“Overview of the NHS in Scotland’s performance 2008/09”
Agenda item 2 is a section 23 report: “Overview of the NHS in Scotland’s performance 2008/09”. I welcome our witnesses, Dr Kevin Woods, from NHS Scotland; Dr Harry Burns, the chief medical officer; John Connaghan; and John Matheson. Do you want to make any introductory remarks, Dr Woods?
Very briefly, if I may. Good morning, everyone. We welcome the opportunity to give evidence this morning on the overview report. The report highlights significant achievements by NHS Scotland up to the end of 2008-09. In particular, I draw the committee’s attention to the performance of the national health service against the challenging performance targets that were set and the fact that, in that year, we achieved an excellent financial outcome, having secured a position very close to recurring financial balance.
Thank you very much for that. We are pleased to have Dr Burns with us.
Yes, we believe that we can do that. We are committed to continuing our quality improvements, and we see our pursuit of quality as being linked to our policy on improving efficiency. We have invested considerable amounts of money in equipping the health service with the tools to do that, and we believe that we can continue to make progress on all our performance targets.
Information about the number of doctors and nurses that you require to deliver continual improvement in the health service is coming out in a piecemeal fashion. Why is that? If there is a planned quality improvement strategy, why have the boards reported on staffing levels in the way that they have done over the past few months? Why was it not spelled out clearly that they do not need as many doctors and nurses?
The information was, of course, ultimately published on 3 June in a collective picture of workforce projections. Every year, boards have been required to produce workforce plans in their more general work on the preparation of local delivery plans. That is intended to demonstrate to us how they will achieve the targets that have been set. We in central Government have always taken an interest in those plans.
Are the doctors and nurses who have expressed concern that reductions in staffing levels will potentially lead to poorer-quality services just plain wrong?
We are all concerned to ensure that we maintain the quality of services. An important dimension of our approach has been the commitment to establish a monitoring group. That proposal builds on the strength of partnership working, which is an important feature of our health service governance arrangements. Members of the committee will know what those arrangements are at the local level; we have similar partnership arrangements at the national level. I am a co-chair of the Scottish partnership forum, which brings together employers, the Government and trade unions. We wanted to ensure that we had arrangements in place through which concerns, if they existed, could be aired and considered, and that those discussions would inform the development of local plans. We understand that, in a time of change, there will potentially be concerns about service change, but we believe that we have well-established machinery in place to enable people to contribute to local discussions and to contribute at the national level, too.
Finally, on the same issue of staffing levels, what are you doing to curb the significant growth in the number of highly paid staff who work in the NHS across Scotland? In addition, what do you intend to do to pull back and curb the very significant salaries that have been paid, under successive Administrations, to those at the top of the NHS in Scotland?
I am sure that you have looked at the detail in the workforce projections, where it can be seen that the group with the largest reduction, at 7.5 per cent, in whole-time equivalent posts over 2010-11 is indeed management. Further, management pay in Scotland, out of the total NHS pay bill of £6.1 billion, is about £100 million, and that pay is subject to ministerial direction. That arrangement was put in place eight or nine years ago, and management is the only group of staff in the NHS whose pay is directly under the control of ministers. For other groups in the NHS, there has traditionally been a very important role for independent pay review bodies informing ministers.
But when people receive salaries approaching £100,000 a year, and indeed beyond that, they do not need annual increments, do they? Will you recommend to ministers that something should be done to pull back both the number of such posts and the level of the salaries that are currently paid?
I think that the Government has made it very plain that there will be a pay freeze for senior salaries. You will appreciate that that is the context in which ministers will have to make decisions about what the levels should be.
Will you recommend to ministers that something should be done about the salaries that are paid to senior NHS staff in Scotland?
Earlier in the review, the Government referred some of the issues around senior staff salaries to the Senior Salaries Review Body. Clearly, as we gather together all the information on this, ministers will be provided with advice. I fully accept that there is a need for pay restraint generally; I think that that is a well-established public policy in Scotland. Recommendations that may go to ministers will be framed in that context. Beyond that I am not really able to elaborate at this stage.
Okay, thank you.
Good morning. At our previous evidence session, I and my colleagues around the table were able to congratulate the chief executives of different health boards on some fairly significant achievements. In the report, for example, the numbers of deaths from cancer, heart disease, stroke, AIDS and suicide are down, waiting times are down and hidden waiting lists are gone. I am happy to do that again, regardless of what you are paid. I put on record my opinion that the report shows that you have done an excellent job recently.
Thank you very much for your comments on the performance of the NHS. The report reflects well on the efforts of health service staff the length and breadth of Scotland, and I agree that they are to be congratulated on what they have achieved.
In June, we published a progress report on the NHS Scotland efficiency and productivity programme, which contains a number of examples of good practice relating to the improvement of the patient experience, well-organised boards and the reduction of ward supply costs. Those are exemplars for the whole service. On top of that, a central improvement support team exists to spread best practice across all NHS boards. On that group’s website, you will find all the examples of good practice that we can muster in Scotland, which are available to all NHS boards.
