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NHS Counter Fraud Authority (Establishment, Constitution, and Staff and Other Transfer Provisions) (Amendment) Order 2020

Volume 805: debated on Monday 7 September 2020

Considered in Grand Committee

Moved by

That the Grand Committee do consider the NHS Counter Fraud Authority (Establishment, Constitution, and Staff and Other Transfer Provisions) (Amendment) Order 2020.

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.

My Lords, I thank the Minister for his introductory remarks, his comprehensive review and his brevity. I support the order. The NHS has been magnificent at tackling Covid-19. Perhaps we should consider striking medals for that army of devoted NHS servants. I was a Health Minister in three Administrations. There was fraud in those far-off days; there is fraud now. Ministerial intervention was not effective then; my colleagues and I did not stamp out fraud. The Minister now is finding fraud to be resilient if he seeks a renewed continuation of the NHS Counter Fraud Authority. Surely he is engaged in a positive, considered and professional reactive policy.

I could say that a distinguished Chief Medical Officer said in my hearing that in this respect, the NHS is a monster and it has got a brain. The Minister has a more positive attitude than that exasperated senior official, the Chief Medical Officer. The noble Lord, Lord Lawson, got it right when he ventured to say most positively that the NHS is the nation’s religion. Certainly, it is a great NHS: that is absolutely certain.

I have some brief questions for the Minister. How many prosecutions for fraud were there in each of the years 2018 and 2019? How many successful prosecutions were there in those years? By what process are prosecutions initiated? With reference to paragraph 7.2 in our helpful notes, does his department have an estimate in money terms of the amount of fraud currently under way? How does his department gather and seek such information? Given the large sums of fraudulent moneys that have been discovered to be involved, will he consider enlarging the budget of the authority for better and ever more effective working? How many staff are engaged in the authority? Perhaps the Minister will give the name of the current chair or director of the authority and indicate the salary paid annually to that person. In conclusion, congratulations must go to the authority on saving the sums of money already indicated.

My Lords, it is a pleasure to follow the noble Lord, Lord Jones, one of the most liked and respected politicians in Wales. I thank the Minister for bringing forward the order, which I certainly support. The NHS is rightly a cherished national institution and extra funding has indeed been brought forward by the Government. That is quite right, particularly in light of the current challenging crisis that faces us.

Fraud is always to be condemned, but there is something especially nauseating when it is taking money away from patient care in our cherished national institution, the NHS. Fraud is something that we should all take very seriously. Like the noble Lord, Lord Jones, I thank the NHS Counter Fraud Authority for the work that it has been doing developing intelligence against fraud and saving the NHS money by uncovering fraud: £60 million in the last year for which figures are available. Of that, £27.6 million related to dental contractor fraud, so that was a considerable amount.

The Minister for Care in the other place said that coronavirus presents a heightened risk of fraud; indeed, the Minister said the same again today. In the light of that, does the Minister believe that additional resources are needed in these challenging circumstances to save additional money for the NHS? If so, what is being done in that regard? I know that the Counter Fraud Authority has been working on a revised strategy, but I do not believe that it has yet been published. Does the Minister have any detail on that, and will he indicate when that strategy will be published?

I believe that PPE for combating Covid—which has presented, in some respects, a challenge with regard to fraud—is purchased centrally by the Government and is therefore not subject to the scrutiny and supervision of the NHS Counter Fraud Authority. Can the Minister indicate what body is scrutinising this area for fraud, what supervision does exist, and if that body—whatever it may be—is working alongside the NHS Counter Fraud Authority in order that the two bodies can be truly effective in that respect?

I thank the Minister very much for bringing these regulations forward; we should all welcome them. I hope that we are able—because I realise that this is on a three-year rolling cycle—to assure the people who are doing this vital work that their jobs are safe. I am sure that is the case, but I fear that when we see these things on a three-year rolling cycle, towards the end of the three years the employees and those working for the authority might perhaps be wondering what will happen to their jobs. I am sure that that is not the case, but anything that the Minister can say about the continuing security of these jobs would be welcomed by the House. With that, I lend my support to this order.

My Lords, I support this order fully. It will allow the NHSCFA to continue to protect the NHS from fraud, bribery and corruption, thereby safeguarding taxpayers’ money. Some £286 million of savings has already been made over the past few years. Doctors and dentists who defraud citizens will face charges. This order will be able to deal with this kind of corruption.

My Lords, this is a very important order. I declare my interests; I am married to a former full-time senior partner GP and I was for 12 years a member of the Public Accounts Committee, specialising in health matters.

I congratulate the Minister on bringing this forward. It is very timely. I wonder why three years was chosen rather than a Parliament, but that is not a key issue. I note, though, that paragraph 3.4 of the Explanatory Memorandum states that this applies to England only. Does that mean that there is a comparable body in Northern Ireland, Wales and Scotland? I hope the answer to that is “yes”—but if it is not, why on earth is it not?

I am not clear—and this goes back to my Public Accounts Committee years—who is actually auditing the work of this very important body. Is it the National Audit Office or some other organisation? Certainly, in my experience across a wide spectrum of departments and semi-independent bodies, the Comptroller and Auditor General in that organisation does a superb job and refers problem areas to the Public Accounts Committee. If the Minister is not able to answer that this afternoon, I hope he will be able to write to me.

I will raise an issue that might not be absolutely key at this point. I note that there are still too many examples of two chemists in a town trading under different names but actually belonging to the same company. The whole respect of the pharmaceutical and chemist world is basically that they get a primary payment, and that should not be happening.

