 Rydw i fyny, a ddunai'n gweithio eich g anesthael y twfledd squaredeb yn 2018. Felly, rydw i'n rheswm eich gallu gwneud fod yn gweithio eu chyfnodau ar gyfer ychydigol cyfwredu o'r blaisiau mewn cyffredinol? 1. 22, 17.18, Audit of NHS Tayside. I'd like to welcome our witnesses to the meeting this morning. Caroline Gardner, Auditor General for Scotland, Fiona Mitchell-Knight, Audit Director, Lee Johnson, Senior Manager Performance and Best Value and Bruce Cross, Senior Audit Manager of Audit Scotland. I'd like to now invite the Auditor General to make a brief opening statement. Thank you, convener. This is the fourth consecutive report I've provided to Parliament on NHS Tayside, highlighting a series of significant concerns in financial performance and governance issues. Today's report sets out NHS Tayside's worsening financial position and the increasing challenges it faces in meeting its financial and performance targets. It provides an update on events over the last financial year, including arrangements for the departure of the former chief executive. The external auditor gave an unqualified opinion on the 2017-18 accounts. This means the accounts provide a true and fair view of the Board's financial position and there are no significant errors. However, she does highlight several areas of concern. For the last six years, the Board has required brokerage from the Scottish Government to achieve financial balance. The Board has a total of £45.9 million outstanding brokerage and further brokerage will be required. In June, the Board approved a one-year financial plan for 2018-19, which identifies a potential deficit of £18.7 million for the year. The Board's financial position has been compounded by the mismanagement of e-health funding and endowment fund monies in previous years. The Cabinet Secretary for Health and Support announced in October that the Scottish Government will not seek repayment of brokerage accumulated up to 31 March 2019 from territorial NHS boards. While this provides NHS Tayside with some breathing space, it does not address the underlying financial challenges facing the Board. I have highlighted in previous reports NHS Tayside's expensive operating model compared to other boards. This is a main factor in the financial challenges it has faced over the years. NHS Tayside recognises this and its transformation programme will be key to reducing the cost base. By June 2018, there was still limited evidence of sustainable service redesign and transformation. The Board achieved efficiency savings of £46.8 million in 2017-18, but only 36 per cent of that was recurring and its net expenditure increased from previous years. The new senior management team has reviewed NHS Tayside's approach to transformation and developed plans through a combination of long-term strategic measures and short-term efficiencies. The independent assurance and advisory groups set up by the Scottish Government was due to provide a progress report on NHS Tayside's transformation programme in November, which I understand the committee received overnight and will review this in due course. Several senior staff have left the Board over the last year and an interim chief executive and chair and a new director of finance took up post in 2018. The auditor reviewed arrangements relating to the departure of the former chief executive and identified several errors in the process and a lack of good governance. The appointment of a new chief executive was announced on 28 November and a recruitment exercise is now underway to appoint a new chair before the end of the financial year. In conclusion, NHS Tayside urgently needs to set out the detail of how it intends to achieve financial sustainability. In particular, it needs effective and stable leadership to drive forward its plans for transformation. As always, convener, we'll do our best to answer the committee's questions. I'm going to open questioning for the committee this morning, but before I do that, I'd like to make a couple of brief observations. The first is on the Assurance and Transformation Group report that you referred to in your opening statement. The committee did receive the third report, Sir Lewis Ritchie's report, but only at 6 o'clock last night. This is not the first time that this has happened that the Scottish Government has sent papers to the Audit Committee at 11 o'clock. It does not give committee members, nor indeed your team at Audit Scotland, time to review the papers in any meaningful sense. I would put on record that it is quite disrespectful of the Scottish Government to provide information to Parliament in this way, and I hope that it will take note of that. The second point that I wanted to observe is the Oscar statutory inquiry, which of course covers the issue of the transfer of money from the charitable endowment fund NHS Tayside to core funding. Oscar has a statutory responsibility to investigate what has gone on. It was due to report on 30 November. We now understand, after a bit of prompting, that it may report in January, but, frankly, I feel that this has taken far too long—at least six months now—to come to any conclusions and come to their first report. We await, we eagerly anticipate that report to see what it says. My primary concern for NHS Tayside is the care of patients right across Tayside. The figures that you provide at the end of your report, I think that NHS Tayside only meets seven out of the 20 Government standards. Can you give us a bit more of your reaction to that, please? I think that the first thing to say is that the leadership at NHS Tayside are very much focused on doing what they can to protect and indeed improve the quality of care for patients across Tayside. However, you are right. I have reported that performance declined this year. I think that, in 2016-17, the board achieved nine of the national performance standards. In 2017-18, that had reduced to seven of them, and we set that out in the appendix. It is worth noting, though, that NHS Tayside is probably still slightly above the average for health boards across Scotland. I reported in my national report in October that performance is declining nationally, so it is not alone in that. Some of them particularly worry, including mental health for children and the waiting times, but I know that one of my colleagues is going to address that. Can I turn your attention, Auditor General, to the issue of severance pay for the permanent chief executive of NHS Tayside? The report details several anomalies on the arrangements of severance pay. The stand-out one for me is the fact that the previous chief executive was paid six months in lieu of notice rather than three, which was in her contract. Is that a legal payment? Is that correct? You are referring to paragraph 41 onwards of my report, where we try to set out what happened in what was clearly quite a confused process. It is important to start off by saying that I concluded that the decision to negotiate a settlement with the chief executive to bring about her departure was a reasonable decision. At that point, the board took appropriate legal advice about the options open to it and the risks of that becoming quite a protracted process, so I am content that the decision to negotiate a