Policy paper

Framework agreement between the Department of Health and Social Care and NHS Counter Fraud Authority

Published 28 September 2022

Applies to England

This framework agreement was signed on 26 March 2021 by:

• Paul Golightly, Deputy Director, DHSC Anti-Fraud Unit (on behalf of Department of Health and Social Care)
• Sue Frith, Chief Executive, NHS Counter Fraud Authority (on behalf of NHS Counter Fraud Authority)

Purpose of this document

The purpose of this document is to define the critical elements of the relationship between the Department of Health and Social Care (DHSC, or ‘the department’) and NHS Counter Fraud Authority (NHSCFA). The document is focused on:

• how the department and NHSCFA will work in partnership to serve patients, the public and the taxpayer
• how both NHSCFA and the department discharge their accountability

NHS Counter Fraud Authority

NHSCFA’s purpose is to prevent, detect and investigate fraud, corruption and bribery affecting the health service – both directly and indirectly – on behalf of the Secretary of State for the health service in England.

NHSCFA’s functions and duties are set out in the NHS Act 2006 (s.195(2)), Establishment Order (SI 2017/958) and directions issued by the Secretary of State.

Its investigatory powers are provided through Part 10 of the NHS Act 2006 and the Investigations Amendment Order (2017/960).

Nothing in this agreement should interfere with the effective discharge of any of its statutory duties and functions.

The department and NHSCFA have agreed to work to the following set of principles:

• working together in the interests of patients, people who use services and the public to maximise the health and well-being gain for the population, and working to the values set out in the NHS Constitution
• respect for the importance of autonomy throughout the system. The department will respect NHSCFA’s independence of judgement, and will not interfere in its day-to-day operations or decision making
• working together openly and positively. This will include working constructively and collaboratively together and with other organisations within and beyond the health and social care system
• recognition that the Secretary of State is ultimately accountable to Parliament and the public for the system overall. NHSCFA will support the department in the discharge of its accountability duties, and the department will support NHSCFA in the same way

Governance

The constitution and governance arrangements are set out in The NHS Counter Fraud Authority (Establishment, Constitution, and staff and other transfer Provisions) Order 2017. The Authority is to consist of:

• a chairperson
• in addition to the chairperson, not less than 3 members who are not officers of the authority
• at least 2 but not more than 3 members who are officers of the Authority, and those officers must include the persons who for the time being hold the office of chief executive and director of finance

The Permanent Secretary has appointed a senior departmental sponsor (SDS) who acts as NHSCFA’s designated consistent point of contact within the department. The SDS acts as the link at executive level between NHSCFA and the senior officials of the department, and also with ministers. Whilst the SDS role is facilitative and recognises the need for direct engagement between NHSCFA and other parts of the department and ministers, it also supports the Permanent Secretary in holding NHSCFA to account and provides assurance on its performance. The SDS is supported by a departmental sponsor team, which is the principal day-to-day liaison point between the department and NHSCFA.

Process for setting objectives

NHSCFA must produce an annual estimate of the level of fraud losses and a description of the nature of fraud threats in the NHS in England – the strategic intelligence assessment (SIA).

The SIA is used to inform NHSCFA’s priorities for the year ahead. Priorities should be agreed with the SDS. These priorities should be informed by and align with the context of the overall health system and the department’s Counter fraud strategic plan. The SDS may issue a remit letter to NHSCFA’s chair setting out its required priorities for NHSCFA.

NHSCFA will share these priorities and work with NHS England and Improvement, NHS Business Services Authority and NHSX (the department’s technology resource including NHS Digital) to facilitate the development of a co-ordinated fraud response as part of their business planning processes.

Based on these priorities, NHSCFA will produce an annual business plan demonstrating how it will meet its legal duties, stating its specific goals for the period it covers and set out key outcome-based performance targets.

