Statement on NHS Tayside

Presiding Officer, I'd 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 these powers was not one I took lightly - and was the result of a series of issues which 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 Scottish Government to balance its annual financial position. The level of brokerage 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, launched in 2015/16, with the twin aim of improving patient experience alongside achieving financial sustainability. To support this Programme, in May 2016 we put in place arrangements to provide tailored support to NHS Tayside.

By its very nature, the scale of change envisaged was not a quick-fix. However, by the end of 2016/17 it was clear that the Year 1 milestones in their plan were not going to be delivered and the Board required a further £13.2 million of brokerage. In response, in March 2017, we appointed Prof Sir Lewis Ritchie to chair an Assurance and Advisory Group, the AAG, to review the deliverability of the Board's plans and the associated financial projections.

On 27 June 2017, the AAG published their Staging Report, confirming the financial picture being forecast by the Board was unrealistic. They also highlighted issues in relation to the Board's vision for the future, its service and workforce planning, its prescribing activities - as well as its leadership and governance processes.

Upon receipt of these 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 this latest report the expert team recognised that while progress had been made, it was largely transactional as opposed to transformational.

E-health funding

Just days after the publication of that second progress report an issue was uncovered by Scottish Government officials, and brought to my attention, on how eHealth funding had been recorded in the NHS Tayside accounts. We commissioned an independent investigation from Grant Thornton UK into this issue, which has also been shared with parliament. The central problem this 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. This includes the withdrawal from eHealth leads of the ability to make financial decisions and a review of internal controls in NHS National Services Scotland.

Endowment funding

On 3rd April, the then NHS Tayside Chair highlighted claims to me that on 24 January 2014, a decision was taken by the Board of Trustees responsible for endowment funds which had resulted in a number of projects being retrospectively approved for charitable funding, when they'd already been approved for funding through core NHS resources.

I immediately took action to have the accuracy of these claims independently verified. Following on from their work on eHealth funding, Grant Thornton were commissioned to undertake a review of NHS Tayside's financial governance. This work has now been extended to cover the use of endowment funds. Given the significance of these 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 Charities Regulator have recently opened a formal inquiry into allegations of possible misconduct in the operation of Tayside's endowment fund. Once I have received assurances from all other health boards, I will share them with OSCR who have agreed to review them. Should they determine that spending of endowment funds by any Board was inappropriate, I expect it 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 - were significantly undermined by these events. The NHS Tayside Chief Executive's attendance at the Endowment Fund meetings in 2014, particularly in the January where 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 these decisions, the culmination of financial control issues along with the limited progress highlighted by the AAG, led me to the conclusion that real change was going to require a new leadership team, with a robust set of skills, to restore public confidence in NHS Tayside. That's 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 and I thank him for his service to the Board over the last 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.

New leadership

It is crucially important 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.

They have both started as they mean to go on with productive meetings already held with the rest of the Board and with the Chief Executives of all three local authorities - 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.

In relation to the issue of endowment funds, 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 which had been retrospectively applied to programmes of work in 2014.

Brokerage

Understandably, stabilising the Board will take some time and I am committed to ensuring 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 endowment funds that have been inappropriately used. It is crucially important that the quality of patient services is protected and maintained throughout this challenging time.

Future priorities

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 with 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 to take the public and the staff of NHS Tayside with them throughout that process. I have every confidence in John Brown and Malcolm Wright that they will deliver this. 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 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 their own consideration of the behaviour of the Tayside Endowment Fund Board of Trustees in early 2014 along with their oversight of activities elsewhere in NHS Scotland, with any funding considered to be inappropriate being immediately returned to the endowment funds.

Presiding Officer, I will ensure all reports are made available to Parliament once completed and that all recommendations from these reports are implemented.