© National Audit Office 2024

Investigation into the UK Health Security Agency’s health security campus programme

UK Health Security Agency

Session 2023-24
28 February 2024
HC 553

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Report by the Comptroller and Auditor General

Ordered by the House of Commons
to be printed on 27 February 2024

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

Gareth Davies
Comptroller and Auditor General
National Audit Office

20 February 2024

Investigations

We conduct investigations to establish the underlying facts in circumstances where concerns have been raised with us, or in response to intelligence that we have gathered through our wider work.

The health security campus programme (the programme) sits on the Government Major Projects Portfolio. The Infrastructure and Projects Authority (IPA) recorded an ‘amber’ rating for this programme in its early years before downgrading this to a ‘red’ rating in 2021-22, meaning that it regarded successful delivery as unachievable with major issues needing resolving. It became apparent across 2023 that decisions on the future of the programme were being delayed, so we decided to investigate the issue to understand the causes of those delays.

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015084 02/24 NAO

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The National Audit Office study team consisted of:

Andrew Ellis, Rosemary Hill, Roksana Karim, Virginia Nicodemi and Tom Tyson, under the direction of Charles Nancarrow.

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Key facts

What this investigation is about

UKHSA’s health security campus programme

1 The UK Health Security Agency’s (UKHSA’s) health security campus programme (the programme) is a long-running programme that aims to enhance and replace UKHSA infrastructure, most importantly its highest containment laboratories, which are essential for protecting the nation against potentially highly infectious diseases. These laboratories detect and study the most dangerous pathogens, including Ebola and Lassa fever, and more recently COVID-19. Existing UKHSA infrastructure at sites in Porton Down (Wiltshire) and Colindale (North London) are nearing the end of their operational life and, unless properly replaced, the UK would lose this capability.

2 The programme was initially established by the Health Protection Agency (HPA), a non-departmental public body that was superseded in 2013 by Public Health England (PHE). In 2021, the government established UKHSA to replace PHE. As part of that transfer of responsibilities from PHE, UKHSA took over the management of the programme. UKHSA is an executive agency of the Department of Health & Social Care (DHSC), as was PHE.1

3 HM Treasury approved an outline business case for the programme in 2015, which estimated the total programme cost at just over £500 million and identified a GlaxoSmithKline site in Harlow (Essex) as the preferred site for new facilities, including the highest containment laboratories. PHE purchased that site for £30 million in 2017. Since then, however, the programme has not received full business case approval. Total estimated costs have increased significantly, and doubts have emerged as to whether the Harlow site will be utilised, with DHSC ministers asking UKHSA to consider whether replacing infrastructure at existing sites, including at Porton Down, is a viable alternative option. While full approval of a programme business case is yet to be given, the programme has spent just over £400 million, with the bulk of this spending being on design and construction works.

4 The programme sits on the Government Major Projects Portfolio (GMPP), which comprises the largest, most innovative and highest-risk projects and programmes delivered by government.2 In its published reports, the Infrastructure and Projects Authority (IPA) recorded an ‘amber’ rating for the programme in its early years. In 2021-22 this was downgraded to a ‘red’ rating, meaning that it regarded successful delivery of the programme as unachievable, with major issues needing resolving.3 We conducted preliminary discussions with UKHSA in spring 2023 and were told that a future decision on the programme was expected by ministers over summer 2023. When it became apparent that decision had been delayed until the end of 2023, we decided to investigate the issue in detail to understand the causes for delays in the programme.

Our scope

5 Our report sets out information on key facts and decision points for the programme. It does not seek to examine and report on the overall value for money of the programme but considers key risks to manage. We look at:

the early history of the programme including the case for change (Part One);

the causes of delays in the programme so far (Part Two); and

what has been achieved at the Harlow site (Part Three).

Summary

Key findings

6 The HPA identified the need to replace its highest containment laboratories at Porton Down as far back as 2006. These laboratories are essential for protecting the nation against potentially highly infectious diseases and include facilities where scientists work to identify, study and respond to the most dangerous pathogens in the world, including Ebola, Lassa fever, and more recently COVID-19. The majority of facilities at Porton Down are over 55 years old. This can present challenges with respect to meeting the standards required by licensing bodies such as the Health and Safety Executive, which can result in increasing operational and maintenance costs for these buildings. In the last decade, these highest containment laboratories have been working with at least one known issue for 50% to 60% of the time, although this largely had no impact on service or health and safety. UKHSA acknowledges that these increasing periods of downtime present a significant but managed risk to public health (paragraphs 1.5, 1.6 and 2.9).

7 In 2015, HM Treasury approved PHE’s outline business case requesting investment of £530 million to create a new national integrated hub for public health science at a site in Harlow. The funding was to be used to purchase and adapt a site in Harlow then owned by GlaxoSmithKline (GSK) and to relocate the highest containment laboratories and workforce from sites in Colindale and Porton Down (Figure 1). Harlow was PHE’s preferred option because the GSK site had space to co-locate PHE’s existing facilities and headquarters, and the location in the London-Cambridge corridor would provide good access to academic knowledge and skills, making staff recruitment easier. It was also felt that developing a new site and then transitioning to it would provide the greatest operational continuity and resilience. PHE assessed that this option would involve lower construction costs compared with developing existing sites as the existing GSK facilities could be adapted, and set out a programme timeline to completion by 2021 (paragraphs 1.9 to 1.12, 2.2, 2.5 and 2.15 and Figure 8).

