I welcome the witnesses to the meeting. Today we are examining financial stewardship in the national health service in Scotland, based on the Auditor General's 1999-2000 overview report. I understand that the facts in the report have already been agreed.
This is the first overview report on the NHS in Scotland—that is, of course, a major area of expenditure, for which you are now responsible. In light of what you have said, I agree that 1999-2000 was not a typical year, but how satisfied are you with the overall performance in the NHS in that year?
Overall, I am satisfied with the performance. That does not mean that no issues need to be addressed—indeed, the report highlights a range of issues. For an organisation managing a budget of about £5 billion to have achieved financial balance to within 0.5 per cent is quite a good outturn. I reiterate that there are issues that we need to address—we will take those very seriously.
Do you consider that, in general, NHS trusts face real challenges in meeting their health care commitments as well as in meeting the financial targets that you set for them?
Indeed they do. The whole of the NHS faces real challenges. As you can imagine, the potential demand for service and the degree of innovation in the service always produce development pressures. With the implementation of "Our National Health: A plan for action, a plan for change", we are proposing to review the finance regime in the NHS and to improve our management of the pressures in heath board areas. We might move on to discuss that later.
Current account deficits surely cannot co-exist with service improvements. How long do you estimate that the deficit will last? Is there light at the end of the tunnel?
I think that there is light at the end of the tunnel. Under the new finance regime, we will be managing NHS organisations in an area as a single entity, bringing together different parts of the organisation, which could include one trust that was overspending in an area and another trust that was underspending in the same area by an equivalent amount. We will be changing the governance arrangements to arrive at a much more sensible, integrated approach to the financial position of the various organisations within a health board area. The new finance regime will allow us to advance significantly.
I invite Paul Martin to start the questions on why NHS trusts are experiencing difficulties in achieving their financial targets.
Mr Jones, I refer you to paragraphs 3.5 and 3.6 of the Auditor General's report, which highlight the fact that eight trusts have failed to break even. When did your department become aware of difficulties with deficits? Furthermore, what action was taken locally to address the issue?
I will ask John Aldridge to answer that question, as he was working in the department at the time.
Throughout the year, we regularly monitor the financial position of the NHS trusts across Scotland. We ask them to forecast their performance through the year to find out how they will meet their financial targets in that year. However, it becomes clear only at different points of the year whether the various trusts are facing difficulties that might cause them to move into deficit. As soon as we become aware of such a situation, my colleagues and I contact the trust to identify the problems and to determine whether they can be resolved straightforwardly. If they can be, that is fine. However, if the problem is more deep-seated, we will ask the trust to prepare a recovery plan to demonstrate how it can move back into balance over whatever period of time it takes. We will obviously try to ensure that that period is as short as possible, although sometimes that is not practical because of the nature of the problems.
I am sorry if I have not picked up the point, but when exactly did you intervene in the process?
Well, we intervene in a progressive way.
When exactly did you intervene?
I am sorry. Are you talking about a particular trust or trusts in general?
Well, you can refer to a particular trust if you want to. More generally, for the eight trusts with deficits, when exactly did you intervene in the process? Did you do so when you became aware of the problem?
We intervene when we become aware that there is a possibility of a trust moving into deficit, which can happen at any time in the year. If the trust reports to us that it is moving in such a direction, we immediately make contact and discuss the seriousness of the problem and the actions that need to be taken. There is no specific date on which we become aware of the position of the trusts; it varies from trust to trust.
I am sorry to labour this point, but do you have the information about when your organisation became aware that the eight trusts were going into deficit?
Certainly. We receive regular monitoring reports from the trusts, which show when they are heading for deficit.
How regular are those reports and what form do they take?
The process speeds up over the year. We receive three-monthly reports in the early part of the financial year and monthly reports as the year draws on.
Paragraph 3.9 of the Auditor General's report indicates some of the main reasons for the deficits, such as
All the factors set out in exhibit 5 of the report certainly cause trusts to have financial pressures at various times in the year; indeed, in some cases, those factors might cause them to move into deficit. However, not all the issues will affect every trust.
But do you agree with the factors listed in paragraph 3.9?
The list gives good examples of the range of the issues that must be addressed within the NHS.
Are there any other factors that you would like to add as part of your evidence today?
No.
We have talked about seeing the light at the end of the tunnel and getting the trusts back into the black as soon as possible. Paragraph 3.15 outlines major problems for the future, such as demography and the aging population, technological and pharmaceutical change, and rising expectations.