There is concern about whether the NHS will be able to sustain the 2 per cent efficiency savings without services being affected. Are you confident that they can be sustained? Nicola Sturgeon, the Cabinet Secretary for Health and Wellbeing, has guaranteed that quality of service will not be affected by the efficiency savings, and a quality strategy has been published, to which Dr Woods referred in his opening remarks. At the evidence session in March, we were given as an example of service redesign—which is where the chief executives said that most of the savings would come from—the fact that poor practice in operating theatres, late starts and early finishes, and so on had been improved on.
I will do my best. I read the Official Report of the discussion with the chief executives and thought that it was very interesting. On efficiency savings, they made the important point that there is a limit to which you can take off 2 per cent in slices and that you actually have to look at redesign in a broader sense. Mr Calderwood’s example around operating theatres was a very good one. He gave another good example regarding the rationalisation of laboratories in NHS Greater Glasgow and Clyde. From his evidence, I seem to recall that, as part of the board’s reconfiguration of acute services, it has been able to restructure those services and to secure and maintain the appropriate quality but also release resources.
I appreciate that.
On the sharing of good practice, you said that there is a practice support team that has a website. Is that team doing anything proactively? I assume that it does not simply rely on health boards taking a look at the website when they feel like it. Is overall co-ordination going on?
The simple answer is yes. The website is not just passive. We encourage the transmission of best practice through helping boards with expert advice. Perhaps a good example of that is where we combine two or three programmes. At NHS Highland’s annual review yesterday, we heard about telehealth services in Argyll and Bute, which can combine the best practice from outside NHS Highland and deliver it to remote and rural locations. The example that we heard about yesterday showed a reduction in hospital admissions of some 91 per cent for respiratory patients in Bute and a 41 per cent reduction in general practitioner attendances. Those are all good examples of our helping boards to reach best practice.
Dr Woods, may I return to a comment that you made about what the chief executives had said? Do you disagree with their view that the salami-slicing approach is not sustainable?
Do I disagree with their view that salami slicing is not sustainable?
Yes.
No—we need to do all those things. As we have said, we wish to continue with the 2 per cent savings; we need to consider everything that we do, and to examine ways of improving quality and efficiency. We need to do all that.
I understand that, but the chief executives said that the salami-slicing approach is not sustainable. Are they wrong?
No, I do not think that they are wrong.
So, they are right.
They are saying the same thing that I am saying, in a sense: that approach has a place, but it is not sufficient.
No—the chief executives said that it is not sustainable. They did not say that salami slicing has a place but that it is not sufficient. It is either sustainable or it is not—I am asking you whether the salami-slicing approach is sustainable.
If the only thing that we did was simply to take off 2 per cent, we would not achieve what we need to. We need to consider how we organise and do things, and that is what has been reflected.
From the examples that Dr Woods has given, I am finding it difficult to work out his understanding of the term “efficiency”. How would you describe “efficiency”, Dr Woods?
We are trying to secure the same or more outputs while reducing the level of inputs.
Could a huge amount of savings be produced by having, for instance, just one health board for the whole of Scotland?
We have not done the calculation for that, but there possibly would be savings. It would be an interesting calculation to do. You will recall that in 2004 we abolished trusts in Scotland and adopted single-system working. Although I cannot recall the figures, there were savings there.
I go further back than that—you probably do, too, Dr Woods, looking at you. You will remember when trusts did not exist, and we had only health boards. We have had two reorganisations within my lifetime.
At least.
Of course it would save a huge amount of money to have just one board. We would not have all the chief executives and all the finance directors, and you would probably not need a chief medical officer and a head of the health service in Scotland. Your own job might become redundant—I think that you are one of the three top-paid people in the Scottish Executive, judging from what I saw the other day. That would be a huge saving, would it not?
Potentially, but one would need to have a well-thought-through, properly presented business case that considered the existing cost structure. We would apply that approach to all changes on such a scale. Intermediate arrangements of some kind would still need to be put in place. The short-term costs and long-term benefits would need to be weighed up.
There would be losses in terms of local input, in Aberdeen or Orkney, for instance.
Potentially. You make a good point, if I may say so: people greatly value local health boards. Although the health service functions in an integrated way and as a whole for people in Scotland, people nonetheless want to have access to a local organisation that they believe should be responsive to their needs and concerns. That aspect would have to be weighed as well.
Which brings me to a subsequent question. Local MSPs in Lothian had a meeting recently with NHS Lothian to discuss its plan to reduce the number of its nursing staff by 333. Would you consider that to be an efficiency saving?
I think that the board is saying that it can deliver everything that it needs to achieve with the workforce changes that it has described and that it intends to achieve those changes through natural wastage, not filling vacancies and staff turnover. In that respect, no one is going to lose a job, but there will be fewer job opportunities at the end of the process.
And a much inferior service to the public. Surely 333 nurses in NHS Lothian are not surplus to requirement.
I am looking for the Lothian data among my papers. In Scotland as a whole at 1 April this year, there were 59,257 nurses and midwives. We should remember that the projections are not necessarily cast in stone: boards must work their way through them. We are determined to apply downward pressure, so that boards can try to achieve savings in other ways. However, in Scotland as a whole, the projections suggest a decline of 1,500, which is 2.6 per cent.
