 I welcome everyone to the 10th meeting of the Public Audit Committee in 2024. The first item for the committee to consider is whether to take agenda items 4, 5, 6 and 7 in private. Are we all agreed? We are agreed. Thank you. The next item on our agenda is consideration of the 2022-23 audit of the Water Industry Commission for Scotland. We have a number of witnesses with us this morning, both from the Scottish Government and from the Water Industry Commission, so you are very welcome. In turn, we have Roy Brannan, who is the director general of Net Zero. Along with him is Kirsty Burge, who is the director of energy and climate change in the Scottish Government. John Rathgen, who is the deputy director of water policy in the directorate for energy and climate change operations. We are also joined this morning by the chair of the board of Wix, Professor Donald McCrae, who is joined by Robin McGill, who is another member of the board and the chair of the Audit and Risk Committee. We are also joined by David Satie, who is down here as the director of strategy and governance at the Water Industry Commission. I know that, as of yesterday, Mr Satie, you were appointed as the interim accountable officer, so we will be asking you questions in that capacity, too, this morning. We have quite a number of questions that we want to put, but before we get to those, I am going to invite first of all Roy Brannan and then Mr McCrae to make a short opening statement. Mr Brannan, over to you, director general. Thank you, convener, and good morning, committee. Thank you for the invitation to attend the committee today. I am joined today by two colleagues, Kirsty Burge, director of energy and climate change and John Rathgen, deputy director for water policy, with sponsorship over responsibility for Wix. It is important at the outset to say that the Scottish Government fully accepts the findings and recommendations by Audit Scotland, and in the Audit General section 22 report, on the Water Industry Commission for Scotland's 22-23 annual accounts. We recognise the seriousness of this report and are working to ensure that each recommendation is fully addressed. The team are focused on supporting Wix to resolve the governance issues and strengthen its financial management according to Audit Scotland's recommendations. In terms of Scottish Government oversight, we are also focused on strengthening the sponsorship relationship. Our primary focus is to ensure that Wix regains stakeholders and public trust as an economic regulator, where we have seen Wix operating technically as an effective economic regulator. This is evidenced by the around 35 per cent efficiency gains that it has helped to achieve from Scottish water through its economic oversight since 2005. It is particularly important, given the combined challenges that are facing us, including assets, increasing climate change and the cost of the living crisis. As always, we will endeavour to answer the committee's questions today and follow-up in writing if we are unable to do so. Wix accepts the need for a greater focus on value for money and the need to operate to the highest standards of financial management. Today, I want to tell you about the changes that Wix has since last December to meet those needs. Wix is the economic regulator of Scottish water, but it supports the hydrogenation strategy of Scottish Government to the extent of generating international income of £1.2 million in the last financial year, and that is 22 per cent of total income. What changes have taken place at Wix since December last year? The CEO and the cannibal officer, one and the same person, resigned effective from 31 December. That has allowed us to achieve a change of culture and a rapid refocus on value for money. We have appointed, as you have heard, an interim CEO and interim cannibal officer who is now sitting beside me. We have reinstated our approvals panel to ensure that any significant expenditure or always significant expenditure has required approvals in place. We have also revised our policies on travel and expenses with the focus on compliant expenses claims to move towards a target of 0 per cent expense claims with no receipt from the 4.4 per cent of expense claims or 1 in 23 experience during the year 2022-23. There is a lot more, but in summary we have agreed 27 actions opposite all the issues raised by Audit Scotland, and of these 27, 24 are now complete. My colleague is here today, David Sattie, who is now the interim CEO and interim cannibal officer, and Robin McGill, who is the chair of the Audit and Risk Committees. We are happy to answer your questions. On that last point, I think that it would be useful for us to get sight of those actions that you have undertaken and understand what progress you have made on them. It would be helpful for us to be able to see that. I hear what has been said about the role of WICS and what it has done to bring in extra revenue, but I think that the focus of the section 22 report is about conduct, behaviour, appropriate action and so on. The reference was made to the governance framework, which, as I understand it, was last reviewed in April 2022, which ironically is the start of the period under scrutiny by Audit Scotland, which has turned up some concerning findings. The Auditor General described it to us as significant weaknesses in the governance and financial management arrangements. He believed that it fell far short. There were things that he identified as coming up, which stood out for him because he had never seen the like before or rarely seen the like before in a public body and we will get into some of that during the course of this morning. If governance is the overarching structure and strategy that provides accountability and direction and that influences the behaviours and culture within WICS, which is the very first sentence of the governance framework of WICS, how have we got to the situation that is reported in this section 22 report? I think that the framework document reviewed back in 22 by John and Kirsty and the team reflects the on-going relationship that we have got in terms of all our public bodies in making sure that our framework documents are regularly reviewed. The issues that have been raised by Audit Scotland in particular would appear to be a lack of adherence with the policies that are set down in the framework document. That is really a question for Donald, the board and the risk committee and indeed the new chief executive. Once it was made aware of the issues in early December, I immediately sought to speak to Donald directly on the back of the report and asked for an implementation action plan to be put in place, which is what Donald just talked about there. 27 actions over 13 areas. To try and address the areas around governance, controls, policies, procedures, reporting and a couple of other issues around the estates themselves. John and Kirsty, do you want to say anything about the framework? The framework was put in place, it was discussed and it was published on the commission's website, so I think there was no doubt about it being in force in that sense. It was a direct response to the Ryan report to put those frameworks in place and that's been an active piece of work across government to make sure those are all in place. I don't think there's any doubt about it being in force. I don't think there's any doubt that it was on the website. I don't think there's any doubt that there's a written document that exists, but I think there's a huge question mark about whether the standards of governance and the standards of behaviour and the systems that were in place match up to the intention that's set out in the governance document. I'm going to bring other members of the committee in, but before I do, can I just check something off with you? Again, in the opening to the governance framework reviewed April 22, it does say that the power of Scottish ministers to direct the Water Industry Commission is confined to matters relating to the WICS financial management and administration. Has a minister been involved in what's happened here? Yes, our minister has been notified of, as soon as we had heard of the section 22 report, Kirsty Neathame notified our minister, cabinet secretary, of the contents of section 22 and she's been closely involved all the way through in terms of the appointment of the new chief executive. She wasn't involved, for example, in signing off the authorisation that Mr Rathgin gave to the £77,000 Harvard business school course. I'm going to invite Colin Beattie to put some questions to you. Since we've just mentioned the £77,350, let me focus on that to begin with. Chief Operating Officer attending a training course in Harvard Business School in Boston. How robust was the business case that was prepared for this course and what options were considered? I'm not going to ask any particular person if the appropriate person can just respond. Well, convener, I will start off answering that question and then I will probably ask David to follow up. WICS is, as you've heard, a small public body operating in a very complex and specialised area and we do find it difficult to compete on salaries with the private sector. To retain staff, our staff are frequently subject to approaches to being poached. We recognise that our staff are our most important asset and we take the view that we have to invest in them by offering advanced management training. Now, in this case that you've referred to, the Harvard Business Training, we accept completely that the value for money was not fully demonstrated and the business case was inadequate. So how do we proceed going forward? Well, we will still adhere to the policy of investing in our staff but we would ask for any such proposal in the future to be given a much more robust business case and almost certainly be asked to produce the training internally from either within Scotland or the UK at much lower cost and frankly better value for money. David, ono, do you want to explain how this process happened? More than happy to explain so. In spring 2021, initial discussions with the CEO and COO took place around personal development and at that time they also included, as I understand, UK institutions. Over the coming months, a preference was highlighted by the CEO for institutions in the US and then a business case was submitted for the course in question. Who was that preference? Was it the quality of the course or what? Mr Bt, I wasn't a part of those discussions so I couldn't say accurately as to why there was that preference for the US but one of the actions that Donald spoke to was the reinstatement of the approvals panel so that there is that collective conversation on expenditure such as this going forward. Would it be possible to get a copy of the business case? I realised that it was inadequate but it would be interesting to see the document itself and what the whole thing was based on. Can you run through what the approval process was for that particular piece of expenditure as it happened and as it should have been? I'll start off with a quick response to that before David answers more fully but this is a really important point. Going forward, I would very much like the approvals panel to make a decision and judgment on such a proposition and call it under the heading of novel and contentious. This is the judgment that was missing in this case because if they had found this to be a novel and contentious decision they should have asked the board to approve and we would have then made sure that all the relevant questions were asked about a value for money. David, sorry, I interrupted you by responding. No, more than happy to. So Mr Beatty, as I was saying, in spring 2021 there was a conversation around personal development and advanced management courses were highlighted as a need and as I said over the coming months there was a narrowing of the institutions. Then in April 2022 the CEO prepared an approval form for the course and I'm more than happy to send you that approval form and this was approved by the CEO as the auditor general highlighted when he presented evidence. At the time there wasn't that group conversation to Donald's point around the approval panel where the value for money case was challenged or indeed the route to market challenged or the subsequent approvals discussed and agreed among the decision makers within the organisation. And that's the reason why we have reinstated an approval panel to ensure that such items of expenditure is subjected to that scrutiny going forward. I hear what you say. Clearly there are many deficiencies in this, not just the business case itself but the whole of the approval process. I'll move on slightly because I think some of my colleagues will probably pick up on this again but what was the decision making process in regard to the Christmas gift vouchers which in total cost £2,600 for each member of staff and it was a taxable benefit that I think was later picked up by the commission. What was the actual decision making process and the approval process that was carried through? Yes, more than happy to. At the time when the decision was taken to give staff £100 vouchers a purchase order, the total quantum of this amount was less than the £10,000 threshold in place for an approval form. So a purchase order was then put in place and signed off by the budget holder and the CEO of the time. But again coming back to the reinstatement of the approval panel, this is something that would be deemed novel and contentious even though it's below the £10,000 fresh rate. Given the point that Audit Scotland had made when they presented evidence, given the £75 limit for gift threshold, this would then require both board approval and Government approval. So this wasn't something that was subjected to an approval panel process similar to the Harvard course, but going forward we will put such expenditure as subjected to an approval panel process. Can I just be clear on one thing? The information you're giving us is second hand, isn't it? Wasn't your personal... I wasn't part of the discussions related to the gifts. So where did the information come from that you're giving us now? It came from subsequent preparations from colleagues ahead of today. Isn't it a bit unusual for a public body to give staff members Christmas vouchers? Mr Beattie, if I could start off with the answer to that, you must remember the situation where we were all operating remotely and still in the process of recovering from Covid. That was a background to the decision, but David, do you want to get some more detail? My commitment to you, Mr Beattie, is that going forward we won't be giving staff any vouchers going forward at Christmas. My question was, is it normal? Is there precedence in public bodies giving such vouchers to staff? I can't concretely say that that's not the case, but it's unusual in terms of any of the public bodies that I have had dealings with. I guess that's a question that we could come back to and check to see whether the public body landscape across the whole of the Scottish Government adhere to a normal process of public sector values. I've been listening to know if there are other cases such as this. I'm not aware of any, no. Just on another angle on that, do we have any examples of payments being made by the commission that have resulted in personal tax implications? Yes, indeed, and David, I think you have the examples in detail. Yes, so we undertook a review of our expenses during the 22, and as part of that review, we had independent tax experts look at the expense policy to deem whether any of the items could be seen as a taxable benefit. And certain items were seen in this light, such as the reimbursement or contribution of personal eye care glasses, for example, Mr Beattie. And that was seen as a taxable benefit, which led to the PAYE settlement agreement to proactively disclose that to HMRC and pay for the tax related to those items. So during that period, if I worked for the Water Industry Commission, I'd be able to get my specs for free, get it reimbursed, up to what value? So the expenses policies in place at that time was to reimburse a proportion of the eye care that staff would pay for. What proportion? I would have to get back to you on the exact, I don't wear glasses, it's not something that I have reimbursed, so I would