settlement was reasonable. There was real confusion, I think, in the advice given to the former, to the acting chief executive and chair, about the notice period, which was relevant to the former chief executive. Her contract clearly stated that she was on three months' notice. The assistant chief executive and strategic director of Workforce believed that other chief executives across Scotland were on six months' notice in order to treat her fairly and with parity with other chief executives six months should be applied. The process by which the contract was updated to reflect that did not meet good governance. It was not considered by the remuneration committee until November of this year. The assistant chief executive was not able to provide the auditor with evidence for why she believed that the contract period should be six months rather than three months, so there is no doubt that there was confusion about that element of the settlement. You said that the interim chief executive was advised on the six-month period. Who did that advice come from? My report identifies that the person providing advice to the interim chief executive and the interim chair was the assistant chief executive and strategic director of Workforce. That is a full title for one person within NHS Tayside. Within NHS Tayside? Was Government consulted on that at any point? Yes, NHS Tayside consulted both the Scottish Government's health and social care workforce directorate and the central legal office. But they would have had a better overview of the three-month, six-month contractual settlement right across Scotland than somebody in NHS Tayside because it is their job to have an overview. Were they not able to provide that information? I think confusion arose between what the contractualist entitlement was for the former chief executive at NHS Tayside and what was being negotiated as part of the settlement. I make the point in my report that the business case that was submitted for approval to the Scottish Government did not make reference to the three-month notice period. I think there is confusion, as I say, which is not reflecting good governance in the way that this was handled. I mean, Auditor General, you know as well as I do that the finances of NHS Tayside have been of extreme concern to both this committee and to you for a number of years now, but especially to people in Tayside. I think that people were shocked that the outgoing chief executive would be paid and it now transpires from your report more than the contractual entitlement. I received a letter from John Brown, the chairman of NHS Tayside, on 7 August this year. He states in that letter, all payments are legal and contractual entitlements and no additional payments have or will be made by NHS Tayside. Given your report, is that an accurate statement? At the point where the settlement was agreed right up to the point of settlement, the contractual entitlement was three months notice rather than six months notice. As I said, I think that the decision to negotiate a settlement was a reasonable one and what figure may have come out of that settlement separately from the notice period is an open question, but I have no doubt that the contractual period for the former chief executive was three months. So the period of six months payment in lieu of notice was not a contractual entitlement? The remuneration committee only agreed a change to the chief executive's contract retrospectively in November of this year. So, as of 7 August, that was not an accurate statement. Alex Neil. Would you regard it as a good practice to change the term of a contract once the person has submitted the resignation? In this case it was changed formally after the former chief executive had left the board. That happened at the end of July this year. I do want to be clear. Having concluded that negotiating a settlement was reasonable, given the balance of risks facing the board to have agreed a settlement period of six months would not have been unreasonable had there been a proper audit trail for doing that, but that audit trail does not exist. There was a confusion about why the notice period was increased to six months. There are not two separate things here. I have never heard that either in the private sector or in the public sector, where a contract of employment is changed once you have left that employment and where the period of notice is doubled after you have left the employment, that surely cannot be good practice. I think I am agreeing with you, Mr Neil. The rationale of the contract period being six months rather than three clearly does not stand up. That is not as though there could not have been grounds for negotiating a settlement payment of six months. You describe it as confusion, but we are talking here about the director of the workforce, who is supposed to be the person who is the professional in relation to contracts of employment, etc. It is not just confusion. It is total incompetence if he changes the period of the contract and does not even check, because the reason apparently he gave for that was that it was to bring it into line, albeit after the chief executive had left the organisation, to bring it into line with other chief executives in the network of territorial boards. He clearly had not even checked whether that was factually correct or not. That is incompetence. That is all just confusion. As you would expect, Fiona and her team as the auditors probe this quite deeply as part of their audit work. I will give you a bit more background if that would be useful. We reference in my report at the foot of page 13 the extant circular, which dates back to 2006, which is very clear that chief executives notice periods should be between three and six months, and that any change requires to be authorised by the remuneration committee. The guidance itself is very clear. There apparently has been at some point a draft circular in circulation to which the Assistant Chief Executive, Strategic Director of Workforce, referred, which proposed some changes to that, but which was never finalised and enacted. The Assistant Chief Executive advised us that she understood that other chief execs of territorial health boards had a six-month notice period and therefore that there was a danger that the board could be found to have been discriminating against the former chief executive at Tayside. Since then, as we say in the report, through audit work, we have discovered that three of the territorial health board chief executives do, in fact, have a notice period of three months. There is confusion about this. I cannot speculate about the source of that confusion, but you are right. This is the sort of good governance that I would expect to see about a decision of this seriousness. Bill, let us be clear. There are three documents. There is a document from 2006 that says that there has to be a period of between three and six months. Her contract of the chief executive was consistent with that because her contract said three months. Then there was a draft circular, but everybody knows that it is a draft circular not being implemented, not agreed, not policy, and yet the director of the workforce and the Assistant Chief Executive, the same person, ignores that. Thirdly, it