Meeting of the Parliament

Meeting date: Tuesday, April 17, 2018

Official Report 833KB pdf

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NHS Tayside

The next item of business is a statement by Shona Robison on NHS Tayside. The cabinet secretary will take questions after her statement, so I encourage all members who wish to ask a question to press their request-to-speak buttons now.

14:24  

I would like to update the chamber on developments in NHS Tayside over the Easter recess.

On Friday 6 April, I exercised powers under the National Health Service (Scotland) Act 1978 and instructed that Paul Gray, as chief executive of NHS Scotland, take immediate action to strengthen the leadership of NHS Tayside. The decision to exercise those powers was not one that I took lightly, and it was the result of a series of issues that have come to light in relation to the management of NHS Tayside over recent months.

As Parliament will be aware, since 2012-13 NHS Tayside has required brokerage funding from the Scottish Government to balance its annual financial position. The level of brokerage that has been awarded each year has risen, and the amount of brokerage outstanding now totals £45.3 million, excluding the repayment of endowment funds, which will be added this year.

In recognition of the need for action to tackle the rising deficit, NHS Tayside developed a five-year transformation programme, which it launched in 2015-16, with the twin aim of improving patient experience alongside achieving financial sustainability. To support that programme, in May 2016 we put in place arrangements to provide tailored support to NHS Tayside.

By its very nature, the scale of change that was envisaged was not a quick fix, but it was clear by the end of 2016-17 that the year 1 milestones in the board’s plan were not going to be delivered and that the board required a further £13.2 million of brokerage. In response, in March 2017 we appointed Professor Sir Lewis Ritchie to chair an assurance and advisory group to review the deliverability of the board’s plans and the associated financial projections. On 27 June 2017, the AAG published its staging report, which confirmed that the financial picture that was forecast by the board was unrealistic. The AAG also highlighted issues in relation to the board’s vision for the future, its service and workforce planning and its prescribing activities, as well as its leadership and governance processes.

On receipt of those findings, we established a transformation support team led by Caroline Lamb, chief executive of NHS Education for Scotland, to provide support and constructive challenge to the senior management of NHS Tayside. The transformation support team provided intensive input to the executive team from July to December 2017.

The AAG’s second progress report was submitted earlier this year and sent to Parliament on 23 February. In that latest report, the expert team recognised that although progress had been made, it was largely transactional as opposed to transformational.

Just days after the publication of the second progress report, an issue to do with how e-health funding had been recorded in the NHS Tayside accounts was uncovered by Scottish Government officials and brought to my attention. We commissioned Grant Thornton UK to carry out an independent investigation into the issue, which has been shared with Parliament. The central problem that it highlighted was that the level of the board’s deficit had been understated over a period of years.

NHS Tayside’s director of finance subsequently took the decision to retire and immediate steps were taken to strengthen the financial controls of all the organisations involved, including the withdrawal from e-health leads of the ability to make financial decisions and a review of internal controls in NHS National Services Scotland.

On 3 April, the then NHS Tayside chair highlighted to me claims that, on 24 January 2014, a decision was taken by the board of trustees responsible for endowment funds that resulted in a number of projects being retrospectively approved for charitable funding when they had already been approved for funding through core NHS resources. I immediately took action to have the accuracy of those claims independently verified. Following on from its work on e-health funding, Grant Thornton was commissioned to undertake a review of NHS Tayside’s financial governance. That work has now been extended to cover the use of endowment funds. Given the significance of those issues, the review will now report to the Scottish Government.

NHS Scotland chief executive Paul Gray wrote to all NHS board chairs on 5 April to seek their explicit assurance, by the end of this month, that all charitable funds have been used appropriately.

The Office of the Scottish Charity Regulator recently opened a formal inquiry into the allegations of possible misconduct in the operation of NHS Tayside’s endowment fund. Once I have received assurances from all other health boards, I will share them with OSCR, which has agreed to review them. Should OSCR determine that spending of endowment funds by any board was inappropriate, I expect that to be paid back swiftly and in full.