have to get back to you on the exact. You mentioned that as one example, what other examples do you have? How wide-ranging is this reimbursement policy? Other examples would include things like a leave-and-lunch for a member of staff if they departed the organisation, or items such as that, Mr Beattie, I wouldn't say it was wide-ranging. Can you give us a list of all the items that were subject to this? Yes, more than happy to write to the convener and provide the items that would be deemed potentially taxable. And presumably the tax implications arising from this policy, presumably the personal tax was dealt with by the commission? At that point in time, the personal tax was dealt by the commission, but as part of the work plan that we have put in place, we have made it clear that they are going forward. Wix will not be paying for any tax or NI on such items of expenditure. I am pleased to hear it, but as an audit committee, of course, we tend to look backwards at what's happened and try to interpret that. How aware was the Board and the Audit and Risk Committee members? How aware were they of this expenditure that was being carried out like this? Was there an approval process at all for individual members of staff? Was that done at a departmental level? Was there an equivalent or some sort of HR committee or that that looked at these personal items? How was it handled? Is that about the particular case of glasses? It's about anything that raised the personal tax implication and anything that was a benefit to staff that perhaps is out of line with what other public bodies are doing. Perhaps, David, you can answer him. Perhaps, Robin may want to come in. Sure. The process, when we undertook the review of expenses as an example, was presented to the Audit and Risk Committee and the Audit and Risk Committee then approves that and recommends it to the Board. Is it each individual transaction or the policy? The policy itself. And who approves the actual items? That would be a managerial decision provided that it tears to the policy. So there was delegated powers down to whatever managerial level it came to and they made the decision that the staff member qualified but there was no consideration of implication of tax at that point? So at that point in time it was delegated to the manager and provided it here to the policy then the manager approved it? So presumably if the Audit and Risk Committee laid down policy, how aware was the board of this policy? Could I just suggest that? Maybe Robin McGill, who's the chair of Audit and Risk Committee, addressed that issue. I'll link it back to something that Donald said earlier on. The CEO at the time had this view and we kind of shared that view. It was very hard to recruit talented staff. So there was a feeling that we need to have a package of measures to retain the staff that we have and that kind of sits within that general view that well that sounds like a good thing but certainly as opposed to the cost of recruiting and turning over staff and everything else. That was the background for some of that. The change in the policy came to the Audit and Risk Committee for us to review the policy. We didn't review individual items like that in the sense that here's an invoice, are we going to approve it? That was very much down the line through budget centres and everything else. But the general policy with certain items in it was deemed that as part of an overall staff retention policy this was a good idea. And now we're changing our mind but anyway that's going forward. How was the board appraised of that? I'm not sure. In the sense that we would recommend to the board that this suite of policies which have been changed, we would say we're content with them and the board should review them and there's nothing that we've seen that would cause us to say to the board don't approve them. So in this case the board did approve the policy's best package of measures? I'll just make an answer that. As chain of the board, we had a report from the Audit and Risk Committee a regular interval throughout the year and the policy on that issue would have been among all the reports that came to the board. The board were reassured by the Audit and Risk Committee's report. But the board would have actually approved that policy? The board did approve the policy yes, of course. I think that Graham Simpson's got some more questions in line with that, Graham. Yeah, thanks very much convener. Mr Brannan, if I can turn to you first, Mr Beattie was asking about taxable benefits and we heard that staff at the commission were able to claim glasses for example. In the rest of the Scottish Government, do these kind of benefits exist? I was trying to recollect there. I think there is something, and I would need to come back to you, but there is something about reasonable adjustments in terms of being able to work. And certainly I test, I seem to remember, there was a case for I test, but I would need to check that and come back to you exactly what the policy is in Scottish Government on those kind of issues. But you can get that for us? Yes, yes. There might be more than just I test, there might be other benefits. Well professional fees for instance are usually in some circumstances paid for and that is set down in policies. So there is quite clear policies both in the SPFM but also more generally across HR in terms of employee benefits, employee and the things that can be claimed. So that is all pretty evident that can be sent to the committee if necessary. Okay. And you said earlier that you weren't sure whether there was anywhere else in government that gave Christmas gifts to staff? Certainly not something that I've come across, but again it's a wide public body sector. I've got 28 public bodies that come under me. I couldn't stand here to sit here today and say categorically that that hasn't happened. I do know in the UK Government for instance that there is a reward system that individuals can get if a team has performed particularly well on a particular task. So again there may be examples elsewhere but I just couldn't say for sure. But you'll go away now and check all the people underneath you whether that is... I will endeavour to get an answer to that. I guess somebody form if I can in terms of the public bodies that I'm aware of. Okay. I want to go back to this Harvard trip. Mr Rathgen. Is that the correct translation? Yes, yes. Rathgen. Okay. We've got a couple of bits of correspondence here which have your name on it. So there was an email... Actually it was an email from you I think. Yes. You write on the 3rd of November 2023 to Alan who I presume is the former chief exec. You're writing about this training course and you say, Had I been informed I would have agreed with the approach. So why would you have agreed with the approach? So I think first up we need to say a business case should have come to us ahead of the expenditure being made and we should have had the full facts of both the approach and the benefits of the course and could then have scrutinised that properly. And I think we certainly have challenged the base of whether or not it should be UK provider or an international one. So it's highly unusual to be asked to approve expenditure retrospectively. I've never seen that before and been asked to approve retrospectively. So I have to say my mindset at the time was very clearly on this expenditure has been made. This was in the accounts. It was revealed in the accounts. So it was a retrospective issue and that is highly unusual. In agreeing the approach that refers to the single tender, which is really why it should have come to government ahead of time. So the mistake that was made I think was that it was assumed to be within the WIC's delegated powers to make the decision on value for money and so on and so forth and approve the business case but in fact because they used a single tender approach it should have come to government with a business case for our appraisal. But my approval of it was essentially that this money had been spent. So there was no material, there was no material benefit of that point in challenging it. Well, you could have challenged it. You could have pushed back. You could have said this was inappropriate. This was far too much money and part of the approach revealed in another email to you was that the COO identified, this is the COO went to Harvard, identified Harvard as her preferred option. So she got to pick where she was going to go. That's part of the approach that you've just said is okay. It's not okay, is it? I think I was assured by the CEO that the course best met the needs of the individual and he also assured me that the costs were comparable with other providers. I think in retrospect it's an error of judgment not to oppress the more information on those points. I think to repeat this was being asked of us retrospectively to the event happening. We had no material way of changing the outcome and that's a highly unusual place to be. I can just build on that point and something I said right at the start. So from what I can see this is a failure in the policies, in the application of the policies. So the framework was pretty clear about the responsibilities for the board, the chair, the chief executive and the sponsor team. In this case, the delegated authorities were breached and the proper process wasn't followed. As John has said, a bad error in judgment not to have continued the challenge at that time. But it was beyond the point of us being able to influence it. This course happened at the start of the year. John was made aware of it when it came forward in the section 22 report. So, again, it comes back to, I guess, the bit that I am encouraged on and Donald and the team are taking forward is the immediate action plan on the back of those issues raised by Europe Scotland and actually addressing things around governance, policies, the procedures and the reporting, which is the really important thing. I want to get wicks back to being the point of a really well-governed public body and that's the, for me, that's the important thing. OK. All right. So, I accept, Mr Rathden, you accept that you should have pushed back, you should have said this was unacceptable and you didn't. So, that's fine. You admit there was an error and you should have done that. But that goes, to me, that is part of the culture that existed at the time that nobody was saying this is wrong. Do you accept that point? I think, you know, what I did push back on was that the Novel and Context Expenditure absolutely should have been brought to our attention and it was not acceptable not to do that and that retrospection was also, you know, simply not acceptable as well. So, and certainly on the gift vouchers, for example, again, that that was again against the framework agreement and was therefore clearly unacceptable. So, I think, you know, could I push back harder? Yes. I could have pushed back harder. Did I push back? Yes. I highlighted in particular that point about Novel and Context Expenditure, which is really the point here, is that I think internally the culture around that kind of expenditure should have been a better culture of thinking about things from how it would be perceived outside of the public body, how would people see those kind of expenditures and I think that's, you know, that was the bit that I was trying to make clear was that that, you know, the thought process around Novel and Context Expenditure was really the issue that, okay, this was picked out of an all, you know, the internal order to highlighted this and brought it, brought it out and then for the general also brought it out. But that was that's obviously far too late in the process. These things that should be a proper appraisal of these things with formal business cases really making sure that value for money was was key to decision making. So I think we were clear about that. I said it's just highly unusual to have to deal with these things retrospectively. It's not something we've seen elsewhere. The committee's heard that within the commission there were, maybe there still are, a number of people who have credit cards which apparently have no limit on spending. You just go out and spend what you like on these cards. Is that still the case? Well, convener, Mr Simpson, could I start the answer by saying that we recognise that there is some action required on cards and we have taken that. However, we do like to point out, I'd like to point out that senior staff having cards is not unusual and it's pretty important given how we all operate these days. We do recognise, of course, that it does mean that our processes and checks and culture have to be correctly aligned to ensure proper operation. Now, David, can you tell us, we have taken some action with regards to cards, which I think will be very helpful. More than happy to, so at the time, and this was also highlighted when the auditor general presented evidence, many of the items of expenditure, including expenses, were incurred in office credit cards. These cards were issued to the senior leadership and certain members of the operational staff, but also some of the individuals undertaking the international consultancy work. Since the issues identified by the auditor general and the work plan that we have put in place, those credit cards have been frozen. Members of staff will incur expenses on their own cards and they will only be reimbursed if that expenditure is compliant going forward, Mr Simpson. So we've got rid of these corporate credit cards. You said they were frozen, are we just getting rid of them? They're frozen only because there still might be instances where expenditure on a credit card is deemed appropriate, for example the purchase of IT. So if there is a business case put forward ex ante and the expenditure justified, then the credit card would be unlocked and the expenditure incurred on the card. So there are greater controls for the subset of individuals that would incur items of expenditure on the card. One of the things that we'll be doing going forward with the sponsor team and David, Donald and the board will be to look at the policies around credit cards. So in the Scottish Government we have electronic purchasing cards. The policy was redone just at the start of the year. Three separations, card holder, authoriser and card controller. I think that there's a lot of learning that can be done from what we do in core Scottish Government for the public body before they start to reintroduce the need for a credit card. There is an opportunity to get a TNS credit card within Scottish Government, but again there are very strict rules about how that's used and adapted and one of the clear exclusions is no drink policy. So again I think there's a lot of learning that can be taken before David moves too much forward into this interim position to just make sure that the policies are as up to date as possible and in alignment with both SPFM but also Government policy. Okay, so one of the problems with this system is that people were able to go out and spend money and they weren't asked to provide receipts and we heard of one example of where the former chief executive went for a meal with a water industry person from New Zealand. This was in October 2022. At the Champagne Inn in Llythgo, the total cost for that meal for two was £402.41. Now, you know, I've been struggling to work out how you could arrive at such a figure for two people. Before I get into it, do you actually know what was eaten or consumed that night? I commence the answer and I'm sure we will have further details supplied by both David and Robin. The meal was indeed held at the Champagne Inn at Llythgo. It was the former CEO with a senior official from the New Zealand Government. It was paid for by the CEO with a credit card. It was wrongly coded subsequently as subsistence when it should have been coded up as business development. It was part of our high donation strategy and it was part of a series of contacts with overseas visitors and the New Zealand contact was instrumental, not wholly instrumental, but was part of the contact that led up to the development of that £1.2 million of income, which I referred to earlier. Having said that, I completely accept that we did not show value for money on this event, in this case. In future, we have changed the rules to make sure