Professor Barbour and Dr Winstanley actually flunked the meeting, because they knew that this was—maybe that was not the reason, and I am reading too much into it. However, they did not attend the meeting; it was chaired by the vice-chairman, so we did not get an explanation. Surely common sense indicates that if you take 333 nurses away from the staff in a health board, there must be a reduction in service, otherwise it beggars belief and is a miracle like that of the loaves and the fishes.
I do not believe that it is impossible to achieve that reduction. We have discussed in this committee over the years the need for greater efficiency and productivity in the health service. What really matters is that we can demonstrate that the need for nurses or, indeed, any other group of staff has been carefully considered, using methods to assess the needs of patients and the skills mix of nursing and other staff. In that regard, it is important for the committee to be aware that we require all boards to use particular methods to examine the relationship between the needs of staff and the numbers and skills mix of nurses. A great deal of work has been done with colleagues in the nursing profession and with their staff-side partners to ensure that those tools are fit for purpose. We can demonstrate through that work that we are getting the balance right. However, I understand Mr Foulkes’s point. What I am trying to convey is that that is why we have put in place the arrangements that we have. We must ensure that, as boards address the need to improve quality and balance the books, concerns about quality are properly addressed.
A last question, then. If one of those nurses came to me—as I am sure that they will—and told me what she did in the hospital then asked what would be lost if your job, for example, were to go, how should I reply to her?
First, you might want to establish whether she was moving on to something else. We would not—
I think that you misunderstand me. What if she asked, “What would happen if Dr Woods lost his job?” Would that be an efficiency saving? Would it damage the health service? How would I explain to her the importance of your job—not you personally, but your job?
You would refer to the role that I play in advising ministers, providing leadership to colleagues in the Scottish Government and contributing to the Scottish Government and the NHS as a whole. The point that needs to be considered is not my particular role. All of us who work in the public service need to understand and be prepared to address how we can do things differently. That is really all that I can say.
Good morning, Dr Woods. I will follow up some of the questions that Lord Foulkes and other colleagues have put to you. Some of them go to the heart of committee members’ concerns about the Audit Scotland report and what we have seen since, in particular the various announcements about reductions in staff counts in different NHS boards and their impact on services. We are looking for reassurance from the Scottish Government that there will not be an adverse impact on the quality of care.
I can give you a complete reassurance that that is the focus of our work. We are just embarking on the round of annual reviews, and the second item on the agenda is quality of service—quality of care. It is clear to us that we need to maintain a focus on that.
I am listening to the discussion about 2 per cent efficiency savings, workforce changes and so on. Clearly, those would be difficult to achieve if health care were static, but it changes rapidly. Like Lord Foulkes, I go back to the time before there were trusts. In those days, when I was a consultant at Glasgow royal infirmary, a gall bladder procedure was a significant procedure that required a stay of eight to 10 days in hospital. Very soon after keyhole surgery was introduced, it took a day or two for someone to recover from a gall bladder procedure. That meant that we did not need to staff nearly as many hospital beds. A whole load of surgical procedures have changed radically in the way in which staff are required to support them. It is important that, year on year, the health service considers such changes as they take place and reacts to them.
That is why one of the national outcomes is healthier life expectancy. We are trying to orientate all our work behind that.
Dr Burns described some of the reductions in pressure on the health service, but there are also huge increases in demand, because people are living longer. In a previous session, we took evidence on all the work that is being done on knee and hip replacements. There is pressure from that direction as well.
Lord Foulkes is absolutely correct, convener. However, even in the case of knee replacements, robotic surgery is coming in that will make operations much easier and require less blood transfusion, which in itself will shorten lengths of stay. Technology is changing the way in which we think about things. On hip replacements, the first port of call is now hip resurfacing, which is far less traumatic than hip replacement. Each year, we have to think about what the extra demands are and what things we can give up to meet those demands, hence the need for us to ask health boards where we can achieve efficiencies and where we can move resources around in order to meet those demands.
Thank you for the information that you have given us so far, gentlemen. In the health service, it is a wee bit of a case of being damned if you do and damned if you don’t. We have heard that life expectancy is increasing, which obviously is a success story, but the fact that people are living longer might have a great impact on the finances that the health service requires. Is that factored into the planning of future efficiencies and costs? Do you take into account the fact that we have a longer-lived and, we hope, healthier population? A number of different factors are involved, but do you consider the extension of life expectancy when you are planning future budgets?
Yes. We know, for instance, that one driver of the increased volume in prescribing is the fact that people are living longer. We obviously think about that carefully.
I do not want to jump ahead, but given what you have just said, I think that it is the right moment to ask whether you propose a shift to more primary health care rather than secondary health care. Previous NHS overview reports have stated that evidence of large-scale transfer of resources from secondary to primary and community care has been limited.
I think that you are referring to a policy that has been given the label “shifting the balance of care”. I take the point in the Auditor General’s report about the shift of resources in that way.
You mentioned that the NHS is due to achieve a 2.6 per cent reduction in the number of nurses. Is that correct?