8 DHSC gave approval to PHE in 2017 to purchase the Harlow site from GSK for £30 million. Following on from the outline business case, PHE produced a business case to support the £30 million purchase of the Harlow site, and this was approved by DHSC in line with HM Treasury guidance for an investment of this value. Four main contracts were let in 2018 to three construction suppliers following the site acquisition. Since then, however, the programme is yet to receive full business case approval, and there is no clear decision on whether the programme should continue at Harlow. DHSC ministers have asked UKHSA to consider whether investing at existing sites, starting with Porton Down, is a viable alternative option (paragraphs 2.8, 2.12, 2.22 and 3.4).

9 PHE/UKHSA has refined its options appraisals for the programme in recent years, on each occasion concluding that Harlow is the best value for money option. With agreement from DHSC and HM Treasury, and in line with relevant guidance, PHE produced a programme business case in 2020, which, as with the 2015 outline business case, compared the plan for Harlow with the option of switching the programme to Porton Down. PHE concluded, however, that Harlow remained the best value option, with an estimated cost of £2 billion at that point. HM Treasury approved that business case in principle, following the advice of the Major Projects Review Group, but, as part of the 2020 Spending Review, asked for a further study to be conducted in 2021 to compare the Harlow and Porton Down options. This study reiterated that Harlow offered the best value for money, but the creation of UKHSA in October 2021 led to a further re-assessment of the options. In December 2021, the then Secretary of State supported the continued development at Harlow and UKHSA’s new Executive Committee endorsed the Harlow option in autumn 2022. This led to UKHSA producing a further programme business case in 2023, which again assessed that Harlow was the best option. It concluded, however, that it could not be built there within the £2 billion that HM Treasury had previously indicated it was willing to fund and that DHSC want to stick to (paragraphs 1.7, 2.7, 2.17, 2.20 and 2.22 and Figure 4).

10 UKHSA’s most recent cost estimate for the programme in Harlow has risen to £3.2 billion, an increase of £2.7 billion, or over 500%, from PHE’s initial estimate in the outline business case. The initial cost estimate in 2015 was £530 million (in 2015 prices, and excluding any assessment of potential inflation, contingency costs, or VAT liabilities), which HM Treasury approved. By 2020, this cost estimate had increased to £2 billion with many contributing factors, of which the key drivers included a maturing risk analysis (£248 million), increased estimation accuracy (£183 million), and additional irrecoverable VAT (£174 million). By 2023, as a result of further delays and with rising inflation, the estimated cost had risen again to £3.2 billion. UKHSA assesses that it could construct new high containment and other bioscience facilities at Porton Down within the £2 billion envelope, but this would not factor in the additional costs required to further maintain and modernise the Porton Down and Colindale sites, which would require a separate business case (paragraphs 2.12, 2.15, 2.17, 2.18 and 2.22 and Figures 6 and 8).

11 The current absolute benefit–cost ratio for the programme is marginal but there are significant potential benefits that are not included. UKHSA’s most recent assessment, in 2023, was that the benefit–cost ratio for Harlow was 1.02, meaning that the benefits only just outweigh the costs. Porton Down has a ratio of 0.86, meaning that the costs outweigh the benefits. UKHSA assesses that the main benefits of both are the delivery of new and enhanced facilities with updated laboratories and improved capabilities for UKHSA, but in addition to this Harlow is seen to represent a quicker way to realise benefits. Both assessments of benefits have potentially significant non-monetised benefits that are not included, for example, the fiscal transfer costs that could be averted as a result of mitigating a future pandemic (paragraphs 2.10 and 2.11 and Figure 5).

12 UKHSA’s current assessment is that, if the programme remains in Harlow, at best that site will become fully operational in 2036, 15 years later than the initial timeline. When the initial outline business case was put together in 2014, PHE’s timeline suggested that the programme would be completed by 2021. Delays to the programme due to uncertainty over the scope, location, costs and a lack of funding now mean that the best-case scenario might see Harlow become fully operational in 2036. Switching the programme to focus on maintaining and modernising Porton Down and Colindale could lead to further delays as design work would largely need to be reset and key construction contracts would have to be reprocured (paragraphs 2.2, 2.4, 3.3 and 3.6 and Figure 3).

Progress at Harlow

13 UKHSA, and its predecessors, have spent just over £400 million on the programme at Harlow up to the end of October 2023. This is around 75% of the initial cost estimate that was approved by HM Treasury in 2015. The largest elements of that spend have been on design, revenue, project/programme support and management, and construction costs, at £91 million, £89 million, £76 million and £66 million respectively, and the £30 million that was spent on acquiring the site. The majority of these costs would be written off if the programme elects to pivot to Porton Down, though some value would be recuperated through the sale of the site and from existing design work (paragraphs 3.2 and 3.3 and Figures 10 and 11).