Three points can be taken into account. First, the allocations to health boards and from the boards to the trusts are not fixed; they increase each year. Significant additional resources are going into the NHS over the next three years. That is a rate of increase over and above the estimated rate of inflation. Additional resources are available to cope with some of the issues that you raise. Secondly, it would be wrong to assume that the NHS is currently working at its ultimate efficiency level. Things could be done differently in NHS systems to improve services and to reduce costs.
I have talked to representatives of the three health boards in the region that I represent—Tayside Health Board, Fife Health Board and Forth Valley Health Board—and they say that they have made efficiency savings and have been cut to the bone. They say that they will now have to move from cutting administration and bureaucratic costs to rationing health care—they will have no option if such savings are imposed on them. You are talking as part of the Executive, Mr Jones, from your headquarters here in Edinburgh, but those in the front line have a different view. They are all saying the same thing. Perhaps they are colluding, but they are saying that they are being asked to make efficiency savings over and again and that they have been cut to the bone.
First, let me repeat the point that all health boards are being funded in excess of the rate of inflation. Secondly, I am not simply speaking from the Scottish Executive viewpoint. I have recently joined the Scottish Executive, having been chief executive of a health board in Scotland. Before that I was chief executive of an NHS trust in England.
I understand that the trusts have to get the boards' agreement on new services, yet in 1999 or 2000 some trusts made changes before agreements had been reached. There appears to be little or no control in those examples.
Before Mr Jones answers that, I must point out that you are in danger of straying into areas that are covered by other questions. I would like us to stick to—
Sorry, I will stick to the question that I asked, which is question 3.
In the NHS, one of the most difficult areas to control is clinical development, particularly in hospitals that are associated with a medical school. World leaders in clinical excellence are seeing new and different ways in which to provide services. At times, that development is incremental and can creep into the system. That is difficult to control, but you are right in saying that we must get better in that area. It is always difficult to manage an organisation financially if one is placed on the back foot trying to cover the costs of developments. We need to improve the ways in which new developments are introduced into the NHS.
How will you do that?
By having stronger relationships between those who are instigating the innovation—the leading doctors—and the trust that manages the hospital. It is critical that the right relationship between medical staff and the managers of organisations is developed. I know that my colleagues in trusts are working actively towards that.
How do you ensure that recovery plans are sound?
I will ask John Aldridge to answer that.
When we receive a draft recovery plan, we discuss it carefully with the trust and with the health board to ensure that the NHS in the area is satisfied that the proposals in the plan are not only realistic but can be delivered practically without adversely affecting patient care. That is why financial recovery can take longer than it might otherwise. We monitor the plan's performance monthly to ensure that it is delivering on the milestones that are set out. If the plan states that, by the end of a certain month, a set amount of savings or a specified set of changes to the way in which services are delivered should have been made, we check that that has happened. If the plan goes off track, we ask for a revision.
I do not want to get bogged down in the issue of Tayside, but it is an example of a recovery plan going off track. In year 1, the plan was on course to deliver the necessary savings but, in year 2, the deficit was up to £10 million because of the junior doctors working directive. Such things can crop up and they must be difficult for you to deal with.
Matters arise that can affect the recovery plan, which is why it needs to be kept under review.
How can the plan be put back on course?
Other options can be considered. Further changes can be made to the way in which services are delivered, or the time allocated for achieving balance can be lengthened. The solution will depend on what is reasonable in the circumstances. In the case of Tayside, although not all the items that were originally intended to contribute to the recovery plan have been achieved, the overall financial position for this financial year appears to be turning out as planned.
I should point out that the committee will be examining the Tayside situation at a later point.
It would be naive if in formulating recovery plans, health organisations did not take into account the fact that, every year, there are additional pressures and new developments that must be coped with. I would expect recovery plans to include contingency plans for such situations. We may not be able to forecast precisely what the issues will be, but the history of the NHS shows that there are always additional pressures, year on year, which must be taken into account in the formulation of a recovery plan—otherwise, the trusts will never get out of deficit.
You may agree changes that are necessary for a trust to get rid of a deficit, but what is the role of the general public?
As we are formulating long-term plans for the NHS, which include financial plans, we should engage the public in addressing some of the issues. It is critical to establish a relationship with the general public. I know from experience that they understand that any service—whether the NHS or any other service—must live within the resources that are available to it and that difficult decisions occasionally have to be made.
