Explained: How the Cabinet Office will control trust spending

The new control regime will give Whitehall the authority to sign-off on trust procurement over £10m.

All expenditure over £10m will be in scope, including new or replacement contracts or call-offs from frameworks, contract changes or extensions, framework agreements themselves, and collaborative procurement between multiple trusts with a single supplier. The policy will be introduced piecemeal over the next two years with the trusts in London going first.

The Cabinet Office “requires visibility of all NHS trust commercial pipeline information in line with their Commercial Pipeline Guidance,” according to the FAQs produced to help explain the initative. NHS England will support trusts to develop this commercial pipeline for all their clinical and non-clinical spend on £10m or above.

The Cabinet Office will then review that pipeline data “to determine whether a business case would be subject to onward approval”. Each case will then be given a risk rating and those considered medium- to high-risk will be subject to additional assurance”.

It is not clear what criteria will be used to determine the risk rating for each business case, 

Each business case will be subjected to “six commercial tests (listed in full below)” which will examine how well, for example, it fits with national government policy.

Once the Cabinet Office has identified which business cases are to be subject to onward approval, according to the FAQs, NHSE will then work with the trust to develop the business case in line with these six tests.

NHSE’s business case panel will then review this while the trust’s internal approval process is ongoing before submitting it to the Cabinet Office.

The guidance says the approval process should take at most 28 days. There is already anxiety from procurement teams that this will lead to significant delays as they go back and forth with the Cabinet Office and NHSE over different points of contention in their business cases.

HSJ has asked the Cabinet Office what specific measures it will take to ensure that NHS procurement efforts are not needlessly held up at this point. We have yet to receive a response.

Business cases for urgent or unplanned procurements will still require Cabinet Office approval “but NHSE will work with Cabinet Office to expedite this”. Trusts are asked to tell NHSE of an urgent procurement “at the earliest opportunity”.

It is unclear how this new policy will interact with the government’s provider selection regime, a set of regulations introduced in the Health and Care Act 2022. These will replace the obligation under the 2012 health act for NHS organisations to go out to tender for providers of clinical services, which was revoked in the 2022 health act.

The new PSR will require commissioners to set out their decisions against set criteria even if they do not necessarily need to go through a competitive tender.

The letter says there will be a full impact assessment once the provider selection regime is finalised “to understand how the different regulations will work together with these new controls”.

The NHSE FAQs say the commercial team “are working with NHSE colleagues involved in drafting these regulations, as well as Cabinet Office, to ensure that the new regime can still support the spend controls requirements”.