The department provides guidance to support this process, including target budgets covering administration, programme, revenue and capital funding. NHSCFA will reach agreement each year with the department on its business plan. To facilitate comment from the department:

• these discussions are to be supported by NHSCFA project documents detailing the aims, objectives, deliverables, key performance indicators and targets

• the plan is shared with the department and discussed in advance of clearance with NHSCFA’s board. NHSCFA will be made aware of any concerns the department may have

• NHSCFA must produce and publish the final business plan to be agreed by the SDS on behalf of the Secretary of State before the start of each financial year unless approval cannot be obtained before that date.

Discharge of statutory functions

NHSCFA ensures that it has:

• appropriate arrangements in place for the discharge of each of the statutory functions
• the necessary capacity and capability to undertake those functions
• the statutory power to take on a statutory function on behalf of another person or body before it does so
• a periodic audit of the discharge of its statutory functions so that the delivery of them remains effective, efficient and legally compliant. NHSCFA should include a review of this in their 3-year audit cycle, but ensure that they take steps to sufficiently assure themselves on an annual basis and include details of this within their governance statements

Cross-government clearance

In addition to internal governance, cross-government clearance is required for major new policy decisions of the type set out in Cabinet Office guidance. Although such cases are likely to be small in number, the Secretary of State is responsible for obtaining clearance and NHSCFA will adhere to any conditions applied through the clearance process. There will also be cases where the Secretary of State must consult Cabinet colleagues before giving the government’s view, even if collective agreement is not required. In such cases, NHSCFA will supply the Secretary of State with any information they need in a timely fashion.

Accountability

Secretary of State

NHSCFA is accountable to Parliament, the Secretary of State and to the department’s principal accounting officer (PAO). The text below focuses on NHSCFA’s accountability to the Secretary of State and the department.

The Secretary of State is accountable to Parliament for the provision of the health system (its ‘steward’), including NHSCFA, and has to comply with a range of duties, including exercising functions with a view to securing the continuous improvement in the quality of NHS services. The department supports the Secretary of State in their role. This involves:

• setting national priorities and monitoring the whole system’s performance to ensure it delivers what patients people who use services and the wider public need and value most
• setting budgets across the health system, including for NHSCFA
• setting objectives for NHSCFA
• supporting the integrity of the system by ensuring that funding, legislation and accountability arrangements protect the best interests of patients, the public and the taxpayer
• accounting to Parliament for the providers’ performance and the effectiveness of the health and care system overall

To support this accountability, the SDS responsible for holding NHSCFA to account chairs regular accountability meetings with NHSCFA. These take place as follows:

• quarterly meetings are attended by the NHSCFA chair and chief executive, the SDS and representatives of the sponsorship team. The focus of the meeting is on strategic and topical issues and any issues of delivery which the SDS or NHSCFA believes it is appropriate to raise. These meetings are structured to promote openness, constructive challenge and the identification and resolution of strategic issues
• performance meetings between the chief executive, director of performance and improvement, SDS and other representatives of NHSCFA/the sponsorship team are held quarterly to also address topical issues and review performance and delivery issues
• SDS reviews of financial performance are conducted as part of SDS attendance at NHSCFA board and audit and risk assurance committee (ARAC) meetings
• quarterly meetings between the NHSCFA accountable officer, NHSCFA finance director, SDS and DHSC Finance to review and plan financial performance

The principal accounting officer (PAO) and NHSCFA’s accounting officer

The department’s Permanent Secretary is the PAO and so is accountable to Parliament for the general performance of the health and care system in England, including NHSCFA. This requires the PAO to gain assurance that NHSCFA is discharging its statutory duties meeting the department’s objectives. In this way the PAO is able to report to Parliament on the department’s stewardship of the public funds it distributes and manages and for which it holds overall accountability.

The department’s Permanent Secretary, as the department’s PAO, has appointed NHSCFA’s chief executive as its accounting officer (AO). The AO may be called to Parliament to account for the performance of NHSCFA in Parliament. The PAO can also be held to account in Parliament since the PAO’s oversight should allow them to assess the adequacy of NHSCFA’s stewardship of public funds and discharge of its duties. This assessment includes making judgements about whether NHSCFA is operating to adequate standards of regularity, propriety, feasibility and value for money (assessed for the Exchequer as a whole).

