Public Audit Committee

Meeting date: Thursday, January 13, 2022

Official Report 622KB pdf

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Section 22 Report: “The 2020/21 audit of NHS Highland”

Welcome back to the first meeting of the Public Audit Committee in 2022. In this part of our deliberations, we will receive evidence on a recently completed Audit Scotland report into NHS Highland. I am delighted to welcome to give evidence the Auditor General for Scotland, Stephen Boyle—welcome back. In this session, Stephen is joined by Leigh Johnston, who is a senior manager for performance audit and best value at Audit Scotland. I am also pleased to extend a welcome to Joanne Brown, who is a partner at Grant Thornton and has been working on the audit.

I invite the Auditor General to make a short opening statement.

I have prepared this report on the 2020-21 audit of NHS Highland under section 22 of the Public Finance and Accountability (Scotland) Act 2000. This is the fifth report on issues of financial sustainability at NHS Highland in the past eight years. Previous reports have highlighted issues and concerns covering finance, performance and governance. Today’s report sets out the progress that NHS Highland has made in those areas over the past two years.

The external auditor has given an unmodified opinion and has highlighted that the board operated within its financial resource targets, while responding to the operational and financial challenges of Covid-19 for its service delivery.

NHS Highland’s financial position has been challenging in recent years. It has required additional financial support from the Scottish Government in each of the past three financial years in order to achieve financial balance. Nonetheless, NHS Highland is making progress under a more stable leadership team, and financial management arrangements are strengthened, alongside improvements in governance and aspects of service delivery.

Health services in NHS Highland are more expensive than in other parts of Scotland, and the board has needed to develop a more sustainable approach. It has made some progress in reducing its reliance on locum and agency staff. The established programme management office, which was set up in 2018-19 to oversee service transformation and financial recovery plans, has also played an important part in the board’s financial recovery. On-going progress will be needed, however, to ensure sustainability and performance improvement in the future.

Steps have also been taken to improve NHS Highland’s culture, following the 2019 Sturrock review. Two key actions were progressed: the completion of a culture survey in the Argyll and Bute area of NHS Highland’s activity; and the development and approval of a healing process to support current and former employees.

As with all NHS boards, the pandemic has had a significant impact on the focus and priorities of NHS Highland, and its effect on the board’s longer-term financial position and savings targets remains uncertain. Achieving a balanced financial position depends on the successful delivery of a cost improvement plan. The board has acknowledged that the plan developed for 2021-22 is challenging, and many of the challenges will be shared by health boards across Scotland.

As ever, Joanne Brown, Leigh Johnston and I will do our best to answer all the committee’s questions this morning.

Thank you very much for that opening statement, Stephen. As you will understand, we have a number of questions on everything from the implications of the Sturrock report and the progress that has been made in addressing the issues identified in it to the funding formula and the recurring challenges faced by a health board that is operating in the most rural part of Scotland and delivering services that need to be accessible, as far as possible, to the population that it serves.

I will start by turning to paragraph 14, which is on page 5 of the report. It reminds us that NHS Highland moved down from level 4 to level 3 in the escalation framework. At face value, that is a positive development. Will you summarise the improvements that have been made, as you understand it, which have led to the de-escalation of the health board’s status? In so doing, will you give any assessment that you have of whether the board is moving in the direction of going down from level 3 to level 2? Are there still bigger challenges to overcome? I ask Stephen Boyle to open up on the evidence on that.

Many thanks, convener—I will also bring in colleagues to share their perspectives. I agree with your assessment that it is a positive step that NHS Highland’s escalation status has dropped from level 4 to level 3. The basis for the judgment that the Government has made looks reasonable when we bear in mind some of the progress that we have reported on.

As paragraph 14 says, we have seen progress on financial management, financial sustainability, governance of the organisation, leadership, culture and mental health services. It was not just one factor that helped the Government to reach its decision on NHS Highland’s escalation status. The move from level 4 to level 3 was consistent with the progress that we have reported on.

How the position translates into a move to an even lower escalation status will be a matter for NHS Highland in relation to the progress that it makes, and for any judgment that the Government arrives at. Our report says that, although progress has been made on a number of fronts, there are still many challenges for the board to address in relation to finance and service delivery.

As you said, service delivery in a remote and rural setting brings challenges in relation to the cost base and access to services. The board will want to be satisfied on all those issues—not just on escalation status or number but on whether patients are getting the experience that they expect from their health board in the Highlands.