Of course, at the top of my mind is the protective equipment that has had to be bought. While there were challenges there—not everything went as smoothly as I am sure the Minister would have liked—nevertheless I recognise the enormous effort that was put into providing protective equipment. But of course, when things are done at speed, inevitably there are loopholes, and I just wonder what we are doing in terms of helping this organisation to look closely at the contracts that were signed, the delivery of those contracts and whether the product was up to specification, to ensure that public money, paid for by the taxpayer, is well spent and that if the contract has not been delivered as thought, there will be not necessarily prosecution but some form of retribution repaid to this organisation.

I will ask another question that may seem strange. Is there any part of the NHS that is excluded from this organisation? It is very important that there is nobody and no part of the NHS that shall be excluded.

My noble friend Lord Bourne raised an absolutely crucial question. There is, it is rumoured—so I am told and I thank my noble friend for reminding me of this, because I did pick it up the other day—a revised strategy circulating somewhere. If there is, it seems to me that it should not be circulating for very much longer, because we really do want to know what is happening on the ground.

I will make just two further small points that are tangential to this. A colleague of mine whom I met a couple of days ago went for a test at Olympia. She was told that there was no space at Olympia and that she should go to Wellingborough—which happens to be next door to my former constituency. Upon complaint, it was discovered that there was space at Olympia. So that is a problem and a waste of resources.

In the papers over the weekend we saw the problem of past tests, where people have been cleared but there is some residue in their body that means that when the results are tested again, they come up as positive. That is another problem.

Finally, my noble friend—I do treat him as a friend, because I have known him for many years—Lord Jones has asked the right questions. How many people have been prosecuted? How many special prosecutions have there been? How many special initiatives have there been? Is my noble friend in a position to update the figures for savings that we have here?

I say again to my noble friend that we owe a huge thank you to the staff who are doing this work. It must be challenging and I hope that they are getting all the resources they need. I hope that they are getting the right skills. If they are short at all, will my noble friend confirm that, as far as he knows, they have got all the staff they need to do a first-class job?

My Lords, first, I need to declare my interests as a former member of a clinical commissioning group and a current non-executive member of a hospital trust—because, of course, we get trained in fraud when we take up these non-exec positions. So I have been diligent in doing my online training with the NHS fraud authority. It is very rigorous and it makes you think very carefully about the whole range of fraud that might occur in the NHS, including in recruitment, procurement and so on. So I will just say that it is very useful that it is so diligent in this. Of course, it is part of the whole audit process that goes on within NHS foundations and NHS bodies all the time.

I thank the Minister for introducing these provisions, which we will of course be supporting. Fraud is by definition a hidden crime and those who commit fraud are of course in a minority. But we are talking about significant sums here. The 2018-19 estimates say that fraud cost the NHS about £1.27 billion. So fraud is not and never has been victimless, and in this case it impacts directly on patient care. I commend the work of the fraud authority in uncovering scams and ghost patients, but there is still quite a long way to go.

Unfortunately, Covid-19 presents a heightened risk of fraud, and it does so across the whole of society. As someone who had to have their bank cards changed three times during lockdown, I say that unscrupulous crooks are seeking to exploit the fact that systems are not working and in particular that our health system is under unprecedented pressure—and they are doing it for their own financial gain. I think all noble Lords will agree that robust response is imperative to safeguard the reputation and resources of our health service, so we welcome these provisions and the extension of their lifespan for a further three years.

The disruption caused by Covid-19 has seen a reported spike in fraud cases across health and social care, ranging from fake PPE to recruitment, as well as cybersecurity attacks. I think noble Lords will agree that this is deeply concerning, so what assessment have the Government made of reports that levels of fraud have been increasing during the Covid-19 crisis, and is the noble Lord able to share any preliminary figures with us today?

Like my noble friend Lord Jones, I say that it is imperative that the fraud authority has the resources it needs to investigate, detect and prevent fraud. So could the Minister assure the Committee that the resources that it does need to investigate, detect and prevent fraud are there, and that there has been increased funding, commensurate with the increased risk?

An urgent concern is the relaxation of recruitment rules and practices to allow NHS bodies to hire staff working across the health and social care sector. I completely accept that this has been necessary at a time of emergency, but I wonder what assessment the Government have made of these exceptional circumstances and the unique pressures that may impact on methods of preventing fraud in recruitment. What advice and support is the fraud authority giving to NHS organisations to help them prevent fraud in these difficult times?

PPE has already been mentioned in this debate, and we have talked a lot about it in the last few months. It is of enormous concern that amounts of public money have been directly awarded outside the usual tendering process, with no competition. What steps is the authority taking to prevent fraud linked to PPE procurement? Given that PPE procurement for Covid-19 is now centrally managed, can the Minister confirm whether this falls outside or inside the remit of the authority? Who will be investigating this as we move forward? Are cases being referred to the Department of Health’s anti-fraud unit, supported by the authority? I hope that the Minister will also take the opportunity to confirm that there will be an inquiry into PPE procurement as we move forward.

The Minister has already mentioned something of vital importance: cross-working. The most recent annual report identifies a number of challenges and potential barriers that affect the ability to tackle fraud against the NHS and highlights the fact that the level of understanding of the nature of fraud in the NHS continues to be uneven across the health system. So if there is underreporting of fraud and suspicious activity, that is of continuing concern. Can the Minister expand on what the authority intends to do to improve cross-NHS working?

In June, as has been mentioned, the Cabinet Office published the Counter Fraud Functional Standard, which is intended to be introduced across the NHS by the end of the financial year. We certainly welcome this move towards a common counter approach across the public sector. But what steps is the NHS Counter Fraud Authority taking to support the NHS organisations to implement this change? Can the Minister confirm that this will be introduced across the NHS by the end of this financial year, as intended, or will it need to be delayed? Perhaps he could explain that.

So we welcome this order and I think that these are all questions that will probably need to be answered in due course.

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.

Motion agreed.

Sitting suspended.