Corporate report

UKHSA Advisory Board: finance report

Updated 17 July 2023

Date: Wednesday 19 July 2023

Sponsor: Andrew Sanderson, Chief Financial Officer

Purpose of the paper

This paper gives an overview of the UK Health Security Agency’s (UKHSA) finances as at month 2 of financial year 2023 to 2024 (the end of May 2023).

Recommendation

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

Budget settlement 2023 to 2024 update

In late March, the Department of Health and Social Care (DHSC) agreed a settlement for UKHSA’s core budget, covering 2023 to 2024 and 2024 to 2025. Having 2-year funding settlement provides greater certainty and gives time to build the organisation, especially the workforce. The headline resource settlement is £395 million, which includes some ring-fenced funds that will be released by DHSC following business cases. Two of these have been submitted and approved (with funding for diagnostics and genomics) with a business case for workforce transformation currently being finalised.

The final settlement on COVID-19 funding was agreed by ministers following further review in June. Of the £575 million settlement, UKHSA will deliver £450 million, with the additional allocation delivered by the NHS. This is planned to be the final year of dedicated COVID-19 funding.

COVID-19 and non-COVID-19 vaccine budgets are still to be formally confirmed.

Summary of in-year 2023 to 2024 financial performance (at end of May)

The tables below show resource and capital departmental expenditure limits (RDEL and CDEL) for 2023 to 2024, including indicative budgets that are yet to be formally confirmed and allocated, split by the 3 parts of:

• core agency costs
• COVID-19
• COVID Vaccine Unit (CVU)
• vaccines and countermeasures

They show year to date (Table 1) and forecast full year outturn (Table 2) against budget. Figures shown reflect thousands (£’000).

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

	Budget	Provisional	Variance
Core RDEL	60,026	57,639	2,387
COVID RDEL	33,046	29,391	3,656
CVU RDEL	100,315	32,146	68,168
Vaccines and countermeasures response RDEL	58,435	58,435	0
UKHSA total resource	251,822	177,611	74,211
Core CDEL	16,553	6,402	10,151
Vaccines and countermeasures response CDEL	16,131	16,131	0
UKHSA total capital	32,684	22,533	10,151
UKHSA total	284,506	200,144	84,362

 

Table 2: Full year resource departmental expenditure limits (RDEL) and capital departmental expenditure limits (CDEL)

	Budget	M2 forecast	Variance
Core RDEL	394,958	397,125	(2,167)
COVID RDEL	449,780	449,780	0
CVU RDEL	939,000	923,392	15,608
Vaccines and countermeasures response RDEL	567,514	567,514	0
UKHSA total resource	2,351,251	2,337,810	13,441
Core CDEL	76,600	76,600	0
Vaccines and countermeasures response CDEL	96,785	96,785	0
UKHSA total capital	173,385	173,385	0
UKHSA total	2,524,636	2,511,195	13,441

Core resource budget

UKHSA’s core resource budget is shown net of £164 million of external income. The full year outturn shows a small pressure of £2 million. However, there are emerging potential reliefs which will return the net position to break-even for the year. Potential underspends, especially in recruiting to planned workforce in front-line scientific and clinical areas are being closely monitored. Recruitment campaigns continue including the use of surge capacity delivered by agencies supporting UKHSA’s People teams.

The Core resource run rate for 2 months is £29 million per month. This emerging trajectory would result in a full year spend of £346 million and therefore a spend below plan of £49 million. To achieve the current full year forecast this requires that the run rate per month increase from month 3 to £34 million. However, budgets have been profiled realistically and spend is expected to increase per month when successful recruitment campaigns are concluded.

Core capital budget

Capital spend is forecast to budget for the year. Business case approvals are currently awaiting approval for new projects and an acceleration of spend is expected once approvals are received.

COVID-19 resource budget

UKHSA successfully managed an unprecedented £12 billion reduction in COVID-19 funding in 2022 to 2023. Now that funding is confirmed for the current financial year, detailed budget planning and phasing is being finalised. As in previous years, a priority will be to bring down spending (recognising that COVID-19 funding is currently planned to be phased out entirely by the end of this year) while continuing to deliver the government’s Living with COVID-19 strategy.

COVID-19 Vaccine Unit

The cost of issuing vaccines is recognised when they are dispatched to NHS providers. At the end of previous financial year, the NHS drew down higher than expected vaccine doses, which has reduced demand so far in 2023 to 2024 for vaccines to be dispatched as the additional supply in 2022 to 2023 is consumed. The expected draw down profile for the vaccines across the year is updated to reflect changes in patterns; however, the total volume of vaccines dispatched across the financial year is expected to be in line with initial budget assumptions.

Vaccines and countermeasures

This budget is ring-fenced by DHSC and managed on the basis that UKHSA should neither gain nor lose. The ongoing governance of the ring-fenced budget is currently being discussed.

Finance and control improvement programme

A formal improvement programme was established in January following the National Audit Office’s (NAO) disclaimed opinion on UKHSA’s accounts for October 2021 to March 2022. It is overseen by a board chaired by the chief executive and with representation from DHSC and HM Treasury. The first phases of the programme focused on the financial year 2022 to 2023 year-end and preparing the accounts for external audit. Although the path to a clean audit will inevitably be a multi-year process, there has been good progress across a wide number of areas.

The draft UKHSA 2022 to 2023 annual report and accounts was reviewed by the UKHSA Audit and Risk Committee in June and submitted so that NAO’s external audit could start as planned.

The next phases of the programme will cover a broader set of control and financial management improvements, including implementing and embedding system and process improvements in line with good practice and government standards.

Andrew Sanderson
Chief Financial Officer
July 2023