The PAO’s oversight of NHSCFA’s performance relies upon the provision of information, and processes to enable both parties to review performance. The information provided to the department by NHSCFA includes (not an exhaustive list):

• annual report
• quarterly in-year and year end performance against budgetary controls
• corporate risk register and update on the key risks to NHSCFA’s delivery, including new risks
• annual governance statement
• board assurance framework
• full bi-monthly NHSCFA Board and quarterly ARAC papers detailing progress
• information to inform bi-monthly and bi-annual accountability meetings with the department
• annual, quarterly and monthly NHSCFA returns to the department, other government departments and DHSC arms-length bodies in relevant functional areas (for example, finance returns, quarterly progress reports against their counter fraud action plan, CDR, national standards annual performance report)

The processes in place to enable the department to review NHSCFA’s performance are:

• an annual accountability meeting chaired by the SDS with the NHSCFA chair
• mid-year accountability meeting with the SDS with the NHSCFA chair
• quarterly sponsorship accountability meetings between the SDS and the chief executive of NHSCFA
• quarterly financial performance reviews between the SDS and accounting officer

The NHSCFA accounting officer

NHSCFA must provide a copy of its annual report to the SDS on behalf of the Secretary of State detailing its activities for each financial year no later than 30 June of the financial year following the year to which it relates. In its third financial year, the report must be sent to the Secretary of State before 31 October if it is not to continue as a special health authority. The report must be published and presented at a public meeting no later than 30 days after it has been laid in Parliament.

NHSCFA is responsible for the delivery of its objectives and the department will limit the circumstances in which it will intervene in its activities. The following constraints do, however, apply:

• all funds allocated to NHSCFA must be spent on the statutory functions. If any funds are spent outside the statutory functions the department could seek adjustments to the grant in aid for running costs (administration) to compensate
• if the Secretary of State considers that NHSCFA is significantly failing in its duties and functions, they may intervene and issue directions. In the first instance, the Secretary of State could direct NHSCFA how it carries out its functions
• if NHSCFA failed to comply with such directions, the Secretary of State could either discharge the function themself, or make arrangements for another body to do so on their behalf. The Secretary of State will always publish reasons for any intervention

Partnership working

The department and NHSCFA work together, and with the department’s other arm’s length bodies (ALBs), in the interests of patients, people who use services and the public to maximise the health and wellbeing gain for the population, working to the values set out in the NHS Constitution. To support this, NHSCFA and the department follow an ‘open book’ approach. In the case of issues with an impact on the development or implementation of policy, the department can expect to be kept informed by NHSCFA. In the same way, the department seeks to keep NHSCFA appraised of relevant developments in policy and government. There are likely to be some issues where the department or NHSCFA expect to be consulted by the other before the department or NHSCFA makes either a decision or a public statement on a matter. The department and NHSCFA will make clear which issues fall into this category in good time. The sponsor team is responsible for ensuring that this works effectively.

NHSCFA host a bi-monthly Tactical Tasking and Co-ordination Group which is attended by investigations leads from NHSCFA and DHSC Anti Fraud Unit. The group considers referrals which may have a strategic or national significance and agrees how it should be handled including what body has investigatory responsibility.

To support the Secretary of State and the PAO in their accountability functions, the Secretary of State has the power to require NHSCFA to disclose to him or her such information as they feel is necessary to fulfil their duties with respect to the health system. It is therefore expected that the department will have full access to NHSCFA’s files and information. If necessary, the SDS’s team is responsible for prioritising these requests for information.

The department and NHSCFA work together to ensure that relevant information is shared between the two organisations in a timely way.

Public and Parliamentary accountability

The department and its ALBs share responsibility for accounting to the public and to Parliament for policies, decisions and activities across the health and care sector. Accountability to Parliament is often demonstrated through Parliamentary questions, MPs’ letters and appearances before Parliamentary committees. Accountability to the public may be through the publication of information on NHSCFA’s website, as well as through responses to letters from the public and responses to requests under the Freedom of Information Act.

