Corporate report

UKHSA Advisory Board: finance report

Updated 22 May 2023

Date: Tuesday 24 May 2023

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

Presenter: Andrew Sanderson

Purpose of the paper

This paper gives an overview of the UK Health Security Agency’s finances as at the end of financial year 2022 to 2023 (the end of March 2023).

Recommendation

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

Budget settlement 2023 to 2024 and 2024 to 2025

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.

While the overall budget is lower than the 2022 to 2023 allocation, it is broadly in line with our current spending, and gives a stable basis for UKHSA’s operations, especially in the context of a challenging financial environment across the public sector. We have been using our business planning process to identify savings wherever we can and adjust our programmes to ensure they are focused on realisable outcomes, both in health and efficiency.

The final decision on coronavirus (COVID-19) funding is with ministers following further review. The proposed settlement is planned to be the final year of dedicated COVID-19 funding and will be a significant reduction from the original 2022 to 2023 allocation of £2.4 billion.

Provisional summary of 2022 to 2023 financial performance (at end of March 2023)

The table below shows resource and capital departmental expenditure limits (RDEL and CDEL) for 2022 to 2023, split by the 3 parts of:

• core agency costs
• COVID-19
• vaccines and countermeasures, including the COVID Vaccine Unit

It shows budget and provisional outturn for the full year.

Table 1: full year (M12) resource departmental expenditure limits (RDEL) and capital departmental expenditure limits (CDEL)

Figures shown reflect millions (£’m)

	Budget	Provisional	Variance
Core RDEL	465	418	46 (10%)
COVID RDEL	1,899	1,214	685 (36%)
UKHSA RDEL	2,364	1,632	732 (31%)
Core CDEL	136	110	25 (19%)
COVID CDEL	(140)	(239)	99 (71%)
UKHSA CDEL	(4)	(129)	125 (100%)
UKHSA total (excluding CVU and VCR) RDEL plus CDEL	2,359	1,503	856 (36%)
COVID Vaccine Unit (CVU)	777	438	339 (44%)
Vaccines and countermeasures response (VCR)	668	630	39 (6%)
UKHSA total (including CVU and VCR)	3,805	2,571	1,234 (32%)

UKHSA accounts now have period 13 in operation through May: a notional period where year-end accounting adjustments can be processed, following central review. The Financial Operations and Control team are working at pace with wider finance teams to make any necessary adjustments.

Core resource budget

UKHSA’s core resource budget is shown net of £168 million of external income. Income was higher than the original plan of £146 million, largely because of increased royalty income from increased worldwide sales of Dysport (a Botox-like product for which UKHSA holds intellectual property rights from its development). In addition, there were underspends, especially in front-line scientific and clinical areas, as the agency did not reach planned workforce levels. Recruitment campaigns have continued through the year including the use of surge capacity delivered by 3 agencies supporting UKHSA’s People teams.

Core capital budget

Capital spend was £65 million in the first 10 months, but saw an acceleration in the final 2 months to reach a provisional full-year figure of £110 million.

COVID-19 resource budget

UKHSA successfully managed the unprecedented £12 billion cut in COVID-19 funding in 2022 to 2023 compared to 2021 to 2022, and we have been aiming to bring down spending even further where possible, while continuing to deliver the government’s Living with COVID-19 strategy. During the year, £375 million of COVID-19 budget was released and handed back to DHSC to help with wider pressures in the health group. Demand and cost drivers have been lower than in the original assumptions for the testing programme, and together with timely decisions on decommissioning, have led to additional underspends against the revised budget.

COVID-19 capital budget

The budget and outturn capital spend on COVID-19 is negative due to accounting treatment, as testing supplies which were purchased in the prior financial year (scoring as capital at the time) were used in 2022 to 2023. Lateral flow device demand continued to fall, and supplies were not consumed as expected. Lateral flow devices which are not forecast to be consumed in 2023 to 2024 are being impaired down to a nil value.

COVID Vaccine Unit

From 1 October 2022, the responsibility for purchasing COVID-19 vaccines transferred into UKHSA as the COVID Vaccine Unit. The budget was formally delegated to UKHSA in March. Changes in policy assumptions about the COVID-19 vaccination programme have led to a significant reduction in resource spend compared to the original budget.

Vaccines and countermeasures

This budget is ring-fenced by DHSC and managed on the basis that UKHSA should neither gain nor lose.

Finance and control improvement

UKHSA established a finance and control improvement programme in January 2023 as a systematic way to respond to the issues arising from the disclaimer of the 2021 to 2022 annual accounts. The programme has been making steady and positive progress, noting that there is likely to be a multi-year journey to a clean audit opinion given the complexity of the legacy issues to resolve.