does not even check her facts, which is the basis of making this decision. That is pure incompetence from a director of a workforce. I do not think that I can add more to what is in my report, Mr Neil. The facts, as you have described them, are correct and are as we have set out in the report. I think that there was a genuine and legitimate desire to bring the situation to a close. This was poor governance that was not based on good advice about the provisions that govern the chief executive's notice period. Is it not time we introduced some sanctions for such poor governance? The poor taxpayer is picking up the tab every time for this, and they are fed up to the back teeth with people in film star salaries getting film star severance payments, and particularly where it would appear they are not even entitled to it based on the period of contract they had. I entirely understand yours and the committee's frustration about it, and I think that it is a question that the committee may wish to take up with government. Colin Beattie, I have lost count of the number of times that we have talked about governance in the public sector in general. Before I go into the particular NHS one here, we have seen it in colleges, in NHS, and it seems constantly we are finding problems with the quality of governance in public sector bodies. Is there any sign of improvement? Is there any sign that it has been recognised and that something is being done to get better quality or better informed, better trained people to take part in boards across the public sector? It is important for me to start by saying that, by definition, the things that I report to this committee tend to be the instances where things have gone wrong. I audit 200 bodies across Scotland and you do not hear about most of them because things are being managed well. That is an important starting point. I think that government does take very seriously the importance of good governance in making the best use of public money and engendering public confidence in the way public money is spent. I think that we have seen moves to improve the public appointments process, tightening to the guidance around severance agreements. You have heard some of that before about the need now for government to approve those packages before they actually take effect. Clearly, in situations like this, particularly when people are under pressure, things go wrong, my role is to report that to you. I think that you may want to explore with government the action that they are taking to reduce the chances of it happening in future. You correctly said that the reports that come forward to us tend to be the bad news. The good news is forever hidden. However, consistently, throughout the bad news that you bring us, there are strong elements of problems with governance that frequently exacerbate and sometimes cause the problems. Is there a pattern? I think that the only pattern that I can draw to your attention, apart from things occasionally going wrong on individual bodies, is that when bodies or sectors are under particular pressure, things are more likely to go awry. As the committee knows, I have been reporting on the growing financial pressures on the NHS since I have been in this role and on my concern that, often, the measures being taken to address those pressures are the short-term measures rather than addressing the underlying challenges, focusing on meeting individual year-end targets rather than whether a board is financially sustainable. You mentioned FE colleges. I think there were particular risks in FE colleges at the time of reorganisation and reform in that sector when we saw a number of things going wrong. I think that it would be unfair to assume that the quality of governance is poor across public services, but we have reported about the risks that arise at periods of particular pressure or of significant change, and we continue to look out for that through our audit work. Turning to NHS Tayside, we have obviously had this before us as a committee for now for several years, and we have been given assurances periodically that things are starting to improve. Clearly from your report, that does not seem to be the case and that progress has been poor. What alarms me is that the new chief executive on page 4 paragraph 4 says that, after considering the governance framework and assurances from the board's committees, he is not able to conclude that corporate governance was operating effectively in 2017-18, which is obviously the period that I need to cover. Is that really the case? Has there been no substantive improvement in the governance quality? If the new chief executive says that he is unable to say that governance is operating effectively, that is quite damning. I think that it is important to be clear that the interim chief executive was making that assessment shortly after he had arrived at the health board, which I think was in April 2018, and as part of the normal process of completing the annual report and accounts for the board and of the audit process reaching a conclusion on that. I think that we have seen some improvements in governance referred to in the report in relation to things like, for example, the financial reporting to the board is better than it has been in the past. We are not at all discounting the fact that significant work has been going on to produce the transformation strategy, the quality improvement programme and the short-term efficiency measures that the board is relying on. The wording in my report is quite careful that there is so far little evidence of the sustainable change that is needed to bring the board into a financially sustainable position for the future. As the convener said, the NHS Tayside assurance and advisory group report came in very late in the proceedings here. Frankly, I have not had an opportunity to go through it in depth. One thing that came out to me was that the chairman on page 5 of the report says that the chairman presented a report to the board in October on an independent assessment of board governance. Have you had sight of that document? Fiona and Bruce will have done as the auditors to NHS Tayside, and I will ask them to talk you through their involvement in that so far. I think that this committee might have an interest in seeing that as well. Yes, we were provided with a copy of that report that went to the board in October. What that summarised was the governance issues that had been identified to date and lays out some initial plans and improvement actions that the board intends to take in the future. Some of those have already been progressed and are mentioned in the section 22 report, as the Auditor General referred to, in terms of improvements in the financial reporting and how the budgets have been based. Obviously, it is very early days, and since October we have not seen the implications of those improvement actions yet, but we will be looking at that as part of this year's audit and we will report in next year's annual audit report. Quite clearly we are in a situation that we were previously, which is that we have a new team coming in with the new chair and new chief executive. In your report on page 5 paragraph 13, you say that the board continues to face leadership