14 UKHSA suspended all its main construction suppliers in 2022, after DHSC, in agreement with UKHSA and HM Treasury, reallocated funding to other departmental priorities amidst continuing uncertainty as to the preferred location for the programme. Three main suppliers were appointed in 2018, tasked with completing enabling and design works before moving on to construction across the site. All three have completed a significant proportion of enabling works at Harlow alongside significant design work. In March 2022, amidst continuing uncertainty over the preferred location for the programme, DHSC agreed with HM Treasury and UKHSA to reallocate funding to other departmental priorities, as part of the Living with COVID-19 strategy. Consequently, UKHSA suspended contracts with its suppliers at a cost of over £2 million, and has not been in a position to remobilise them since. Between March 2022 and October 2023, the programme spent £2 million on running costs for the Harlow site, including £1 million on security. UKHSA has asked suppliers to continue to provide some advice, but they are all contractually free to walk away from the programme. With continued uncertainty around the programme, a key risk that UKHSA is currently bearing is that key suppliers do leave the programme or there is a failure in the construction supply chain (paragraphs 2.9, 2.22 and 3.4 to 3.6).

Concluding remarks

15 Replacing and modernising UKHSA’s facilities through the programme is of crucial importance to ensure the UK has the capabilities to identify, study and respond to the most dangerous pathogens in the world. Yet the programme still has no clear decision on where it should be located, despite a site having been purchased in Harlow back in 2017 with an original timeline that would have seen the new site fully operational by 2021. The government is committed to the programme but has not yet made a decision on the programme’s location. Over six years on from purchasing the Harlow site, very little progress has been made and just over £400 million has been spent against an initial total cost estimate of just over £500 million. Revised timelines show that, at best, the programme might be fully operational in Harlow by 2036.

16 PHE’s original estimate of the programme cost was plainly wrong, and the full implications emerging from design development, as well as the inclusion of contingencies, VAT and inflation, led to significant cost increases through to the programme business case in 2020, which was approved in principle by HM Treasury. The latest total programme cost estimate as of the 2023 business case is £3.2 billion, with changes to the scope and delays to the timetable, with an ensuing impact on inflation, contributing significantly to pushing up costs. We have seen similar challenges in other major government programmes, where decisions to proceed were not accompanied by sufficiently robust and realistic assessments of affordability.

17 Since 2022, UKHSA has suspended all main construction suppliers on the programme, and the programme has essentially stopped. UKHSA has been asked repeatedly by HM Treasury, DHSC and relevant ministers to re-evaluate whether Harlow is the best value for money option. It has consistently concluded that it is, but that it is no longer deliverable for the £2 billion the programme estimated it would cost in 2020. There needs to be clarity between all parties as to the way forward on this programme otherwise further delays and increases to costs are inevitable.

18 DHSC considers that delays to the programme have not affected the UK’s resilience to dangerous diseases in the short-term, as UKHSA continues to maintain and manage risks at both the Porton Down and Colindale sites. In our view, as things stand, the UK’s future resilience to dangerous diseases and value for taxpayers’ money are both being undermined by failures in decision-making for a key part of the national infrastructure.

1 The Department of Health became the Department of Health & Social Care in 2018. For ease of reading, we refer to DHSC throughout.

2 The programme was initially called the PHE science hub and is listed as such in the IPA’s GMPP reports. For ease of reference, we refer to the current programme name, the health security campus programme, throughout the report.

3 The IPA states that an ‘amber’ rating means that successful delivery is feasible, and, while significant issues already exist, they appear resolvable. An ‘amber/red’ rating means that successful delivery is in doubt, with risks or issues in key areas. A ‘red’ rating means that its successful delivery appears to be unachievable.

Part One

Early years of the health security campus programme

1.1 This part of the report gives the background and early history of the health security campus programme (the programme) and explains the UK Health Security Agency’s (UKHSA’s) role and responsibilities.

What is health security?

1.2 The COVID-19 global public health emergency has put the importance of effective health security into sharp relief, and UKHSA has a key role in providing critical national infrastructure for it. Health security refers to proactive and reactive activities to reduce vulnerabilities to public health incidents that can pose threats to the health of a population.

1.3 Successive public bodies of the Department of Health & Social Care (DHSC) have had responsibility for health security and public health.4 Until 2013, the Health Protection Agency (HPA), a non-departmental public body, had responsibility for protecting UK public health through the provision of support and advice to bodies including DHSC and the NHS. HPA was superseded by Public Health England (PHE) in 2013, and in 2021 PHE merged with NHS Test and Trace and the Joint Biosecurity Centre to form UKHSA.

1.4 UKHSA is responsible for protecting citizens from the threats of infectious diseases, chemical, biological, radiological, nuclear incidents, and other health threats. Its role is to provide scientific and operational leadership with local, national and international partners to protect the public’s health and build the nation’s health security capability. Its remit covers England, with the majority of health protection in Scotland, Wales and Northern Ireland being devolved. UKHSA holds some UK-wide responsibilities such as representing the UK internationally and in deploying specialist capabilities across the UK in areas such as radiation.

The UK’s health security infrastructure

1.5 The UK’s health security infrastructure includes a range of high containment laboratories. UKHSA has laboratories that are licensed to operate at the highest level of containment. These highest containment laboratories are specialist facilities and are essential for protecting the nation against potentially highly infectious diseases. There are laboratory spaces at Porton Down (Wiltshire) and at Colindale (North London) (Figure 2) where scientists work to identify, study and respond to the most dangerous pathogens in the world, including Ebola and Lassa fever, and more recently COVID-19.