Leigh Johnston will say a bit more about the escalation status and the steps that might be needed to move to an even lower number.

I do not have much to add to what the Auditor General said. The Government decides whether the board moves down a level. As the Auditor General said, we have seen improvements, so we think that the move from level 4 to level 3 is a fair reflection, but the board still has challenges. The board will be working to address those challenges, and it will be up to the Scottish Government to decide on any further de-escalation.

We will move on to look in a bit more depth at the board’s financial management. Craig Hoy will pose a number of questions to probe that.

I turn to financial management and stewardship. Paragraph 15, which is on page 5, says:

“NHS Highland delivered a break-even position ... while operating in a period of considerable uncertainty and while responding to the ... operational and financial challenges”

that the Covid-19 pandemic has posed for service delivery. Given those circumstances and the backdrop, how much of an achievement by NHS Highland do you consider that position to be?

It is important that health boards meet their financial targets. The requirement is for boards to break even against their revenue and capital resource limits, within the confines of any cash requirement that they agree with the Scottish Government. Therefore, it is welcome that NHS Highland has managed to break even and is reporting a small surplus of £700,000 for the year. Joanne Brown may want to say more about the nature of that break-even position. However, as we go on to say in the report, 2020-21 was an unusual year because of all that we have had to do over the course of the pandemic, which has obviously translated into the finances of NHS Highland and all health boards across Scotland.

As we would expect, NHS Highland has received significant additional funding to cope with the challenges of the pandemic. At paragraph 17, we note that it received £57.3 million from the Government to cope with some of those challenges. On top of that, NHS Highland received £8.8 million to support its financial position. The committee will have seen that, in previous years, NHS Highland received brokerage funding or end-year loan funding from the Government. The £8.8 million was not brokerage, but it was additional funding to support the board’s—[Inaudible.]—position.

As ever, the context for 2021 is that it was all about the pandemic and its impact on services. That has played through directly into the board’s financial position, but it is, nonetheless, positive that NHS Highland has broken even.

I invite Joanne Brown to add anything that she wishes to.

To that outline I would add only a comment about the success of the project management office. In 2021, the PMO continued to operate in what was a difficult environment due to Covid in anticipation of the delivery of the savings. Although the board started the year needing to make financial savings of £37 million and, as Stephen set out, required the additional funding of £8 million to support it to break even, the PMO delivered on a number of savings, an increasing number of which were recurring in nature. Therefore, I pinpoint the PMO as a key success factor for 2021 in terms of financial planning and the achievement of the financial position.

Thank you.

You have almost read my mind in respect of the next question, but I will seek confirmation from you. You referred to the fact that the Scottish Government provided additional funding of £8.8 million, which was what would have been anticipated through brokerage. Will you confirm that and tell us why the Scottish Government provided the £8.8 million as additional funding, and not brokerage?

We can give a perspective on that, but Mr Hoy and the committee might want to inquire directly of the Government or NHS Highland as to the subtle difference between additional financial support and what we would previously have known as brokerage funding.

The history has changed around brokerage funding. Previously, financial support that the Government gave to health boards for brokerage had to be repaid in subsequent years. That arrangement ended three years ago, if memory serves me correctly, when previous brokerage no longer had to be repaid. That was significant for \NHS Highland, because it was due to repay many millions of pounds. However, the Government’s decision and, I am sure—I am speculating, so I caveat this slightly—the context of Covid has changed how health boards work.

As Joanne Brown mentioned, although NHS Highland has made progress with savings, its ability to operate in a normal environment was severely constrained, which would have impacted the extent to which it could make savings in a way that would have been normal before the pandemic. Some of that will have flowed through to the financial position, and the Government has arrived at a decision not to give brokerage but instead to give year-end financial support.

The report explains that the board delivered total efficiency savings of £20.7 million in 2020-21, of which £5.4 million, which is 26 per cent, were recurring savings. Does that mean that 74 per cent—nearly three quarters—of the total savings can be counted as non-recurring?

10:45  

Yes, it does. That has been an on-going challenge. Joanne Brown is right. The programme management office and the health board as a whole must deliver a secure financial position. What matters is longer-term service change and transformation, and an end to reliance on non-recurring savings to secure the financial position. That is challenging. Non-recurring savings can be opportunistic or led by circumstance. You are right that the ratio is either one or the other: it is either non-recurring or recurring.