challenges. Are those leadership challenges going to be addressed by putting in place the new chair and the new chief executive? Are there broader issues with the composition of the board itself and the skills and experience that they have got? I think that my starting point is that, as you say, we are still in a period of change that the newly appointed chief executive is due to take up his post early in 2019. The Scottish Government is currently recruiting a new permanent chair to the board, so those two people aren't yet in place, one of them isn't yet identified. I think that Fiona would agree that there are signs of pressure on the leadership team at NHS Tayside, as you would expect in a situation as challenging as this and with as much instability and turnover as there has been. I think that one of the things that I'm interested in is the level of support that the Government is able to provide to boards in these circumstances, making sure that not only is support available but that it's joined up, focused on the right issues and focused on the longer term rather than on short-term measures, what's really needed to bring sustainability against the picture of the overall pressures facing health and care in Scotland? Is the level of Scottish Government support there adequate, do you think, or are there other things that it could be doing? It's hard to draw an overall conclusion about it. I think that there certainly is support in place. The Assurance and Advisory Group is part of that. There has been consultancy support, as you know, put in and paid for by the Scottish Government. My concern is less about the volume of support but about making sure that it's focused on the right things and that it really is joined up and consistent to help people tackle what are genuinely difficult circumstances in this board and in other boards across Scotland. Liam Kerr. Thank you, convener. I'd like to pick up on the chief executive pay-out. If I may, you talked in brief there of a business case having been prepared. Can the committee see that business case? I certainly have a copy of that business case. I don't know what the normal protocol is for us providing that. Auditor General. I'm sure you can have a copy of it. You may want to request it from the board but we have a copy if that's a more direct or quicker way for you to get hold of it. I think that would be very helpful. You mentioned Auditor General that legal advice was taken at some point in this process. Can you tell me when competent legal advice was first taken? Was it before the extension of the notice period? It was during the negotiation of the settlement agreement with the former chief executive. It was certainly before the remuneration committee confirmed the extension of the notice period, which didn't happen until November 2018. I think it was on-going engagement between the point where it became clear that the former chief executive would have to leave because her accountable officer status had been revoked running up until the point of her departure in July 2018. Just before I explored that settlement agreement, who would that legal advice have been taken from? Is that internal to NHS Tayside? Is that Scottish Government? It was the Scottish Government's central legal office. Right. There was a settlement agreement concluded. Have you seen that settlement agreement, Auditor General? Yes, we have a copy of that. Excellent. Fiona Mitchell-Knight, can you tell me? I'm really not understanding the payment here. The source of my confusion is either that it was entirely a contractual payment in lieu of six months notice, but I'm struggling with that because it doesn't appear to have been ratified until November, which would tend to suggest that it was still a three-month notice period. Let's assume that there was a valid contract variation, and I will come back and ask you about that in a second. Why would the former chief executive agree to that? Because by going from a three-month notice period to a six-month notice period, she pays tax on the whole sum under the settlement agreement, whereas if she says, I'll stick with my three-month notice period and take a three-month pay-off, she doesn't pay tax on the three-month pay-off. So why would she have agreed to that? And secondly, if she has agreed to that, she's just signed a settlement agreement signing away 12 months unfair dismissal rights payment for nothing. Why would you do that? I think that's exactly the source of the confusion that we're trying to convey to the committee, Mr Care. First of all, I think this was a negotiation rather than a payment simply in lieu of contractual notice. Secondly, the assistant chief executive and strategic director of workforce was concerned that the risks of an unfair dismissal claim were heightened if the former chief executive's notice period was lower than it ought to have been and lower than that of other chief executives of territorial boards across Scotland. We now know that both of those were not the case, but that was part of the rationale that was put forward. The reason why I concluded that the decision to negotiate a settlement was reasonable was because there were risks that the CLO had assessed that an unfair dismissal claim could be successful, which could have cost the board more than the payment they came to. Now none of that removes the fact that there was confusion in the negotiation and in the business case that was then submitted to government for approval. Yes, I understand and I accept the point about the settlement. There is logic, complete logic behind concluding it in this manner, but Fiona Mitchell-Knight, can I press you on this? Have you seen the clause in the settlement agreement? Does that say that this is a six months notice payment or three months notice payment plus three months payoff? I would need to refer to the settlement for the exact wording, but it does make specific reference to the notice period being six months as part of the settlement. It says that all parties agree that the notice period is six months at that point in time. I have two very brief questions. The interim chief executive appears to have been heavily involved in this process. The interim chief executive is moving on to take up a new position very shortly, but I believe that replacing Paul Gray at NHS Scotland. Can I just confirm that I am correct on that? My understanding is that Malcolm Wright has been appointed to act as director general for health and sport in the Scottish Government from 1 January, I think, for a period of 12 months. That is correct. Finally, on the board positions, I think that you are saying in your report that there have been changes on the board. There have been three changes. Could you just tell me a bit more detail about which positions have been changed out, please? I report that I think three non-executive directors left the board during the year and have been replaced and then more directly relevant to this. As you know, the former director of finance left in the spring of last year and is now being replaced on a permanent basis by the director of finance who is covering both Grampian and Tayside. Malcolm Wright has been the interim chief executive from April until December of this year and will