This is the fourth consecutive report that I have provided to the Parliament on NHS Tayside, highlighting a series of significant concerns on financial, performance and governance issues. Today’s report sets out NHS Tayside’s worsening financial position and the increasing challenges that it faces in meeting its financial and performance targets. It provides an update on events over the past financial year, including the arrangements for the departure of the former chief executive.
The external auditor gave an unqualified opinion on the 2017-18 accounts, which means that the accounts provide a true and fair view of the board’s financial position and that there are no significant errors. However, she highlights several areas of concern.
For the past six years, the board has required brokerage from the Scottish Government to achieve financial balance. The board has a total of £45.9 million outstanding brokerage and further brokerage will be required. In June, the board approved a one-year financial plan for 2018-19, which identifies a potential deficit of £18.7 million for the year. The board’s financial position has been compounded by the mismanagement in previous years of e-health funding and endowment fund moneys.
In October, the Cabinet Secretary for Health and Sport announced that the Scottish Government will not seek repayment of brokerage that was accumulated up to 31 March 2019 by territorial national health service boards. Although that provides NHS Tayside with breathing space, it does not address the underlying financial challenges that the board faces.
In previous reports, I have highlighted NHS Tayside’s expensive operating model compared with those of other boards. It is a main factor in the financial challenges that the board has faced over the years. NHS Tayside recognises that, and its transformation programme will be key to reducing the cost base.
By June 2018, there was still limited evidence of sustainable service redesign and transformation. The board achieved efficiency savings of £46.8 million in 2017-18, but only 36 per cent of those were recurring savings, and its net expenditure increased from previous years.
The new senior management team has reviewed NHS Tayside’s approach to transformation, and it has developed plans through a combination of long-term strategic measures and short-term efficiencies. The independent assurance and advisory group, which was set up by the Scottish Government, was due to provide a progress report on NHS Tayside’s transformation programme in November. I understand that the committee received the report overnight and will review it in due course.
Several senior staff have left the board over the past year, and an interim chief executive, an interim chair and a new director of finance took up post in 2018. The auditor reviewed arrangements relating to the former chief executive’s departure and identified several errors in the process and a lack of good governance. The appointment of a new chief executive was announced on 28 November, and a recruitment exercise is under way to appoint a new chair before the end of the financial year.
NHS Tayside urgently needs to set out the detail of how it intends to achieve financial sustainability. In particular, it needs effective and stable leadership to drive forward its plans for transformation.
As always, we will do our best to answer the committee’s questions.