Joanne Brown might be able to answer this, or perhaps you may be able to flesh it out. How were the non-recurring savings made? Do you have any insight into how the board plans to move forward in making planned savings in future financial years?

I will ask Joanne to come in in a moment, but I can say something about the detail for the 2020-21 financial year and also for the current financial year and beyond. As we set out in exhibit 2 in the report, there is a welcome change of emphasis. Savings of £32.9 million are planned for the 2021-22 financial year. Only £4.5 million of those savings are identified as being non-recurring. It is by no means certain that the board can deliver on that, given the unpredictable environment that we are in. However, if that can be delivered, that would be a significant step forward. Joanne Brown may wish to add more.

On the PMO, 186 themes make up the £25 million in the savings programme. The ultimate aim for the PMO is to focus on what can be achieved through recurring savings. There are a number of bigger schemes that are based on service redesign and change, rather than one-off gains. For example, improving procurement and prescribing sit within that programme, as does operating theatre productivity. The board aims to get the recurring savings through the PMO.

All savings go through a five-stage approach within the PMO. It continues to report on and risk assess those savings. As part of the risk assessment, it identifies the recurring or non-recurring nature of savings. As the Auditor General said, that continues to be a challenge. NHS Highland has struggled with recurring savings, but we have started to see an improvement. A number of service redesigns are planned to support that work. Covid will have an impact on that, but the focus is on turning savings into recurring savings.

That is similar to the position in many local authorities in many respects.

We want to further interrogate the board’s financial position in terms of not only its management but its sustainability.

Auditor General, your report explains that NHS Highland’s budget uplift of £16.4 million is its share of the £30.2 million that is being provided nationally to maintain NHS boards within 0.8 per cent of national resource allocation formula parity. A simple calculation suggests that NHS Highland receives more than half of the funding that is available nationally. Is that correct?

It is partly correct. Paragraph 20 of the report refers to the national resource allocation funding model. That is the overall model that the Scottish Government, in conjunction with NHS boards, uses to distribute funds to health boards across the country. It is based on a range of factors such as population size, deprivation levels and geographical factors, which we set out in one of the footnotes to the report.

We are referring to the uplift of £16.4 million as the NHS Highland share of the £30.2 million to support NHS boards’ move to within 0.8 per cent of the Government’s model of what is called NRAC parity. There is a long history of boards’ views on their financial position and where it ought to be relative to the funding that they receive. The overall story suggests that NHS Highland is moving closer to getting what it views as the share of overall resources that it requires to deliver health services. In terms of the overall allocation, it received more than 50 per cent of that uplift arrangement during the course of the financial year.

So, the answer is yes.

In short, yes. It has received more than half of that particular component of NHS funding.

It seems extraordinary that one health board is getting such a significant uplift. I am not questioning whether it deserves it; I am just saying that it seems disproportionate.

It probably reflects the fact that there is much history behind the use of this funding model to allocate resources to particular health boards. There have been many reviews over the years. Leigh Johnston might want to say more about that history.

It got to a point at which the Government’s approach was to resolve all the views of the different health boards across the country and the unease that they felt about their share. The model for the revised arrangement was to move to a point of parity, or within 0.8 per cent of parity, because a number of boards, of which NHS Highland was one, were adrift in respect of that parity. I think that we are seeing a catch-up arrangement being played out and additional funding being provided by the Government to NHS Highland to support that.

If it would be helpful, Mr Beattie, I will invite Leigh Johnston to give more detail.

I am interested to know whether, in your opinion, the NHS Highland situation reflects fairness.

I will answer that question and then I will turn to Leigh.

I think that NHS Highland’s view—although, of course, it can speak for itself—would be that a factor in its financial challenges in years gone by was where it sat in terms of NRAC parity relative to other boards. The additional funding that it has now received will help to move it towards both parity and, more importantly, financial sustainability in the services that it can provide to its communities. I invite Leigh to tell you a bit more about how all of that is working.

I do not have much to add to what the Auditor General has said. The main point is that NHS Highland has had a significant uplift this year because, historically, it has been further from parity than other boards. That is reflected in that quite significant uplift this year.

Okay. I will move on to another question. In paragraph 21, on page 7, your report tells us:

“The board has recognised that elements of costs included within the financial plan may potentiality become part of core services in the future, but the longer-term funding position is ... unclear.”

Can you provide some detail as to why the longer-term funding position is unclear?

