PPE Expenditure

Lord Markham Excerpts

Wednesday 25th January 2023 Lords Chamber

[Lord Harris of Haringey]

To ask His Majesty’s Government what is their latest estimate of expenditure incurred in purchasing faulty personal protective equipment (PPE) during the COVID-19 pandemic; how much had been recovered by 31 December 2022; and how much they forecast to recover by 31 December 2023.

[The Parliamentary Under-Secretary of State, Department of Health and Social Care (Lord Markham) (Con)]

The department’s Annual Report and Accounts 2020-21 confirm that 817 million items of PPE worth £673 million were not fit for any use. By December 2022, the department had reduced the number of contested PPE contracts from 176 to 60, with an associated recovery of value for the taxpayer of around £1 billion. Given commercial sensitivities, we cannot comment on our forecast for further recovery.

[Lord Harris of Haringey (Lab)]

My Lords, I am grateful to the Minister for that reply, but when I look at the National Audit Office report it produces some slightly different figures from those that he has given. It says that his department had identified 3.6 billion PPE items that were not suitable for use, at a cost of £2.9 billion. The point I want the Minister to comment on is that 53% of those suppliers who came through the VIP route provided materials which were not fit for use. Does that raise any questions about the procurement processes operated during the pandemic?

[Lord Markham (Con)]

I thank the noble Lord. Given the recent press, I want to start by setting out the position of Cignpost, the private sector Covid testing company in which, as many noble Lords will be aware, I own a stake. To be clear, Cignpost did not bid for any government PPE contracts and has only private sector clients. None the less, upon taking up the role as an unpaid Minister of Health, I resigned my directorships, made an undertaking to sell my stake, and in conjunction with the Permanent Secretary, ensured that I was not engaged in any areas where there could be perceived to be a conflict—I just wanted to make that clear.

Turning to the question, I was giving the most up-to-date figures. The £1 billion reflects the money that we have continued to recover. Right now, the only amount that has been written off is the £600-odd million that I have mentioned, and we are continuing to pursue the other amounts. When we close the accounts, we will have an update on where that will go. On the VIP lane, I think we accept that, given our time again, we would conduct that in a different way. I will check but I do not recognise those figures as to the level of faults.

[Lord Allan of Hallam (LD)]

My Lords, as well as the financial cost of failures in the PPE procurement process, does the Minister agree that it is important to remember the human cost paid by care workers who became ill when looking after vulnerable and elderly people without adequate PPE? Does he understand how frustrated care workers must now feel to see this level of wastage when their services are crying out for more investment? We could buy a lot of care packages for “£600-odd million”.

[Lord Markham (Con)]

In the circumstances at the time, I think we were all worried that we were going to run out of PPE. If the noble Lord remembers, it was the Wild West out there in terms of trying to purchase it, with planes gazumped literally on the runway and flying to other countries. That is why we stepped in. We bought to a worst-case projection, because we knew we could not afford for PPE to run out in our social care homes or our hospitals. We ended up buying 20% too much as a result, and that is what we are dealing with now. However, only 3% of everything that we bought ended up being faulty, which I think people will agree was a pretty good result.

[Lord Forsyth of Drumlean (Con)]

My Lords, will the Minister indicate how much we are paying for storage of PPE? Are the press reports that we paying for the storage of PPE on a substantial scale in China correct?

[Lord Markham (Con)]

Right now, less than 1% of stock is held in China—to answer that question directly. In terms of cost, we are currently paying about £700,000 per day, which is why we are writing off the stock and effectively disposing of it. We have tried to donate as much of it as possible to people who want it, but we have to bite the bullet on the rest and say, “You know what? It’s no longer required so we are disposing of it as rapidly as possible.” We are bringing down those costs; we will be saving £200 million a year through that rapid disposal.

[Baroness Finlay of Llandaff (CB)]

How many health and social care staff are now off long-term sick with long Covid? What correlation has there been between long Covid and their perception that they did not have adequate PPE for the job to be done?

[Lord Markham (Con)]

I will write to the noble Baroness with the statistics. I can be clear that the endeavours undertaken to buy the PPE were to make sure that we did not run out. Again, there is quite a bit of hindsight going on in saying, “Ah, we bought too much of it”, when at the time everyone was scrambling to say, “You need to buy more.” That was the result of the situation, and to try to apply hindsight now is quite wrong. They did a pretty good job regarding the amount that they bought; they got 97% of it right, which I think we would agree is a pretty good result.

