk of fraud, where criminals may seek to exploit the situation. Never before has a counterfraud response to protect this investment been so important. To us, “Protect the NHS” is about protecting not just staff but the money that taxpayers contribute to this invaluable national resource. The NHSCFA has played a key role during this period and has produced and shared coronavirus threat assessments with partners, and coronavirus counterfraud guidance specifically for the NHS. This includes guidance outlining the unique risks to the coronavirus response and specific guidance outlining types of mandate fraud and how to identify, prevent and respond to them.
As technology evolves, the risks to the NHS will evolve too, especially from fraud, so we will need organisations such as the NHSCFA to co-ordinate the response at a national level. If we made the decision to abolish the NHSCFA today, it would expose the NHS to significant financial risks. It would mean that there was no ability to accurately record and assess the nature and scale of fraud and to inform the response, both within the NHS and across the wider health group. It would result in serious and complex fraud investigations being transferred elsewhere; for example, to other NHS bodies, the police or the DHSC. It would involve costly additional expenditure for local NHS bodies at a time when they should be focusing on a global epidemic. It would undermine the funding of much-needed resources that are critical for patient care.
I urge noble Lords to keep this vital organisation in place and allow it to keep doing its important work, providing confidence and certainty to so many people. I commend this draft order to the Committee.
Lord Bethell (Con)
My Lords, I thank noble Lords who contributed to this lively debate. I completely endorse the comments of several of them, including my noble friend Lord Naseby, who thanked the CFA for its work. It is tough work; it requires huge diligence. It is not always glamorous, exciting, blue lights and fun; it is about grinding out huge amounts of detective work and auditing and being thorough. I am extremely grateful for the work of the CFA and say a massive thanks for its impact. Some of that is seen directly through the numbers, but a lot of it, as was alluded to by the noble Baroness, Lady Thornton, is seen through soft impacts such as cross-working, “encourager les autres” and a general sense of grip, which it is an important thing for NHS management to have over the system.
With all the taxpayers’ money that is going into investment, recruitment and epidemic response, never before has counterfraud been quite so important—a point made by several noble Lords. The CFA has been instrumental in providing guidance and organisation across the health sector and, very importantly, in sharing intelligence with law enforcement partners.
A number of noble Lords asked about the approach of the CFA. We know that preventing loss is much more cost effective than prosecuting suspects and recovering funds. That is why the CFA does an enormous amount of work on fraud prevention methodologies. It is pushing hard to build and develop capabilities across the NHS and to share national standards and best practice with all parts. That is why it is driving a national, co-ordinated and cross-organisational response focused on prevention—the approach alluded to by the noble Baroness, Lady Thornton.
I say in response to my noble friend Lord Naseby that the CFA was established as a special authority only in 2017, but we have seen from its own strategic intelligence assessment that there has been a year-on-year reduction in fraud loss estimates. For that, we are enormously grateful.
The noble Lord, Lord Jones, asked about the number of prosecutions. The CFA has 45 ongoing investigations, involving 165 suspects. In 37 of those cases, a potential fraud value has been calculated which exceeds £34 million. I hope that that gives the noble Lord an idea of the scale of this work. The estimate for NHS fraud has been reduced, according to the strategic impact authority, from £1.27 billion to £1.21 billion, which shows the recent impact of the CFA. The chair is Tom Taylor and his salary is currently £14,450 for an average of two or three days a month.
The noble Lord asked also about the type of fraud investigated by the CFA. Covid fraud has been focused on—cyber-enabled fraud through malicious emails, apps and SMS texts. It has also investigated fraudulent appeals designed to exploit public sympathy and the spreading of false information. In this, the CFA has worked closely with the Cabinet Office, which has provided incredible support.
On how much fraud is reported to the CFA, it receives around 5,500 reports each year. The figure of 5,500 for 2018-19 was an increase of 700 over the year before. Almost half of those reports relate to fraud committed by NHS staff and a quarter to fraud committed by NHS patients.
My noble friend Lord Bourne asked a number of questions about the budget. The current budget of the CFA, which is an indicative, non-ring-fenced revenue budget allocation, is £11 million. That budget is funded through the DHSC in the same way as other health arm’s-length bodies. In 2019-20, we detected and recovered a total of £126 million which would have otherwise been lost to fraud.
My noble friend asked also about the PPE supply chain. PPE procurement during Covid-19 is currently managed centrally and not by NHS trusts. Therefore, Covid-19 procurement activity falls outside the CFA’s remit. The DHSC anti-fraud unit is working with partners to scrutinise transactions and reduce the risk of fraud against the Government—the noble Baroness, Lady Thornton, asked about that specifically. The CFA is supporting this work, but I will take a moment to give special thanks to my noble friend Lord Agnew, who is very much leading the charge from the Cabinet Office in the anti-fraud campaign. I am a representative member from the health department on what is known as the “fraud board”, which meets regularly to update policies and programmes in this area.
I thank the noble Lord, Lord Bhatia, for his comments. On my noble friend Lord Naseby’s question about the devolved authorities, I want to clarify that the CFA, although focused on England, provides a huge amount of training, technical support, data and other specialist support for DAs. Although they handle this as a devolved area, they benefit greatly from the CFA’s expertise.
My noble friend is entirely right about Covid spending. I would like to have said that everyone behaved immaculately through the Covid campaign, but that is not true. We were subjected to an enormous, co-ordinated and systematic campaign by those who sought to defraud taxpayers. We are conscious of that. We put in place enormous co-ordination with the police authorities in order to spot fraudulent efforts. They were extremely energetic but not always successful, and we have prosecutions in place to chase down fraudsters who sought to take money unreasonably off taxpayers.
Auditing of the CFA is done by the National Audit Office. I reiterate the thanks given by my noble friend Lord Naseby to the CFA.
On the CFA’s three-year cycle, it is an arm’s-length body established as a special health authority under the National Health Service Act 2006, which gives it a maximum tenure of three years. It is therefore out of the electoral cycle. Affirmative secondary legislation is required to extend the tenure for a further three years until 30 October 2023, which is why we are here today.
I think that I have addressed a number of the comments made by the noble Baroness, Lady Thornton, but I reiterate what I said on PPE in particular, which was subject to a concerted, organised effort by the criminal world to defraud the British taxpayer. Our response has been energetic and remains ongoing.
Extending the current model provides an opportunity for the CFA to continue its work. Its budget, which a number of noble Lords asked about, is under review, but we believe that it is ample for the work that it is doing. The department will continue to oversee the function of the CFA in its sponsorship role to ensure that it is fit for purpose. This will also allow the department to consider the best operating model for the CFA in the long term. The order is important secondary legislation that is integral to allowing the CFA independence and a crucial remit to continue. I urge noble Lords to approve it.