We will do our best. I am happy to say a word or two about that. In addition to today’s report, we will publish our overview of the national health service in Scotland next month. It will take a much wider look at the financial position, at service delivery challenges, at how the NHS will remobilise its services, at living with and beyond Covid, and so forth.

The unclear funding position is a component of the judgment, which we also reached in this report, that NHS Highland’s service delivery options will evolve as a result of the pandemic. We spoke to your predecessor committee about some of the changes that are already happening in service delivery, such as the increasing use of digital technologies. There is also the issue of what the remobilisation plan looks like and how it will be delivered. Highland will be one of the sites for the new national elective centres where the NHS in Scotland will deliver services. All of that will play into what feels like an uncertain, and potentially quite volatile, service environment—[Inaudible.]

Looking at the report, it seems that one significant subject is missing. All the previous reports on NHS Highland have made great mention of Raigmore hospital, which has had significant overruns in prescriptions, staffing and almost everything that one could think of. However, from this report, it seems that the matter has vanished completely. Does that mean that everything is good and under control there?

You are right—we have not focused on Raigmore hospital in this report. I will ask Joanne Brown to say a bit more about the financial impact of the Raigmore situation on NHS Highland’s overall position. I should note that it was not an unconscious choice for us to leave it out of the report. Although Raigmore will be a significant component for the programme management office regarding the need for savings and service changes in the future, it is the largest single hospital in the Highlands and it delivers much of the acute activity. We felt, therefore, that the situation of Raigmore was not the overall story in the way that it has been in previous years, especially in the light of the pandemic and the forward look at making savings, service changes and so forth.

Raigmore will remain part of our focus, and we will continue to audit and report on it through our work as we follow up through the NHS overview report and future audit reporting.

I will pass over to Joanne Brown, who might wish to say something about what all of that means for Raigmore’s impact in the years in question.

We have seen the appointment of a new deputy chief officer at Raigmore, and there have been some changes in the senior clinical team and the leadership team. As the Auditor General outlined, a number of the savings in the PMO relate to Raigmore, but we have already started to see positive change there. The hospital has achieved positive savings, which it was not able to do in the past. We will obviously continue to consider the long-term position of Raigmore in our external audit work as we move forward.

It would have been interesting to see some continuity on Raigmore, with regard to the progress that it is making. I have no doubt that the subject will come up again in the future.

At paragraph 23, on page 7, the report tells us:

“The financial plan requires £32.9 million of savings to be delivered through the ... Cost Improvement Programme.”

Where are those savings likely to come from? In the past, NHS Highland has had great difficulty in making recurring savings, and many of them seem to be one-off savings patched up. Where are the savings being targeted?

I am happy to start on that, and Joanne Brown can then come in.

The sum of £32.9 million represents significant savings to be made, which informs our overall judgment on NHS Highland in the report. Although progress has been made, the board needs to continue that progress in order to deliver, on a recurring basis, service change and associated savings.

We point out in the report—and Joanne Brown rightly mentioned—the role of the programme management office, which combines the need for service change with the drive for associated financial savings in a way that we hope will allow the board to move on from the emphasis on non-recurring savings, on which we have reported in previous years. Usually, some of the savings can be embedded and built on from one year to the next.

In exhibit 2, we set out the three high-level categories of savings from which the total of £32.9 million will come. As you see, most of it will come through the programme management office, with a smaller component coming from non-recurring savings. The other element is to do with the board’s adult social care arrangements with Highland Council. Joanne Brown mentioned prescribing and other components. She may wish to elaborate in more detail on where recurring savings will be made as part of that £32.9 million.

The board is looking at service redesign in order to make recurring savings in a number of thematic areas. I do not have to hand the information for 2021-22 on how much of what is in the PMO plan has been achieved to date and how much is recurring in nature. My understanding is that the board feels confident that it will achieve at least 80 per cent of what it has set out to save through the PMO during 2021-22.

11:00  

A number of thematic areas such as prescribing and procurement have been highlighted, and the board has certainly been able to make some recurring savings in corporate services and in estates and facilities. As we have seen, NHS Highland has, throughout the Covid pandemic, naturally had to change how it has delivered services. One of the key areas for the board as it moves forward will be digital clinical engagement and the continuation of the NHS Near Me service, which has enabled the board to realise a different service model that brings benefits in terms of the financial savings that it needs to make.

However, there is still risk with regard to the non-recurring nature of savings. That is routinely reported through the financial savings board and through the PMO itself.

Did you find any indication that NHS Highland is using staff vacancies—at consultant level, in particular—to manage its savings? In other words, has it been delaying appointments?