that we do demonstrate better value for money. The policy for such an event states that such expenditure would have to be pre-approved. As you have heard, we have reduced the number of credit cards in use and it would be correctly coded up under business development. There is one last point that I want to make. It refers to the last point that you have made, Mr Simpson, about the culture. Having rules is very useful, but culture on when to obey the rules is actually more important. That is what I want to see major change. We have sought to do that by having training in value for money for our senior staff and by making sure that that is rolled out to all members of WICS, so that when they come to look at a proposition such as this in future, they will take the view that this should be novel and contentious and will seek further approval. David, do you want to give some more detail on the actual process? I have been looking at the menu at this fine establishment. If you pick the most expensive item, start a main course and dessert. Cold smoked salmon, £12.95 ahead. Then we move on to the chateau brionne, £16 per 100 kilos. If you get the minimum weight of £800, that is £128 for two people. Then you move on to a cheese course, £14.50. That all adds up to £202.90. That is for food. Where does the rest come from? I would have thought somebody should have been querying this bill. Could I suggest that David answer first and then I will go to Robin who actually looked at this expense. As the chair highlighted, this was a dinner attended by the former CEO and a delegate from the New Zealand Government. The expenditure was not provided with an itemised receipt. We have no way of knowing Mr Simpson the exact items that were purchased. The expenditure was not provided with an itemised receipt. We have no way of knowing the exact items that were purchased. It was reimbursed on an office credit card. These are some of the items that going forward we will not allow. So items of expenditure will be incurred on personal credit cards and only being burst if an itemised receipt is provided and compliant with policies. Mr Satie, it is unbelievable. Nobody thought to question it. But now you would but nobody at the time thought to question this. Robin will give us more detail. Mr Simpson, I can assure you at the time I challenged this. One on the first instance because it came through coded as subsistence and I said this is ridiculous and I sent it back and refused to sign it off. Then I had a discussion with the CEO about the nature of the meeting in the context of business development a very lucrative business development although it was eye-watching. It was a legitimate expense so it was challenged at the time absolutely. I also took every opportunity to speak to the CEO every time anything that has happened to reinforce the need for itemised receipts because it just leads you to wonder as I was wondering what on earth did you spend this on? What was the answer Mr McGill? Well he was just saying it was a business expense it enabled this business and it was good value for money and it serves to demonstrate where he was thinking it was and I had many occasions to say to him you know it's not all about the bottom right hand corner on the account you've got to be seen to be doing the right thing and through my arc meetings we had regular conversations about public reaction to excessive spend so we were challenged at the time and a lot of pushback but we kept that challenge on but maybe as a convener if you allow me just a minute to give some context to the whole expenses thing Audit Scotland did sampling and since that we've actually gone right down to the bottom we've been through thousands and thousands of transactions we can give you the latest update if you like and it's slightly different of those expenses that came through 92.5% were itemised and fully compliant so a lot of people who were working were doing the right thing getting them approved, getting the right documentation and that was good it's worth noting that the monetary value of those 92.5% of transactions was 99% of the total value of transactions put through the transactions that were not compliant but amounted to about 162% just slightly more in the period and 58% of them were relating to non-itimised receipts so I just wanted to make the point that there was a lot of people at Wix doing the right thing and they were doing the right thing to go on about their business and there was a few people at Wix not doing the right thing I just thought that context might be helpful for the committee A few people, how many? If you do an 80-20 it's probably two or three people account for most of the non-itimised receipts Two or three people CEO and a couple of others Who are the other two? Again I don't want to actually but there were senior directors who presented expense claim forms without receipts and those we are following up but it's still a very small number and the value was basically I think it comes up to the CEO was accountable for nearly half of these Are the other two people still with the organisation? Well they are and I think it comes to culture it's a question of why were they behaving that way when they knew perfectly well that that wasn't the right thing to do and I say now the CEO has departed I'm pleased to say in January and February we had zero non-compliance in expenses in the reports so I think the organisation has made a real shift the action plan that's been delivered is also made a real shift towards tighter, no alcohol and pre-approval of anything that supports is contentious because there's a lot of tension between running a domestic regulator, small body and running an international consultancy in terms of approach and we've been trying to fit that into one policy and it's very hard and we'll take advice from the support group going forward how can we do that because these tensions will continue as we go forward and pursue this business so we need to get clear guidance I've got one final question I know I've had quite a long time here but are you still sending people off to New Zealand and if so are they flying economy or are they going business class or first class and indeed did they do that before No one ever went first class business class the policy currently states that over a six hour flight you're allowed to book business class and obviously going to New Zealand is a long long flight nice work if you can get it right thank you Mr Rathden I want to go back to you because I feel as though you're almost misleading the committee because you've said that yes you believed it was an error of judgment and that you thought what was going on was not acceptable but when I read the email that you send you are saying things like I'm grateful for the opportunity to comment on the Christmas gifts I accept that this was an oversight I do not think it's proportionate to try and recover the balance on the training costs I rather agree that this is a unique training offering and can see why single tender was your approach I would have agreed with the approach due diligence had been carried out I mean that doesn't tell me that you're challenging that decision that tells me you're going along with the decision you're complicit in what many people looking at this now understand it to be a waste of public money so what I was saying was that I felt that the commission should clearly have come with a business case to us ahead of the expenditure being made and that what I was concerned about was that they had not done that they had not brought that fact so at a point where we could make a material difference to it so I was then given assurance to follow up I was then given assurance by the CEO that all the due diligence had been done it was the right thing to do and what I'm saying I made an error of judgement it's the error of judgement to have relied on that assurance at that point that he gave me but again I could make no material difference to the outcome at this point the point is the retrospection is the issue but even with the benefit of that hindsight you don't challenge it in fact you agree with it and then in turn the expenditure you had it in your gift to turn that down that was an option open to you wasn't it I could have rejected the expenditure but again it would have made no material difference to do so it had already been incurred months ago okay so I mean can somebody tell me what this chief operating officer does and why do they need £77,000 worth of training as a matter of the commission well can I start the answer then as I explained there is a policy of offering senior advanced management training to senior members that works for all the reasons of keeping staff, retaining staff and making sure that we can offer an attractive package at all times and in the future so this was part of that policy I have to say though of course as I said that the policy was enacted by CEO particularly and he did have a preference for what's called North American courses mass MIT Harvard so on and I'm sure you know convener that Harvard does have a particular high value in the whole world of education and management and business schools having said all that I do think that there was room for a much greater business case to be produced and I'd look to that in the future you are an experienced very experienced economics professor Joe Armstrong who was on Mr McGill's audit committee I think says in the CV she holds two economics degrees and is a business economist so you're very familiar with the academic landscape did you say earlier on you weren't aware of any of this at the time of the Harvard business training course I can categorically state that the first we heard about it was on November 2 which was well forward the course had taken place by then but what's your view on the fact that we've been told that the only institutions that were considered for this course were Harvard, Stanford or Yale I'm sitting not far from an institution that's awarded me two degrees in the past so I'd be wrong with me to criticise any business school and in fact I was a member of such a business school for a short period but I think my main point is that we're not against such a policy of providing such a high level of managed education but it must be produced with a definite business case a robust business case which proves value for money and I can't say what the board would have said had we been given the choice but I'm pretty certain we would have asked for a very much more robust business case than the one I eventually saw well the business case appears to be written by the person who was benefitting from the course which is quite extraordinary can I move on to Mr Brannan what do we spend on the training of top civil servants in the Scottish government in this area I can't say for certain exactly what scale of courses are available but we use a lot of the courses that are provided through Cabinet Office for instance the Infrastructure Projects Authority on major projects in programming civil service college I guess I can't comment on the individual or the learning and development gap or whether or not the gap was met by this course or not but a bit like the chair I would have expected to see a wide range of offerings that were able to match the gap of development training that was required but I couldn't say for certain whether there is nobody that's gone through a similar course in the Scottish government it's something that I've not come across in all my time in the Scottish government but you've not come across it that's right okay that's interesting I mean what as I understand it as well mentoring programmes and that kind of thing a fabric of personal development aren't they within the civil service mentoring coaching those are all available to members of the senior civil service and indeed everybody to benefit from either from the cohort of senior colleagues or elsewhere within the UK government yeah and they don't cost £77,000 presumably I guess one other final question I've got before I invite Willie Coffey to put some questions to you is so this chief operating officer who's benefited from £77,000 of public expenditure to attend the Harvard business school I don't know how long the course lasted but are they now is there any kind of condition on that expenditure which means they will stay with the organisation for a certain period of time or could they leave tomorrow that's right Commander I will start the question I answer we normally do have such conditions and David can give you some more detail on that but in this case there were no conditions applied that I'm aware of David do you want to give some examples of so in this course lasted for slightly under six months there have been instances where training opportunities of longer duration have been subjected to a lock-in for staff normally over a two-year period Mr Leonard so there have been instances in the past where a lock-in has been provided well maybe that was another facet of the business case that was drawn up by the chief operating officer herself Willie Coffey you've got some questions to put thanks very much good morning colleagues this is not particularly pleasant being a member of the Parliament in the audit committee on and off for 17 years now and I would have to say to you colleagues that this is one of the worst sessions I've ever participated in and I really have to be honest with you in saying that I have just a few questions I'd like to ask if I may to Mr Rathgin on the issue of whether the expense was retrospectively approved or not it wouldn't make a difference because it had been incurred why would you do that why wouldn't you state your case and say that this is unapproved you can't approve something that is clearly not approvable if you understand my meaning why wouldn't you do that because ultimately the public would like to know what's the difference then between approving something or not if there's no outcome because I suppose normally we would get a business case we would have it would be prior to the expenditure and that would be the normal way we would see a novel and contentious expenditure come through or something that was beyond the limits in the framework agreement set out for the organisation so in that process we would absolutely scrutinise the business case we would go through the value for money we would ask questions we would press and we would come to a judgement on that particular expenditure and that would be the proper process the normal way of doing it this highly unusual to get a retrospective request essentially it's a highlight from an audit that has said this should have been requested and it gets noted to government but at that point I sought the assurance of the chief executive about the appropriateness of the spend and received that assurance and I say my my area of judgement in a sense was that assurance at that point but my mindset was this is a done deal this expenditure was gone so I will make the point that it should have come to us that it should have been followed proper process and that was my my push back to them essentially at that point but there was no material change could be affected so there wasn't really normally there would absolutely be this sort of thing where you'd say no you know that's straight forward on it because you know it would be very hard to see a business case that would justify that level of expenditure I'll come to the audit now but what would happen if you had still not approved it what would happen in government what would happen surely something different was between approving and not approving so my understanding we can confirm this is it would just be noted because the expenditure had already been undertaken but we can check that because the point here is the fact that it's really really unusual for it to be retrospective I've never seen that before in 30 odd years of government it's just not it's just not something that happens okay turn it to the audit this was picked up by an audit I'm not sure if it was internal audit or external audit could somebody clarify if it was external audit that picked up this issue or was it internal audit sorry could you clarify which issue the issue about the Harvard approval of the 77,000 it was picked up by the auditor the report says is that external audit or internal audit why wasn't it picked