The deteriorating state of the infrastructure

1.6 HPA realised as early as 2006 that investment was needed to ensure the capabilities of the highest-level containment laboratories. In 2008, it was estimated that the laboratories had only five years of service life left, and remedial investment and derogations have been required to keep them operational beyond that period. Between 2013 and 2022, there was at least one known issue across the laboratories for 50% to 60% of the time, although largely this had no impact on service or health and safety. In that time, all high containment laboratories had between six months and 12 months of downtime responding to critical updates where the facility was unavailable as it was unsafe to use. This can present challenges with respect to meeting the standards required by licensing bodies such as the Health and Safety Executive, which can result in increasing operational and maintenance costs for these buildings. UKHSA states this presents a significant but managed risk to public health and that replacing these facilities is becoming urgent to maintain the safety and security of UK public health. The COVID-19 pandemic has only further highlighted the critical need for resilient access to modern highest containment laboratories.

HPA and the early years of the programme

1.7 HPA developed a strategic outline case to submit to DHSC in 2008 to replace the facilities at Porton Down and subsequently received approval to produce an outline business case.5 In 2009 HPA became aware of an opportunity to purchase a site, Terlings Park, in Harlow (Essex) which was then recommended to DHSC as the preferred option by the HPA board. This option was put on hold, however, when an opportunity to purchase a site from GlaxoSmithKline (GSK), also in Harlow, emerged and was investigated in 2010. An outline business case was submitted to DHSC in 2010 with the preferred option being the GSK site in Harlow.

The transition from HPA to PHE

1.8 DHSC’s review of the outline business case was protracted, and there were uncertainties with the transition from HPA to PHE in 2013. PHE inherited a disparate estate covering 180 organisations, also taking on responsibility for the programme. Harlow was approved as the preferred option for the programme in 2014 and, in addition to replacing laboratory facilities, the relocation of corporate and headquarter functions was added to the programme’s scope. An outline business case was formally submitted to DHSC in 2014, following design work and stakeholder engagement.

The 2014-15 outline business case

1.9 PHE set out in the 2014-15 outline business case that the Harlow site would be used to create a national headquarters and a public health science hub. It described the Harlow site as a modern, fully operational facility which had space to co-locate PHE’s two large national level public health facilities, with other London-based sites and most of the headquarters function in one space, bringing together a critical mass of scientists and knowledge into a national centre for public health.

1.10 Other advantages of the preferred Harlow option in 2015 were stated as:

it could give an opportunity to bring together non-core services and develop working practices that rely on people being close to each other;

since it is within the London-Cambridge corridor it could make it easier to recruit staff with the necessary academic skills and knowledge; and

it could offer the potential to work with other bioscience centres, such as the Medical Research Council and University of London.

1.11 PHE also stated that the preferred option of a national headquarters and science hub at Harlow would have lower construction costs than equivalent options at Porton Down or Colindale as there were existing facilities at the GSK site that would only require adaptation. Additionally, it was felt that developing a new site and then transitioning to it would provide the greatest operational continuity and resilience. PHE recognised that there were significant risks related to the relocation of its existing workforce but said that these had been identified and mitigation strategies were being developed.

Approval of the outline business case in 2015

1.12 HM Treasury approved PHE’s outline business case in December 2015. In that outline business case, PHE presented a full relocation to the GSK site in Harlow as the preferred of 10 shortlisted options, down from a longlist of 22 options that considered other locations. This option was to create a new national headquarters and public health science hub at the GSK site in Harlow. Work included the replacement of facilities from Porton Down and Colindale (and the closure of the Colindale site), as well as rented office and laboratory space in central London, and construction of new highest containment laboratory facilities. We explain the progress that has been made on the programme since 2015 in Parts Two and Three.

Summary of the current governance arrangements

1.13 The programme is managed by UKHSA, and we set out the programme management and governance structure in Part Three. UKHSA is an executive agency of DHSC (as was its predecessor, PHE) and, consequently, all major approval points in the programme need to be signed off by DHSC. The programme has also been listed on the Government Major Projects Portfolio (GMPP) since at least 2012-13, a portfolio which comprises the largest, most innovative and highest risk projects. Consequently, the programme’s business cases are subject to the highest level of scrutiny within HM Treasury, through what is called the Major Projects Review Group. The programme has also received regular assurance from the Infrastructure and Projects Authority.

4 The Department of Health became the Department of Health & Social Care in 2018. For ease of reading, we refer to the Department of Health & Social Care (DHSC) throughout.

5 HM Treasury guidance requires that programmes must have a programme business case. The business case process for a project is divided into three stages: a strategic outline case, an outline business case (OBC) and a full business case (FBC).

Part Two

Delays to the health security campus programme

2.1 This part of the report examines the delays to the UK health security campus programme (the programme) and the reasons for those delays.

Overview of the delays to the programme schedule

2.2 At the time Public Health England (PHE) submitted the initial outline business case for this programme in July 2014, PHE set out a timeline that would see new high containment laboratories ready for use in July 2020 (see Figure 3). According to that timeline, by June 2021, the transition from PHE’s legacy sites would be complete and the programme finished.

2.3 That timeline has not been met. Since 2015, PHE/UK Health Security Agency (UKHSA) has created a number of business cases. Each time, estimates of costs have increased significantly.

In late 2015, PHE revised the original outline business case estimate of the programme cost to £888 million.