That is the projected reduction in the number of posts, according to the table on projected changes.
Can you give figures and a percentage in relation to the reduction in the number of doctors?
Yes. The projected reduction is 68 posts, or 0.7 per cent.
The impact on nurses will be heavy in comparison with the impact on doctors.
Proportionally, the largest projected reduction is in management posts, at 7.5 per cent.
How many posts is that?
The current number of staff in post is 1,312 and the number is projected to go down by 99 posts, which represents 7.5 per cent of the total.
That is helpful, thank you.
The table has been published at national level and for individual boards. Posts in administration services are projected to go down by 1,053, or 4.1 per cent.
The largest number of projected reductions in posts—I accept that it is not the highest percentage of total posts—is in nursing staff.
It is, and of course nursing and midwifery is the largest group of staff in the health service at 59,257.
Indeed. I assume that, in some health board areas, the figures are higher than the national average and in some they are lower. What is the highest percentage of nurses that it is proposed to—
I would have to go through the table, but the data are there.
Is there a significant variation?
I cannot recall off the top of my head. I would have to look at the individual tables. What I can say—which I hope will be helpful—is that, in our dialogue with the health boards, we wanted to be sure that, to fulfil the cabinet secretary’s commitment to the importance of front-line clinical services, there was no weighting in relation to nursing and midwifery. Although we value the contribution of administrative and management staff, we wanted to be sure that we could achieve change in those areas if we wanted to. I am happy to give Mr Stephen the detail that he wants, but there are numerous pages here and it would take too long to flick through them.
You are telling us that you have looked at the figures by health board area.
Yes.
You cannot give us the figures just now.
Well, they are all published.
They are all published but—
If you get us the figures, we can circulate them to committee members.
Absolutely.
You would be concerned if there was one outlier or an area in which the figures were substantially higher than they are in others. You would have picked that up in the process.
We would want to have a dialogue with the board to explore what lay behind the figures, and to ensure that the local and national monitoring arrangements were picking up the variation. We would also want to be satisfied that the health board was using the workforce measurement tools in nursing that we talked about earlier.
How do you expect individual health boards to identify the number of individual nursing posts that are to go? What is the process for achieving that? Is there a general figure or is there a carefully structured process that identifies posts department by department or discipline by discipline?
I will talk about Glasgow, which has a big health board that makes up 25 per cent of the NHS. In our dialogue with the health board, we have asked Glasgow to explain how its proposals match its service strategy, and how the changes relate to the development of ambulatory care hospitals and the redevelopment of the Southern general hospital. We have also asked how it used the workforce measurement tools to make those assessments. That is the kind of dialogue that we have had. Of course, that dialogue is far from finished. We are covering the territory in the annual review meetings, which have started and will continue over the next couple of months.
This is your final question.
Surely the decisions that the health boards are making are driven by the scale of the savings that are required. That is the starting point. The primary objective is to achieve savings; it is not to protect services or the quality of patient care. At what point in the process would a health board say that its savings target was prejudicial to patient care or the quality of service? Will everyone in the NHS accept a minister saying that services are secure and patient care will not be affected?
We are pursuing all the objectives that you have described, not one to the exclusion of the others. As I explained, we are very committed to driving up the quality of care. We are also committed to improving the efficiency and productivity of the health service, and we are committed to ensuring that the health service responds to the changing needs that exist—
But there becomes one fixed savings target and a single figure—
Let Dr Woods finish. Then we will move on to questions from Cathie Craigie.
I am sorry—could you repeat what you said, Mr Stephen?
In every health board, there becomes one fixed savings target—a single figure that the health board is trying to achieve in efficiencies and savings.
The 2 per cent?
The 2 per cent is part of it, but the overall budget is probably the most fundamental part.
We encourage boards, if they can and if they have well-thought-through plans, to exceed the 2 per cent target because, if they do, they can reinvest those resources in new services. The existence of that incentive to generate more than 2 per cent efficiency savings is important. Indeed, a number of boards have efficiency targets of more than 2 per cent.
Thank you, that is helpful.
Good morning to you, Dr Woods, and your colleagues. You have mentioned Glasgow a couple of times this morning—the redesign of the services there and how resources have been invested in other areas. That is one issue that we explored with the chief executives, as I am sure you will be aware from the Official Report.
Change can be very uncomfortable. Over the years, we have seen many controversies about proposed changes, and the health service has learned many lessons from them. Put simply, there are two important lessons: the need for engagement of staff, and the need for engagement of the public from the outset in the development of proposals for change. We have tried to ensure that that happens in a number of ways.
I think that we will leave for another day the question whether elections to health boards were a wise use of scarce resources.
I have to say that I am looking forward to seeing the outcomes of the pilot. I support the principle of health board elections—and, indeed, have supported the pilot—but my intelligence on the ground suggests that the process has not been as successful as some of us had hoped. However, we will leave that issue hanging on the wall until we see the outcomes. I might well have to eat my hat in some places.
Notwithstanding what the convener has said, I have met all the newly elected—
No, no—let’s not go there.
Not today, then.
It could take us down a whole different track.
I know—I could talk about the issue for hours.