then move on. John Brown, the chair of Greater Glasgow and Clyde health board, has been the interim chair of NHS Tayside from April until March 2019. The Government is in the process of appointing a new chair to NHS Tayside at the moment. You asked a question about Malcolm's involvement in this decision making. He was one of the people involved but one of a number of players. He and the interim chair of NHS Tayside were advised by the assistant chief executive and strategic director of Workforce, who was responsible for providing advice to them. There was also involvement in consultation with the Scottish Government's central legal office and the Scottish Government's health directorate for Workforce. Just for my absolute clarity, Auditor General, you have talked a bit in the session about the assistant chief executive. Who is that assistant chief executive and where are they now? I will ask Fiona for the post holder's name in a moment. She is the assistant chief executive and strategic director of Workforce for NHS Tayside and is still in post. Fiona will be able to confirm her name for you. Her name is Dr Annie Ingram and she is also director of Workforce in Grampian, NHS Grampian. Auditor General, following on from Liam Kerr's questioning and your report, does this throw up a bit of doubt on the quality of advice coming from the NHS central legal office? I would say not. I think that we are comfortable that the advice they provided to NHS Tayside was entirely reasonable on the basis of the information provided to them. How then could NHS Tayside have made such a mess of this in terms of the six-month, three-month notice period? Surely the lawyers should have picked that up and been quite strict with them in their advice that that was not the right thing to do to double the payment. I think that, as my report says, the business case submitted to the Scottish Government for approval referred to a six-month notice period. I think that within the board there was a misunderstanding, first of all, that six months were standard and secondly that it could be, the notice period could be increased as part of the negotiation around the settlement without remuneration committee approval. That's incorrect, as I say in my report. I think that that element of it got lost within the wider negotiation about the chief, the former chief executive's departure. The legal advice was given on the basis of the six months and that was a mistake made by NHS Tayside? I think that the mistake was the formal status of the notice period and the connection between that and the six months settlement that was finally agreed at the end of July. Should these severance payments be taken right out of the hands of boards and dealt with at the highest level? I think that it's difficult to say that that would increase accountability. I think that the new checks and balances that have been introduced relatively recently requiring them to be signed off by government are a useful safeguard and it clearly does depend on people within NHS boards and other public bodies providing and seeking good HR and good legal advice to make that work properly. As I said to the committee, I struggle to understand the confusion that arose here around the extent to which the chief executive's notice period was in line with the guidance and different from that of other chief executives. The board wasn't able to provide us with evidence to support their view and it's not been difficult for us to identify the guidance and to find that other chief executives of territorial health boards do have a three-month notice period. The point that you make, Auditor General, is that the legal advice appears to have been sound but there seems to have been a disconnect at the NHS Tayside end. There was an erroneous pension payment so a £19,000 pension payment was made that it has now come to light shouldn't have been made. My understanding from paragraph 53 of your report is that the legal officers have said that clawing that £19,000 back would breach the agreement. You then go on to say that the Assistant Chief Executive, Stokes Strategic Director of Workforce, whom we were just talking about, takes a different view and is going to go ahead against the advice from the legal people saying this would be a breach of the agreement and the Assistant Chief Executive is going to seek repayment of the £19,000. Do you have any comment to make on that and the appropriateness of the Assistant Chief Executive looking to go against the legal officers' advice apparently once again? The £19,000 sum that you are referring to wasn't a payment made to the former chief executive but a contribution made to the NHS pension scheme by NHS Tayside as covered by the settlement agreement which had been reached between the board and the former chief executive based on apparently a misunderstanding of the regulations that pension contributions relate to pensionable service rather than to payments and therefore a payment in lieu of notice doesn't attract and indeed can't attract pension contributions in that way. The advice of the central legal office as I understand it was that that contribution was part of the settlement agreement and that they therefore can't advise the board to reopen the settlement agreement and reclaim that payment to the NHS pension scheme. The board's view is different which is that because it doesn't represent pensionable service, the payment shouldn't have been made to the board. The former chief executive doesn't benefit from the payment and therefore that it will be reconciled as part of their annual review of the overall amount that should have been made to the pension scheme. I'm afraid I don't think I can clarify the matter very much more than that. It's clearly another element of confusion within this decision. Just to be absolutely clear, the legal advice is clawing it back would be a breach of the agreement. The assistant chief executive takes a different view and will proceed based on her own view. That is a direct quote from my report and it's still our understanding of the position. I can't reconcile the two any more than you can. I've got Anas Sarwar first and then I'll bring you in. If it's on that then I'm happy. Two quick supplementaries. Number one, who actually authorised the £19,000 into the pension fund? Was that the director of workforce? The settlement agreement was agreed between the board and the Scottish Government as it's required to be before it was signed. As I understand it, it was based on advice provided by the assistant chief executive and going through a normal process of negotiation that would take place in these situations. Presumably you'd have expected somebody in charge of HR to know the rules on pension contributions. My second question is, in pursuing this, if this is going to be pursued legally, is the legal cost of trying to recover the £19,000 from the pension fund possibly going to exceed the £19,000? As I understand it, the board isn't proposing to pursue it legally. Their position is that the contribution should never have been made to the pension scheme, that the former chief executive doesn't benefit from it and therefore they will recover it as part of the normal end-year reconciliation, which makes sure