Public watchdog bites the NHS.
Authors: N Ellis
Journal: BMJ (1986)

For  taxpayer it is reassuring to know that public spending, now over ?14 000 million a year, is rigorously scrutinised by independent public auditors in  National Audit Office. This office, headed by  comptroller and auditor general, aims to ensure that public resources are put to good use, avoiding waste and loss, and that systems of control are improved to secure better value for money. With a few major exceptions?for example,  nationalised industries?the comptroller's task is to follow public money wherever it goes. It may be surprising that a relatively unknown body such as  National Audit Office has had a considerable impact on  health service. The investigations of its National Health Service division (with over 30 professional auditors) have led to some important financial and organisational changes, and its strident criticism of NHS management belies its image of being staid and anonymous. For example,  investigation of working practices in  NHS has shown widespread failure to maintain satisfactory incentive schemes for NHS employees; some schemes had decayed to such an extent that employees could earn full bonuses for substandard performance. His inquiries also showed that health authorities had failed to provide  Department of Health and Social Security with  required evidence that their bonus schemes had been reviewed and were satisfactory. More recently,  comptroller took  unprecedented and humiliating step of publicly qualifying  NHS accounts for 1984-5 because of  serious weaknesses in control shown by his auditors. In successive value for money investigations  comptroller has identified a continuing lack of management control of resources and finance in  NHS. Indeed, a persistent feature of his reports over many years is  obdurate reluctance of  DHSS and health authorities to act decisively to remedy defects in control and management. The comptroller's reports frequently refer to a significant proportion of health authorities who fail to implement DHSS instructions and guidance on improved managerial and financial controls. In 1984 he stated that this was the third successive report in which I have commented on  adequacy of health authority controls over articles in store and in use and  need to identify and report losses, adding that  DHSS did not even consider it necessary to obtain confirmation that some 60 health authorities had actually introduced security strategies. The comptroller reported that  lack of control over stores and equipment was in fact so serious in 16 health authorities that  statutory auditors were unable to confirm  value of  stock held and were therefore obliged to qualify  accounts. Similar criticisms have been made by  comptroller of  failure of health authorities to operate effective controls over charges for services to private patients in NHS hospitals. Public sector auditing has a long pedigree. The first comptroller and auditor general of  Exchequer was appointed in 1314, and he has been followed by successive audit bodies over  intervening centuries. Recent years have seen important changes in  work of  comptroller and auditor general. He has become increasingly concerned with value for money examinations into questions of economy, efficiency, and effectiveness. But  comptroller does not question  merits of policy objectives themselves. For example, he would not question  policy of contracting out work from  NHS as such, but he would not hesitate to assess  financial controls over such contracts and  way in which these are awarded. He undertakes?three main functions on behalf of parliament. (0 He authorises  issue of funds to government departments and other public bodies. (n) He examines and certifies their accounts. (in) He carries out examinations of economy, efficiency, and effectiveness in their use of resources. The comptroller's work provides independent information, advice, and assurance to parliament about all aspects of  financial operations of  government departments and other organisations whose accounts he audits. He is wholly independent of  government and  Civil Service. Although he is subject to certain limited controls by parliament, he is not constrained by any professional or operational controls. The comptroller's main duties are carried out on behalf of parliament, working closely with  Public Accounts Committee. This is an influential backbench committee whose work is based on  comptroller's reports. This link with parliament was strengthened by  National Audit Act 1983. This created  National Audit Office with  comptroller and auditor general as its head, reinforcing his financial and operational independence from  government and  Civil Service and giving statutory authority to his work on economy, efficiency, and effectiveness. This third sphere of work has greatly increased during recent years. In  NHS  comptroller has undertaken many value for money investigations (table). Traditionally,  value for money investigations reported to parliament have focused on particular prominent examples of waste, inefficiency, and extravagance. Value for money auditing is now mostly concentrated on systematic reviews of selected large areas of public spending, including some within  NHS. The impact of  comptroller's reports on aspects of NHS expenditure is heightened by juxtaposing his specific observations on  lack of financial and management control in  NHS alongside  often bland (if not complacent) responses from  DHSS.