Corporate report

UKHSA Advisory Board: finance report

Updated 16 November 2022

Date: Wednesday 16 November 2022

Sponsor: Andrew Sanderson, Director General, Finance, Commercial and Corporate Services

Presenter: Andrew Sanderson

Purpose of the paper

The purpose of the paper is to give an overview of the UK Health Security Agency’s (UKHSA) finances as at month 6 financial year 2022 to 2023 (end of September 2022). At the time of submitting, the month 7 (end of October) figures were being finalised.

Recommendation

The Advisory Board is asked to note UKHSA’s financial position.

Summary of in-year 2022 to 2023 financial performance

At end of September.

The table below shows resource and capital departmental expenditure limits (RDEL and CDEL), split by the 3 parts of:

• core agency costs
• coronavirus (COVID-19) (former NHS Test and Trace activity)
• vaccines and countermeasures

It shows year-to-date budget and spending for April to September, and budget and forecast outturn for the full year.

Table 1: resource departmental expenditure limits (RDEL) and capital departmental expenditure limits (CDEL)

	Budget (year to date)	Actual (year to date)	Variance (year to date)	Budget (full year)	Actual (full year)	Variance (full year)
Core RDEL	201	179	22 (11%)	454	415	39 (9%)
COVID RDEL	872	766	107 (12%)	1,924	2,029	(105 (5%))
UKHSA RDEL	1,073	945	128 (12%)	2,378	2,444	(66 (3%))
Core CDEL	26	32	(6 (22%))	135	99	36 (27%)
COVID CDEL	0	(25)	(25 (0%))	0	(176)	176 (0%)
UKHSA CDEL	26	7	19 (74%)	135	(76)	211 (156%)
UKHSA total (excluding VCR) RDEL plus CDEL	1,099	951	148 (13%)	2,514	2,368	145 (6%)
Vaccines and countermeasures response (VCR)	(310)	(310)	0 (0%)	121	121	0 (0%)
UKHSA total (including VCR)	789	642	148 (19%)	2,634	2,489	145 (6%)

COVID-19 resource budget

As noted in the last Advisory Board paper, we have handed back £285 million of budget to the Department of Health and Social Care (DHSC) to help offset wider departmental pressures, in addition to £90 million previously transferred for this year’s flu vaccination programme. COVID RDEL spending to September was £107 million lower than plan. Rapid demobilisation of testing sites and operations, driven by effective UKHSA oversight, has contributed to this, but a significant driver is that lateral flow device testing in the NHS has been lower than predicted.

For the full year, we are currently forecasting a pressure, driven by higher than planned rates of Pillar 1 PCR testing (which is carried out in the NHS but paid for by UKHSA). Previously this was captured as a risk; from Month 6 it is included in the forecast. There is work with DHSC and NHS England on options to mitigate this.

COVID-19 capital budget

Forecast capital spend on COVID-19 is negative, as testing supplies which were purchased last year are used this year. (Under budgeting rules set by HM Treasury, test supplies are treated as capital when purchased; but, when they are consumed, the cost is reversed from capital and shown as a resource expense instead.) There may be an opportunity to convert the CDEL inventory credit into RDEL, subject to discussion with DHSC and HM Treasury to assist in managing emerging pressures.

Core resource budget

The agency’s core resource budget is shown net of external income; we are on track to generate £150 million of income. As signalled at the last Advisory Board, the trajectory on core spending has been below plan, and this was reflected in forecast underspends being reported in September. Key reasons are the challenges of receiving a late budget settlement and constraints on the pace at which the organisation can build new capabilities. Depending on progress with recruitment, it is possible that further underspends will emerge.

Core capital budget

Similarly, the delays in setting budgets have contributed to slow progress in capital spend so far, with only £32 million spent in the first 6 months. The month 6 forecast showed an underspend of £36 million (27%). We have carried out an in-year prioritisation exercise to identify additional opportunities for capital, and work is under way to develop these and make progress where feasible.

Vaccines and countermeasures

This budget is ring-fenced by DHSC and managed on the basis that UKHSA should neither gain nor lose; therefore, the expenditure is shown as equalling the budget.

From 1 October 2022, the responsibility and budget for purchasing COVID-19 vaccines has transferred into UKHSA as the COVID-19 Vaccine Unit. The 6-month apportionment of the budget is being fully reconciled, and formal financial reporting within UKHSA will be incorporated from month 7.

Other financial issues

2021 to 2022 accounts

The National Audit Office is carrying out its audit of UKHSA’s first accounts, and the plan is for the annual report and accounts to be published at the end of 2022.

Future funding

UKHSA budgets for the 2022 to 2023 financial year were only agreed in March and were formally confirmed for one year. We are currently working with DHSC to agree future funding, both for the core agency and the COVID-19 response. Whatever decisions are reached, high inflation and wider pressures on the public finances mean it will be important for UKHSA to prioritise and drive value for money in order to achieve maximum impact on our health security objectives.

Andrew Sanderson
Director General, Finance, Commercial and Corporate Services
November 2022