Millions of pounds of taxpayers’ money was wasted on a doomed NHS contract to outsource the care of older and mentally ill people in Peterborough, investigators have found.
A National Audit Office (NAO) report pointed to several mistakes and misgivings over the contract between Cambridgeshire and Peterborough Clinical Commissioning Group and UnitingCare Partnership, which collapsed after just eight months.
UnitingCare, an NHS consortium of Cambridgeshire and Peterborough NHS Foundation Trust and Cambridge University Hospitals NHS Foundation Trust, pulled out in December after saying the deal was not financially viable.
The contract - worth around £800 million - was the biggest in NHS history and was designed to bring together hospital, mental health services and community care for adults and older people in Cambridgeshire.
The NAO report criticised the planning for the contract, the lack of data informing the true cost of the service, and the role of NHS England and Monitor in providing oversight.
It said several costs were not factored in, with some critics arguing the cash set aside for redesigning services was insufficient. Clauses in the contract also provided “significant financial risks” for the CCG.
Amid a range of other problems, UnitingCare Partnership agreed to begin the contract from April 2015 while “continuing to negotiate on cost clarifications”.
One month into the contract, UnitingCare Partnership requested £34 million of extra funding for the first year, some 21% more than the contract price for that year.
But in the December, the CCG said it could offer no further advance funding, leading to the collapse of the contract.
This resulted in £16 million of “unfunded costs that had been incurred between the CCG and the partner trusts”, the NAO said. The CCG paid half this cost and the trusts split the difference.
Alongside this overspend was a £8.9 million direct cost to the NHS due to the set-up, bid and termination costs of the contract.
A previous deal with the private sector in Cambridgeshire also collapsed in 2015. Then, Circle, which ran Hinchingbrooke in Cambridgeshire, from 2012, said budget cuts and high demand made its deal unsustainable.
The NAO said the termination of the UnitingCare deal “indicates that the health sector may not have learned lessons about assessing and managing risk when working with a private provider, despite the earlier failure of the Hinchingbrooke contract and experience in wider government.”
The report also said NHS England and Monitor acted in accordance with their statutory roles “but, ultimately, regulatory checks on individual bodies’ risks did not ensure that the contract was viable”.
It added: “Monitor took assurance from UnitingCare Partnership’s actions to limit its financial contractual liability and assessed that the risk taken by Cambridgeshire and Peterborough NHS Foundation Trust was reasonable.
“The effect of the additional clauses was that the CCG bore more of the financial risk of the contract, without comparable scrutiny from NHS England
“Each body acted within its defined role but no organisation held a holistic view of remaining risk in the system.”
Amyas Morse, head of the National Audit Office, said: “This contract was innovative and ambitious but ultimately an unsuccessful venture, which failed for financial reasons which could, and should, have been foreseen.”
She said “limited oversight and a lack of commercial expertise led to problems that quickly became insurmountable.”
Meg Hillier, Labour MP and chairwoman of the Public Accounts Committee, said the report “details an astonishing array of errors” in implementing service changes.
“Significant weaknesses were obvious from the start and yet the UnitingCare Partnership, clinical commissioning group, Foundation trusts and other bodies were content to continue.
“Despite drafting in specialist expertise from the private sector and the NHS, the assumptions underlying the contract’s cost structure were not tested.
“Instead, the contract - which was not remotely ready - was rushed through without due regard for protecting taxpayers’ money.
“The result of this is damning: a contract terminated before the ink had even dried out, at an unnecessary cost of £16 million.”
A joint statement from Cambridgeshire and Peterborough NHS Foundation Trust and Cambridge University Hospitals NHS Foundation Trust said: “We welcome the National Audit Office’s report.
“It is important that our local community, the taxpayer and the wider NHS fully understand what happened and why, and that lessons are learned. We believe that the report is balanced and provides clarity on the reasons why the contract ended. The report also recognises that we acted in the interests of local services during the close down of UnitingCare.
“Despite the contract ending we are pleased that the services UnitingCare put in place are continuing to make a positive impact for our patients.
“Our focus now is to continue working closely with the CCG and our partners to ensure that those benefits are developed further.”