There are perhaps two dimensions to that question. First, anyone who has visited an ambulatory care centre will have seen the incredible services that it can provide with results such as the advance that has been made in health care in Glasgow. However, as Dr Burns will tell me, planning for these centres started 20 years ago, which shows that it can take an enormously long time to illustrate what certain changes will mean and convince people of that. The point, of course, is how we illustrate the benefits of these measures in a tangible way for people.
I do not know, but you are the people charged with trying to find the best way of doing things.
I will say something about Lanarkshire and then something about Ayrshire.
I am sorry; I just used that as a specific example of which I have experience.
Can you be brief, as we really need to move on?
I will probably not be able to cover all the points that I was going to make. I think that I covered the essential points of our policy earlier. I do not wish to be discourteous, but given that time is short, I do not want to reiterate the things that I said earlier about shifting the location of care.
No matter the fledgling nature of some of the democratic institutions that are forming, I would much rather have elected bodies of some sort than unelected bodies. I think that the bodies need to be given an opportunity to grow and develop.
The two pieces of work that I described are intended to remedy shortcomings in some of our planning and costing methods, which have been considered previously. We are trying to put them right.
That is encouraging. Audit Scotland’s overview report said that no link existed between specific activities and their costs. Are the measures that you describe addressing issues such as not knowing the relationship between cost and activity and therefore the benefit?
We are doing work, which I have not mentioned, to review the cost book and improve its quality. The context for some comments in the report is that our approach to costing in Scotland is not similar to that in England, which was designed for the payment system there. That is called payment by results, but it is actually payment for activity rather than results—I hope that my comment is not considered inappropriate. In England, detailed costing is needed to support the approach to competition and contestability. As our health service in Scotland is designed differently, we have not gone down that route. Nonetheless, we are committed to improving the quality of our costing information and ensuring its reliability and consistency.
The committee has noted many times that data and information are not available nationally in Scotland and that they live in various health boards. Is a move being made to provide the committee and other interested bodies with the national picture on a range of indicators, particularly in health care? A common message throughout our meetings on health matters is that we do not have nationally collected information.
I do not deny that we can always improve. However, I will add a couple of points. Audit Scotland submitted to the committee—I do not remember precisely when—a report on the activities that we undertook to improve the data that ISD Scotland holds at the national level, for instance. The conclusion of that discussion was that we were making quite a bit of progress.
You said that sometimes the questions that we ask of national data sets cannot be answered. One question that we asked after considering the overview report concerned the number of young people who present to A and E under the influence of alcohol. Anecdotally, that appears to be a growing problem. We have examples from specific health boards where that is the case, but we have received a letter from NHS Grampian that states:
As part of our e-health strategy, we are standardising A and E systems across the country. That is an important starting point. You have referred to the work that is under way in ISD, which will improve the quality of those data. We will have further discussions with ISD about whether we can ensure that some data are captured. There are really difficult issues relating to definitions, standardisation and so on, to get the quality right. I know that the CMO has been looking into the issue. I invite Dr Burns to comment.
First, the number of very young people attending A and E departments with alcohol-related problems is small compared with the overall problem of alcohol, so it is subject to significant year-on-year variations. Small numbers—an extra dozen a year across Scotland—can double the total. We are always cautious about interpreting statistics that involve small numbers.
It is flat, so it is not increasing.
The information that I have up to 2008 does not show a significant increase. I am talking about hospital discharges, not A and E attendances. Adult hospital discharges associated with alcohol are increasing consistently, but the number involving under-15s is relatively small.
I hope that, if we manage to get our minimum alcohol pricing policy through, the number will reduce, but it would still be useful to be able to look at national figures.
Any instance—it need only be one—of a young child presenting at an A and E department with an alcohol-related problem is a disaster. That is a life that is in some difficulty.
I will follow up on that point. You will have seen the letter that we received from Dr Strachan at NHS Grampian, with the helpful tables attached. When you drill down through the information, it seems to support what you were saying about there not being a substantial increase—in fact, there is very little increase. Such increase as there is would seem to be among the zero-to-five age range. Perhaps I am making an erroneous assumption, but I suspect that the toddlers of Aberdeenshire are not involved in drunken parties. I suspect that it is probably a case of a toddler drinking a glass of wine that was lying around the house and their parents taking them down to A and E, which is clearly a social ill but a completely different social ill from youngsters binge drinking. It would be helpful if we could get more robust data on the matter.
In my experience of reviewing a range of clinical conditions for research purposes, in such cases you would want to go back and get case records out. I suspect that, in such cases, when you pull information off a computer system you need to go a stage further and look at the circumstances involved to be certain that you are dealing with what you are talking about. I think that we need to have a conversation with NHS Grampian to ask it to go that extra stage and look at the case records of the individual children concerned.
The final issue that I wish to raise is deprivation, which I know is a matter that Dr Burns has spent some time on. Notwithstanding what Dr Woods is saying, which is that we want to see better outcomes and better results from fewer inputs—I know your reservations about the accountants and economists—there is always the worry that the impact of efficiency savings will be more severe on areas of the country where deprivation is high and will damage the attempts that are being made to improve health there. A number of recent reports have questioned the improvement in Scotland’s health, particularly in areas of deprivation, despite the fact that there have been significant increases in investment. What is your take on what the efficiency savings will mean for your strategy and our collective desire to see deprivation tackled?
