UKHSA Advisory Board: finance report
Updated 12 March 2024
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Date: 13 March 2024
Sponsor: Andrew Sanderson
1. Purpose of the paper
This paper gives an overview of the UK Health Security Agency’s finances as at month 10 of Financial Year 2023 to 2024 (the end of January 2024).
2. Recommendations
The Advisory Board is asked to note UKHSA’s financial position.
3. Summary of in-year 2023 to 2024 financial performance (at end of January)
The table below shows resource and capital departmental expenditure limits (RDEL and CDEL) for 2023 to 2024, split by the parts of:
- core agency costs
- COVID-19
- non-COVID-19 vaccines and countermeasures and the Covid Vaccine Unit (CVU)
It shows year-to-date and forecast full-year outturn against budget.
Table 1. Month 10 year to date resource departmental expenditure limits (RDEL) and capital departmental expenditure limits (CDEL)
| Budget | Provisional | Variance | |
|---|---|---|---|
| Core RDEL | 324,489 | 303,467 | 21,022 |
| COVID RDEL | 224,574 | 168,253 | 56,321 |
| ODA RDEL | 11,695 | 11,695 | 0 |
| CVU RDEL | 852,282 | 852,282 | 0 |
| VCR RDEL | 464,507 | 464,507 | 0 |
| Core CDEL | 72,702 | 72,603 | 99 |
| COVID CDEL | (16,800) | (18,112) | 1,312 |
| VCR CDEL | (85,668) | (214,505) | 128,837 |
| UKHSA total resource | 1,877,546 | 1,800,203 | 77,343 |
| UKHSA total capital | (12,448) | (142,696) | 130,248 |
| UKHSA total | 1,865,098 | 1,657,507 | 207,590 |
Table 2. Full year resource departmental expenditure limits (RDEL) and capital departmental expenditure limits (CDEL)
| Budget | Provisional | Variance | |
|---|---|---|---|
| Core RDEL | 391,457 | 380,771 | 10,686 |
| COVID RDEL | 284,142 | 285,799 | (1,657) |
| ODA RDEL | 12,629 | 12,629 | 0 |
| CVU RDEL | 1,071,578 | 1,066,978 | 4,600 |
| VCR RDEL | 589,149 | 589,149 | 0 |
| Core CDEL | 86,294 | 100,924 | (11,630) |
| COVID CDEL | (16,800) | (18,112) | 1,312 |
| VCR CDEL | 22,132 | 22,132 | 0 |
| UKHSA total resource | 2,348,955 | 2,335,326 | 13,629 |
| UKHSA total capital | 6,358 | (111,913) | 118,271 |
| UKHSA total | 2,355,313 | 2,223,413 | 131,900 |
The figures have been updated to include prior period adjustments which will score against 2023-to-2024 budgets at a group level. These are adjustments which were included in UKHSA 2022 to 2023 Annual Report and Accounts but were too late, or not considered material, to include in the Department of Health and Social Care (DHSC) group accounts. The adjustments included in the full-year resource forecasts show additional spend of £9.9m core, £10.5m COVID-19 and £71.5m Covid Vaccine Unit.
3.1 Core resource and capital budget
UKHSA’s core resource budget was agreed at £395m and then a reduction was made for the accounting treatment of lease payments. Budget which had been ringfenced by (DHSC) as contingency against a shortfall in our royalty income and for workforce transition is included.
The full-year resource forecast including prior period adjustments shows an underspend of £10.7m against the revised budget. However, the current monthly run rate would project an underspend of circa £18m, which shows that programmatic spend is profiled for delivery in the final two months of the year. This delivery is being closely monitored by the Executive Committee.
The core capital budget shows a pressure for the year as £16m of capital spend through the new ‘IFRS 16’ lease accounting standard has been included. Capital spend from major projects is heavily backloaded, so depends on ramped-up delivery in the final two months.
3.2 COVID-19 resource and capital budget
The year-to-date position shows an underspend (excluding the PPA adjustment), as demand has been lower than originally planned and we have prioritised bringing down spending during this final year of COVID-19 funding. Budget transfers to NHS England are planned which will utilise the remaining budget.
3.3 Covid Vaccine Unit resource and capital budget
The budget was adjusted in January, in line with a funding agreement from the Spending Review, to include additional funding from the Treasury Reserve. The increased budget was based on the resource forecast produced at month 8. The resource forecast is based on national vaccine drawdown plans and an optimum inventory position which supports demand and scientific advice.
The capital credit is generated by a refund and purchases from contracts agreed in the previous financial year and delivered in 2023 to 2024.
3.4 Vaccines and countermeasures resource and capital budget
This budget is ring-fenced by DHSC and is currently managed on the basis that UKHSA should neither gain nor lose.
3.5 Business planning
The planning and prioritisation process is under way, with the aim of confirming allocations later this month. Key areas of focus have included whether and how to absorb priority COVID-19-funded activity in the agency’s core budget, the planned cap on the civil service workforce, and pandemic preparedness capability.
4. Annual accounts
As discussed at the last Board, the National Audit Office disclaimed their opinion on UKHSA’s 2022-23 accounts. The NAO were unable to get assurance on COVID-19 vaccine balances in time for the statutory accounts deadline. COVID-19 vaccines are a major part of UKHSA’s finances (in contrast to the previous year in DHSC, where they were barely material). Therefore, this lack of assurance, in combination with the roll-forward impact of the previous disclaimer, meant the accounts had to be disclaimed again. The Chief Executive is appearing alongside DHSC permanent secretaries at the Public Accounts Committee on 13 March.
The specific issue was that the Covid Vaccine Unit make operational forecasts of future vaccine demand; these estimates are needed to calculate several balances in the accounts. However, the accounts needed to be updated in line with new forecasts several months after the financial year end, to reflect changes in vaccination policy in response to a new COVID-19 variant. These late updates, coupled with the fact that the CVU shifted to a different forecast model and the change wasn’t communicated promptly, meant there was not enough time to provide sufficient assurance for the audit; and NAO had concerns about the governance of the model.
Other than the CVU issue, the accounts process ran more smoothly than the previous year, and there was significant progress through the Finance and Control Improvement Programme. However, this is a multi-year journey of improvement, and there is more to do to embed ‘right first time’ in controls and financial management across the organisation. Delivering this effectively, along with a credible plan and timetable for the 2023 to 2024 accounts, is a continuing top priority for UKHSA and DHSC, with close scrutiny from the Audit and Risk Committee.
Andrew Sanderson
Chief Financial Officer
March 2024