that the contributions made overall are at the right level for all of the staff covered for the year as a whole. Let me just clarify that we are going to receive a copy of the business case, is that correct? As I've suggested, convener, I think that first of all the committee may want to request it from NHS Tayside, but we have a copy if that's an easy way for you to receive it. And the settlement agreement as well. Thank you very much. I was going to ask some questions about performance, but before I do that, we've covered before in previous sessions around the fact that we are governance and leadership heavy across the public sector, particularly on the NHS. I'll repeat a question that I've asked before. You've mentioned around the chair of Greater Glasgow and Clyde being the interim chair in Tayside, someone who's doing a shared workforce role in Grampian and also in Tayside, the previous chief executive being a chief executive elsewhere and now moving on to being chief executive in NHS Scotland. Are there too many chiefs? You asked the question last time and my answer last time wasn't straightforward. I think that this is a really clear example of the fact that these are big, difficult jobs. The job of transforming NHS Tayside and making it clinically and financially sustainable for the future is a big job. And when the committee was asking me questions about NHS Tayside at a session earlier this year, I expressed a concern that asking somebody to be covering both NHS Tayside and NHS Grampian at that point for the chief executive, for the finance director and for the workforce director was a big ask. So I think that we do need to make sure that we have enough people of sufficient experience and calibre to do the job that we're requiring. And I think that we make what is already difficult to recruit and retain enough of those people across Scotland is made more difficult by adding in additional bodies at different levels without considering the shape of the system as a whole. Was that polite way of saying there probably are too many big jobs and not enough people with sufficient abilities to do those jobs? I reported in my NHS overview report back in October that it's increasingly difficult to recruit and retain people to do the jobs that are required. And I think that that challenge is made more difficult by the fact that we now have not only 14 territorial health boards but 31 integration authorities and that we are adding additional levels of planning in regional planning to the NHS as well while trying to integrate with social care. For me it's the complexity of the system which I think is the problem rather than there being too many people doing the jobs. On performance, we've covered before the chair covered the fact that there's 13 failing standards, nine of the failing standards are below average and five are worse than they were last year. Do you want to comment again on the patient impact side of the issues that are happening at NHS Tayside and I'll cover some of the subjects in a second? There's no doubt we all know that the quality of care provided by the NHS is the most important thing that we're talking about here. Although the national standards don't cover in my view the whole of the health and care system and therefore run the risk of giving us a partial view of what's going on, there's also no doubt that they cover things which are important to patients, waiting time in A&E, the time from referral to treatment. They're all things that matter to people and would to any of us and our families. So just a couple of specific examples. The treatment time guarantee around 12 weeks. The target is 100 per cent. The average is 75 per cent. Last year, Tayside was 81 per cent. It's now at 71 per cent. That doesn't sound like a board that's getting his act. Together, it sounds like the opposite. The 12-week outpatient exact, same 95 per cent standard, 75 per cent in Scottish average, 86 per cent was Tayside's performance last year. It's now dropped to 71 per cent. Again, it doesn't feel like they're getting to grips with it. Cancer treatment, again, below the standard, below the Scottish average, worse than last year. Save on psychological therapies, it's getting worse from last year. It doesn't look like new governance, new structures, is actually making a tangible difference to patient care in Tayside. My report is clear that the board has slipped from achieving nine of the national standards last year to seven this year and that, as you say, has an impact on patients. It is against a backdrop of declining performance against the standards for the NHS as a whole in 2017-18. I think it's always been clear that the change that's required to improve performance across NHS Tayside and to put it on a more sustainable footing will take time. That's very much the work that the plans that the interim leadership team have put in place is trying to achieve. My report says there's little evidence yet of an impact on those figures, which is what you're highlighting. We all hope that that will become evident in future, and I think that that really depends on more detail on the underpinning plans and effective and stable leadership to bring it about over a long period of time. The most stark statistic is that we all know about the tragic high incidence rate of suicide in particular Dundee, but covering NHS Tayside. We know of the Lost Souls of Dundee group, which is campaigning around trying to reduce the suicide rate in Dundee and to try to improve mental health services in Dundee. We've already had in this Parliament a call for a review, which was passed by the Parliament in terms of a review into mental health services in NHS Tayside. To look at the stats around psychological therapies and the CAMHS stats in particular is absolutely stark. The standard of 90 per cent for CAMHS performance and the Scottish average being 71 per cent, Tayside's performance being relatively good a year ago, but in one year they've dropped. Over some of that period, while we've had this debate about mental health services in Dundee and in Tayside, it's dropped to 41 per cent, so six out of 10 children aren't getting their referral to treatment in time in mental health services in Tayside. For psychological therapies in the round, over 40 per cent aren't getting their referral to treatment in time, when we also have the fact that that is the highest suicide rate area anywhere in Scotland, anywhere in the UK and perhaps anywhere in Europe. How can anyone justify that? Forget the severance payments for a second, forget the governance issues for a second. How can anyone in any kind of leadership position at any level in Tayside or across the NHS in Scotland justify that performance? I've been reporting to this committee over a number of years about the challenges facing NHS Tayside precisely because of my concern, the concern of my colleagues, that what the Board is there to do is to provide health services to the people of Tayside and its financial position is making that more and more difficult to achieve. I have no doubt about that. We have reported in today's report some of the action that's under way to try to turn that around and said that so far there's little evidence that it's having an impact. We'll