up by the internal audit team is there an internal audit team problem there is an internal audit team and the the challenge there is the CEO had chosen to interpret the rules to suggest to himself that he didn't need to refer this to anyone or run it by anyone and although and I would like to say for the individual concerned that the advanced management program at Harvard is really hard course to get into and the fact that somebody proposes a proposal and writes it doesn't suggest somehow they were they were gaming the system or something like that the proposal was put in the chief executive officer and accountable officer deemed it was appropriate for him to just say yes and put the expense through which is why internal audit we've not picked it up and I think this was picked up largely because it was one of a sequence of things that caused the external audit of concerns about decision making quality of decision making by the chief executive but that the organization Donald did your organization know that that type of expenditure had to be approved by Scottish Government it was over 20,000 the rules in operation were that the board were not required to be told about that but the bit that I'm really keen on changing and it has changed is where such a proposal comes to the approvals group which wasn't the approvals panel which wasn't an operation at that time that's another crucial change so the approvals panel would discuss this proposal and have input from all the other directors so it wouldn't be the chief exec influencing that decision almost entirely on his own that's an important change so first of all the approvals panel is in place to stop that and the other thing would be that the approvals panel have gone through a series of training courses to enable them to make the decision about whether a proposal is novel or contentious and that's judgment I think was wrong in this case because the CEO at that time supposing he was very keen on this proposal should really have said this is novel or contentious I should get the approval off and discuss his government and that's the bit that was missing and didn't happen and we're working hard to change that David you want to come in on Yeah, so Mr Covey the time the decision taken was that because an options appraisal was provided that the threshold this wasn't deemed a single tender purchase and therefore the threshold was £100,000 as per the governance framework however Audit Scotland when it embarked on the audit reviewed the appraisal it didn't find it sufficiently robust and classified it as a single tender purchase and therefore the £20,000 threshold was applicable which then led to the retrospective approval by the former CEO in November last year clearing it as an options appraisal did that somehow give some comfort to making that decision and not seeking the approval because it's clearly not a tender process an options appraisal isn't a tender process who introduced this notion that it's an options appraisal process and therefore doesn't need Scottish Government approval Sir, as at the time this is why I was making the point at the time this wasn't discussed around the group collectively to look at either the value for money case the procurement approach or indeed the requisite approvals that they followed so at regardless of whether or not an options appraisal was put forward or whether or not this was deemed a single tender purchase it would have been deemed novel and contentious and should have been put forward for approval to the board and to the Government as a matter of course which gets back to the cultural point which we are now trying to change within the organisation Okay, thank you and maybe my last question on this is for new Roy I mean this committee as you know over the years has engaged in issues about sponsorship sponsorship division and its relationship between public bodies and so on so that this hardly stands out as a great example of the successful relationship that we have and we have come up against issues time and time again what would you say to the committee and to the public about the nature of this relationship particularly between yourselves and this particular body and what lessons are we learning about the future and how this has to improve so that we don't continue to meet as an audit committee year after year Yeah, thanks Mr Coffrey and you know firstly this is unacceptable to be sitting here with a public body that has not complied with the policies that are set down in the framework document and I think Donald and David have done their best to set out why that has occurred as a result of the former chief executive not complying with those policies from my own perspective if I set out the timeline first the first I was made aware of this was when Audit Scotland approached me to say like a quiet word with you on what's about to come forward in terms of a section 22 and then they then went through that in a bit more detail having then surfaced those issues speaking to Kirsty and John we immediately moved to speak to Donald on the 11th of the month and then conveyed my I guess concern severe concern over what had arisen out of these this audit and cited to the sponsor team so the sponsor team found out at the same time as the section 22 report and I look back at what more could be done in terms of that sponsored relationship so here's a body that out of all my bodies is one that I would have thought would have been in a really high efficient operating way as a commissioner and clearly wasn't and we talk about the things that we're trying to put right now in terms of helping Donald and the team get back to that position but there was regular engagement from John and supported by Kirsty as the director responsible for the body on the policy regulation element of the work of the board previous accounts had indicated any issues with the board and that's not a defence it's just a matter of fact the attention was probably more on its operation as a technical efficient regulator rather than on the inner workings we wouldn't normally get sight of expenses for instance within a public body we wouldn't normally be party to the policies set up in terms of travel and the likes those are matters for the board as set down in the framework agreement very clearly what the responsibilities are linked to the SPFM again very clearly on the responsibilities of the portfolio accountable officer and of the team executive role as accountable officer and those are pretty clearly set out and in this case I think there was clearly a delegation from those duties in terms of that accountable officers responsibilities going forward I think the key thing for us is to re-establish that trust from this committee and others in both the workings of the board but also how we as a sponsor team Kirsty and John and the wider team start to work with the board on improvements I'll just say two more things Mr Cofay if I can the first of those the discussion that I had with Donald in November I said to him then that I would undertake an independent review of governance and that's being worked through just now in terms of procurement on our side to get somebody to undertake that we will also look at the sponsorship to make sure we are strengthening what we can in that sponsorship role the public body support unit will provide a dedicated piece of work towards David and the team again to try and improve governance as we go forward and since the 11th we have had a monthly meeting with Donald and Kirsty and the team to go through the action plan 24 of the 27 actions are now complete which is good but there's more work to do the culture change is the bit that is going to take the real draft off both the chair of the board and the chief executive to make that cultural change happen and get this back into an even footing more widely there's a DG responsible for quite a big portfolio and a number of public bodies on the back of the Ryan review as you know from what the perms second has probably said previously on the Ryan review of public bodies we undertook a couple of new initiatives in terms of how do we try and make sure we get assurance as accountable officers on all our public bodies the first of those we were the first one of two DGs actually to trial a red amber green rating from our lead directors on the state of the public body across a range of questions to just get an idea of where those were running appropriately or not that document is something that's discussed at the DG assurance quarterly meetings that I hold with all our directors external audit and we review that on a regular basis as do the directors we also on the day that it was told by Audit Scotland off the section 22 report I immediately put that out to all our directors in the portfolio to make sure that they with a clear message that they needed a to make sure that frameworks were regularly reviewed in accordance with the guidance and that they had regular engagement with their chairs and chief executives it's difficult for me to meet everybody and try and do it on a cyclic basis I've got a forward programme of cyclic engagement but I do that where I can to try and tie up with the work of Kirsty and John Who and again under the framework agreement it's pretty clearly set out that the delegated engagement with the board is through Kirsty John and the sponsorship team and then again I reinforce that in the 20th of December and since then I think six times in SMTs this year I have brought back this issue of public body sponsorship the importance of making sure that that works right there is really good guidance available from the public bodies unit which is cascaded through the teams to make sure that they are following best practice and helping our public bodies to be highly efficient and well operated but again it comes back to they're very clearly set out responsibilities in the framework agreement for the chair, the board the chief executive and the sponsorship team and it would be inappropriate for us to be in about all of the work of the board because it has been set up as a non-departmental public board in law with particular responsibilities to undertake that Roy just fairly just all of that is really appreciated but you saying what happened here can't happen again it shouldn't need a quiet word from the auditor general but something that's happened for the sponsorship team to be aware of there has to be some kind of earlier better quicker engagement that helps to stop a problem like this arising internal audit didn't fail, it was ignored because of other circumstances that the colleagues have described but you're not being made aware of it until the tail end that needs to change the sponsorship relationship needs to be closer or more engaged in whatever way I'll bring Kirsten to say that but absolutely that is the case unless these issues are surfaced and brought to the attention of the sponsor body and as I say there were regular engagement with John and the organisation it's difficult for the sponsor body to get to that level of detail and I think that's the key thing here is how do we learn the lessons out of this so that we help our sponsor teams to ask those difficult challenging questions so that they can be assured and in turn I can be assured that we're doing everything possible to ensure the board is complying and the chair and the chief executive complying what's written down in the framework and in SPFM Kirsten? We're really running against the clock now I know that the deputy convener has got some questions to ask so I'm going to bring him in now and if you get an opportunity in response to Jamie's questions Jamie Greene Thank you convener and some of my questions will give you perhaps some further opportunity to say what you were just about to say I'd like to start first of all before we look at the wider issues of other public bodies but on this issue of WICS itself I'm new to this committee and I didn't attend the last session but I did watch the footage and I thought that was uncomfortable this is ten times worse what I'm hearing though are quite a wide range of issues where if you worked in that organisation there were a number of perks if you like working practices free personal eye care lunches retail vouchers expensive training courses at Harvard business class flights and so on and none of that really rings any alarm bells anyone that's worked in the private sector will find that that's quite common that's common practice that's how businesses work but this isn't the private sector and it seems to me like what I'm hearing is a culture of the private sector where you're spending shareholders money but in the public sector so I guess my question is has this organisation been running like a private sector business instead of a public sector body I'll start with the chair of the board well thanks I'll start with the answer to that that question WICS is indeed a public body but it is quite different in that it generates 22% of its income from international consultancy there is a grey area here I feel strongly about this point that we are charged with developing that international consultancy income which means that you have to extend you have to invest and that means sending people off abroad to conferences to give papers to build up the reputation which in fact has been done and I can tell you that WICS enjoys and we are being continually asked to host visiting delegations from other countries to see how we do it and I'm proud to say that Scotland has an excellent record in in Scottish Water and in how it's regulated and that's what they come to see and then they ask us often to take part in consultancy now if you recognise that we have an objective of developing international income to supplement that which we have as a levy from Scottish Water and it is quite substantial then you have to recognise that that means undertaking activities which you wouldn't normally expect of a public body so I am going to ask for further clarification from Scottish Government on what it is exactly we should be what is appropriate then for a public body which is tasked with developing external income what is appropriate for that body to undertake because you are asking staff on one day to be behaving with a potential customer with a lucrative contract which might lead to extensive income and then the next day to be adopting perhaps a very low cost event on domestic regulation and that's frankly not that easy to do now we have started quite a degree of accounting separation of these activities and Robin can give you more detail on that we have started that and we have had discussions about how we proceed even to the point of setting up a different legal entity which might be responsible for the international income but that issue is still there and it's grey and it's something I welcome further clarification from our colleagues in the sponsor team so I'm looking forward to that I've got a lot of questions so I'm going to rattle through rather than ask the whole panel to respond and I'm going to ask for brief responses to them and I think that is a very valid conversation the reason I raised it is because we are absolutely right to be sitting on this table and the wider public watching to be outraged at 400 quid buzi lunches and people flying off first class for training courses Never first class? Well business class, £5,000 to Boston is quite a lot of money I would say but that's by the by I think my wider point though is that there is a clear inherent conflict of interest in the work that people are doing on the ground but forgetting that these cards that they're using are using public money and I think that's where there's clearly some conflicts have to be resolved I also have a wider issue having listened to the evidence in that I read your I read the commission's annual report all 75 pages of it and on page 30 it states in black and white there have been no governance issues identified during the year that are significant in relation to WICS's overall governance framework Of that be the case then why did the auditor general say that the commission demonstrated poor governance over expenditure insufficient engagement with its sponsor and as we've heard a wide-ranging Pandora's Box of failures in governance so my problem is this the report is saying that our internal audit processes and indeed your external