Those are not simply technical, internal matters.
No.
The financial pressures of 1999-2000 have continued into the current financial year, as paragraph 3.16 of the Auditor General's report points out. How many of the 28 trusts expect to achieve the break-even target at the end of the current financial year?
I do not have that information in front of me, but I can provide it to the committee.
So you are effectively presiding over £30 million of deficit in respect of the 28 trusts.
No—
Let us forget about percentage terms. Let us be clear.
Factually, what you suggest is not the position. Trusts in deficit had a total deficit of £29 million, but some trusts among the 28 were in surplus to the tune of around £10 million. The net deficit of trusts was less than £20 million; it was not £29 million.
The Auditor General's report makes it clear that there was a deficit of £29.8 million and you have no clear idea whether the eight trusts that are currently in deficit will achieve their break-even figures. Does it not concern you that we do not know how we will deal with that issue over the coming financial year?
No. That is not what I was saying. We have recovery plans for each of those trusts, but I do not have the details in front of me. I would be happy to send them to the committee.
The number of trusts in deficit has increased. Will that trend be reversed or will it continue? What do you predict the deficit situation will be next year or in two years' time? Will the number of trusts in deficit increase or decrease?
Our current information is the forecast position of trusts for this year. That may change before the end of the year, so I would not want to suggest that what we have will be the final position.
What responsibility do the health boards have for monitoring the expenditure of the trusts? Mr Aldridge's earlier reply seemed to indicate that the boards are missed out and that the trusts report directly to the Executive. Do the health boards have any statutory responsibility or a monitoring role, or do they stand aside in bemused amazement while trusts go into deficit?
The first responsibility for health boards is to ensure that their expenditure is contained within their cash limit. That is a statutory responsibility on the health boards. We expect health boards to take an overview of the financial situations in their areas and, when they allocate resources to the primary care trusts and hospital trusts, to take into account the financial circumstances of those organisations. Through the health improvement programme, we expect financial plans to be produced showing how a health board area will move forward and how the developments and plans proposed in the programme will be financed.
You accept that there is a gap that must be addressed.
Absolutely.
You have recognised that gap, which I hope the health plan will address.
I accept absolutely the principle of looking at health boards and trusts in total. As we put together the new finance regime, it is critical that we ensure that we have service plans and financial plans that relate to each other and which have been the subjects of effective consultation with local communities. It is clear that it is the direction in which we need to go.
I would like to raise a point of clarification. Exhibit 8 on page 19 indicates that Argyll and Clyde Health Board had an underspend against cash limit of £3.8 million.
That is correct. Every organisation has a cash position—has it made more cash payments than it has received in a year? It also has an income and expenditure position—do the financial commitments into which it has entered exceed its income? It is quite correct that the Argyll and Clyde Health Board cash position was £3.8 million, but its income and expenditure position was an overspend of £273,000.
If you look at authorities that are in deficit, do you also investigate authorities that are in surplus to find out why? They could be in surplus because they are doing something that everybody else should be copying or because they are doing something inefficiently.
We look at the total financial position of all organisations. We pay particular attention when organisations are in significant deficit, but we have to consider the overall position.
Including value for money.
Absolutely.
We will now address the very modern problem of why the level of clinical and medical negligence claims is rising and what the consequences are of that.
Mr Jones, you will agree that negligence claims are a drain on NHS resources. The rising trend in claims, which is shown in paragraph 4.7 of the Auditor General's report, seems to point to problems in the quality of health care that is provided by the NHS in Scotland. Do you have reasons why the claims for clinical and medical negligence are rising?
There are two reasons why the cash provision for claims is rising. First, we live in a society that is much more likely to sue than was historically the case. More actions will be initiated without anything else in the system changing. Secondly, the level of settlement of some claims is rising. Now, if negligence is proved, settlements can be as high as £2 million or £2.5 million. There are large claims in the system, and more people seeking to sue.
That was a clever answer, but it was not the answer to the question that I asked. I asked how you explain the fact that claims for clinical and medical negligence are rising. You answered that the cash provision is rising, but why are claims rising?
Because more people are taking action.
Obviously, claims have to be met from NHS resources, which therefore are diverted from health care. How do you intend to control this rising tide of claims?