In 2020, PHE submitted a programme business case that included an estimated cost of £1,971 million. At the 2021 Spending Review, HM Treasury set a cap of £2 billion in response to the 2020 programme business case.

At the beginning of 2023, UKHSA created a revised programme business case with an estimated cost to completion of £2,858 million, in addition to the £345 million already incurred. In March 2023, and again in December of that year, DHSC ministers asked UKHSA to consider other options to stay within the HM Treasury spending cap.

UKHSA expects to develop a further business case once the preferred way forward is agreed with ministers.

2.4 PHE updated its expected timeline for the programme in its 2020 programme business case, with the expectation that the programme would be complete in 2031. In late 2023 UKHSA produced a new expected timeline that would see Harlow (Essex) reaching full operating capability by 2036 at the earliest. The timeline has been repeatedly delayed due to a lack of clarity over the scope of the programme, and its location, as well as escalating forecast costs and a lack of funding. We explore these causes and consequences in more detail through the rest of this part, including:

changes to the scope of the programme;

reconsideration of the location for the facility;

escalating costs; and

lack of funding.

Changes to the scope of the programme

2.5 In 2015, PHE’s vision for the programme was to create a national integrated hub for public health science that delivers the core national responsibilities of PHE. The preferred option was co-location of PHE services at the Harlow site and the creation of a Harlow national headquarters and public health science hub. The site would incorporate replacement facilities for existing PHE sites at Porton Down (Wiltshire) and Colindale (North London) and rented office and other accommodation in central London. Other features of the option included:

establishment of a PHE hub with potential for expansion and clustering with collaborative organisations;

Colindale site to close;

Porton Down site to remain as a location for Development and Production functions;6 and

other PHE functions, such as South West/South local Food, Water and Environmental facilities, would remain at or near Porton Down.

2.6 In 2016, PHE changed the scope of the programme to accommodate an additional estimated 800 staff previously based in London at the Harlow site. This broadening of scope contributed to delays to design work, and the programme team identified this increase in scope as one of the causes of increased revenue costs in 2019. In 2020, PHE’s programme business case presented revised costs and timeframes, with the preferred option for progression remaining the development at Harlow of a public health science hub and national headquarters, with the increased scope of bringing in the majority of functions from central London premises.

2.7 In August 2020 the then Secretary of State announced the creation of the National Institute for Health Protection (NIHP), to incorporate health protection and resilience functions from PHE with the Joint Biosecurity Centre and NHS Test and Trace. NIHP was renamed the UK Health Security Agency (UKHSA) in March 2021, and the programme transferred to UKHSA in October 2021. As a new organisation, and with the impact of the COVID-19 pandemic, UKHSA re-assessed plans for the programme in 2021, concluding that, while the strategic context had changed, Harlow remained the right approach. In December 2021 the then Secretary of State supported the continued development of the Harlow health security campus. This approach was also endorsed by the UKHSA Executive Committee in autumn 2022 and UKHSA’s revised 2023 programme business case presented a move to Harlow as the preferred option. This business case broadly reflected the scope in the 2020 business case but included an opportunity to partner with the Medicines and Healthcare products Regulatory Agency (MHRA). It also left open the possibility for an enduring organisational presence at Porton Down in the long term. This was to be financed by seeking additional funding through private investment.

Location of the programme

2.8 Alongside a continued lack of clarity on the scope of the programme, there has also been uncertainty about the location. Figure 4 shows that as the programme has developed, PHE/UKHSA has considered various different options across the three main sites of Colindale, Harlow and Porton Down. Harlow was seen to offer the best value for money in 2015, and it was on this basis that PHE produced a business case to support the £30 million purchase of the site in 2017. This was approved by the Department of Health & Social Care (DHSC) in line with HM Treasury guidance for an investment of this value.

2.9 Since then, every time PHE/UKHSA has revisited its options analysis, it has always concluded that Harlow remains the best value for money option. Despite this, HM Treasury and DHSC ministers have asked PHE/UKHSA for further consideration of the Porton Down option on more than one occasion. The majority of buildings at Porton Down are over 55 years old. Safety and security requirements in recent years at Porton Down have led to increased investment in that site, and there was also £41 million of investment in the site through the Vaccine Taskforce up until 2022-23. This created 18 new laboratory spaces, though these have a shorter design life than the programme’s specification and are not the highest-level containment laboratories that are critical to the overall programme.

2.10 UKHSA’s programme business case in 2023 again concluded that Harlow was the best value for money option, although with rising costs the absolute benefit–cost ratio was marginal and only assessed at 1.02, whereas the Porton Down option was seen to have a ratio of less than 1 at 0.86, meaning that the costs outweigh the benefits (see Figure 5).7 Both options involve the creation of a health security campus with new and enhanced facilities, including updated laboratories, and both generate similar kinds of benefits, but the Porton Down option would likely increase the length of time needed to construct new high containment laboratories by at least two years. This is in part due to the requirement for re-procurement of construction suppliers which may lead to further delays to realising the full benefits (see paragraph 3.6).