continue to monitor it and the NHS as a whole is under pressure. Now my job is to bring these facts to the attention of the committee with as much context as we can and we'll continue to do it. I think there is an important point now about giving the leadership team time to bring forward and to implement the plans they have for making change and the committee will be interested in what assurance you can take that that's happening from us, from the Assurance Advisory Group, from Government, I think. There's one particular point I should clarify just for the record. The committee will recall that we briefed you quite recently on our report on child and adolescent mental health services and I think in relation to that particular standard there was an issue around the changes to services and the way in which information was recorded which had an effect on performance over and above the pressures on the service itself. That's not to say there are no pressures but I think there is a factor that relates to that fall from 96 per cent to 41 per cent in a single year, which is not only about the service. But is factually correct to say that since the implementation of the new leadership team performance on the standards has declined? That's not quite true just to be absolutely clear. The performance here is performance as at the 31st of March 2018 and the new leadership team came in in April 2018 on an interim basis. The quarterly figures that are published are showing an improvement or a reduction? I don't know if we can answer that for you just at this moment. No, we can come back to you, but I can't answer it to you. Final question. In terms of performance, do you put down the performance to it being primarily a leadership governance issue, primarily being a financial issue in terms of financial pressures or primarily a workforce issue in terms of gaps in the workforce? Or is, as is most likely the case, a balance between all three of those? If it is all three, where is the biggest challenge in terms of order of priorities? I think that you're right. It is a balance of all three and I'll ask Lee to tell you a little bit more about what we know about the board's performance and the pressures on it. Again, just to repeat, I guess what the Auditor General was saying is that we recently reported that we see declining performance across many boards in Scotland, so Tayside is not alone in their declining performance. I think that it is a mixture of all three, the financial pressures. Again, we say this in our recent NHS in Scotland report, workforce issues, rising demand. The thing that we should point out about Tayside is that although some of the standards have declined, I think that in several areas, I'm just looking at nine, they actually do better than the Scottish average and in some very key areas. For example, in accident and emergency waiting times, anti-natal care, hospital associated infections and you pointed out that cancer waiting times is one of the 31 days. They are below average but actually in the 62 days I think they are above average. Across Scotland there are some of the key areas where we see decline in performance in other areas. You've said in the report that they'll require brokerage again. Do you expect that to be signed off again or written off again? The fact that any health board does not have to be in budget in a single year but it has to be over a three-year period, surely that brings challenges and if we're accepting that Tayside is required, brokerage again, is the incompetence of Tayside being given too much favourability at the expense of patients and other health boards across Scotland? There's a lot in that question so I'll take it step by step and perhaps ask colleagues to pick up anything I miss. First of all, the board's current financial position. The financial plan for 1819 that was agreed in June by the interim leadership team forecast a potential deficit of £18.7 million this year to which needs to be added the £3.6 million required to repay the endowment fund's money going back to 2014-15 and the board's latest financial projection, which was reported to the board last Thursday, suggests that they are £3.8 million behind the £18.7 million so all of that together, the current forecast is a deficit of just over £26 million for 2018-19. We understand that the board will require brokerage from the government to cover that. I don't know what discussions are going on between the board and the government about the difference between the originally planned position and the latest forecast but those discussions I'm sure will be underway. In relation to the write-off of brokerage, the commitment made by the Cabinet Secretary was that territorial boards would have all of the outstanding brokerage as that the 31st of March next year written off and I assume that will be the case subject to any discussions about this year's brokerage requirement. We don't yet know in any detail how the commitment about breaking even over a three-year period will work in practice or indeed whether it will apply to all health boards. We're waiting for more detail on that and it will obviously have an impact on NHS Tayside's financial position after the current financial year, which is another one of the uncertainties that decided me in bringing this report to the committee today. I'm sorry, final question. Do you think that there's a risk that health boards will say we're going to get a written off anyway? We're going to get brokerage, we're going to get a written off anyway and we're now creating a pattern of rewarding bad behaviour that gives us longer-term financial challenges for NHS Scotland? The existence of brokerage and the reliance on it of some boards over the years that I've been in this job is something that I've been raising as a concern with this committee. It focuses people on the year-end financial performance to the exclusion of wider clinical and financial sustainability. I think that it does raise the risk that those boards who have poorer financial management benefit at the expense of those who take a longer-term or strategic view. If anything, I think that the commitment to move to a three-year cycle, depending on the details of that, will improve that position, not worsen it. We're watching quite carefully what's happening in health boards across Scotland this year as we're heading up to the 31st March 2019 point at which the Cabinet Secretary has said that all outstanding brokerage for territorial boards will be written off. We don't yet know what that will look like, but we're watching it closely. One of the purposes of the audit committee is to try to identify where performance is improving. It's not all just glumindum and giving health boards or whoever a kick-in when performance is bad, but when there are any examples of good performance, we should highlight it. The performance table in your report auditor general seems to show that for NHS T-Side. In Lee, Johnston New mentioned a few examples. Depending on how you read it, there are five or seven indicators where NHS T-Side are performing above target or above the Scottish average, whether it be in four hour A and E response time, where they've always had a good reputation, as I understand it. They've