This area is quite interesting. When you look at the information in the report, which we have been doing over the past couple of weeks, you see that while the provision that is being made for potential claims is rising significantly, as you said, the actual settlements have been fairly constant, certainly for the past five years, and have settled at about £4 million per year.
May I add to what Mr Jones said? He has explained how we might limit the financial pressure on the NHS in future, but I think that Mr Johnston was also asking about the steps that we are taking more generally in the NHS to try to reduce the number of claims that arise. A lot of the claims that are in the system now relate to incidents that happened a long time ago. We have taken steps in recent years, particularly with the development of clinical governance, to increase the awareness of all those who work in the NHS of the need to manage risks and reduce the risk of adverse incidents occurring. That is embedded in the new clinical negligence and other risks indemnity scheme, which was introduced a year ago as the new way of funding clinical negligence claims in the NHS in Scotland. The risk management culture is embedded in that.
We are talking about £84.4 million being put to one side, against £4 million in annual claims. That is a massive amount of money that is unavailable for services. Will the clinical negligence and other risks indemnity scheme be enough? How will it operate in practice? Does more have to be done to free up those resources for services?
The answer to that question has two elements. We believe that the clinical negligence and other risks indemnity scheme will help to limit the risks, because every organisation in the NHS will have to meet certain standards in all the areas of its activity, both clinical and non-clinical, to reduce the risk of adverse events happening. It will have an effect, but that in itself may not reduce the financial exposure to claims because, as Mr Jones explained, more people are litigating and making claims, which could have consequences for the NHS.
Is there a paradox in that financial problems have to be dealt with, claims arise because of problems in the service and problems arise in the service because there are deficits? Is that a soluble problem?
I think that it is. If I am correct in my initial assumptions about the provision, we could significantly reduce those deficits anyway. Part of the deficit relates to the provision for clinical negligence, so there are solutions that involve managing deficits. I do not believe that action is being taken in the service in managing resources that is increasing the risk to individual patients and giving rise to clinical negligence claims. I do not think that that is the case. I would be very concerned if any organisation was taking any action that threatened the safety of individual patients because of the way in which financial resources are managed. I do not believe that that happens.
I hope that there is no clash between clinical views and financial views—between what the surgeons would want for clinical reasons and what can be afforded according to the administrators.
The debate tends to be about how much surgery of a particular type should take place, rather than the issue that gives rise to clinical negligence—how a particular surgeon operates.
I will not enter into the Glasgow controversy, but I have read the Evening Times.
Mr Aldridge, you mentioned that there are improvements in clinical governance. How can you measure those improvements? What standards will you put in place to see whether there is an improvement in clinical governance?
Clinical standards are being developed by the Clinical Standards Board for Scotland, which came into being about a year ago. It is working with the service and with the Executive to determine what those standards should be, and the NHS will then be expected to meet them.
What is the time scale for that?
It is progressive. Some standards are virtually on stream now, and others will be developed as time goes on.
As time goes on over what sort of time scale?
We are developing a new performance assessment framework for the NHS. Until now, controls of the service have tended to be financial. We are developing a new performance management framework that will include clinical standards, non-clinical standards and how we manage staff within the service, as well as financial targets. The new performance assessment framework will therefore bring such issues quite directly into the monitoring and control arrangements of the new NHS boards.
You said that the levels of clinical and medical negligence claims have risen because more people are suing. That gives the impression, which is not borne out in other areas, that we live in a developing litigious culture. Will you indicate whether standards are actually declining—hence the increase in people making claims—or whether, as you implied, we live in a more litigious culture?
I have seen no evidence to demonstrate falling clinical standards. As a result of the processes that John Aldridge has described, I hope that standards are rising. Nor have I seen evidence to demonstrate increasing mortality rates in particular specialties; the tendency has been towards continual improvement in clinical performance.
To what would you attribute the increasing number of claims that are being made?
I cannot give you a definitive reason for that. It may be that more people tend to take action now.
Do you agree that—as Mr Welsh and Mr Johnston hinted—it is the perception of the public that there is considerably more negligence in the health service occurring as a result of underspending? Do you agree that it has little or nothing to do with people choosing to take health boards and health trusts to court because that is the developing culture of this country?
I have not seen any evidence for that.
Why do you think that there has been such an increase in the number of people making claims?
I cannot express a view on why the public choose to sue.