In responding to such events, the maintenance of public confidence in the health service in Scotland is of paramount importance. The credibility of the board’s updated reform plans, as well as public confidence in the board’s leadership and in donating funds for the benefit of the health service, have been significantly undermined by these events. The attendance of NHS Tayside’s chief executive at the endowment fund meetings in 2014, particularly in January, when decisions were made on the use of charitable funds for retrospective expenditure, raised serious concerns.

Although the chair was not in post at the time of those decisions, the culmination of financial control issues, along with the limited progress highlighted by the AAG, led me to the conclusion that in order to restore public confidence in NHS Tayside real change was going to require a new leadership team with a robust set of skills. That is why I exercised my ministerial powers of intervention and asked Paul Gray, as chief executive of NHS Scotland, to strengthen management at NHS Tayside with immediate effect.

The chair, Professor John Connell, tendered his resignation on 6 April. I thank him for his service to the board over the past two and a half years. Lesley McLay is currently on sick leave and the role of accountable officer has been transferred to the new chief executive, Malcolm Wright. It is not possible to comment further on Ms McLay’s employment position at this time.

It is crucial that the new leadership team at NHS Tayside is strong and experienced, which is why I have appointed John Brown CBE as the new chair. Mr Brown already chairs a large health board and is a chartered management accountant, with significant experience in leading change. I have also approved the appointment of Malcolm Wright OBE as chief executive. Mr Wright is a very experienced NHS chief executive and has already been involved in a number of successful board transformations. Mr Brown and Mr Wright have both started as they mean to go on, with productive meetings having already been held with the rest of the board and with the chief executives of all three local authorities in order to underscore the importance of collaborative working in designing and delivering health and care services for the people of Tayside. Another priority has been to ensure that all staff in Tayside are sighted on developments, with an all-staff briefing issued immediately on the new leadership team taking up post.

On the endowment funds issue, an emergency board meeting held last week agreed to a proposal presented by Mr Brown and Mr Wright to repay in full the endowment money that had been retrospectively applied to programmes of work in 2014.

Understandably, stabilising the board will take some time, and I am committed to ensuring that the Scottish Government continues to support NHS Tayside with financial brokerage, with repayment currently suspended for a three-year period to provide breathing space for the board to focus on achieving stability and to plan properly for change. I have also agreed that the brokerage be increased to cover the repayment of the endowment funds that have been inappropriately used. It is crucial that the quality of patient services is protected and maintained throughout this challenging time.

The staff of NHS Tayside have much to be proud of: a reputation for good, safe, person-centred and effective care, with many examples of innovation and good practice recognised across the country. I met the board, alongside its new leadership, on 9 April and it is clear that there remains a real appetite within the board to drive forward positively, underpinned by clinically driven change initiatives. I have been clear with the new leadership that their priorities must be to steady the ship, provide clarity on where the organisation is going and take the public and the staff of NHS Tayside with them throughout that process. I have every confidence that John Brown and Malcolm Wright will deliver that. I look forward to seeing NHS Tayside reach its full potential and become the organisation that the staff and people of Tayside deserve.

Alongside the work that is on-going in NHS Tayside, we will also see the completion of the Grant Thornton review of Tayside’s existing financial controls, including the use of endowment funds. OSCR will complete its consideration of the behaviour in early 2014 of the Tayside endowment fund board of trustees along with its oversight of activities elsewhere in NHS Scotland, with any spending considered to be inappropriate being immediately returned to the endowment funds. I will ensure that all reports are made available to Parliament once completed and that all recommendations from those reports are implemented.

I am happy to take questions.

The public in Tayside and across Scotland have rightly been shocked and angered by the use of charitable funds by NHS Tayside to help to pay for NHS board projects. In her statement, the cabinet secretary referenced the independent review by Grant Thornton on e-health funding between e-health, NHS National Services Scotland and NHS Tayside between 2012 and 2018, which did indeed raise many very serious issues. However, for some reason, she has not mentioned the repeated failures of oversight within her own department over that period, which were clearly identified in the review.

How will the cabinet secretary ensure that lessons are learned so that, in future, she and her officials will provide the proper level of scrutiny and supervision that must be provided in relation to the use of taxpayers’ money? In light of the concerns that other NHS boards may have been using charitable funds in a similar way, does she agree that a broader independent inquiry into the extent of the practice across Scotland is now needed—one that is able to make clear recommendations to prevent that from happening again in the future? Does she agree that that would be the best way to restore public confidence—something that is now vital?