The department and its ministers remain responsible to Parliament for the system overall, so will often have to take the lead in demonstrating this accountability. Where this is the case, NHSCFA supports the department by, amongst other things, providing information for ministers to enable them to account to Parliament. In turn, the department provides leadership to the system for corporate governance, including setting standards for performance and accountability.

NHSCFA, however, has its own responsibilities in accounting to the public and to Parliament, and its way of handling these responsibilities is agreed with the department. In all matters of public and Parliamentary accountability the department and its ALBs work together considerately, cooperatively and collaboratively, and any information provided by NHSCFA will be timely, accurate and, where appropriate, consistent with information provided by the department. To facilitate this, the department and NHSCFA have agreed a public and Parliamentary accountability protocol that sets out how they work together to secure the confidence of the public and Parliament, and to maintain the service levels that MPs and the public have come to expect.

Transparency

NHSCFA is an open organisation that carries out its activities transparently. It demonstrates this by proactively publishing on its website its annual report, accounts and key information on areas including pay, its approach to diversity of the workforce, performance, the way it manages public money and the public benefits achieved through its activities, and by supporting those who wish to use the data by publishing the information within guidelines set by the Cabinet Office. The annual report includes a governance statement, which is reviewed by the SDS . NHSCFA holds open board meetings in line with the Public Bodies (Admission to Meetings) Act 1960.

To underpin the principles of good communication, ‘no surprises’ and transparency, NHSCFA and the department put in place arrangements for managing communications. Further details are provided in Annex C.

NHSCFA’s executive and non-executive board members operate within the general principles of the corporate governance guidelines set out by HM Treasury. They also comply with the Cabinet Office’s Code of Conduct for Board Members of Public Bodies and with NHSCFA’s Board’s rules on disclosure of financial interests.

NHSCFA has a code of conduct for all staff which will comply with the principles in the Cabinet Office’s Model Code for Staff of Executive Non-departmental Public Bodies (see Public bodies: a guide for departments, Chapter 5 Annex A).

NHSCFA will take all necessary measures to ensure that:

• patient, personal and/or sensitive information within its care and control is well managed and protected through all stages of its use including through compliance with the Data Protection Act
• it provides public assurance in respect of its information governance practice by completing and publishing an annual information governance assessment using an agreed assessment mechanism
• it meets its legal obligations for records management, accountability and public information by compliance with relevant standards, including government and NHS codes of practice on confidentiality, security and records management

NHSCFA’s senior information risk owner and Caldicott Guardian will work together to ensure that both patient and other personal information are handled in line with best practice in government and the wider public sector.

NHSCFA, as with the department and all its ALBs, has whistleblowing policies and procedures in place that comply with the Public Interest Disclosure Act 1998 and best practice guidance. It should prohibit the use of confidentiality clauses that seek to prevent staff from speaking out on issues of public interest.

Sustainability

As a public sector body, NHSCFA has a key role to play in driving forward the government’s commitment to sustainability in the economy, society and the environment. NHSCFA complies with the Greening Government Commitments that apply to all government departments, executive agencies and non-departmental public bodies, set out in the action plan for driving sustainable operations and procurement across government. Reporting will be via the department (including the consolidation of relevant information in the department’s annual resource account), and the department will ensure that NHSCFA is aware of the process for this.

Audit

The comptroller and auditor general audits the NHSCFA’s annual accounts and NHSCFA lays them before Parliament together with his report.

The comptroller and auditor general may also choose to conduct a value-for-money audit of any aspect of NHSCFA’s work: NHSCFA will cooperate fully with the National Audit Office (NAO) in pursuing such audits, and give them full access to all relevant files and information.

NHSCFA is responsible for establishing and maintaining internal audit arrangements in accordance with the Public Sector Internal Audit Standards. NHSCFA’s internal audit function should report to its audit and risk sub-committee, and should consider issues relating to NHSCFA’s adherence to its business plan. The department’s audit and risk committee remit includes risk management, corporate governance and assurance arrangements in all its subsidiary bodies and so NHSCFA’s audit and risk committee should work closely with the departmental committee.