But is the increase in the number of claims purely down to the fact that we live in a culture that is more litigious, or is it because there are failures, which are principally provoked by lack of financial provision in the NHS in Scotland?
The number of claims lodged each year has remained pretty static over the years—about 500 new claims are lodged each year. There has been an increase in the value of claims, not a rising trend in their number.
In answer to Mr Johnston, I was talking about the number of claims and their value. The table on my briefing demonstrates that the number of claims is falling, marginally. The value attached to those claims is rising.
Do you have any analysis of the type of claim? Has that changed over time?
I do not have that information but I would be glad to provide the committee with it.
It is important that we safeguard public funds by paying only on claims that are justified. Is there a danger that claimants will suffer hardship because claims take far too long to process?
Until a liability can be demonstrated, it would be inappropriate for the NHS to settle claims without having gone through due process. As one of your colleagues said, if we settle a clinical negligence claim, that expenditure is at the expense of other patient services. It is absolutely right that it should be the responsibility of the NHS to demonstrate that there was negligence before any payment is made. The period that that takes is part of the legal process; it is difficult for the NHS to speed up that process. It would be wrong to rush claims through.
When does a patient cease to be a patient and become a claimant? Should the same level of care be extended to them during the period of their claim as when they are in hospital or receiving treatment? In the perception of the trusts or in your perception, does a patient cease to be a patient when they become a claimant, or is the culture one in which the patient remains a patient until the litigation is over?
For the NHS, the patient remains a patient for the whole of their life. We should always adopt a caring attitude towards all our clients and the whole population.
Do you have performance targets for progressing claims?
I do not know.
First, I will respond to the earlier part of the question. When liability has been recognised but the amount to pay has not been agreed, we have made payments on accounts to litigants, when much lawyers' work has remained to be done.
Thank you. I am aware that we may be straying from the report. The committee deals not in policy, but in facts and in establishing them.
The convener partly covered the other question that I intend to ask when he asked about the efficacy of the clinical negligence and other risks indemnity scheme. Will that scheme provide incentives that are aimed at reducing the incidence of negligence?
Yes. The principle of CNORIS is that an NHS organisation that can show that it is managing its risk and has processes in place to manage and reduce its risks more effectively will receive a discount on its premium every year. Therefore, the scheme provides a financial incentive to improve risk management in the organisation.
I was glad to hear Mr Jones say that he had no evidence of falling clinical standards. However, I must ask whether the pressure on clinicians to reach targets on waiting lists and waiting times and bring those figures down rapidly has an effect on treatment. While they are under such pressure, the rate of medical advances accelerates. Clinicians are also under pressure to keep up with constant changes and progression in treatment. Does that make it difficult for them to maintain high clinical standards?
The first priority is ensuring the highest possible standard of clinical care. That must be the NHS's overriding objective. Mr Raffan asked whether the need to reduce waiting times added to pressure on clinicians. From the public's perspective, it is critical that the NHS reduces the time that people wait for treatment. That is a clear commitment that we must achieve. To do that, we need not always do more, but we must plan how we manage our waiting lists better.
Thank you. I would like to make progress. We will now examine financial targets and consider whether they serve their purpose.
Paragraph 3.10 explains how some trusts met their financial targets by using non-recurring income or funding earmarked for capital. That means that those trusts would otherwise have failed and would have started the next financial year with an underlying financial deficit. How then do the financial targets provide a true indication of performance and enable comparisons between trusts?
It is appropriate for trusts to use the total resource available to them to manage their affairs. It is quite right that trusts should use non-recurring income to do that. Equally, trusts have non-recurring expenditure in their accounts. The best example might be the year 2000 issue: £43 million was spent to ensure that there were no problems as a consequence of year 2000. A significant proportion of that money was non-recurring expenditure. It is sensible for trusts to use non-recurring income—ideally to address non-recurring expenditure. That is the perfect solution.
The valuation of land and buildings has implications for individual trusts' income and expenditure accounts. One of the trusts in my constituency has expressed concern about this year's financial statement, because the book price of something that has been disposed of leaves it with a deficit of nearly £400,000. What facilities are there to address that? The price that the market will pay for something that has a notional price attached to it is outwith the control of the trusts.
I recognise the fact that several trusts face such issues from time to time. Sometimes, the Executive can do something to help. If there is a book loss on the value of a property—perhaps because the valuation was too high and it achieved a lower price—it is possible in certain circumstances to write off that deficit. However, each case must be considered on its merits.