2.11 The assessment of the benefits for both options do not include potentially significant non-monetised benefits. For example, in line with HM Treasury guidance, consideration of the fiscal transfer costs avoided through mitigating a future pandemic are not included as a benefit. We reported in June 2022 that the total cost to government as a result of COVID-19 was £376 billion.8 Both the Harlow and Porton Down options also assume that, should there be another pandemic similar to COVID-19, they could have helped speed up the rollout of a vaccine by 14 days, and the reduced number of infections across those 14 days is taken into account in the calculation of benefit–cost ratios. However, the modelling of this does not account for the fact that bringing forward a vaccine not only impacts the number of infections across those 14 days but would also suppress subsequent infections, and so it is a conservative estimate. Other unquantified benefits that formed part of the assessment included further preventative measures and build capacity, commercial opportunities, recruitment, reputation, and environmental impact.

2.12 At a meeting with DHSC ministers in December 2023, UKHSA and DHSC were instructed to spend the early part of 2024 working up further details on the Porton Down option. UKHSA had given the advice that the Harlow option offered the best return on investment, despite having a higher initial cost than other options as it had the potential to deliver economic value as well as cost savings along with levelling-up impacts for the local area. However, ministers were still keen to see more on options that fit within a £2 billion funding package (see section on funding below). In June 2023, UKHSA had suggested that developing a new high containment facility at Porton Down could contain costs to less than £2 billion, with that funding also being enough to refurbish 15% to 20% of existing general UKHSA laboratories. This option does not, however, factor in additional costs that would be required to maintain and modernise the rest of the Porton Down and Colindale sites, work which would require a separate business case. Once this further work on the Porton Down option has been conducted, and subject to a decision on the preferred option for the programme, UKHSA expects to develop a further business case.

Cross-government collaboration

2.13 At the same December 2023 ministerial meeting, ministers asked for further consideration to be given to the prospect of UKHSA working with other areas of government who also have a need for high containment laboratories. The MHRA has long been seen as a potential partner for UKHSA at Harlow, with co-location in scope for the Health Protection Agency before 2013. The option has continued to be discussed since the development of the 2020 programme business case, but no firm decision has been reached on that.

2.14 The Ministry of Defence, through its Defence Science and Technology Laboratory (DSTL) body, and the Department for Environment, Food & Rural Affairs (DEFRA), through its Animal and Plant Health Agency (APHA), are some other public bodies with a need for high containment laboratories. We reported on DEFRA’s site management in 2022, noting that it had limited funding approval from HM Treasury at that time to progress its own programme, which includes a new science hub forecast for construction to start in 2027.

Escalating costs of delivering the programme

2.15 The estimated total cost of delivering the programme has escalated by £2.7 billion, or over 500%, since PHE’s outline business case received approval for £400 million of capital funding and £130 million in revenue funding (excluding VAT, inflation, and contingency). In the draft 2023 programme business case, UKHSA estimated the costs to completion of the Harlow option were £2,858 million, on top of £345 million of costs already incurred. Costs in the draft 2023 programme business case, the 2020 programme business case and the 2015 outline business case are expressed as single point figures, rather than as ranges, with the later estimates including risk, contingency and optimism bias. Figure 6 shows how the costs have increased each time the business case has been revisited.

2.16 In late 2015, PHE adjusted the outline business case estimate to take account of inflation and contingencies including optimism bias. With the inclusion of VAT as well, following a change to the organisation’s VAT status, and some other small adjustments PHE estimated that the adjusted cost of the outline business case was, as of December 2015, £888 million.

2.17 By the 2020 programme business case, PHE had more than doubled its estimate for the total cost of the programme to £1,971 million, an increase of £1,083 million on the £888 million in the revised outline business case from 2015 (see Figure 7). PHE attributed these increased costs to a number of factors, including £248 million due to maturing risk analysis, which meant increased risk allowances from a greater understanding of risks by external project teams, £183 million from increased estimating accuracy, £174 million from irrecoverable VAT, and £157 million due to inflation from the programme schedule being prolonged.

2.18 UKHSA’s revised programme business case in 2023 estimated a total cost to completion of £2,858 million, an increase of over £1 billion or 55% on top of PHE’s estimated cost to completion in the 2020 business case. UKHSA data suggest the increase was made up of the contributing factors below:

£360 million due to change such as design changes due to regulations, technological advances and future proofing;

£185 million from prolongation due to pausing the programme and costs of remobilising and reprocuring;

£325 million from inflation; and

£150 million from additional VAT.

Lack of funding

2.19 UKHSA needs DHSC and HM Treasury agreement to get funding approval for the programme. Figure 8 shows that, while HM Treasury approved funding for the outline business case in 2015, the programme did not get full funding approval for its 2020 programme business case, with the programme instead ending up with a one-year settlement of £129 million for 2021-22.

2.20 HM Treasury approved the 2020 programme business case in principle, following the advice of the Major Projects Review Group, but as part of the 2020 Spending Review asked for a further value for money review in light of the pandemic response and the upcoming organisational transition from PHE to UKHSA. That value for money review was commissioned by HM Treasury, and was led by DHSC with involvement from PHE and HM Treasury. A final report produced in August 2021 concluded that Harlow remained the preferred option.

2.21 For the 2021 Spending Review, HM Treasury allocated funding of £442 million to the programme for 2022-23 to 2024-25 (see Figure 9), subject to UKHSA, and DHSC ministers confirming their preferred way forward for the programme, and whether they intended to pursue the Harlow scheme only, or a combined Harlow/Porton Down approach. At this point, DHSC was working to the £2 billion programme funding ‘cap’ that HM Treasury had previously indicated it was willing to fund, reflecting the requested spend of £1,971 million from the 2020 programme business case.