No. There will be some non-recurring savings that happen naturally as a result of difficulties in appointing people to positions. However, the medical and clinical workforce side is still an area of cost pressure for the board as it delivers services, and it is not looking to achieve non-recurring, one-off savings in that area.

I have one last question.

At paragraph 25, on page 8, the report tells us:

“NHS Highland is not currently budgeting for a financial brokerage requirement from Scottish Government for the 2021/22 financial year.”

Is it possible that NHS Highland will require some level of brokerage from the Scottish Government in the current financial year, given the other things that we are taking into account?

Based on our—

Sorry, Joanne—I will ask you to come in shortly.

It is possible that the board might require additional funding or financial support from the Scottish Government. As we say in the report, there was a component of £8.8 million in additional financial support from the Government in 2021. As we have just discussed, there are significant and challenging savings plans to be delivered, alongside the uncertainty around how the pandemic will evolve further over the rest of this year. It will be for NHS Highland and the Government to keep the financial position under close review so that anything like that does not come as a surprise later on, towards the year end.

Sorry, Joanne—you might want to come in with your own thoughts on that.

From a 2021-22 perspective, at this point in time, NHS Highland is forecasting break-even and potentially a slight surplus. At present, that does not involve what would traditionally be referred to in the NHS as brokerage. However, as the Auditor General set out, it is acknowledged that a number of additional Covid moneys for the NHS are currently sitting with NHS Highland, which will support the achievement of break-even in a similar way to what we saw in 2020-21.

In effect, therefore, the Covid moneys are masking the underlying financial issues to some extent. Is that correct?

Again, Joanne Brown will have a perspective on that, but I do not think that there is a lack of transparency about the financial position and the challenges that NHS Highland is looking to address. It is clear that there is a significant financial savings plan that sets out steps to deliver nearly £33 million of savings, and, like all health boards, NHS Highland has received considerable Covid funding from the Scottish Government, which is shaping and influencing its overall position. As and when the pandemic ends, it will need to recalibrate and consider what that means for its financial position and service delivery.

It is likely that it will not go back to how it was before the pandemic. Joanne Brown rightly mentioned that, and, as we have discussed at committee previously, the adoption of different service models such as NHS Near Me is an essential factor. As Audit Scotland said and as my predecessor rightly pointed out, before the pandemic, the NHS in Scotland was not in a sustainable financial position, so all the learning to transform service delivery requirements and financial sustainability is even more important. Covid moneys are shaping that at the moment. When the pandemic subsides, that will be the time to restate what that means in relation to service delivery and associated—[Inaudible.]

I am bound to reflect on the evidence that there has been a lot of controversy in the Highlands about the centralisation of services. So, when Joanne Brown speaks about service redesign, the question that many people in the Highlands will ask is, to what extent is that clinically led and to what extent is that financially led? It may not be for the Auditor General to offer commentary on that, but any reflections that you or Joanne can make would be useful in getting the inside track on what is pushing those changes.

I am happy to start, and Joanne can add anything that she wishes. The nature of service delivery and design should be based primarily on being clinically safe and on appropriate access to services and treatment for patients across the Highlands. The best model for delivering that is ultimately a matter for NHS Highland and the Scottish Government. It is important that that is part of effective engagement and consultation on the communities’ services.

As auditors, we are looking to express a view on how well public money is being spent and the impact that is achieved from it. Today’s report sets out that NHS Highland still has some significant financial challenges but is making progress. In doing so, it should deliver a sustainable financial position and appropriate, safe healthcare for the people of the Highlands. That is always a balance. Ultimately, it will be for clinicians to determine the best model of healthcare for the Highlands.

That is all that I have to say on the issue, convener, but I invite Joanne Brown to contribute if she wishes to do so.

I will add one thing. I touched earlier on the impact that digital services are having on NHS Highland—particularly things such as NHS Near Me. NHS Highland would cite the fact that, before the pandemic, there were roughly 88 NHS Near Me consultations a week, whereas the figure is now averaging out at around 1,000 consultations a week. That has opened up a different clinical way of working and of reaching patients, particularly in the remote rural locations that NHS Highland has.

In its future strategy, it wants to link that platform to its planned service redesign. It is already looking again at its strategy and service redesign beyond Covid, considering all the positives that have happened and how it can continue to embrace this way of working instead of how it worked in the past.

Thank you—that is useful.