Paragraph 3.10 also says that Tayside Primary Care NHS Trust and Yorkhill NHS Trust
It depends on the circumstances. If an organisation knew that a receipt was about to be received at the end of the financial year, it would seem reasonable to include it as income. I would not be particularly happy with that, but a case could be made for including such a receipt. Clearly, if there was simply a hope or an aspiration that the receipt would be received some time in the following year, it would be totally inappropriate to include it.
I am not suggesting that, in the two cases that are highlighted in the Auditor General's report, there was anything wrong with anticipating such receipts. However, that practice could be construed as a way of trying to balance the books on paper and so hide the fact that there may be underlying financial difficulties. It seems strange that trusts would anticipate receipts in their accounts. Usually, when organisations present their accounts, they just make a note if anything that is about to happen that might put a different gloss on the figures. Anticipating the receipts suggests something other than the explanation that you gave.
I do not think that we would say that there was an effort to hide things. The Auditor General is very clear in that particular paragraph that the department's approval of that accounting entry was conditional on there being a plan to demonstrate recurring financial balance in the organisations. It was explicit; it was not about hiding a problem. It was about demonstrating that the entry would be approved only if there was a long-term solution.
Was it appropriate to do that in those circumstances?
With the specific conditions, I think that it can be justified.
Last month, the Minister for Health and Community Care published the national health plan for Scotland, which said that many of the measures, targets and systems that derived from the previous internal market were no longer appropriate. Does the department have any plans to review the current financial targets for NHS trusts? Is that the new financial regime that has been mentioned on numerous occasions this afternoon?
Yes, indeed. The Executive intends to review the financial regime. We hope to be able to make proposals reasonably soon on some short-term changes that may be beneficial and on some longer-term changes that may require legislation. We are still working on the details. As I say, we hope to get rid of any perverse incentives in the existing system.
We will move on to how we can get a better understanding and a more comprehensive picture of the overall financial performance of the NHS in Scotland. Again, we have a question from the hard-working Scott Barrie.
I want briefly to return to something that has been touched on by a couple of people already. It relates to the way in which the accounts are presented. The accounts show that 15 health boards have a surplus and that eight trusts have a deficit. Given that people think of the NHS as it affects them locally, are not the accounts confusing? Do not they make it difficult for people to work out what is going on in the health service? A story about a trust in financial difficulties will get headlines, yet it seems that money is not as short as it might first appear.
As I said earlier, health boards are managed on a cash basis. That is in line with Government accounting, but it is changing, because the Government is moving towards resource accounting. Health boards are managed on a cash basis and trusts are managed on an income and expenditure basis. However, the health boards' accounts give their income and expenditure position as well, so we can compare like with like. We have a table that may be useful to the committee. It shows the income and expenditure position of health boards and trusts in each health board area. It gives a feel for the local financial position and I would be happy to share it with the committee. It shows that health boards are not all in surplus in income and expenditure terms. Argyll and Clyde Health Board has a deficit. Borders Health Board has a small deficit of about £111,000. Fife Health Board has a deficit of £1.7 million. On the other hand, Ayrshire and Arran Health Board is £2 million in surplus. Health boards vary: some have a surplus and some have a deficit.
I was going to ask for the officials' view of the true picture of the financial position of the NHS in Scotland, so I think that the figures to which you alluded would be useful in helping us to understand that.
The introduction of resource accounting will make things easier for the committee and for members of the public who take an interest in such matters. Do you have any plans to bring that forward for examining the accounts for the whole of the NHS and for what happens at trust level and board level? You indicated that there might need to be legislation. Could you take measures now that might facilitate a step change?
Some health board areas already manage their accounting systems in an integrated way. That can happen without legislative change. What we cannot necessarily do is impose a statutory target. There is nothing to prevent health board areas from working together to manage the total resource as a single entity to ensure that they get the best return for the amount of money they have available.
That would be a welcome step forward in ensuring that the process is open and can be understood by the vast majority of individuals in a health board area. It could be part of the public consultation that is alluded to in the national plan. It would be rather foolish for health boards to dig their heels in and say that they will wait until they are forced.
I agree.
We will bring in the patient Mr Eric Harper Gow to discuss the common services agency.
As the report says, it is difficult. It is certainly not what we would have wished. We worked hard to improve the situation that we faced. It did not happen as quickly as we would have liked, but it did happen eventually.