2.22 Following the Spending Review in 2021, DHSC took the decision to reduce the programme’s funding for 2022-23, resulting in UKHSA wholly or partially suspending its main programme contracts in March 2022. This decision was led by DHSC priorities, with the agreement of UKHSA and HM Treasury, in the context of other budgetary pressures including the Living with COVID-19 strategy, and work on other major projects within the DHSC portfolio including on NHS spending. The contracts remained suspended, while UKHSA conducted further work progressing a new programme business case that was ready in spring 2023. This confirmed that the preferred Harlow option could not be delivered within the £2 billion funding envelope identified in 2020, and instead could cost up to £3.2 billion. This draft business case did not enter the DHSC approvals process and has not yet been formally taken to HM Treasury, as DHSC ministers are still seeking to pursue an option within the initial £2 billion funding envelope. At the end of 2023, UKHSA was asked by ministers to conduct further analysis before a decision can be taken.

6 In 2015 Porton Biopharma Limited (PBL), a limited liability company, was spun out of PHE. PBL produces vaccines and medicine on a commercial basis.

7 The benefit–cost ratio compares the benefits and costs of a project in monetary terms. A project with a benefit–cost ratio greater than 1.0 is estimated to deliver more benefits than it costs to achieve them.

8 We produced a COVID-19 cost tracker to bring together data from across the UK government and provide an estimate of the cost of measures announced in response to the COVID-19 pandemic. Available at: www.nao.org.uk/overviews/covid-19-cost-tracker/

Part Three

Progress at the Harlow site

3.1 This part of the report looks at what has been achieved at Harlow (Essex) so far and the management of the health security campus programme (the programme).

Spend on the programme

3.2 Up to October 2023, the UK Health Security Agency (UKHSA) had spent £401 million on the programme, around 75% of the initial cost estimate in 2015, with £313 million of this capital and £89 million revenue expenditure (Figure 10). Revenue expenditure is expenditure on the programme that cannot be categorised as developing an asset. Between 2016-17 and 2021-22 the programme spent an average of £52 million a year. This fell to £29 million in 2022-23. In 2023-24, up to the end of October, only £8 million had been spent. This reflects the stalled progress on the programme as funding has been reduced, and a lack of certainty over the scope and location of the programme, as set out in Part Two.

3.3 Figure 11 shows that the highest category of spend so far has been on design work (£91 million), with £89 million classified as revenue expenditure. £76 million has been spent on project/programme support and management, and £66 million has been spent on construction works. UKHSA assesses that, were the decision to switch the programme to focus on maintaining and modernising Porton Down (Wiltshire) and Colindale (North London) be taken, of the spend to date, most of the £400 million expenditure would be written off. The exceptions are around £40 million to £50 million in design work should the new building design be recycled, although further design would still be needed, and whatever costs could be recuperated from selling the Harlow site.

Commercial arrangements

3.4 The spend on design and construction works is primarily through contracts that Public Health England (PHE) procured and UKHSA now manage. Four main contracts were awarded in 2018 across three construction suppliers. These contracts were awarded as part of a two-stage procurement process, whereby the suppliers complete enabling works and design in the first stage before finalising the second stage of the contract, which allows the construction work to begin. A significant proportion of the enabling works have been completed and the designs work has progressed up to developed design stage, with just the technical design stage to be completed before construction can start .9 In order to proceed to the next stage, the construction contracts would need to be formally entered into. The programme plans the refurbishment of an existing building to provide around 102 laboratories as well as office space, in addition to the construction of a new specialist high containment and bioscience facility. These are to be supported by new arrivals, education and logistics buildings and the necessary supporting energy centre and infrastructure.

3.5 In March 2022, UKHSA suspended all three of these main construction contractors, as well as a construction project management contract, as the programme did not have sufficient funding approval to progress the work further. Suspending these contracts cost UKHSA £2.4 million (including VAT), with most of these costs reflecting the demobilisation of staff and equipment. As the second stage of the construction contracts are yet to be finalised, UKHSA expects that this represents the majority of any costs that would need to be paid should the programme not resume at Harlow. At present, those suppliers remain suspended, as UKHSA seeks a decision on the future of the programme. Although this means no work is currently ongoing at the site, between March 2022 and October 2023, UKHSA spent £2 million on running costs for the site, including £1 million on security.

3.6 UKHSA has asked suppliers to continue to provide some advice, but they are contractually free to walk away from the work at any stage, and failures in the construction supply chain is one of the main risks that UKHSA is currently bearing. UKHSA acknowledges that, if there are further delays to the programme, it will only increase the risk of suppliers walking away as well as adding to costs, as suppliers will continue to factor this risk into their assessment of costs. Should the decision be taken to move the programme over to Porton Down, UKHSA does not believe it could compliantly transfer these contracts over to that site and would have to begin the procurement process again.

Programme management

3.7 The programme is managed within UKHSA, though, as noted in Part One, with oversight from DHSC and HM Treasury on key approval points and with assurance from the Infrastructure and Projects Authority (IPA). Figure 12 reflects the latest governance structure for the programme. The programme is headed within UKHSA by the Harlow Programme Board, which has delegated responsibility from the UKHSA Executive Committee to progress the business case for the programme, and reports on progress, escalates risks and issues and seeks approval to changes to the overall programme baseline through the UKHSA’s Strategy and Change Board. The following sit below the programme board.