I turn to Sharon Dowey, who has a series of questions on the theme of the cost pressures that are demonstrated in the audit report on NHS Highland.

Auditor General, your report provides welcome information on the progress that NHS Highland has made in tackling its reliance on locum and agency staff, which was raised in previous section 22 reports. The board has filled 21 hard-to-fill consultant positions and, in October 2022, it took the management of locums back in house to control spending and rates. Is that sufficient or is there more work to be done in that area?

I share your assessment that there has been welcome progress. NHS Highland has managed to fill challenging posts, some of which are consultant positions and some of which are in rural general hospitals. A consistent theme in our reporting on NHS Highland has been that, in living with hard-to-fill vacancies, the board has had to incur huge costs in order to sustain services, as there have been very significant locum and agency—[Inaudible.] It is welcome that NHS Highland has been able to fill posts permanently.

The insourcing of the board’s locum arrangements is another sign of progress. We also report that turnover dropped during the year. There are a number of welcome signs, but you asked whether what has been done will be enough. This is true of all health boards, but I suspect that NHS Highland in particular keeps the working patterns and preferences of clinicians under constant review.

We will continue to report in our overview report that people who work in the NHS are under enormous strain and pressure, and that the wellbeing of those who work in the sector needs to be carefully managed. In delivering an essential service, they should be looked after and given the right working conditions so that it remains attractive to work in the sector. Those key long-term challenges are built into the workforce plans that NHS Highland and all health boards will have to keep under close review.

Have processes been put in place to encourage people to take up the positions, or has the pandemic had a bit of an effect, with people being kept in positions as a result of not being able to move about because of lockdowns or restrictions?

It is a bit of both. As we have seen, the pandemic has changed some people’s preferences from what they might have been before Covid. For example, they might want to go to more remote and rural areas to benefit from a different lifestyle. I speculate that that will have influenced the decisions of some of the people who have moved into posts that have been hard to fill for a long time.

Ensuring that those people stay in post is the more important issue. As we touch on in the report, NHS Highland made progress through an attraction, recruitment and retention strategy. It is key that the board builds on the benefits of filling the posts and that it has a model that makes NHS Highland an attractive place for people to work.

That links to the convener’s point about how the board can deliver services in the Highlands. If NHS Highland can attract into the posts highly skilled people who could work anywhere in the world, that will allow it to have a model of delivering services that does not rely on centralisation, with people being able to access services in all parts of the Highlands. The attraction, recruitment and retention strategy is a key component of the long-term sustainability of health service delivery in the Highlands.

Is it too early to work out whether there is best practice that could be passed on to other health boards that have the same issues?

That is a fair conclusion. NHS Highland has had some great benefits from filling those posts in recent years, and there will undoubtedly be other examples of that in other parts of the country, such as the south of Scotland, the Borders and the Scottish islands. Although we are two years into the pandemic, it is perhaps too early to draw any real conclusions on whether there is a new model that should be rolled out across the country. Nonetheless, I am sure that NHS Highland will be sharing its learning with other health boards.

Your report sets out the progress that has been made in recruitment to and staffing of the programme management office. Are you content with that progress? Earlier, Joanne Brown mentioned the success in delivering a number of savings, so that work seems to have been a success.

11:15  

We think that it is an important contributor to NHS Highland’s service delivery and financial position. We said in our report that the programme management office now has permanent staff in place, who are benefiting from mentoring and knowledge transfer from the consultants who had set up the office. There are certainly signs of progress, but the PMO has an important job to do in delivering the financial savings and transformation that NHS Highland requires.

Joanne Brown may be able to say more, as she has interacted with the PMO.

We have seen the journey of the PMO from when it was established to the way that it operates now. It has become much more embedded in NHS Highland’s wider arrangements and across the organisation. There has been a move away from the use of consultants to provide temporary, short-term support to those posts in the PMO being filled on a permanent basis. There are suitable skills and experience within the PMO, and there is now a reasonable reporting structure in place. Dashboards are used to regularly report on and track savings. The board has embraced the set-up of the PMO, which is now fully operational with permanent staff who are all NHS Highland employees. That is a good position from which to take forward the PMO.

The work on the PMO certainly seems to have been a success. The Audit Scotland report says:

“a substantive PMO director is now in place with short-term mentoring support being provided by the previous appointee.”

Do you have any concerns about the previous appointee leaving? Will you continue to monitor progress once they have left?