Without such data, how can trusts challenge GPs to improve prescribing, if they do not know whether it is necessary?
Information was provided; the problem was that it was not all reconciled as promptly as possible. When people were working with it, they had to treat it as provisional information, because there was no guarantee that it was complete and accurate until the reconciliation process had been completed.
We are talking about 64 million transactions and £1.2 billion. Do you agree that the problem was a critical weakness? Can you tell us to what extent the position has improved or deteriorated during the current financial year?
The volume of transactions involved does not make dealing with the problem easier.
Are you saying that there is now reconciliation between the CSA and the health bodies?
The financial reconciliation process is operating smoothly.
The other highlighted problems are inconsistencies in post-payment verification and the absence of a formally documented disaster-recovery test for the GP payment system. The CSA agreed to take corrective action on those problems. What is that action, and is it working?
I will deal with those matters separately.
Paying GPs is complex and involves many transactions. Will there be exact reconciliation of the figures and will the system be able to track exactly what is going on?
Going back to the financial reconciliation of amounts of money, the reconciliation process, which was the issue in 1999-2000, has been addressed.
The 1999 Accounts Commission report "Supporting prescribing in general practice" pointed to a range of improvements in prescribing that could benefit patients and generate savings of around £26 million, which is a substantial amount of money. Have such improvements been introduced? Will such a benefit arise?
Could you refer me to the point—
The 1999 Accounts Commission report pointed to a range of improvements in prescribing that could benefit patients to a great extent. Do you agree that primary care trusts are essential for delivering such savings and that good financial information is the key to that?
I agree with your assertion that primary care trusts are essential. Although we have addressed the issues in the report relating to the previous financial year, other issues have arisen in the current financial year which mean that we still face certain difficulties.
I hope that you will report back to the committee on that matter.
I have no doubt that it will be the subject of audit comment this year.
Will fully reconciled information for 2000-01 be available on a time scale that will enable audits to be completed in accordance with the deadlines notified by the department?
I referred a moment ago to this year's difficulties, which are giving us some cause for concern. We are in discussions with the primary care trusts and other bodies, including the Executive and audit representatives, to address some of the issues that we will face on 31 March. We do not yet have all the answers.
You talk about the difficulties that you are experiencing. Primary care trusts are charged with providing robust, fully audited accounts by a certain date. As their contractor, you are undertaking work for them and are obliged to supply them with the appropriate information. Are you saying that you will not be able to fulfil your contractual obligations?
No. I am saying that we have difficulties to resolve and that we are discussing how to do that. Those discussions are not yet complete. We do not have agreement on all aspects, but we are working towards that.
Was it right to move payment to a centralised system? When it was a local matter, more issues were identified by people living in the communities where they worked.
Perhaps I should pick up that question. The concept of consistent systems for paying primary care practitioners is right. Before centralisation, there were 15 different systems and interpretations. The audit raised the issue of post-payment verification partly as a result of bringing together 15 disparate payment systems. I have no problem with the principle of using modern technology to put common systems in place, replacing old technology that was coming to the end of its useful life.
I refer you to paragraph 10.6 of the report. If primary care payments represent some 20 per cent of overall NHS expenditure in Scotland, why were steps not taken to ensure that there was a robust system for verification checks from the start?
Convener, this is your point about post-payment verification which I did not answer earlier. Mr Jones referred to the fact that centralisation attempted to combine 15 health board systems into one. When centralisation was undertaken, we had the option of carrying on with 15 centres, but managing them centrally, or of combining them and having just one centre. We went for the option of three centres—at least for the time being.
I am not reassured by your answer. It appears that there is a new internal market involving you—the agent—the primary care trusts and the Executive. You say that you will eventually get round to talking to the audit community. Given that the Auditor General has identified post-payment verification as a particular problem which concerns the expenditure of significant amounts of public funds, your first port of call ought to be to the Auditor General. You should be reporting to him on the general thrust of what you will be doing. Mr Jones would then indicate to the primary care trusts that they need to comply in order to secure the appropriate use of a large amount of public funds. Or is that too commonsensical?
If my answer misled anyone, I apologise. When I said that proposals are going to the audit community—I think in February—I was referring to written proposals. We have been in discussions with the audit community and the Executive throughout the process and the discussions are continuing. We are not doing this in isolation. I meant to say that a document containing formal proposals for a consistent, unified system across the country will see the light of day next month. We must then go from the plan to implementation. Obviously, that will not happen by next weekend.