audit processes you're paying quite a lot of money to Grant Thornton to do some of this work and I beg the question what role they've had in all of this yet it took the Audit Scotland the Audit General to step in and say hold on something smells wrong here what has gone so catastrophically wrong in years of board to have missed all these governance issues If I could start the answer to that again convener we have a budget which is approved by Scottish Government board approves we have regular financial reports to the board we have regular audit committee reports back to the board we have external audit as well internal audit contribute to the ARC we note I note that the accounts were not qualified ever including the last year to which the Audit General has reported on which the Audit General has reported and there were no issues found in all the preceding years in all the 24 years of WICS so we are agreed of course that we did not demonstrate value for money sufficiently That is one of the four key accountability metrics that you as a board have to sign off you signed off each four value for money is one of them but there are others effective and robust internal controls high standards of proprietary behaviour there is a whole list of things that you have to sign off in the annual report you signed them off and it is there in black and white it says no governance issues were identified if there were no issues then why did the Audit General produce a section 22 report that said there were issues I am sorry So either you knew the issues and said there weren't in the report in which case the report was false or you missed all these issues in which case how could you have missed them but Audit Scotland found them I start with the value for money and value for money WICS has repaid actually in each of its four strategic review periods some money back to Scottish Water in fact the last payment was £21.5 million our costs per household are about the same as of what and we have made some comparisons for the costs even of our staff and we do compare well in terms of being below it so I would suggest that overall our value for money and I said overall is good now the costs of WICS are My question is about any of that my question is your role and the gentlemen sitting to your right as two members of the board failed to identify any of these corporate governance issues in your annual report why? There's a report that came to the Audit and Risk Committee which then came to the board in 23 which highlighted the pilot that had been in place for six months on a new expensive policy and the report was there was nothing to report it was going well but I'll pass to Robin to answer that particular question on the expenses policy but could I just finish though my last point and that is if you look at our expenses in total there are actually 3.1% lower than there were five years ago so that's my argument about value for money but Robin I know you want to talk about the expenses No I think we're in the danger of conflating two separate issues there's audit and as the Auditor General said in the last session the audit is a sampling process you do it risk-based the Audit and Risk Committee applies similar processes we look for where we think the big issues are and I'll come back to 99% of our expenses were properly done so we were aware of the tensions and the difficulties of managing the expenses but Donald's highlighted two very different businesses sharing the same house and same set of accounts this has been a live issue this has been discussed at the board for years should we separate, should we do something different how can we keep this apart and not allow one to cross-contaminate or subsidise the other these have been live debates that the board have had so we've been working very much on those so the audits that were done subject to the sampling that was done and the materiality thresholds didn't pick this up several of the big issues was that the Auditor General to be concerned about culture the board was completely unsighted you've heard us talk about that at length so it's a very unusual situation you held ten meetings in that year I refer to five formal, five informal and there were no issues of culture around the senior directors and the chief executive arose in those meetings there were issues around there weren't issues around policy issues that we identified with an arc if I speak about my committee and the board were aware that there were issues with compliance with policies and the approach we were taking was on a risk-based to continue tightening the policies we went forward continue our scrutiny we introduced a non-compliance report to highlight areas and to keep every time we could reinforcing how people should behave now if people then choose to go outside and do things from the site of the board and not bring them back to the board or bring them back to the Audit and Risk Committee that's very difficult when you're trying to do a risk-based sampling the Audit Committee meets four times it's got a broad remit, we've only so many hours and that's what we do and we did our best and I think those comments are what's reflected in the report the other things that were happening off to the side under the table took an audit to find them and we rely on audit to give us feedback for unearthing these and joining up some dots and saying you've got a major issue here, a lot bigger than we thought we had sounds like you've got some work to do on your internal audit though you need to be having a conversation with your internal auditors surely if you've only got picked up an external audit correct and based on the policies, based on the governance framework based on the interpretation of what do I need to do to get this approved by the CEO none of those flagged up so internal audit wouldn't have picked those up because they didn't flag up properly so yes, we have got work to do the internal audit since this has happened we've refocused the internal audit from doing what they were doing to really focus on processes procurement processes control and finance so we'll be well prepared for the governance review and any other review because we've been digging into that since the middle of November I appreciate timers also against us I had one specific question a lot of conversation today has been around the former chief executive who obviously resigned and it's very easy to make a skateboard of individuals when there are wider systemic issues especially if they're not here to defend themselves but can I ask he clearly didn't resign with a heap of glory given the issues but did he receive any financial settlement upon his resignation and if so how much well the board had asked the CEO and the executive for a detailed response to the section 22 report and we were still considering that response when the CEO tendered his resignation and he said it was for personal reasons he'd set out wicks he'd been there for 24 years what he could do for wicks and the board decided to accept and his contract required him to give six months notice and we agreed that we would honour that and he resigned on the 31st of December with any financial payment he was given exactly what he was due legally six months salary so he was under not investigation but he was under a lot of pressure to respond to a very serious allegation of corporate governance by Audit Scotland whilst that process was going on and you were presumably waiting on a response he handed his notice in he's required to give you six months notice so rather than have him hanging around for six months he was allowed to leave presumably with a media effect and a six month pay off it wasn't the pay off the CEO's contract required him to give six months notice that would have had him working as CEO and in post for six months until June of this year and being paid for six months and he was legally due that so rather than that the board agreed to pay him six months salary in Louis notice provided he departed at the end of December we took extensive legal advice and gained approval from the sponsor team for this approach why didn't you make him work his six months why is the public funded him to go off and do something else for six months the agreement to have him depart at the end of December was because we wanted to have a departure date off the end of December that allowed the board and Wix to quickly refocus on value for money and to produce an action plan that's been referred to in response to the section 22 and to start the process of appointing both an interim and in fact a permanent CEO and changing the culture Mr Brannan I have one final question and this is a real cause of concern to me is that what we've heard today has uncovered some quite serious issues you are responsible for 28 other public bodies within your directorate you talked about a new process which I think is very welcome this red amber green process of identifying bodies that may not be fulfilling their obligations first of all would you be willing to publish that for the interests of transparency so the public can see where there are areas of concern but do you personally have any other concerns of the other agencies that are under your control there may be similar issues which we just haven't discovered because Audit Scotland doesn't have enough time or a big enough team to do a routine branch review of every single public body because I would hate to think that what we've seen at Wix is happening elsewhere but we just don't know about it on the first point I think that's something I'll need to take away with the corporate team because it's done across the whole of the Scottish Government so all DGs follow that process so I'll take that away and speak to the DG corporate and the permanent secretary on the second point I think we have the sponsor teams different degrees across the different elements N4 for instance we were one of the first to do a stress test with NatureScot which effectively is a a period of time two to three years where in a safe environment, governance, relationships and the approaches are taken forward and I think it's a willingness to try and make sure that we use the best practices occurring across Scottish Government and rolling that out to other teams can I categorically sit here today and say that there will not be another issue that arises in terms of governance I would like to hope not and certainly in terms of my approach to this is very much making sure that both I and the sponsor teams and the directors that are responsible for looking after those teams fundamentally understand what's required of them in terms of the frameworks that are in place but also their duties to this committee, the Parliament and the wider public and making sure that those boards are operating as efficiently and effectively as possible and by and large they do that I think some of the larger boards NatureScot and SIPA for instance, all very very good in terms of their approach to governance and I'm sure that Order General Scotland will attest to that on those that he audits specifically as I said before it's uncomfortable sitting here today and it's unacceptable that we've ended up in this position but I think the work that I've now got in place with David, and Donald and the board to try and support them in getting back to a position of really high governance organisation will hopefully get us back to this point that the next time you come you want to see us will be in a better position with some of these issues that are being raised I do hope so, thank you OK thank you, well we are out of time so I'm going to wrap this session up and thank everybody for the evidence that you've given us this morning you've given us quite a lot to think about I've just got one very quick final question which is how much then is the value of six months salary for the chief executive who was paid off at the end of December Well, convener, rather than give you a figure which is not exact can you allow me to give you that figure in writing? Yes, I'd rather it was accurate so yes, I'm happy for that to be the case OK, so can I thank you for your time this morning and I'm going to suspend the meeting to allow for a change of witnesses Well, can I welcome everyone back to the Public Audit Committee for consideration of our agenda item 3 which is a section 23 report on the National Health Service in Scotland 2023 and can I welcome our witnesses this morning in this session we're joined by the Auditor General Stephen Boyle, good morning Auditor General Cornelius Tiquama is back with us again for this session very welcome Cornelius, good morning Lee Johnson, who's a senior management at Audit Scotland is also joining us and Martin McLaughlin, who's an audit manager at Audit Scotland we're a little bit up against the clock this morning Auditor General but before we get to questions could I invite you to make an opening statement Many thanks convener, good morning committee I'm pleased to bring you this morning my latest annual report on the NHS in Scotland my previous reports on the NHS have largely focused on the immediate response to the Covid-19 pandemic and then plans to move from response to recovery this report however takes a longer term view reflecting the need for significant service transformation to ensure the sustainability of Scotland's health services health continues to be the single largest area of Scottish Government spending accounting for around 40% of the Scottish budget but rising demand, operational challenges and growing costs have added to the financial pressures upon the NHS and without reform it's longer term affordability unchecked there is a risk that Scotland's NHS will take up an ever-growing share of the Scottish budget and therefore less money for other vital public services in 2022-23 health board saw the end of Covid-19 specific funding but some associated costs continued at the same time general inflationary pressures increasing utility prices rather than expected pay deal prices have significantly increased NHS spending all boards met financial break even targets in the year but over one third of territorial boards needed financial support from the Scottish Government to do so seven boards failed to deliver planned efficiency savings and overall the NHS remains reliant on one of savings even if ambitious future savings targets are achieved boards are likely to require further financial support but the addition to financial pressures convener operational performance continues to be challenged services are yet to operate in the way they were before Covid and activity in secondary care has increased but is outpaced by growing demand there's also been some progress in reducing the longest waiting times but key waiting time standards are not yet being met and overall waiting lists continue to grow with new patients being added more quickly the NHS workforce is its single biggest important resource the staff are reporting under significant pressure and sustained challenges vacancies continue to be unfilled and staff turnover and absence rates are increasing more banking agency staff is being used to cover these agency staff in particular costs increased by over 25% in the financial year in question operational performance and workforce challenges are impacting patient safety and experience concerns being raised relation to overcrowding staff wellbeing and as I mentioned the continuing use of bank and agency staff financial and operational pressures have contributed to the NHS struggling to implement elements of its 21 to 26 recovery plan including these longer term reforms that are required the national policy context that the NHS operates in is complex and we have set out that much in our reports with a range of strategies, plans and policies in place but yet no single overall vision for how health services will look in the future the absence of this direction is hindering boards ability to plan and deliver reform at the scale, pace and ambition required to deliver effective reform the Scottish Government needs to lead a new national strategy for health and social care it should include investment in measures that address the causes of ill health to reduce the longer term growth of demand for health care and it should put patients at the centre of these future services convener, as ever, we'll do our utmost to answer the