The ways in which you can narrow the gap in health between rich and poor include steps such as ensuring that the poor have access to good health care. Over the years, I have looked closely at the issue, particularly in the cancer field. For certain cancers, such as breast cancer, there are differences in survival rates: rich women are more likely to get breast cancer, but poor women are more likely to die of it once they get it.
How will you be able to guarantee that the efficiency savings do not impact more severely on cities such as Glasgow and the small pockets of deprivation that are scattered across Scotland?
Under the mechanism that Dr Woods set out, the impact of proposals that come from health boards will be scrutinised. The boards’ reasons for saying that certain jobs can go will be scrutinised closely to assess the impact on services.
Either Dr Woods or ministers will have the final say on whether the job cuts will be at the levels that have been suggested, and either Dr Woods or ministers will have the final say on how money is spent and saved.
Ultimately, accountability rests with the Scottish Government, but the boards nonetheless have an important role. Our interest will be awakened if we have drawn to our attention evidence that boards are embarking on changes that do not support national and local priorities of the sort that we have been discussing.
If there are no compulsory redundancies—we have had a guarantee of that—and it is all done by voluntary redundancies, surely the vacancies will be haphazard. Some departments might lose all their staff. The people who are likely to go are the good people who have been there for a long time and who will get a good redundancy package. It is likely that the people who hang on will be those who are relatively incompetent and who know that they will not get a job elsewhere. Is that correct?
No, I do not think that it is. We are trying to manage this through turnover, which we estimate to be about 7 per cent. The loss of posts is about 3 per cent. On your point that the vacancies will be haphazard, clearly we want the boards to keep an eye on that—[Interruption.]
I am sorry. Whoever’s phone that is, can they switch it off?
Now I can get my answer.
As turnover occurs and vacancies arise, we expect boards to consider carefully their impact as part of the analysis of the situation. Some posts that become vacant might be filled because they are regarded as being particularly important to particular programmes—I am not saying that some jobs are more valued than others, but they will have to be assessed against the objectives that the boards are pursuing.
It would be grossly unfair to leave an impression that, after voluntary redundancies take place, those who remain are incompetent. I do not think that the committee accepts that view. However, George Foulkes was right to say that we could lose the accumulated experience of a lifetime invested in services. We saw that in local government reorganisation, when talented people left at a relatively young age because there was an attractive financial package. That left people who were still developing their competence and experience to shoulder the burden. There is a valid point that the burden falls on people who are left to their own devices in areas in which experience has been lost.
You have put the point far more diplomatically than I did, convener.
There are no compulsory redundancies, and voluntary severance in the way that has been described is not part of the boards’ plans. Last year, the only board that ran a voluntary severance scheme was Grampian; as far as I know, none of the other boards is planning for any scheme of that nature. We do not anticipate that the situation will unfold in quite the way that you have described. Nonetheless, if people choose to leave because they have a job elsewhere, and their post is not filled, the board will have to consider whether to keep that vacancy and how to manage it within its overall workforce projections. It is a very important point.
Cathie Craigie will make a final point.
I am flicking through the report because I am sure that it mentions something about the way in which the number of unfilled posts is calculated. Am I right in saying that? I am looking at Barbara Hurst because I am sure that there is something in the report about how that is calculated within the efficiency savings. Could you follow up on that and let the committee know how many unfilled posts there are across the boards and what the total cash amount is?
You can revert to us with that at a later date.
I am glad to say that the Auditor General looks suitably perplexed.
If you can find any information that can help with that, you can send it to us.
It might have been another Audit Scotland report.
Thank you. It has been a long meeting. I am sure that the issue will come back to the committee during the next few years as the financial implications of what we have been through and the budget that has just been announced hit us. This will be the first of many discussions to be held over the next few years.
Thank you.
We will have a break for five minutes.
Is it an official break?
Turn off the microphone.
It is an official break.
“The Gathering 2009”
I invite the Auditor General for Scotland to brief the committee on the section 23 report, “The Gathering 2009”.
Thank you, convener. The report was published today, so I have the opportunity to introduce it to the committee.
Thank you, Mr Black. I know that committee members have not had a lot of time to look at the detail of the report, so it is inevitable that our questions will be relatively superficial, but we may have a chance to come back to the matter at a later date.
You covered a number of points. With help from my team, I will do my best to provide what information we have on those issues.
It is important to put the matter in context. The EKOS Ltd report, “The Gathering: Economic Impact Assessment” concluded that the overall impact of the event had been positive for the economy. However, I concur with the convener; Audit Scotland’s report shows a cavalier attitude towards public money on the part of the Government and some of its agencies. That is a serious matter.
Your question would be best directed to the Scottish Government. We do not have knowledge of the detailed discussions that took place between the Scottish Government and representatives of the council and DEMA. My conclusion in the report is unequivocal: the press release was misleading and may well have had the sort of consequences that you outlined.
