NHS Tayside financial governance arrangements: independent review

Appendix 3: Approved minute of the NHS Tayside

Endowment Fund Board of Trustees 24 January 2014

Minute of the Extraordinary Meeting Tayside NHS Board Endowment Fund Board of Trustees, held on Friday, 24 January, 2014, at 1.30pm, in the Seminar Room, Kings Cross Hospital.

Mr S Watson in the Chair

1. APOLOGIES

Apologies were noted as above.

2. DECLARATION OF INTERESTS

There were no declarations of interest.

3. PROPOSED VARIATION TO TAYSIDE NHS BOARD ENDOWMENT FUND POLICY & PROCEDURES

Mr McDonald advised Trustees that he had met with the Standing Committee Chairs Thursday morning to brief them on the financial position of Tayside NHS Board. Following discussion with the relevant Chairs, it was agreed to look at temporarily suspending the retrospective element within the Policy and Procedures, to allow certain applications to come forward for consideration by Endowment Advisory Group ( EAG), and/or Board of Trustees. He confirmed health board procedures and the new national guidelines had been looked at, and there was no conflict which would prevent this happening. Dr Cowie joined the meeting Mr McDonald advised Trustees that Mr Carson and the Endowment Team had conducted work around OSCR, Central Legal Office ( CLO) and the National guidelines to ensure there were no conflicts.

Mr Carson advised Trustees that the charitable purpose of the Endowment Fund is within the legal framework of the Health Service Act 1978, and the definition is as broad as "for advancement of health", which means the Endowment Fund can fund anything it can as long as it is for health advancement. Trustees further noted that the Endowment Fund is not accountable to OSCR, but the guidelines are observed. The National Guidelines were recently finalised following a review by a National Steering Group chaired by Mr Paul James, Director of Finance in NHS Glasgow. Trustees noted there are a couple of issues that require to be looked at, mainly tax implications with HMRC, but there is nothing to suggest that we are out of step with the procedures and technical issues contained within the report.

Mr Carson advised the grey area is what is core and what is non-core. Going by the policy, anything covered by exchequer should not be coming out of endowments, but there are various "shades of grey". Trustees noted that NHS Tayside is looking to fund items that meet the endowment criteria and which can therefore be appropriately funded from endowments. Bids are currently being put together, which will have General Manager support, and a temporary lifting of the retrospective barrier within the Policy and Procedures would allow these bids to be considered.

The Chairman clarified that by suspending the retrospective element in the Policy and Procedures, this allows NHS Tayside to look at a number of projects that have gone through exchequer in the past year, and pick out the elements of spend that can be met appropriately from endowment funds. Trustees noted that the Committee Chairs had been briefed on this, and had come away with a recommendation to go down this road. He stressed this was only in relation to the retrospective element, and was not about changing the Policy and Procedures.

Cllr Middleton noted the bids would only relate to the financial year 2013/14, but was keen to learn how long the temporary suspension would last. She acknowledged it was deemed legal to do this, but felt uncomfortable that it was being considered.

Trustees noted that Mr McDonald provided assurance as Director of Finance that anything being put forward would be appropriate and relevant for endowment funding. He added that this temporary suspension being sought would be only for the month of February, and would not go beyond this, but in future bids would be worked up prospectively, should they meet endowment funding criteria, and be submitted for consideration.

Mrs Dunion advised she was present at the meeting yesterday. She remarked that the news had been completely unexpected, especially given there had been Board of Trustees and Finance & Resources Committee meetings just last week. She was still concerned that we may yet still fall foul of OSCR, but noted that we observe the guidelines, but are not constrained. She referred to an incident in Shetland Council, where it had been deemed that the Trustees had acted in the interest of Shetland Council and not in the interest of their endowment fund. She further advised that she had spoken with the Chairman and Mr McDonald with regard to her concerns, and wished the assurances received to be explicitly minuted. Mrs Dunion commented on the potential reputation risk to NHS Tayside, and that if a journalist was to look at this, the potential headline could be NHS Tayside are dipping into endowment funds in order to balance the books, and she felt very robust communications PR work would be required. Mrs Duncan acknowledged that if this was made public, everything from the past would be dredged up, and advised that there would need to be very robust lines for how decisions were made, referring to guidelines, and ensuring we are covered by OSCR and CLO. She further advised that in terms of publicity for endowments, communications tended to more reactive than proactive. Trustees noted there are now dedicated Health Reporters attached to some newspapers, who are looking at F&R papers more closely and are reporting on them. One possible way forward was to do a "what your donations and legacies have raised over the past 12 months", which would generate good press coverage. There was obviously a risk attached to this, but it may be a good way to thank the public at the end of the financial year.

Trustees noted that any retrospective bids would be scrutinised in the usual way that all bids are when presented to EAG, and it may well be that not all are approved or recommended for approval. Further noted that in this instance, the F&R template would be used for these papers.

Cllr Middleton advised she felt Trustees could be as proactive as possible, but it still did not get away from the fact that funding had initially been provided from exchequer, and it was now coming from endowments. She felt it better to say nothing, but have the lines ready if the situation arose.

Mr Cross recognised this was just the first stage in a process, and advised he was supportive but that by no means did it mean bids would automatically be approved. He noted that reliance would be placed on EAG to scrutinise all bids. Referring to the financial position, he wished to have an understanding of how NHS Tayside has got to this position in the first place, and an assurance that it will not be repeated, and that steps will already be taken to ensure savings are in place for next year.

Mrs Golden felt Trustees had to ask what the reputational risk would be if we did not suspend the clause, and what was the alternative for the Board. She noted that this year would be the first year of consolidated accounts, and if she were a member of the public, would be asking why she had to wait so long for "x, y and z" when there is a lot of money sitting there. Mrs Dunning reminded Trustees that they were meeting as Trustees, and not as Board Members.

The Chairman advised that the reality was if the clause was not suspended, the Chief Executive and Director of Finance would have to put together massive cuts package, and the content of that would be damaging.

Mrs Rogers pointed out that the use of aged funds has often been discussed at EAG, and how funds have not been used as quickly as they should be. This may be a way of addressing that issue, as donors expect their donations to be used. She advised that as long as funds were being used as per the criteria, etc. she would be supportive of this.

Trustees:-

• Noted and accepted the current position of Tayside NHS Board, and agreed a temporary variation in the Endowment Fund's Policy and Procedures to allow retrospective applications to be considered.

Trustees further noted:-

• Finance colleagues have advised that the Health Service Act 1978 states that the endowment funds are for the advancement of health;
• the relationship with OSCR, but that the Endowment Fund was not accountable to OSCR;
• the criteria for endowment funds will not be changed;
• there is a clear understanding that the temporary suspension of retrospective bids covers expenditure only in the current financial year, and
• Specific proposals will be brought forward to EAG/Board of Trustees for consideration.

Mr McDonald advised that the tax issue with HMRC is the delay factor in bringing the National Guidelines to Board of Trustees, but agreed to bring a paper, with the guidelines attached, to the next meeting of Trustees.

The meeting closed at 2.05pm.