[Lord Whitty (Lab)]

My Lords, the reference to hindsight is misplaced. The Minister accurately described the shambles and panic that happened at the beginning of the pandemic, but there had been several reports in the 10 years before it that indicated that one measure the Government could take for any pandemic was to have standby contracts whereby there were arrangements with companies to provide PPE and laboratory facilities. That was recommended by, among others, your Lordships’ own Science and Technology Committee. Do such contracts now exist so that, were another virus to hit us, we should not go through the same shambles and corruption that we did on that occasion?

[Lord Markham (Con)]

Absolutely. As ever, we want to learn the lessons. That is why we have set up the Covid inquiry. Yes, supply arrangements are in place. At the same time, as per the answer to the previous question, holding high levels of stock does not make sense. It is cheaper in this case to dispose of it while making sure that the supply lines are in place so that we can rapidly respond to any future event.

[Baroness Walmsley (LD)]

My Lords, I understand from the Minister that it is the department that paid the cost of this useless material, and for its storage. How many doctors, nurses and ambulance staff could be given a decent pay rise if that money had been given to the NHS?

[Lord Markham (Con)]

Again, I would take issue with the words “useless material”. It was bought based on a projection of how the pandemic could progress and what would be required. The fact that it did not progress that far was thanks a lot to the work we did in being the quickest country to vaccinate in the world. So, we did not need that level of PPE; that was a good thing. We bought for a worst-case scenario and, thank goodness, we did not require it because of the action we took to get on top of it all. Now, we are dealing with the surpluses bought for that worst-case scenario and quickly disposing of them.

[Baroness McIntosh of Pickering (Con)]

My Lords, can my noble friend tell us the amount of this stuff in UK warehouses, and how much that costs daily?

[Lord Markham (Con)]

As I mentioned before, the daily cost is roughly £700,000.

[Baroness Merron (Lab)]

My Lords, the National Audit Office found that during the pandemic one in 10 suppliers processed through the VIP lane were awarded contracts. This compared to less than one in 100 suppliers going through the ordinary lane. In view of this, could the Minister share with the House what particular qualities were required of suppliers to merit VIP status? Following up on his answer to my noble friend Lord Harris, in the event of a future emergency, was the Minister ruling out having a VIP lane?

[Lord Markham (Con)]

I think we all agree that, at the time, some mechanism was needed to sift the thousands upon thousands of offers of goodwill to help with PPE. A decision was made to take recommendations —the so-called VIP lane—and I think we all accept now that was not the right decision. Going forward, a different sifting mechanism would be set up in place of that. Now, of course, we have supply chains set up to do this, so we hope that occasion will not arise in future.

[Lord Lexden (Con)]

My Lords, my noble friend was right, was he not, to remind us of the context in which those decisions were taken three years ago? There was an overwhelming sense of crisis, to which the Government had to respond with extreme rapidity.

[Lord Markham (Con)]

Absolutely. I remember well, as I am sure do others, watching the news about planes being diverted to other countries and it being asked how come they were not coming to the UK and what the department was doing to get on top of it. I am sure there was criticism from this House—it was before my time—asking what we were doing as a Government to get a grip of it. Well, we did get a grip of it; we did buy the PPE and it did not run out. Yes, we ended up buying too much of it because, thankfully, the pandemic did not turn out to be as bad as we thought it would. I think we did a sensible thing at the time, and now we are going after all those people who did not keep to their supply agreements, and we are recovering the funds. By and large, with the benefit of hindsight, I think we did a fairly decent job—not perfect but pretty good.

[Lord Patel (CB)]

How long will we continue paying £700,000 a day to the Chinese?

[Lord Markham (Con)]

As I said, less than 1% of the stock is being held by the Chinese. Most of the money being spent on storage costs is in the UK. Notwithstanding that, we clearly want to get rid of it as quickly as possible. As soon as I came in, I said, “Let’s bite the bullet, write it off, get on with it and dispose of it.” That is absolutely what we are doing. We are accelerating that to the maximum extent. Those accelerations have already saved £200 million this year.