Can you shed light on whether creditors would be in a better or worse position if the press release had not been issued and they had taken action at that stage?
That would be speculation. I am not sure that we are in a position to answer your question.
I think that the City of Edinburgh Council entered into an arrangement with a creditor who had threatened to take action. Is it the case that an out-of-court settlement was reached and that there was a confidentiality agreement with the creditor?
Yes. That is correct.
Therefore, at least one of the creditors who threatened to take action potentially received some financial benefit. However, the rest of the creditors, who received assurances as a result of the press release and decided to do nothing, are out of pocket.
It is true that the council responded to a particular creditor, who had advised in October 2009 that they would instruct solicitors to commence winding-up proceedings. That followed through into an out-of-court settlement to meet an obligation to the creditor.
There might be questions that other people need to ask of the council.
The steering group of the three original public sector funders—EventScotland, City of Edinburgh Council and Scottish Enterprise Edinburgh and Lothian—had a quarterly meeting to follow up what was happening with the development of the company and the events that were due to take place. I do not know whether it is within your remit to comment on whether the funders carried out their duties at those meetings sufficiently to be aware of what was taking place with the company.
As I think I said in my introduction, the steering group had a purely advisory role, so it had no formal authority over the company whatever. It was a group that came together, really under the auspices of EventScotland, which is part of VisitScotland, to look after the interests of the public sector funding parties involved. The group met regularly and received reports, but it is clear from the audit that the quality of the financial information that it was getting was not as strong as it might have been—that is probably the central point that it is worth making.
You are probably right.
My general answer to that would be that, with the benefit of hindsight, the steering group should have constituted itself in a way that would have made it very clear to the company what financial and performance information should have been provided. It did have an arrangement whereby certain targets were to be delivered, which were important for triggering the release of funds, so a duty of care was exercised there, but the quality of information provided, particularly in relation to finances, was not as good as it might have been. I wonder whether the team can expand on that more fully.
On the financial projections that were coming in, we were obviously anticipating the overall income and expenditure figures for the whole event when it reached its conclusion. What we were saying is that it would have been beneficial if actual income and expenditure figures to date were being reported to the steering group. If then, for example, income was running below expectations at a particular point in time, that would have allowed people to challenge whether the overall projected income was likely to be accurate. If that process had been gone through, it would have perhaps strengthened the quality of the financial monitoring and the extent to which the steering group could challenge the information.
Does that suggest that a positive spin was being put on how things were developing—basically, that everything would be all right on the night?
I am not sure that we are in a position to read the minds of the people involved. I am sorry about that.
It just sounds a bit like that.
I am sorry about that.
No, that is fine. Thank you.
Paragraph 31 of the report tells us:
There was a meeting between the Minister for Culture, External Affairs and the Constitution and the company directors in April 2009. As I think I mentioned earlier, that meeting was primarily for them to discuss broadcasting issues. At that meeting, the company directors mentioned cash-flow problems and that led to the offer of a short-term interest-free loan in June.
The steering group was not told about that in April, May or June. When was it told about the arrangement?
I am not sure that the steering group was aware of the loan until after the event took place.
It was not aware of it until after the event. Okay.
The key point is that the loan was awarded under section 23 of the National Heritage (Scotland) Act 1985, which gives the Secretary of State the power to make payments to anyone whose activities appear
Convener, we would have to find out if that power transferred to Scottish ministers, and if there is a difference between a payment and a loan. I accept that the question should be directed elsewhere.
That is a significant point. Is there a difference between a payment and a loan? Was that legally competent?
I just have a couple of points. The minister at the time was Mike Russell, was it not?
It was.
You keep telling us that we will have to ask the Scottish Government to answer our questions, so who is the accountable officer?
The accountable officer in relation to the budget would be the permanent secretary.
So we will need to move quickly before he leaves.
He has already left.
Has he?
Yes. A new permanent secretary has assumed office.
Can we call the other one back?
Yes.
We can.
The company was established in the normal way, as a company limited by the share issue. Each of the directors owned one £1 share, so they have limited personal financial liability to the company’s creditors, which reflects the share investment.
Is that of £1?
That is our understanding.
So the Scottish Government loaned those people money, the council gave them money and EventScotland approved them, knowing that if they made a lot of money, they would keep it, but if they lost money, they would be liable for only £1. Is that right?
I cannot say what would happen to any profits that the company made, but it is certainly true that the financial losses of the two directors would be very small. The main consequence to them would be a loss of reputation by being associated with a company that had gone into liquidation.
What due diligence was done on those two people and the company? Until the matter arose, Jamie Sempill called himself Lord Sempill, but I have never seen him around the House of Lords. He is not a member of the House of Lords, is he?
I understand that he is the 15th Lord Sempill and so he has a seat in the House of Lords.
I am sure that he does not. I have never heard of him.
He was a hereditary member of the House of Lords in the 1990s.
What due diligence was done on the two people?