committee's questions this morning thank you excuse me, I'm going to kick off with a question related to that very last point you made is your critique that there isn't really a long term national vision for the national health service in Scotland we've got a new cabinet secretary for health in post so it's not your job to advise government ministers what to do but in the context of the job that you do have what do you think the benefits would be of there being a clear national vision for the national health service and what effect would that have on the ability of boards to deliver the services that we need them to deliver many thanks convener perhaps on the record my role clearly excludes me from commenting on the merits of policy in place however we do make recommendations in terms of financial sustainability and delivering value for money to performance from public services and that is our assessment that lies at the heart of today's report that there are many policies plans strategies even and we set out some of a timeline of that in part 3 of our report over the past 20 years but no overarching vision and the reason we believe that is so necessary as we set out in the report and many other organisations are commenting upon is the pressure that health and social care services are experiencing in Scotland and our assessment if we look into the medium term that we are unlikely to see a significant departure from the circumstances that we are currently in if we do not have this longer term vision about how Scotland's people will remain fit and healthy for as long as possible our investment in preventative measures at the expense of the investment that we are making in secondary or reactive and acute settings and that can move us away from what seems to be a very very challenging context on the delivery of health service to one that is sustainable and affordable and if I may just end on a financial note as we are continuing to see in our own work and drawing on the work of others notably the Scottish Fiscal Commission who themselves are forecasting that without change we are currently at 40% and the years to come will be approaching 50% of the Scottish budget that health spending will consume and all of that will mean less money for other vital public services so this replies the health and social care setting but much more widely on the need and the case for reform in my view convener. Thank you very much for painting that big picture I think that's a really useful way to start this session and I'm going to invite Graham Simpson to put some questions to you Graham Simpson. I promise to be brief because I'm aware of the time constraints so orders to general your report it provides a summary of progress by the Scottish Government against the recommendations in your report of 2022 and a third of the recommendations in that report you've made again so to what extent he's satisfied with the progress that's been made. So we think there's more to do here Mr Simpson in terms of setting out clearly the progress against the NHS recovery plan and that that is one that can be measured and is reported. There is clear trajectory from the actions and the intentions of the recovery plan through to what was delivered. I'll pass to Lee in a minute because I think it would be helpful for me to set out for the committee what our assessment is of what is a range of measures statements but it's quite hard to track from the recovery plan to what's actually being delivered so hence why we repeat that recommendation in today's report as we did last year but Lee can say more. Thank you Mr General. We made this recommendation last year and again we call again for greater transparency so the progress report on the recovery plan was published this year and yet again it's very difficult to track the progress that is actually being made with some of the commitments and ambitions set out in the recovery plan so for example the additional capacity that was intended there's no mention of the progress that is being made towards that. We know for example that the national treatment centres are pausing that was one of the key things that we're going to offer that additional capacity within the system and there's no mention of the delays to the NTCs within that update the progress update to the recovery plan there's other areas such as the number of people self-presenting to urgent care again that's not being tracked within the recovery plan although there is some mention of some of the different things that they've done to try and improve cancer care for example the only reference that's made is to the median waiting times to one of the cancer waiting time standards but there's actually no mention of the poor performance in terms of cancer waiting times within the progress update so yes we think that it would help to have more transparency around the progress of the commitments and ambitions that are set out within the recovery plan that's very interesting does this come back to a recurring theme that we have in this committee about lack of data you're right Mr Simpson that has been a feature of many audit reports about the need for better data that allows and really planning for outcomes to an audit Scotland report from a number of years ago actually that when publishing strategies or plans that public bodies and absolute Scottish Government know how they intend to measure, track and then report so there is a there is very clear issue and if I may refer the committee back to the evidence and your own reporting on adult mental health arrangements in Scotland that was a very strong theme that because data exists in a more stronger context in an acute secondary setting in primary care there are still data gaps so there is much work to do there, yes it just seems ridiculous that we want to see progress but as Lee Johnson said it's difficult to track it that's an absurd situation I'm not asking you to respond to that that's my view, it's absurd I'll ask you about something else this came up when we were questioning full valley health board they've obviously had their problems but they broke even because they received extra money from the Government they were effectively bailed out and that has happened to other boards so all boards have broken even but some of them have had this extra money and as you've said or as the general there is this over reliance as we saw with full valley and non-recurring savings do we have a situation that's essentially not sustainable I'll ask Martin to come in on a moment Mr Simpson to address your question directly that's our belief that the system in its current guise is unsustainable context is everything so during the pandemic the committee might recall individual boards were supported so we didn't see any experience of brokerage the term that the Scottish Government used to provide financial support as we've come out of that period we're now back into a cycle that maybe remember from before the pandemic of individual boards experiencing financial challenges and as they move towards the year end engaging with the Scottish Government that they're not going to be able to break even and then a range of individual tailored financial support so you mentioned full valley but I think what we're seeing is a measurement introduction to remarks there were five territorial health boards at 14 that required brokerage financial support to break even but you also alluded to the wider context which Martin can elaborate on is that non-recurring savings remain the vehicle with which health boards use with which to deliver their financial target this isn't about the more fundamental aspect of system change and evolution in a longer term plan it's moving from one challenging financial year to another challenging financial year but bring Martin in to elaborate Thank you doctor general morning committee I think it's fair to say that the financial challenges the Scottish Government and individual boards both accept our stark we saw a reintroduction of brokerage arrangements in 2223 ultimately moving forward the rationale for setting out the financial support arrangements which the Scottish Government introduced as an attempt to address the challenges because under the previous regime there would be historic issues around brokerage where it would have led to formal escalation it's now at a point where escalation perhaps would not be by exception so the support framework is aiming to address that there is now in place a 3% baseline RRL recurring savings target for boards you can see in exhibit 3 that the achievement of savings in 2223 was probing to be difficult without preempting what will come from the current financial year which we're almost at the end of and the new financial plans that we submitted you could see that going forward in exhibit 4 even if the savings were made and those savings that were forecast were relying on non-recurrent measures there would still be a residual deficit that had to be addressed those will want to come in so one final question from me did you look at general practice in your report so this is fundamentally no we haven't made an assessment of general practice in this audit however as I refer to in the report it's my intention to do a wider specific audit on primary care services in Scotland something that will be undertaking over the course of 24 with a reporting date to be confirmed I may also highlight for the committee's interest that the accounts commission which oversees local government services of which integration joint boards are part of will be publishing a performance and financial overview of IJBs in the coming months but general practitioners will be part of my audit on primary care Mr Simpson okay okay thank you very much Colin Beatty's got some questions Colin I guess my first question is really about staffing there's reference in paragraph 25 page 14 about the commitment to increase the NHS workforce over the next 5 years by 1% which is 1800 WTE the NHS is already at a record number of staff although there's still so many vacancies within that there's no there's no consideration in that increase of 1% to reflect any reduction in WTRs as the NHS comes down to 35 hour week should that 1% commitment be reviewed in the light of these factors I think ultimately to be policy decisions for ministers Mr Beatty about the size and structure and the number of workers within the NHS what we know in that paragraph and also in the paragraph is that the number of workers in the NHS WTE or actual is increasing so NHS is experiencing record cash funding levels and commitment for extra staff but demand is also increasing too and we're also reporting more widely about some of the pressures that are on Scotland's workforce if I may address the point that colleagues might want to come in as well about the working hours will be a factor so we've seen in the past few weeks that NHS has moved from a working week of 37 and a half hours to 37 with a direction of travel in due course to a 36 hour week and then more widely was referring to in the paragraph you mentioned of 35 hour week which is consistent with the fair work agenda and the public sector pay policy that sets out the Scottish Government's ambition to move all public bodies and their staff to a 35 hour week this will have a bearing both on finances productivity and then outputs so some real complexity with which the Scottish Government will have to manage to deliver upon this level of growth in the workforce and then changes that underpin it through working hours Is that entirely arbitrary or is it based on need? I'll maybe ask Lee, Lee might want to say a bit more about the basis for that and as it relates to how that's delivered through an effective clear strategy for workforce we might reference in the report about the need for that clarity Mr Beattie that the workforce strategy company by workforce plans give government and health boards the real model with which to make these changes but Lee can say more The 1% was set out in the national workforce strategy for health and social care which was published back in March 2022 what we have said in the report is we are awaiting an update on progress with that strategy and as part of that the Scottish Government have committed to working workforce projections based on modelling what the future workforce will look like so we're still awaiting that we've been assured that that will be published in spring 2024 I imagine that they might review the 1% as part of that for example, again, I've said before we know that the national treatment centres have been paused obviously there was staff needed for those national treatment centres and if they are no longer going ahead then that might lead to a slight reduction in the number of staff required but until we see those projections and the update on progress of the national workforce strategy we don't know so as far as you're concerned, you're waiting to see the direction of travel down the line as to what's going to happen with this 1% versus the reduction in working week and so forth yes, absolutely that's a fair assessment this is a very complex circumstance there's no doubt about it and the number of variables whether Lee mentioned the role of capital investment around the national treatment centre plans to address waiting lists growing staff costs in terms of pay deals drugs budgets the need to invest in the estate in the round Mr Beattie so there are a huge number of variables that will need to be fed through both in the workforce strategy as I mentioned in discussion with the convener as part of that wider strategy about where next the crude figure it's pretty much impossible to tell much about it because we don't know how it's made up obviously it won't all be nurses we don't know what the breakdown is and I presume there isn't any breakdown I think really the relevance in my mind is centred on the update to the workforce strategy that Lee mentioned until we see that and that is imminent as welcome should give NHS and its practitioners, patients and indeed yourselves that clarity so we look forward to seeing that Mr Beattie just still on the basis of staff agency and bank staff which is a favourite one for us to talk about the increases in that are pretty eye watering I mean paragraph 26 page 16 you're talking about agency staff costs in 2223 increasing by 25% with a 79% increase in spending on agency nurses this is continuing to go up and yet every year or every time as a report we're assured that they're working on that they're going to manage it down and all the rest of it but it doesn't happen I mean it's a huge cost to the NHS is there any belief that this might reduce in the future it's such a significant cost I think it's probably more a question for NHS leaders than me to give you a reliable response I think what our intention is to you know as you alluded to to highlight that this has been a recurring issue in terms of the delivery of health services that was interrupted with controls and relaxations both during and after the pandemic what we also draw attention to in the report and again a lead to amount to the remarks is what the patient experience and in terms of working with agency in particular not to mention the additional cost that comes with agency workers so I think whether the national strategy refers to an address that we hope so I think that would be appropriate but actually just looking at context the one that's been recurring for many years Mr Beattie is one that's probably the best place for NHS leaders to address I'll move on a little bit to estate management obviously the capital budget that's been available to the NHS for a number of years now has been relatively to other areas of the public service fairly generous and there's been lots of new building projects and so forth and per 27 page 16 you say that around 70% of the current estate is in good condition and used efficiently however it's likely that there's going to be some constraints on that in the future given the cuts to the capital budget now you recommend that the Scottish Government develops and publishes a national NHS capital investment strategy to clarify how its spending is going to be prioritised in the future and how the overall estate is going to be managed why do you believe this strategy is so important and do you know whether the Scottish Government intends to take this