The cabinet secretary says that it is time to “steady the ship”. We have been raising these concerns in Parliament for some time and it is quite clear that, for too long, NHS Tayside’s leadership has been sinking under the leadership of this Government. Is it not now time to act, and time for the whole Parliament to have a role in supervising the finances of our health boards?

Parliament, of course, does have a role. That is why we have an audit committee, which is looking into these matters—that is quite right and proper. Also, I said at the end of my statement that I will make all the reports available to Parliament so that we can be open and transparent about these matters.

In my statement, I went, in some detail, through all the support that has been given to NHS Tayside, so I do not think it is fair to say that the Scottish Government has not tried, in its endeavours, to support the board. Over the years, we have given it extensive support—I laid that out in some detail in my statement—but after all of that, particularly in light of the e-health and endowment funds issues arising, we reached the conclusion that what was required was a new leadership team at the top of NHS Tayside to take the organisation forward. That is not something that I did lightly, as I said in my statement.

Miles Briggs also talked about a need for independent oversight of the issue of endowment funds. OSCR is independent. That is why we have asked it to look at all the returns that will come from boards. At the moment there is nothing to suggest that the endowment funds of other boards have been used in the way that NHS Tayside used its funds. However, it is important that OSCR looks at all of that. It is independent, and as the charities regulator it is the organisation that is best placed to oversee that.

I point out that endowment funds are separate from ministers and that ministers have no role in them. It is important to note, therefore, that OSCR is the body that looks at and has oversight of those funds.

Once all of that is completed, we will make sure, as I am sure OSCR will, that all the information is put into the public domain.

I thank the cabinet secretary for prior sight of the statement. The cabinet secretary said in her statement that NHS Tayside needs new leadership and that

“their priorities must be to steady the ship, provide clarity ... and take the public and”

NHS

“staff ... with them”.

The leadership of our NHS is the cabinet secretary. She has let down NHS staff, she has failed too many patients and she has breached the trust of the public. This has happened on her watch in her local health board. This is her mismanagement and her failure. The sad reality is that the public have lost confidence in the cabinet secretary and she has lost control of her brief. Will she, therefore, do the decent thing and at the very least withdraw herself from the investigation, if not withdraw herself from the portfolio altogether?

Anas Sarwar failed to mention that he agreed with the decision to remove the leadership team of NHS Tayside and replace them with a new leadership team. He did not mention that fact, but it is important, and I am glad that he supported my decision.

I think that, in all that, there was a question about the investigation. I do not know whether the member listened to my statement or indeed the answer that I gave to Miles Briggs, but I think that I was very clear that OSCR is leading the investigation. If Anas Sarwar is suggesting that, somehow, OSCR is not independent and is not capable of leading the investigation, that is very unfortunate indeed. As the charity regulator, OSCR is the best organisation to look at whether the endowment funds have been used appropriately. That is how the process will be taken forward.

The external audit of boards will also have a look at endowment funds. That will also be taken forward. We will have the returns from boards by the end of this month. By the end of May, OSCR will give us an initial view on those returns and it will take any appropriate action thereafter. By the end of June, the external audits will have taken place with their particular look at endowment funds. I would have thought that, in anybody’s eyes, that is a robust process with the independence of OSCR at its heart.

Does the cabinet secretary agree that the change of senior management must also lead to a cultural change at the top of the organisation, not least to ensure that the financial challenges that have been highlighted do not adversely affect the provision of services to patients in rural settings such as those that I, John Swinney and Mairi Gougeon represent?

I have been absolutely clear that the financial challenges that are facing NHS Tayside must not affect the quality of the services that are being provided to patients. I said that in my statement and I have said it previously, including to those who are in rural settings. That is why I have committed to continuing to provide brokerage to NHS Tayside, and it is why the repayment of brokerage is currently suspended to enable the board to focus on getting back on track. That is important.

The new leadership team has already signalled that the quality of care will remain a key priority for the board. In its words and actions, it has already underlined the importance of a culture of honesty and openness, and of engagement with staff at all levels. It has signalled a new culture and approach, and it should be given time to get on with the job.