The short-term mentoring arrangement that NHS Highland put in place was there to support the incoming permanent director. That support is no longer required. The permanent director is now in charge of and is operating the PMO. We will continue to look at that. The PMO will play a key role in the future financial sustainability of NHS Highland and will continue to feature in our external audit. I do not have any concerns about the previous appointee leaving or about the change to a permanent set-up.

I have a couple of short questions for Stephen Boyle about leadership and governance, but I want to go back to what Joanne Brown said about the Near Me digital platform. I think that she said that the number of digital consultations through Near Me had gone up from about 88 a week to about 1,000 a week. That is a fantastic transformation, which has been brought about by Covid.

Do you have a sense that that will remain in place if and when we get through the Covid emergency? Will that digital mechanism or model be retained? It seems to be a good one, and one that has been particularly successful for NHS Highland.

Would you like Joanne to answer that directly?

Yes—that would be really helpful.

NHS Highland has experienced a marked change in the use of Near Me. That is at the forefront of the board’s future planning for technology, given how well Near Me has worked for it during the pandemic.

NHS Highland has seen clinicians become more confident about using Near Me, as well as more confidence in patients about how well that has worked for them. Previously, a lot of travelling had to be done in remote rural areas so that people could see the relevant clinician. Part of the future strategy is to use Near Me beyond the pandemic.

It is good to hear that.

Turning to leadership and governance, the report is positive about the improvements that have been made in the stability of NHS Highland’s leadership. That is welcome, as are the comments about succession planning. I think that the report said that the first round of that was due to be completed by December. Has that work been done, or is it still in progress?

Joanne Brown or Leigh Johnston might know whether NHS Highland was able to deliver on the first round of succession planning by the end of last month; that would have happened after we produced our report. If we have that detail now, we will share it and, if not, we will be happy to write to the committee.

Before my colleagues say a word or two, I emphasise that the stability of leadership in NHS Highland has been a catalyst for the progress that the organisation has made on service delivery, governance and its financial position, which has fed into the work of the programme management office. That is all really welcome.

In workforce planning, succession arrangements are key to all the things that we have spoken about. Given the workforce challenges that NHS Highland has had, such as hard-to-fill posts, and given the diverse service delivery across a wide geography, that is an important component of how the board will deliver its services in the future.

I ask the team whether we know more about whether the deadline was achieved.

I have nothing to add to that update. After the meeting, I would be happy to update the committee on what progress has been made and whether the plan was produced as intended in December. I do not currently know that.

If you can find out that information, that would be appreciated—thank you.

Paragraphs 39 to 41 of the report remind us about the Sturrock review of allegations of bullying and harassment and so on and about the on-going programme to transform the board’s culture. The Auditor General mentioned the key actions that have been taken, which include a survey in Argyll and Bute and the development of what you described as a healing process. Will you say a wee bit more about how that is going? How will you monitor that aspect in your programme of work?

The Sturrock review of allegations of bullying and harassment was a significant event for NHS Highland. It was the culmination of many years of concerns from people who worked in the organisation about experiences that they had and how they were treated.

You mentioned two actions that were due to take place, which were taken. A similar review of the experience of people who work for NHS Highland in Argyll and Bute was undertaken through a survey. Their feedback was consistent with the experiences of NHS workers in the Highland area.

The other part was a healing process to give people who work in the Highlands the opportunity to share their perspective, receive feedback and have their voices heard. That was a very important part of John Sturrock’s recommendations for the board to take forward.

How does that translate into the future? The date to register for the healing process has passed. We reported that more than 300 people registered to be part of it. By the end of May last year, the independent review panel had recommended 136 people for a remuneration payment as a result of the experiences that they had. To date, 118 financial payments have been made, at a total cost of £1.7 million. NHS Highland has provided for the remainder of the payments as part of the process.

That has been a difficult process and a difficult part of NHS Highland’s history, but it is important that people have gone through that. As ever, the learning, the experience and the sharing of that will change the culture for the better, so that people who work in the Highland part and the Argyll and Bute part of NHS Highland experience what we all expect to experience at our work, which is to be treated fairly and with kindness and respect.

Thank you so much for that, Stephen. I think that the convener might wish to continue to develop the questions in that area, so I hand back to him.

Thank you, Willie.