recommendation forward are they doing it I'll give you my belief why it's important and Martin might want to update you on what our understanding is the Government's position in accepting the recommendation if I may actually refer first of all to infrastructure briefing paper that we produced last year and then the evidence that the committee recently took from Scottish Government officials on this matter we deliver health services in safe settings, buildings hospitals GP centres, health centres across the country so you're quite right 70% of those are in good condition but unfortunately by arithmetic 30% are not and that chimes with the over billion pounds of maintenance that's required Government officials told the committee that in respect of the availability of the capital budget means that they are going to have to make some very difficult choices that is going to impact on the progress of plans around the national treatment centres and also a sense that the Government is thinking about where to go next I made a recommendation in that briefing Mr Beattie around the need for a wider review of Scotland's public buildings in respect of the use of not just administrative buildings but operational assets as well I still believe that that's an important factor with which public services need to be assessed reviewed as part of Government's thinking around reform and I know that the Government's position on this was that administrative buildings are currently but health services and the way that we access health services in my view will change in the future and if we are genuine about moving to a preventative model and have a national strategy that underpins and takes us from the position of challenge where we are currently to a more sustainable model that needs to be more encompassing around a national strategy that also looks at how the NHS and Government plan to invest so that we can address the challenges of today and be fit for the future I'll pause if I may and bring Martin just to say about the interaction we've had with Government on the recommendation Martin I will try and keep it brief my understanding is that Scottish Government have accepted that recommendation and are currently preparing as they term it an asset management and investment strategy and the underlying point as the other general outlined was there's a lack of new investment and there's already a substantial backlog of maintenance the ability to address the maintenance by way of replacement isn't there so in a period where there is a pause in investment it's very important to look at how you can manage maintenance of the estate but more importantly as well to in part 3 and as the other general just referred to boards need to shape and manage their estates to be fit for the future so there has to be that longer term aspect of the planning not only to investment and maintenance but the likely nature of the future estate that we require to deliver services You say that the Scottish Government have accepted this recommendation did they give any indication as to timescale I realise it's probably quite a big task I believe they've asked for submissions from boards my understanding is that it's part of the 24-25 budget documentation and communication with boards they indicated that this was being prepared as to the exact timescales I'm not 100% clear on and they're going to come forward to yourselves once that's in place you've got to be correct I think they just publish it I think it should be published that would be my expectation rather than any liaison with ourselves Mr Beattie but if we have more information we'll come back to the committee but it's perhaps one for NHS Scotland to address directly with the committee I may ask that I omitted to mention that the other thing to look out for over the next few weeks will be the publication of the infrastructure investment plan that will set out the Government's priorities as it relates to individual projects alongside the medium-term financial strategy for the next few years and just one last question on monitoring and support just before paragraph 37 subheading page 20 you conclude there's a need for greater clarity about Scottish Government monitoring and support this recommendation what made you decide to make that recommendation I realise you do sketch out in some of the other paragraphs a bit about it but it led you to make this recommendation so thank you you're referring to the second recommendation that the relationship between new financial engagement arrangements and the support and intervention framework is widely understood ahead of, as Martin has mentioned the submission of financial plans I think it really goes to the heart of the financial challenges that are being experienced by NHS boards that this doesn't lead us into hopefully it leads us away from the circumstance that we find ourselves in with the NHS funding of a rolling one-year challenge that we can then move to a more sustainable model of clarity around investment and building on some of the work that I think it reasonably referred to the financial improvement group and so forth but there's clarity of submission and then what's been asked of individual boards I'm going to now invite the deputy convener to put some questions to you Jamie I appreciate we're short on time and this was a very wide-ranging report so I'm going to focus on very specific areas particularly around operational performance of the NHS I think that's the one that affects people out more than some of the other issues the first obvious one to cover is those of waiting time targets and where we're at with those well I found it probably makes for quite grim reading but of the eight key performance metrics around performance and waiting times it seems to me from the exhibit although this is up to September 2023 that none of the targets are being met and some of them are failing by quite some margin particularly around A&E treatment times cancer treatment starting within 62 days and the 12-week inpatient and outpatient targets so I just wondered what your general views and whether things are getting slightly better or the long-term trend has been a trajectory of increased waiting times You're right, exhibit eight sets out deputy convener the challenges that the NHS is experiencing Lee might want to say bit more in a moment but it really sets out your assessment of it that in the round challenges are being experienced and that's reflecting a deterioration in performance over a five-year trend but that there's more of a mixed picture as it relates to performance within the past 12 months some improving, some deteriorating it is also, I think, reasonable to say in drawing on the data and perhaps the Scottish Government's own direct focus is around, yes you mentioned A&E performance but particularly cancer times waiting for initial treatment and I think just to highlight for the committee's attention we note paragraph 46 that cancer in particular is a focus of the First Minister on the 2023-24 programme for government as part of one of the objectives for the Cabinet Secretary for Health and Social Care to improve cancer wait times before patients receive their first treatment Lee might want to say a bit more Thank you, Mr General I don't think things are improving I think it varies across different boards we set that out there is information on our website about the performance of different boards but for example the 62-day cancer waiting times target no board is meeting that standard the new outpatient appointments within 12 weeks again none of the boards are meeting that target the inpatient and day-case treatment within 12 weeks no board is meeting that target and the 18 weeks referral to treatment target no board is meeting that target currently either and as we say in our report waiting times are longer and waiting lists are substantially longer than before the pandemic and although there is some improvement in activity it is still well below pre-pandemic levels what effect does this have we know the obvious effect that has on people's general health waiting for longer to be seen waiting for longer for treatment to start we will clearly have a negative effect on their health but have we done any analysis on waiting long periods of time over a year, over 18 months and those numbers are very stark in 2019 there were around 3,500 people in Scotland waiting over a year for outpatient treatment that's up at 40,000 now it's a massive increase and on inpatient treatment presumably those with quite serious conditions of the 18 month long wait target there are only 486 that's up at 17,000 so my my suspicion and my worry is that not all these people will make it until treatment arrives is there any analysis of that so extending our work into that analysis whether on mortality rates on excess deaths wasn't a feature of our methodology this year but it has been particularly during some of our reporting during Covid to explore that what we've done in today's report is instead to make a broader assessment both on patient experience which I think you know as you're relating to and then patient safety in the round where we draw on the work of healthcare improvement Scotland and others in setting out that the experience that people are getting and in light of some of not just waiting times but also some of the pressures that are in hospitals isn't where the clinical experts want it to be so there is work to do but I think your wider point is right and we don't have that data to hand unfortunately but I'm sure it would be supported by statistical analysis both in terms of the numbers but also regrettably what is likely to be increased mortality rates as a consequence of longer wait times and that's obviously very sad we're talking about numbers but we're also talking about people at the end of the day and people passing away whilst waiting for treatment that's increasing that's clearly worrying for all government and Parliament but one of the issues that people we talk about often and does come up is the issue of A&E and some of the situations that are rising there you've talked in your report about very specific issues of overcrowding in A&E ambulances queuing outside and people not being handed over within the one hour target one hour itself is quite a long time to be sitting in the back of an ambulance that's been exceeded by substantial time we have anecdotal evidence which we's politicians get have access to but statistically or quantitatively are we seeing data that supports that what is the situation in A&E across Scotland? I'll pass to Lee to update the committee with our understanding in the report so any wait times are not being met I think that's the kind of high level message to be absolutely clear on when we sit that out in the committee it is also reasonable to recognise that the Scottish Government and NHS bodies are doing their utmost to address that and we refer to the work and engagement that they're having with Scottish Ambulance Service to try and improve turnaround times and the extent of waits that people are experiencing not just in A&E departments but also regrettably in ambulances queuing to give people getting them into A&E before passing to Lee I think that the other thing I would mention as we say in the report neither A&E nor ambulances are suitable places for people to receive longer term care so there has to be a real consideration and change if the current arrangements aren't working to improve the throughput of A&E but stepping back a second deputy convener helping people not to get to either planned or unplanned attendance at A&E in the first place but I'll ask Lee to elaborate his wishes Thank you, Minister General So the Scottish Government as we say in our report issued new guidance in April 2023 to support the safe and timely handover of patients who arrive at hospital within an ambulance but I guess and that guidance states that by August 100% of patients should be handed over within 60 minutes but we know that turnaround times indicate that handover within one hour is not always achieved and show that turnaround performance varies across boards I think I would echo what the Auditor General was saying there is a lot of work going in to try to address these issues in terms of trying to redirect people both away from accident and emergency to the best place to receive care but also away from the need to call an ambulance in the first place if there is somewhere better that they can receive care and then on arrival at hospital how they are prioritising people who are sometimes queuing in the ambulances how do we prioritise those people and make sure that the most urgent people are seen first so there is lots of work going on around trying to reduce that pressure on scheduled and emergency care it's very hard to identify whether I suppose there are a number of factors at state care one is potential volume of people going through the system because it's the only option available to them and what work could be done around what percentage of those people would immediately be removed from the system if there were other options available versus delays which are caused by shortages of staff on the ground at the moment or perhaps that third option which is that throughput of people who, once they have presented A&E then should be transferred somewhere else but there is no somewhere else the somewhere else is that capacity so that creates a bottleneck in the system I presume the answer to that is that all three are the risk factors involved here but is there any specific ones that immediate action could be taken that would alleviate that situation more quickly perhaps I think it is a combination of all of those factors as I've said we know that there is work going on to try and reduce what we call unplanned A&E attendees so people just turning up self-presenting we call it so there has been lots of different initiatives flow navigation centres clinical triage hubs to try and make sure that either people are sent elsewhere or that they have an appointment to attend A&E what we call planned attendance we do know that the unplanned attendances at A&E are lower than pre-pandemic but what we don't have data on is how many people are now turning up as planned attendances so using those other initiatives such as flow navigation some people will turn up with a planned appointment but there isn't currently the data to understand how many unplanned and how many planned attendances there are we know the unplanned we don't know the planned attendances but we do know that Public Health Scotland are working on trying to make that data available and robust I should declare an interest having gone through that process of having a planned A&E appointment it was news to me but it seemed to work reasonably well looking at appendix 3 obviously I may be new to the committee but I'm aware that you've produced previous reports into the NHS and made very specific recommendations to the Scottish Government appendix 3 contains nine key recommendations covering a wide range of areas for consideration my analysis of this shows that of the nine five are in progress three have demonstrated limited progress in review and one has made no progress at all with none of them having completed those recommendations is that a normal state of affairs when you're down the line is there any without giving personal opinion perhaps are you content that the direction of travel is a good one particularly around the issue of the NHS recovery plan which clearly is an important one post pandemic which shows no progress and how you've reached that conclusion I think I would say an answer that these are complex sometimes intractable issues that we're dealing with and our recommendations are designed and probably I would characterise today's report on the same basis to acknowledge that the system has to change its sustainable model and that our recommendations are along those lines so some are in progress there's some limited progress some aspects will be quite direct things that we think can happen now whether it's transparency or in progress around the recovery plan and others even looking at the recommendations of 10 or so that we make in today's report will require action over a number of years assuming that Martin's mentioned one of them recommendations in the round so I think there's some mitigation that