Thank you for that clarification. I invite Paul Martin to take up the matter of post-payment verification.
Do you agree that practice visits are an important part of the post-payment verification system, as covered in paragraphs 10.6 and 10.9 of the Auditor General's report?
I agree that practice visits can be part of post-payment verification, but they are only one element of it. They also serve other purposes. There are still some differences of opinion as to whether they represent value for money, but we think that they have a place. You asked me whether I thought that they were an important part. I would not want you to get the impression that they were more important than anything else, because they would not necessarily come top in the pecking order.
But are they important—yes or no?
They have a role.
To be fair, the question whether they are important is quite simple. Yes or no?
They have an importance, yes.
So they are important.
They are important.
But you have qualified that by saying that there are other measures. How many verification visits have been carried out in each health board area?
There are three CSA practitioner services regional offices, one of which is in Edinburgh and covers the east of Scotland. We visited 54 practices over a period of months and, as I said, we had some concerns about whether that represented value for money. Only £200 was recovered.
I asked about each health board area. Forgive my ignorance on this matter, but how should I divide that total of 54 practices?
We do not visit general practices every year, and that has never been the plan. As I tried to explain before, the visits are one element of the range of measures that we group together and call post-payment verification. There will be proposals for two types of visit: those that are indicated by statistical analysis and other intelligence, which will be very targeted; and a small number—probably about 1 per cent—of random visits. I do not have information to hand about the total number of visits that have been made so far in this financial year, but I can obtain it and make it available to the committee.
You said that there were 54 visits. Was that the total for all the health boards?
No. The Edinburgh office made 54 visits for the health boards that it covers. That was not the total number for the whole country. I will have to obtain that information and pass it on to you.
That would be appreciated.
I have a schedule showing current progress under each of the main headings that were identified as issues from the internal control statement. I could go through that statement now, or I could supply a copy of it to the committee.
We have been going for some time, so rather than go through the statement now, I would appreciate it if you would send it to us following the meeting.
We will do that.
We will move on to the last section, which is on the European Union working time regulations.
In paragraph 11.9, which is on page 32 of the report, we are told:
We had a clear understanding that there was a legal requirement to comply with the EU working time directive. However, the extent of that liability was not clear and there was, shall we say, legal discussion about that. The exact effect of the directive on the pay of NHS staff in Scotland was not clear, which is why payments to staff were not made until this financial year.
Sorry—could you clarify whether you are saying that NHS bodies did not realise that they would have to implement the regulations?
They knew that they would have to implement the regulations, but the extent of their liability was not clear.
Why did not they implement the regulations when they came into force?
Because the way in which the regulations needed to be applied was not clear.
In paragraph 11.11, we are told that the regulations could cost the NHS £15 million. What is your latest estimate of the final figure? How much has been paid out so far?
The arrears, which go back to 1998, were estimated at £15 million in the provisions that were entered into the accounts for 1999-2000. As I said, in September last year the Executive issued £20 million to the health service to help it meet those costs. The final cost is not known yet as some of the health service bodies are still working through the details of what the directive is costing them. It appears that the backlog costs will probably come to an amount that is not significantly different from the figure that we made available. However, there will be a continuing cost, which will work through the accounts of health bodies in future years.
Has the £15 million been paid out now?
Yes.
The costs arising from 1998 have been paid.
Yes.
I will return to the recovery plan, as I am still worried about a point that was made earlier. We all know that there is an uneven spread of services and treatment among different health board areas. I have an interest in the area of drug misuse and can cite the example of Ayrshire and Arran Health Board, which has a relatively good service, while Fife Health Board, which is in my region, does not have a good service.
Funds are allocated to health boards based on their populations' assessed need. If trusts in a health board area manage their resources tightly and never go into deficit, the range of services that they offer their population will be in balance. For whatever reason—and we have a schedule of things that may contribute to a deficit, such as unplanned developments—trusts in another area may bring new services into the equation that cause overspend.
I had planned to ask for any final comments, but I think that we have just had some. This market day is wearing late indeed. We have dealt with a wide range of topics and we appreciate today's replies to our questions and the promise of further information. I thank Mr Trevor Jones, Mr John Aldridge, Mr Eric Harper Gow and their colleagues who were here to assist them.
Meeting continued in private until 15:57.