In reply to a constituent of mine, OSCR stated that it did not become aware of the alleged issue about the use of NHS Tayside assets until the media reports appeared on 4 April. During the period 2014 to 2018, did the Scottish Government have any communications with OSCR about the use of NHS Tayside funds, given that one of OSCR’s key roles is to review charities’ accounts?

Liz Smith raises an important issue. OSCR will look into all this because it is doing a specific investigation into the endowment issue at NHS Tayside, and it is right and proper that it should do so.

I can tell Liz Smith that, in the return from the audit and risk committee of NHS Tayside of 17 June 2014, no significant issues were raised and the board was given a clean audit opinion. The issue was not escalated to the Scottish Government as a matter of concern at the time by either internal or external auditors. There are issues there for the reviews that are under way and they will help us to determine any further controls that are required in light of all this. Liz Smith can be assured that the issue will be taken forward.

I can also tell Liz Smith that OSCR has signalled its intention to review the guidance on the use of endowment funds that it helped us to develop back in 2013. It is concerned about a potential conflict of interest between people who are sitting on the board and sitting as trustees of endowment funds. I assure Liz Smith that that, too, will be taken forward with OSCR.

I am concerned about governance on the board at NHS Tayside. In 2014, board members agreed to suspend the constitution to transfer charitable funds to core expenditure, breaking the trust of local people who give so generously.

I welcome the decision to pay back the money but we now need a full review of every board member at NHS Tayside to ensure that they have the requisite skills to prevent a breach like this from ever happening again. Will the cabinet secretary outline a full appraisal and skills review of every board member at NHS Tayside?

I welcome the fact that Jenny Marra welcomes the repayment of those funds. That was an important early decision by the new leadership team.

It is also important to allow OSCR to do a proper investigation—I reiterate that it is doing a full investigation into the endowment fund issue within NHS Tayside. OSCR will look back to 2014, to the decisions that were made by the trustees and the basis for those decisions, so all that will be looked at.

On the wider issue of corporate governance and the skills of board members, it will be for the new chair and chief executive to look at whether they have the right skill set across their board. It is right and proper that they are given the support to do that.

On a general point, John Brown, the new chair of NHS Tayside, is leading a review of corporate governance. Additional support is being given nationally to non-executive members of boards so that they have the confidence to probe and ask the right questions.

All of that will help us to strengthen corporate governance, but I reiterate what I have said in previous answers—if any recommendations come out of all the reviews that are taking place that can further strengthen that governance, Jenny Marra can be assured that those recommendations will be taken forward.

I completely agree with what the cabinet secretary said, in her statement, about maintenance of public confidence in the health service and in the board’s leadership being of paramount importance.

What assurances can the Scottish Government give that the appropriate measures have been taken to install suitably high-calibre leadership in order to restore public confidence and trust in the board of NHS Tayside, and to manage the challenges that it faces?

I am confident that we have in place people with the skills that NHS Tayside needs at this time. As I said in my statement, John Brown is already chair of Scotland’s largest health board and is also a qualified accountant. Anybody who knows him knows that he is also very good at leading change, which he will do with NHS Tayside. Malcolm Wright is also an experienced chief executive who has been involved in successful transformational change.

Both have made it clear that quality of care is a priority, as is getting the board back to financial balance. Restoring public confidence and trust is key, and although they have been in place for only a couple of weeks, it is fair to say that they have certainly hit the ground running and have been working very closely with the staff side, as well as with clinicians, in order to begin to rebuild that confidence.

I am also aware that John Brown and Malcolm Wright have offered to meet local MSPs or, if that is not possible, to give them a call. I think that they have been engaged in that over the past few days.

It is right that we demand complete transparency regarding the financial decisions that are taken by the board, because such a situation cannot be allowed to happen again. It is also right that a new leadership team takes over.

However, as Audit Scotland pointed out last year, the majority of health boards had to use short-term measures to break even. I would like to understand how the cabinet secretary will address that issue at its root. Will she introduce longer-term planning for our integration joint boards? Will she tackle the significant use of agency staff that has been reported in NHS Tayside?

We are addressing use of agency staff. A lot of work is being done to reduce agency-staff spend. Fiona McQueen, as the chief nursing officer for Scotland, has been leading on that.