these are complex circumstances but as the convener asks you know should the committee choose to take evidence about whether the Government accepts the recommendations or not in the event that they do we would expect thereafter to see a clear programme and plan to implement the recommendations and I think today's assessment is one of in the round is there an inevitability that the health budget will reach 50% of all Scottish Government spend it sounds like a massive figure perhaps one that the public is even quite aware of sometimes or is that something that could be prevented I think there isn't I don't believe there should be an inevitability about it I think what I'm recommending today is that there's an intervention so that there is a more sustainable affordable model in the short of time convener but I think that the important point is that the Government's own assessment with experts so it engages with the OECD in terms of its approach around realistic medicine and that assessment says that around 20% of spending on healthcare doesn't lead to improved health outcomes so the system that we have is the system but it doesn't mean that that should be the only way that we deliver health and social care services is absolutely appropriate with the support of Public Health Scotland and the Government that they are looking at a three horizons model but I have a plan, I think that that's the clear I have a vision and a plan to move from an unsustainable system at the moment that avoids the need for an ever-growing health and social care budget at the expense of other vital services now to convener Okay, thank you very much I'm now going to invite Willie Coffey to put some questions to you Willie Just on the issue about performance having spoken to Ayrshire and Arran's chief executive just last week on the specific target 31 day target for cancer treatment she was saying that Ayrshire and Arran does continue to meet that 95% level and actually it was 100% in November so I don't know whether there's a little discrepancy in the data gathering period for the report, Stephen to me last week I'll ask Lee to comment on that as Lee mentioned we don't set it out in today's report but it's included as a link to our website a more detailed regional assessment drawing on the source for our reporting appendix we cite Public Health Scotland as being the source on a national basis and just for completeness reports that between September 2018 and September 23 the performance dropped from 81.4% to currently 72% how that relates to the information you've had from NHS Ayrshire and Arran we can certainly check if Lee doesn't have that detail to hand just now I don't have the exact data for Ayrshire and Arran but I think the point we're making there is that some boards are struggling to meet that target it's just below target there as you can see the target is 9.9 and the target is 9.25 but that slight reduction is because there are about I think four boards who are struggling to meet that target I just thought I'd mentioned that cos it was a positive side of what she had to describe last week amongst a range of these indicators that are of interest to the members Auditor General your predecessors Caroline Gardner and Bob Black for them both saying to risk committee over over several years the need for service redesign and transformation and we know that the demand on the NHS is going through the roof through the roof of Covid and it's not dissipated yet are your recommendations for the service redesign transformation that you're urging the Government to embrace changed in any way since from then till now the model that they saw in terms of service transformation the same as what you're recommending now given that huge change in demand that we've seen in recent years would you say? So I would recognise the point you made that certainly my predecessors have made similar recommendations and views known about the unsustainability of health and social care services I fear that we're in a more acute setting today Mr Coffey than we were under previous auditors general when they were in post how to discharge the recommendations is ultimately a matter for NHS leaders and the Government but I think there's enough evidence before us of whether it's any wait times more general performance targets and the financial implications of not change that makes a strong case that the model that we have isn't sustainable and I think these are reasonable estimates that the Scottish Fiscal Commission is making that of course policy choices can lead to the we'll spend as much as we need to on health and social care services but the opportunity cost will be severe for other parts of public service delivery Okay, okay, hopefully three very brief questions one on the lead discharge that you cover in the report when you talk about the model glass flow could you just give the committee a wee glimpse of what does that mean and is that having an impact on reducing the problem that we have with the lead discharge? I'll go to pass straight to Lee on this one, a paragraph 68 we set out the plans that NHS Greater Glasgow and Clyde along with their IJB partners are taking forward I guess the best way to describe it is a continuous flow model so it's having a regular schedule of patients who move from A and E into inpatient wards and the planning that goes on behind that so that you have a continuous flow of patients but that obviously relies on the beds being available but again it's about that continuous flow of discharges as well are part of that there are a number of boards using a similar model but I think it is important to point out that Glasgow said it's not a magic bullet we need to you need to have all the bits lined up but what it has created is greater partnership working and joint working across the hospital system to use that continuous flow model and they have seen some benefits from it in terms of trying to getting people out of A and E quicker into hospital beds and ensuring that their discharges are happening when they should be getting about the door at the other end quicker back into the community or where they are supposed to go is it succeeding in that regard I think in certain wards it is that our report to lead discharges remains stubbornly high across the NHS in Scotland Related to that issue convener the chief executive Ayrshirean also said one of the issues that affect that interestingly enough is the power of attorney and families granting that I'm getting that permission that power to deal with that that affects over half of her discharge cases she said is that coming through Scotland do you think and is it something that encourages the public to embrace that that's such an important point isn't it we set out following paragraph 69 this was consistent from the three case study where we worked with individual boards when preparing the report just to test our theories and progress to hear their experience to shape the report to Mr Coffey and both power of attorney and also complementary anticipatory care plans were one of the preventative measures that they said makes a big difference so if somebody falls ill unexpectedly a relative don't have power of attorney or don't know what the patient's wishes are there's inevitably a delay in consultation and engagement with families to better understand so if what feels like a relatively small step was the feedback that could make a big difference yes thank you for that turning to staffing is the ability to staff that demand or at the general and you've mentioned the clear difficulties that we have what more can we do what more could the Government do to try and close that gap we know that the demand is increasing year on year but we do have difficulties in getting the right numbers of staff and health and social care to meet that demand what are your recommendations there for the Government now to try to help so we've made a recommendation in terms of a clearer republished workforce strategy that Lee has mentioned but it's complex I would recognise this Mr Coffey ambitions to increase the NHS workforce are one thing so finding the right people to staff vacancies keeping the people that you have safe and healthy as members of staff in terms of their wellbeing we've mentioned already this morning workforce conditions working hours will be a factor in that but also I think it's that fundamental point about the environment that people are working in we reference it in our own report and certainly listening carefully to the commentary that's come from NHS professional bodies since publication day are very clear about how challenging stressful and difficult an environment is for people who are working in the NHS currently giving members of staff confidence to raise concerns in terms of whistleblowing are all relevant factors and we've set a number of these out in today's report but I wouldn't want to be glub Mr Coffey and say that a strategy will resolve this that this is a multifaceted approach that NHS leaders in partnership with their staff will need to take so that they can get to a sustainable model service delivery and lastly from me convener digital transformation can offer us Stephen you've mentioned that in the report too but are there blockages throughout the system that do you think the digital e-health strategies or telehealth or whatever in terms of how we embrace digital technology can help and block some of the cues that people face whether that be in GP contact services or consultation services do you see more opportunity for that and are we embracing enough of those opportunities at the moment to help us Leo want to say more I'm sure I haven't looked at this closely during the audit and it's been a recurring theme in terms of adoption of technology to support transformation to perhaps to give people access to services outside of a hospital setting to allow people to access remote consultations with GPs and that's all well and good perhaps of interest to the committee before passing to Leo is that we're looking at this outside specifically the context of the NHS as part of future audit work we're currently undertaking an audit of digital access or digital exclusion arrangements that just explores in a bit more detail some of the pace of change the adoption of technologies and people are brought along at the right pace Mr Coffey of some of these changes but specifically in terms of the NHS I'll bring Leo in I think again it's a range of outcomes for different things so we've seen the real impact of near me and the difference that that is making particularly within our more remote and rural areas and the access that that's giving people but I think as we say in our report boards have a bit of choice about some of the different things innovations that they adopt and I think we need to have greater monitoring and reporting I think to determine how both how the digital programmes and innovations are being adopted but also the difference they're making if we can show the difference that they're making how effective they are how they're perhaps driving efficiencies for example then we might be able to encourage to willingly adopt different innovations going forward and we do make that recommendation within our report Do you find that patients are receptive to using digital technology if they think it will maybe get them seen or heard to be a bit quicker are they quite open and easy with that or would they still prefer the face-to-face direct I think it varies Can you at least say a bit more that it's a mixed picture I think it's something we looked at specifically in terms of patients' response to digital technology but the general picture from the work that we have done is there are opportunities that digital offers to respond to the short term operational challenges but some of the longer term as well the Scottish Government and causeless digital health care strategy which is trying to make progress in some of these areas the key risk that I think has been identified around that is around capital budget the ability to have enough funding to roll out those digital options at scale so that is one of the risks around digital that we are highlighting in the Auditor General's report OK Thank you very much for those OK, thank you just a final question really from me and that's on leadership and especially at health board level first of all you mentioned in the report that there are four out of 14 territorial boards that will be looking for a new chief executive I think that that number might have gone up actually since the date of report but I think the point is how much succession planning is there the impression that we get on this committee is that people move around from board to board is that too narrow a focus for recruitment for those senior positions could other parts of the public sector be looked to and do you have a view on that and then the second part of my question is about the non-executive board members obviously we've looked in some detail at the NHS of North Valley experience where there's been a whole governance review and some fairly substantive recommendations have been made and people have moved on and so on do you have a view about the the recruitment the standard of people that are coming forward for non-executive posts whether the training that they receive is sufficient to equip them to do the very important job that they've got I mean in the end for a huge part of that 40 per cent public expenditure potentially rising to 50 per cent public expenditure in Scotland under the devolved budget anyway Auditor General on those questions many thanks convener so you're right there is there is real change in terms of the executive leadership first of all at some boards the NHS leadership NHS Scotland are not unsighted and I think one points we would recognise that they are addressing in terms of some of the their approach to succession planning developing programmes around how to identify future leaders supporting them to make the transition into what are very challenging roles and I think the predecessor committee as I recall looked into this matter in a bit of detail a number of years ago held round tables around the NHS leadership the attractiveness, what are the factors that are relevant if anything it's more challenging now than it was in that context with Covid and all the other factors we've touched on over the course of this morning so there is an onus absolutely on the NHS in Scotland to make sure that they are giving the right support setting the right conditions and then creating the environment for people to thrive I think they recognise it was clearly that there is work to do if only borne out by the arithmetic convener about the turnover that is in place briefly on the role of executives absolutely and the good governance has to be absolutely fundamental in this setting work is under way the final section of the report looks at the blueprint for good governance and that gives a framework for the non executives to discharge their responsibilities in terms of how they identify people, are they bringing the right people in to that specifically we know that there has been a degree of turnover at NHS Fort Valley and some other boards so it's probably too early to make an assessment but the work of the public appointments team is crucial here that under the direction of ministers they know who they're getting they know what skills they're looking for and then there's a full assessment process in place Paragraph 126 makes a passing reference to this convener there are plans in place including that external review of board governance so that the Scottish Government has that level of assurance that the sponsorship requirements are being discharged appropriately and it's one we'll keep under close review okay well look thank you very much indeed I'm sorry there was an air of rushness to that session but it's a very comprehensive report as the deputy convener remarked and I think it's given us quite a lot of evidence which we'll need to consider what we do with and whether there are further people we might want to invite to give us their view of what you've found in this annual section 23 audit of the national health service so Auditor General can I thank you very much for your evidence this morning Cornelius, Liam Martin thank you as well and I'm now going to move the committee into private session