Bosses who screwed up £750 million contract for mental health and older people services in Cambridgeshire criticised by National Audit Office

National Audit Office criticised Cambs health contract

National Audit Office criticised Cambs health contract - Credit: Archant

An independent investigation into the collapse of a £750 million contract to provide mental health and community services for adults and older people in Cambridgeshire blamed “lack of commercial expertise” for its failure.

The National Audit Office (NAO), said the Cambridgeshire and Peterborough Clinical Commission Group and UnitingCare Partnership “could and should have foreseen” the risks.

The contract led to losses of £9 million in procurement costs and another £16 million when the contract was terminated in December last year after only eight months.

The two health bodies entered into a £726 million, five-year agreement to provide core services for adults and older people, which were set to revolutionise the delivery of care and plug a £250 million funding shortfall.

“This contract was innovative and ambitious, but ultimately an unsuccessful venture, which failed for financial reasons, which could and should have been foreseen,” said Amyas Morse, head of the NAO.


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“It had the strong potential to join together all bodies in the local health economy and to deliver better patient care. However, limited oversight and a lack of commercial expertise led to problems that quickly became insurmountable.”

It said the termination of the older people’s contract suggested the health sector “may not have learned lessons about assessing and managing risk when working with a private provider”.

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Commenting on the report UNISON regional organiser Jo Rust said: “This proves the dangers of running the NHS like a business. It also shows that absurd claims are often made by organisations and private providers about financial savings and efficiencies without a shred of evidence.

“Not only is this yet another failure in trying to create a market in the NHS, but questions need to be asked about how much money was wasted in trying to bring this off - money that should have gone into patient care.”

The report acknowledged that the CCG was facing a funding shortfall of £250 million in the five years till 2018/19 and is one of the most financially challenged CCGs in the country.

The UnitingCare business case predicted estimated savings of £178 million to the local health economy by 2020, mostly by reducing inappropriate emergency hospital admissions.

A contract was signed in November 2014, despite a number of uncertainties and outstanding issues, and launched the following April. By May 2015, however, UnitingCare was requesting £34 million of extra funding for the first year and the contract collapsed when the CCG said no further funding was available.

The CCG has said it accepts the NAO’s findings and the suggestions contained in the report.

“It is clear that there was a wide disparity between the CCG’s contract expectations and UnitingCare’s expectations of income. The CCG recognises that there were too many outstanding issues at contract signature and that there was also gaps in the procurement advice the CCG has received. There is much to learn, and where the CCG has been able to, changes have already been made.

“We continue to support the model of care that is now being delivered locally and we are working closely with all our health and care partners to ensure that patients receive good outcomes from the care they receive within the resources available to the health and care system as a whole.”

Keith Spencer, chief executive of UnitingCare, said both parties had concluded that the arrangements were no longer financially sustainable.

A joint statement from the two organisations behind UnitingCare, the Cambridgeshire and Peterborough NHS Foundation Trust and Cambridge University Hospitals NHS Foundation Trust, said: “We believe that the report is balanced and provides clarity on the reasons why the contract ended.”

The CCG said: “It is clear that there was a wide disparity between the CCG’s contract expectations and UnitingCare’s expectations of income.

“The CCG recognises that there were too many outstanding issues at contract signature and that there were also gaps in the procurement advice the CCG has received.”

It added there was “much too learn”.

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