Delegations and financial management

Details of the NHSCFA’s financial arrangements, including in-year reporting, preparation of accounts, and the accounting officer’s responsibilities in relation to financial management and NHSCFA’s accounts, are provided in Annex B.

NHSCFA’s overall revenue and capital resources are set out each year in a letter from the SDS to the chief executive of NHSCFA. This is based on an assessment by the department of NHSCFA’s proposals for funding and human resourcing, considered alongside the financial and human resourcing needs of all of the department’s ALBs. The department will endeavour to provide NHSCFA with sufficient human and financial resources to deliver its agreed core functions.

NHSCFA’s delegated authorities are issued to it by the department, including those areas where NHSCFA must obtain the department’s written approval before proceeding. NHSCFA will adhere to these delegated authorities.

NHSCFA must demonstrate that it is delivering its functions in the most efficient manner, and must provide timely returns to the department where these are required either by it or by other departments within central government.

NHSCFA, as with all public bodies and government departments, must operate within any relevant set of efficiency controls. These controls may affect areas of spend such as information communications technology (ICT), marketing and advertising, procurement, consultancy, the public sector estate, recruitment, major projects or strategic supplier management. The department will ensure that NHSCFA is kept informed of any efficiency controls in operation.

As part of the government’s approach to managing and delivering public service at a reduced cost base, NHSCFA, as with all other ALBs and the department, receives elements of back office support, including finance and accounting, HR, payroll, procurement and ICT, through a shared or standardised service approach. Details of the services between NHSCFA and the service provider will be set out in contract or where appropriate a service level agreement or Memorandum of Understanding.

A shared or standardised value for money approach will also apply to the use of estate. NHSCFA will comply with guidance on property and asset management, and the principles set out by the department’s Property Asset‎ Management Board.

Risk management

NHSCFA will ensure that it deals with the risks that it faces in an appropriate manner, according to best practice in corporate governance, and develop a risk management strategy in accordance with the Treasury guidance Management of Risk – Principles and Concepts (The Orange Book)]. It will adopt and implement policies and practices to safeguard itself against fraud and theft, in line with government Counter Fraud Functional Standards. It should also take all reasonable steps to appraise the financial standing of any firm or other body with which it intends to enter into a contract.

NHSCFA produces reports for the board on its financial and operational performance against the business plan at its meetings. This assurance report will include information on risks and how they are being managed in accordance with the Treasury guidance mentioned above. The information prepared will be shared with the department to enable the department to assure itself on risk management. NHSCFA and the department will agree a process and trigger points for the escalation of risks to its ARAC, where those risks will have a potentially significant impact on NHSCFA, the department or the wider system that requires a co-ordinated response. This process entails NHSCFA having a statement of its risk appetite, attendance of internal and external audit representatives and the SDS at NHSCFA ARAC meetings and accountability meetings.

Risks to the wider system that arise from NHSCFA’s operations, identified by NHSCFA, the department or another body, will be flagged in the formal quarterly accountability meetings chaired by the SDS. Such risks may also be flagged by NHSCFA’s Board and escalated to the department’s ARAC for consideration. It is the responsibility of NHSCFA and its sponsor to keep each other informed of significant risks to, or arising from, the operations of NHSCFA within the wider system.

NHSCFA will have effective and tested business continuity management (BCM) arrangements in place to be able to respond to disruption to business and to recover time-critical functions where necessary. In line with Cabinet Office guidelines, the BCM system should aim to comply with ISO 22301 Societal Security – Business Continuity Management Systems.

Human resources

NHSCFA is responsible for recruiting staff, but complies with any departmental or government-wide recruitment controls. The department ensures that NHSCFA is made aware of any such controls. Very senior managers in NHSCFA are subject to the department pay framework for very senior managers in ALBs, and may be subject to additional governance as specified by the department. The department ensures that NHSCFA is aware of any such requirements or restrictions.

NHSCFA must obtain the approval of the Secretary of State in respect of policies relating to remuneration, pensions, allowances or gratuities.