EventScotland undertook some due diligence of Red Sky at Night when the gathering idea was presented to it. Obviously, there was no company history as the company was new, so EventScotland had nothing much to exercise due diligence work on. Therefore, it looked at Red Sky at Night, because Jenny Gilmour was a director of that company and also a director of the Gathering 2009 Ltd. It has a fair amount of experience of helping to contribute to that kind of event. I understand that Lord Sempill has a more general marketing background. He is very high up in the Standing Council of Scottish Chiefs—he is convener of it. I understand that he spends a fair amount of time in America, where gathering-style events are also popular and that he has many contacts in that area.
So Nicol Stephen and I could set up a company and get hundreds of thousands of pounds of grant from the Scottish Government and the council. Is that right?
No.
That is unlikely.
It would be unlikely that you would get that, George.
As you say, only certain people would get it.
We did not validate the EKOS work in any way. That is another question that would possibly be best answered by the Scottish Government.
What is EKOS?
It is an independent consultancy.
Does Jamie Sempill have anything to do with it?
No.
That is good.
I want to ask briefly about two things. First, would the event have gone ahead if the Scottish Government had not given the loan? What would have been the consequences? Would they have been worse for everyone concerned if the Scottish Government had not given the loan? I am trying to work out why it thought that it had to give the loan.
The report says that that was in the contract that the organisation set up with WorldPay.
So the company knew about it.
The report says that the company was contracted.
Okay. It may not be an issue for this committee, but it is concerning when companies face difficulty and have a cash-flow problem because whomever they contracted to take care of internet sales is hanging on to the money. My main question was, what would have happened if the Government had not provided the loan?
Clearly, we are in the realms of speculation, but it is possible that the company would have run out of cash and would have been unable to meet its obligations. If so, it would have been trading unlawfully. It is not impossible that the company would have had to fold before the event. Given the advanced stage that the project had reached, with many tickets having been sold and many commitments having been made by providers of goods and services, it is understandable that the Scottish Government should have done as much as it could to ensure that the company got to the event.
We have not had time to read the report, as it has just been published, but I cannot help thinking that the main mistakes came early on and that the Scottish Government had little option other than to provide the loan to the company. It is just unfortunate how it all turned out in the end.
I wonder why the report has come to us on the day of its publication. I would like to find out how that came to be, as I do not recall another occasion in the lifetime of the Public Audit Committee when it has been asked to examine a report that has been released and put on the table that very morning. I do not recall the matter being on the committee’s agenda previously. There is plenty of opportunity for the committee to consider the report in depth. The danger is that members will rush to scandalous judgments and pick out key aspects of the report that reflect their point of view.
I am responsible for the timing of the publication of all reports in my name. There are two factors to bear in mind in relation to this report. First, members of the team had to work hard to allow me to lay the report before the summer recess; I am grateful to them for that. We have been up against a time limit.
I accept that explanation, but committee members are poring over the pages as we sit here, trying to pick out noteworthy points. It is difficult to do that when particular items stand out. The balanced overview that the Auditor General gave earlier painted a slightly different picture from that which some members have chosen to portray by picking out particular items, although it is entirely up to them to do so.
Hear, hear.
By the SNP, you mean.
I think that George Foulkes wants to come in, but first I want to confirm some of the figures. We are talking about £490,000 of public funding, £382,000 that was written off by public organisations and £344,000 that is owed to private creditors. Is that correct?
That is correct.
So we are talking about £1,216,000—most of which is public, and £344,000 of which is private—for an event that was, according to all reports, largely ignored by the Scottish public. Those figures are accurate.
I am not clear on this: is there a plan to hold another one of these events?
I believe so, but I do not think that the Auditor General can go into that. If we decide to do anything, we can ask ministers or officials.
The Auditor General has made recommendations for the future.
We can take that up with the Scottish Government.
In his response to Willie Coffey, the Auditor General said that the team had worked hard to publish the report before the summer recess. Why did it have to be published before then? I too am finding it difficult to read the report—which is no doubt very good—while I am sitting here. What was the rush?
All our reports are produced as speedily as we can manage, so that the Parliament and the public can get whatever assurance we are able to provide. This report was no different from any other in that respect.
We are having an attack on the Auditor General.
No, we are not going to get into that. Points are being made and answered. Is there anything else that has not been covered?
The Auditor General mentioned that his team had not had time to validate the EKOS report. Does he plan—or have the power—to examine that report? The EKOS report said that the gathering generated £10.4 million of additional tourism revenue, so it should have run at a profit. That raises more questions around it.
Our colleagues in the Economy, Energy and Tourism Committee are undertaking an inquiry into homecoming Scotland 2009 and the gathering. I assume that they will have the opportunity to go into the detail of the EKOS report, which tries to put a nice gloss on what has been a financial disaster. We will leave it to that committee to pursue the matter. Is there anything else?
I understand that the reports are produced as speedily as possible, but was the Auditor General asked specifically to have this report ready before the summer recess?
No—the decision was entirely mine. The alternative would have been to hold off the report until after the summer recess. In view of the interest in the matter in Parliament and the time lapse since the event, it seemed reasonable to attempt to get the report to Parliament before the recess. That gave me the opportunity to present it in the first instance to Parliament, rather than the matter continuing to run with much speculation in the media.
I thank the Auditor General for the report, which we will no doubt come back to.