Alison Johnstone will be aware that additional funding for our front-line NHS boards will amount to £354 million, which is £208 million in real terms. NHS Tayside will see £13.7 million of increased investment and a share of the transformation money. More money is going into the health service, but more demands are being placed on it. That is why reform also has to take place.

Alison Johnstone has made a good point about integration joint boards; we have been discussing with health boards and local councils how to enter into longer-term financial planning, beyond the one year that was required because of the budget process that we have just gone through. The Scottish Government is developing a financial framework that will look at a five-year horizon. That will enable us to plan funding at national level and to shift the balance of funding, such that that is visible over the next five years. That framework will be published in the next few weeks.

Professor John Connell was asked to resign in response to a scandal that occurred before his tenure. What exactly did the cabinet secretary expect him to have achieved in terms of resolving the situation to her satisfaction, and what comfort can she extend to other board chairs who are concerned that they, too, might in the future be used as scapegoats to protect the SNP Government? Will she today rule out any suggestion to abolish NHS Tayside and merge it with another board, as has been proposed by senior MSPs from her party.

In my statement I paid tribute to the work that John Connell has done over the past two and a half years, and I acknowledged that he was not in post when the endowment issue arose in 2014. That period spanned the previous health secretary’s term of office and mine, but I believe that no health minister could have picked up on something that internal and external auditors did not flag up. The situation requires that we examine why those issues were not flagged up to the Scottish Government by the auditors, because we rely on their processes in order that we can do something about such issues.

Alex Cole-Hamilton asked specifically about the position of John Connell. There was a cumulative set of events. I laid out very clearly in my statement all the issues that led to the escalation to level 5, at which point ministerial intervention was made. We had reached the end of the road, after huge amounts of effort and support had been put into NHS Tayside. The only conclusion that we could reach was that new leadership was required—a new chair and chief executive—to take the organisation forward.

On merging of boards, Alex Cole-Hamilton will be aware that we have been working towards having more regional planning, and towards boards working across boundaries, but form should follow function. The important thing is that people realise the benefits of regional working and working across board boundaries, rather than focusing on organisational change. To be frank, that would take up the efforts and attention of senior leadership teams that need, in Tayside, to be focused on getting the board back on track and restoring public confidence.

Thank you. Six members still wish to get in, so please make questions and answers short.

Does the cabinet secretary recall that intervening in NHS Grampian led to a very successful outcome and to continuous improvement? Does she agree that moving the chief executive from NHS Grampian to Tayside should provide the reassurance that staff and patients need that the serious issue is being taken seriously?

Yes, I do. I met the board on 9 April, along with the new leadership team, and everything that I have seen and heard about the approach that has been taken to date gives me confidence that NHS Tayside will continue to make provision of high-quality services for patients a priority. It is very important that the board does that.

It is also important to say that work has been undertaken to provide assurance in Glasgow and Grampian that there will not, because of John Brown and Malcolm Wright’s focus on Tayside, be an impact on work that is on-going in those boards.

Regarding the on-going Grant Thornton review of NHS Tayside, will it or a further forensic investigation fully establish who approved the incorrect entries regarding the e-health funds and, most important, who in NHS Tayside and the cabinet secretary’s office knew about that window-dressing of the NHS Tayside financial statements for six years?

As I said previously, all the reviews, including the Grant Thornton review, will get to the bottom of all that and make sure that there is full openness and transparency about e-health and endowment moneys. We have brought to bear the external process not least to see whether there are areas that we need to change and tighten up on in order to avoid such a situation happening again. That is, of course, the action that we will take.

Will the independent investigation by OSCR extend to other health boards?

Yes. I mentioned the process by which the returns of boards will come to the Scottish Government. OSCR has written to the chairs of the endowment funds asking for those returns. That will happen by 30 April. We hope that OSCR will be able to indicate by the end of May any further issues that it wishes to consider in more detail. In addition, external audits will examine endowment funds in particular.

All of that taken as a whole—particularly the role of OSCR, which is entirely independent of the Scottish Government—should give members assurance that the matters will be looked into fully.

I apologise to members who still wish to ask a question, but we have run out of time. We have already taken substantial time out of the next debate.