NHSCFA staff are to be employed on Agenda for Change (AfC) terms and conditions. AfC staff remuneration is subject to the government response to the recommendations of the NHS Pay Review Body.

Very senior manager remuneration is subject to the government response to the recommendations of the Senior Salaries Review Body.

In relation to pensions, the organisational pension scheme is the NHS Pensions scheme which is administered by the NHS Business Services Authority. Each scheme has rules set down in legislation.

Like all departments and ALBs, NHSCFA is required to follow any requirements for disclosure of pay or pay-related information.

Subject to its financial delegations, NHSCFA is required to comply with the department’s and HM Treasury’s approval processes in relation to contractual redundancy payments and any non-contractual payments. All novel or contentious payments require the department’s and HM Treasury’s approval. Special severance payments are always considered novel or contentious (this includes any proposal to make a payment as a result of judicial mediation).

Equalities

The public sector equality duty requires NHSCFA (as a public body) to have due regard to the need to:

• eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under the Equality Act 2010
• advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it
• foster good relations between persons who share a relevant protected characteristic and persons who do not share it

The specific duties require NHSCFA, as a public body, to:

• annually publish information to demonstrate compliance with the Public Sector Equality Duty. This information must include, in particular, information relating to persons who share a relevant protected characteristic who are its employees (provided the organisation has 150 or more employees) and other persons affected by its policies and procedures
• prepare and publish one or more objectives it thinks it should achieve to meet the Public Sector Equality Duty (this was required by 6 April 2013, and is required every 4 years thereafter)

Relations with the department’s other ALBs and NHS organisations

NHSCFA works in partnership with the department and its other ALBs, in the interests of patients, people who use services and the public, to maximise the health and wellbeing gain for the population, and working to the values set out in the NHS Constitution.

The department and its ALBs have complementary but distinct roles within the system to ensure that service users receive high quality services which deliver value for public money.

Where helpful, partnership agreements detailing joint working arrangements will be put in place with NHSCFA’s key national partners including NHS England and Improvement, NHS Business Services Authority and others as may be appropriate.

NHSCFA has responsibility for providing strategic advice and support to specific ALBs to support them in delivering the department’s counter fraud strategy and meeting HM Government’s Functional Standard on fraud. These ALBs are NHS England and Improvement, NHS Business Services Authority and NHS Blood and Transplant and NHS Resolution. The ALBs NHSCFA is responsible for may be revised through agreement with department.

NHSCFA is part of the Fraud Function and works across government to help tackle fraud, with a focus on NHS loss.

Directions to NHS trusts and special health authorities direct NHS organisations to cooperate with NHSCFA in countering fraud and to adhere to NHSCFA’s counter fraud standards for providers and commissioners.

Review

The department regularly reviews NHSCFA’s performance at formal accountability meetings. In addition, the department will undertake a tailored review of NHSCFA during each Parliament.

In July 2018, the department completed a review on behalf of the Secretary of State. In 2020, NHSCFA’s 3 year lifespan as a special health authority was due to end. Following Parliamentary procedure, a Statutory Instrument has been laid to extend the lifespan to 30 October 2023. A further review will be due before 30 October 2023 when NHSCFA’s 3 year lifespan as a special health authority is due to end.

The outcome of this review could be:

• the life of the NHSCFA may be extended by an order requiring the affirmative procedure under sections 28A(5) and 272(6)(zc) of the 2006 Act
• NHSCFA will change from being a special health authority to another form of legal entity
• NHSCFA is abolished and the department would then be responsible for putting in place arrangements to ensure a smooth and orderly transition, with the protection of patients being paramount

In particular, the department is to ensure that, where necessary, procedures are in place in NHSCFA so the department can obtain independent assurance on key transactions, financial commitments, cash flows, HR arrangements and other information needed to handle any such transition effectively and to maintain the momentum of any ongoing and/or transferred work.

This agreement will be reviewed every 3 years, or sooner upon request of either party.

Annexes

Annexes to this framework agreement have been published separately:

• Annex A: wider guidance

• Annex B: finance and accounting responsibilities

• Annex C: communications responsibilities

• Annex D: relationships with other bodies