Auditor General, you are absolutely right to talk about the human dignity and respect that are at the centre of the Sturrock report and recommendations. I want to look at the overall cost and some of the nuts and bolts of that. Do you have any indication of how many further recommendations for financial payments there are likely to be? Could you clarify who is footing the bill for that? Is the funding coming from the health board itself, or is any additional Scottish Government funding being made available? Could you, Joanne Brown or Leigh Johnston shed any light on what the division is between the value of the compensation payments that have been made and the cost and administration of the process?

Could you begin by addressing those points, Stephen?

I am happy to start, and I am sure that Joanne Brown will want to come in, too.

To continue the discussion with Mr Coffey, £1.7 million of payment recommendations have been made, which cover 118 people. All the costs of running the process are being met by the Scottish Government. In addition to the £1.7 million, the cost of setting up, running and administering the healing process—that is aside from the cost of the healing payments—is £1.1 million. One of those two components is the cost of administering the process; the other is the payments to individual members of staff.

That is not an insignificant amount of public spending, as I am sure you would agree, but I think that it has been necessary for NHS Highland to have gone through that, so that people’s experiences, particularly those that were negative and detrimental, are reflected in compensation, and that they are able to move on, as individuals and as an organisation, with the right learning and changes to the culture that they will want to make on the back of John Sturrock’s report.

I turn to Joanne Brown in case I have missed anything and she wants to add something in response to your question.

The only thing that I would add is that NHS Highland is expecting the final cases to be heard by the end of March this financial year. Therefore, any remaining financial cost will be shown in the 2021-22 accounts. As Stephen Boyle said, the set-up costs and the costs of running the healing process are being tracked, alongside the cost of the financial payments that are made.

There is a commitment and a plan in place for NHS Highland to take a board paper in July this year, which, in effect, will wrap up the healing process. I expect the board, as part of that paper, to consider how well that process is being applied and whether it has achieved the aims and objectives, while also considering the value-for-money aspect around the set-up and the payments. That will be very visible through the board in July, which is the timetable that NHS Highland is working to for that.

Thank you very much—that is very useful. There is continuing public interest in the costs of the operation and administration of the healing process, and in the balance between that and the pay-outs themselves.

I have a final point that I want to ask about. Referring to the board risk assurance framework, the report states that

“further work is required to review and redefine some of the risks and the escalation process within the BRAF”.

Could you tell us a little bit more about what further work is required on that? I do not know whether that is for Joanne Brown or Stephen Boyle.

I can say a word or two of introduction; Joanne Brown can say anything additional that she wishes.

We are reporting signs of progress on NHS Highland’s governance arrangements, both in how it is running its risk management arrangements and in the effectiveness of its audit committee—which are both key parts of the driver for—[Inaudible.]—internal control environment and—[Inaudible.]—really important that that has happened, especially given some of the judgments that were previously made by Joanne Brown and Audit Scotland about how effective governance and risk management were in the board.

11:30  

As we say in the report, how that translates into the board’s risk assurance framework and the ownership of risks by the executive team is really important. It matters that there is visibility and ownership of particular risks and that risk management is developed, given the significant responsibilities and challenges for all health boards in Scotland. Joanne Brown might want to say a bit more about the components and workings of the board’s risk assurance framework.

As we outline in the report, a lot of work has taken place around the risk management framework. NHS Highland acknowledged that it needed to consolidate the strategic risks that were facing the organisation and ensure that there was clarity in how risks were reported.

We have seen a big impact through the risk management steering group, which reviewed its membership and role in the governance structure, and the links to the various sub-committees and the board in terms of risk. We now need to see how that is embedded so that we are comfortable that the board has put in place, with the right design, the necessary controls and governance. As part of our 2021-22 audit, we will look at how that aspect has been embedded in the governance structure.

One area that the board continues to develop, where its position is not dissimilar to that of other NHS boards, relates to risk appetite and the links around that, and how it mitigates and manages risks. Nonetheless, we have seen a really positive improvement in risk management, and we will now look to ensure that that is fully embedded as the board takes risk forward.

Thank you. I am extremely sorry, but we have run out of time in this evidence session. There is quite a lot to follow up on, not least the points that Joanne Brown was addressing just now.

I take the opportunity once again to thank you, Joanne, for your time and your evidence, which has been illuminating. I thank Leigh Johnston for her input, as always, and I thank Stephen Boyle, the Auditor General, for his work on this area.

I am sure that we will return to many of the themes that we have discussed today, not least in the light of the overall NHS Scotland audit report that Audit Scotland will produce next month. I bring the public part of the meeting to a close.

11:32 Meeting continued in private until 11:53.