Programme Delivery Board (PDB), which has delegated responsibility from the Harlow Programme Board to provide strategic direction, senior oversight, scrutiny and support of programme and project level budgets, plans, progress and risk. The PDB maintains oversight of all significant changes in the wider policy and strategic context that might impact on the programme and to agree or endorse any subsequent modifications to the programme subject to Programme Board agreement.

Science and Estates Requirements Board (SER), which has delegated responsibility from the Harlow Programme Delivery Board to ensure that UKHSA requirements on science, estates, facilities, technology and systems are captured and articulated to inform the design, construction and delivery of the UKHSA health security campus.

3.8 The programme currently has an interim senior responsible officer (SRO) with delegated authority from UKHSA’s Chief Executive to deliver the programme, and day-to-day leadership is provided by a full-time programme director. Both the Major Projects Review Group and the IPA have recommended that a full-time SRO be appointed ahead of awarding the main construction contracts. A recent recruitment campaign failed to attract candidates of sufficient quality to take over the role. The interim SRO expects to be in post to manage the ongoing development of the business case, with a replacement being brought in once that business case has been approved.

3.9 In February 2022, the programme had a staff team of 92 full-time equivalent (FTE), based across multiple sites including Porton Down, London and other regional UKHSA centres, working across programme operations, management, and delivery and capability, in addition to construction, finance and commercial and leadership teams. In November 2023, there were 69 FTE staff on the programme. The programme team is made up of civil servants and service providers, and has input from colleagues from other parts of UKHSA.

Assurance reviews

3.10 The programme is on the Cabinet Office’s Government Major Projects Portfolio (GMPP), and consequently receives assurance from the IPA. The programme has appeared in the IPA’s annual report since 2012-13. The programme had an ‘amber’ rating in its early years and had a ‘red’ delivery confidence rating in 2021-22 and 2022-23, meaning that its successful delivery appears to be unachievable, with major issues with project definition, schedule, budget, quality and/or benefits delivery that need resolving. In addition to the annual report ratings, the IPA has provided assurance reviews at a number of checkpoints throughout the programme (Figure 13).

3.11 The Government Internal Audit Agency also published a report on the programme in May 2021. This report gave an overall ‘moderate’ rating, meaning that “some improvements are required to enhance the adequacy and effectiveness of the framework of governance, risk management and control”.

9 The Royal Institute of British Architects (RIBA) has a plan of work that outlines eight stages (numbered 0 to 7) in the design and construction of building projects. Stage 4 in this plan of work is the technical design phase, with construction beginning at stage 5. See RIBA Plan of Work for more information: www.architecture.com/knowledge-and-resources/resources-landing-page/riba-plan-of-work

Appendix One

Our investigative approach

Scope

1 The health security campus programme (the programme) is a proposed development of a new site for the UK Health Security Agency (UKHSA). The development is intended to provide an integrated hub for public health science, including the highest containment laboratories which are essential facilities for conducting research into potential pandemic infections and preserving the health security of the UK. In 2021, responsibility for the programme passed from Public Health England to UKHSA.

2 This study provides an overview of the programme, factors that have contributed to delays in the programme’s delivery, and what has been achieved to date. The study examined:

the early history of the programme, including the case for change;

the cause of delays in the programme so far; and

what has been achieved at the Harlow site.

3 The report has not sought to examine and report on value for money, but considers key risks to manage. Our findings are based on evidence we collected between November 2023 and February 2024.

Methods

4 In examining these issues, we drew on a variety of evidence sources, including interviews, site visits and document review.

Interviews

5 We carried out eight interviews with officials from UKHSA, HM Treasury and the Department of Health & Social Care (DHSC). These interviews were with individuals and teams with experience or knowledge of the health security campus programme. We covered a range of areas including the background to the programme, management of the programme, risk, contracting and engagement with other departments. All but one of our interviews was carried out on Microsoft Teams, with one interview taking place in person. We did not record the interviews, but we did take a note of each interview, and these notes have informed our findings.

Site visits

6 We visited UKHSA’s existing facilities at Porton Down, and the site in Harlow that has been proposed as an option for the development of the new site. During these visits we spoke to relevant officials to inform our understanding of UKHSA’s work and how the programme has developed to date.

Document review

7 We reviewed more than 100 documents provided by UKHSA and DHSC. We reviewed these documents to inform our findings and help us understand the initial objectives and set up of the programme, and how it has progressed. These documents included:

relevant outline and programme business cases;

governance documents, including programme board meeting minutes;

risk management documents, including risk management strategies and risk registers;

contractual information;

ministerial submissions;

internal audit and assurance documents;

Public Health England reports related to science hub; and

stakeholder strategy and site reports.

8 We also used in-house experts to review business cases and programme risk registers.

Data analysis

9 We analysed financial data provided to us by UKHSA on the spend on the programme up to October 2023, split by revenue and capital, and the categories of capital spend, to understand what has been spent on the scheme so far and on what. This is in addition to increases in cost to completion estimates, to allow us to understand how the programme has progressed and reasons for delays.

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