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NHS trusts will have to receive Cabinet Office approval for any clinical and non-clinical spending over £10m, HSJ can reveal.

The new controls will be introduced by NHS England in London first and then rolled out to the other regions over the next two years, according to documents seen by HSJ.

This new control regime will apply to NHS and foundation trusts, shared procurement services and procurement hubs, and subsidiaries where the majority shareholder is a trust. It will cover framework call-offs and agreements, contract changes or extensions, and collaborative trust procurements awarding to a single supplier.

The new rules will also apply to spending in areas that have pre-existing spending control processes, such as digital and IT, and capital procurements over £5m that require NHSE and the Department of Health and Social Care approval.

Contracts between two government bodies, including deals between a trust and other NHS organisations, will be exempt from the process. Any procurement scheme that is already going through a trust’s internal governance and approval process – so-called “in-flight business cases” – will also be excluded, as will capital schemes above £15m which already have their own approval process.

Integrated care systems are not covered by the new rules, however, though they “will be engaged as part of this process to ensure they understand the new requirements and the impact on NHS trusts”, according to the guidance.

NHSE estimate the new rules will result in the Cabinet Office reviewing 1,200 NHS business cases each year when the system is fully rolled out.

NHSE guidance says only “the most high value and contentious cases will be subject to spend controls”.

Explained: how the Cabinet Office will control trust spending

The new policy follows an instruction in August from former health secretary Steve Barclay telling NHSE to introduce central government spending controls to the health service. NHS trusts along with other health arms-length bodies had been exempt from the spending controls that the Cabinet Office has applied to central government.

Procurement professionals contacted by HSJ expressed concern that massively increased central scrutiny could create an additional bottleneck delaying important spending decisions. The rules explicitly cover “urgent business cases”.

This new spending control mechanism is partly intended to provide support to local trusts with central expertise and help develop their procurement teams in areas including contract management. It will also give the centre greater insight into trust procurement pipelines to identify potential efficiencies.

This is part of NHSE’s ongoing effort to bring greater central management and oversight of trust procurement activity. It comes more than two months after the centre formally launched its new Central Commercial Function under Jacqui Rock, NHSE’s chief commercial officer.

It also fits into Whitehall’s ambition to bring greater control to NHS expenditure and is in line with the new government’s desire for greater fiscal restraint.

Phased implementation The new spending controls will be introduced between now and 2024-25 “through a phased, regional approach beginning with the London region”, according to a letter from Ms Rock.

“Lessons learned will be considered and incorporated” after the London phase is complete. “This will enable enough time for trusts to incorporate Cabinet Office service-level agreements, with agreed turnaround times, into their procurement timetables and pipeline planning”.

The timetable for the London rollout will last six months and spread the implementation over two groups of the capital’s trusts, listed below.

There are 21 trusts in the first group, including most of the acutes and large teaching trusts such as Barts Health Trust and Guy’s and St Thomas’ Foundation Trusts, as well as all the specialists. It will run from October to December. The second group will follow from January to March next year.

The roll-out then moves to the Midlands with two phases from March 2023 to May and June to August. After that, the south west (September to November), East of England (December to February 2024), south east (March 2024 to May), north east and Yorkshire (June to August), and finally the north west (September to November).

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Source: HSJ

Date: 10 October

Posted in News on Oct 10, 2022

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