always been pretty good, whether it's in antenatal care or C-diff treatment, or IVF waiting times for access to GB practice. What could explain the contrast in good performance over a range of areas, and then not so good or deteriorating performance in some of those other areas that have been mentioned? We always try to be fair and balanced in our reporting, as the committee would expect. As Lee has said, NHS T-Side has, over the last few years, tended to perform in general against those standards above the Scottish average. I suspect that that's related to some degree to its more expensive operating model. It does have higher staffing costs than other NHS boards for delivering similar services. It's prescribing costs are higher. I think it's estate costs are higher. None of those are directly related necessarily to higher standards of performance, but you can see a picture where those two could hang together. My understanding is that the interim leadership team has done a lot of work to understand the way in which health services and T-Side are planned and provided and the relationship with costs. It's now turning that into detailed action plans for making change, which seems to me to be a priority. The assurance and advisory group report that was mentioned at the start of the meeting minute did come late, but it's not alone in papers that come late to this committee or other committees, so perhaps we've got unfair to single that out. We always get late material, but I wonder if the general fair had a chance to look at that. I didn't say we always get late material. I said it's not the first time it's happened. It's happened three or four times. Please continue. I'm saying we always get late material from a wide range of sources, convener, the experience out of this committee and other committees, and there's no set rule about when deadlines are for papers to appear for committees. They just seem to appear and we take them, and this one's no different. I haven't had a look at it in the two areas that you mentioned in your own report, Auditor General, in relation to workforce costs and prescribing costs. They are high and you've said that in your report, but in the advisory group report, which we did get last night, there seems to be progress being made in these two areas. In relation to workforce, that report says that there's a marked improvement in the agency nursing costs fallen about 33 per cent compared to the same period last year, and the figures for medical locoms have also improved, showing an 11 per cent decrease against that quarter. So there seems to be some progress in the workforce costs, and have you had a chance to have a look at the report yourself or will you come back to us at a future committee to assess this progress? I'm afraid I haven't had a chance to look at it. I think it was sent to the committee at six o'clock yesterday evening. It was copied toward It's Scotland, but unfortunately it was copied to our general business support email inbox and wasn't identified until our admin staff started work at 8.30 this morning, so I haven't had a chance to look at it at all. I'm pleased to hear there's progress and I don't think that changes my view that at the time my report was prepared those little evidence of the sort of sustainable change that's needed. I did have some time to look at it, convener, in the prescribing area, which has been highlighted, has been excessively overspent in the past. There's also some moderate progress there too, and this report shows that to the end of March 18 showed that a delivery of £2.7 million in efficiency savings from primary care prescribing. They do say that that's a modest amount compared to the target of £3.5 million, but it is showing, hopefully, for members a trajectory of good performance in getting to grips with two of the key overspend areas that the board has been facing. As you'd expect, we'll be looking at it closely now that we've received it, and we'll be triangulating it with what Fiona and Bruce are seeing as part of their audit work during the year, and it will be a key part of our reporting back to the committee next year. Bill Bowman, convener. It's a couple of areas. Firstly, could I ask, going back to the chief executive's payment and live notice, when did the Auditor General or Audit Scotland become aware of this as an issue? Did they bring it to you or did you find it? The committee will recall that we gave evidence to you about the position in relation to 2015-16 earlier this year, and events then moved on to the point where the former chief executive's accountable officer status was removed and negotiations opened. At that stage, we were aware of the negotiations, and Fiona and her team were keeping close to it. They then did the detailed audit work to look at the process and the factors that were taken into account, and I can ask you to talk a bit more about the timing of that, Fiona. Yes, immediately we became aware that the chief executive had formally departed from the board. We contacted the assistant chief executive director of finance and explained that we would be carrying out the audit work and requested a range of information, which included the business case, settlement agreement and a range of information, which fed into our conclusions. As part of the audit, we met with the assistant chief executive, the director of finance, the interim chief executive and the chairman. We also spoke to the Scottish Government representative who signed off the business case, and we spoke to the central legal office also as part of the audit. When exactly would you say you found that as an issue? We more or less concluded our work by the end of November, so it was ongoing. It was quite a lengthy process just because we needed to speak to so many people as part of that. There was no way you could have influenced the actual outcome of the negotiation? No, the agreement was already reached, and the chief executive had already departed before we became aware of that. Just moving on slightly, you said that three non-executives had left and they were from the audit committee. Is the audit committee now fully staffed, if you like, with appropriately qualified individuals? When you discussed this issue with them about the payment of the law of notice, how did they excuse themselves in relation to that? Bruce, do we know if the audit committee is fully staffed? I understand that fully. The audit committee does have a full complement of non-executive directors. We can't really comment on how effectively that committee is operating at the moment because it's two early days with those new executives. That's something that we will look at throughout our audit. We didn't discuss the findings of the chief executive's departure with the audit committee. It's very clear in the Scottish Government guidance that the ultimate responsibility for a settlement agreement lies with the accountable officer, so that's the chief executive, and we did speak to him as part of this. As we've already discussed earlier, there was a role for the remuneration committee in all of this that once the notice period was increased, but the remuneration committee was only asked to discuss it in November as a result of the findings of our audit. I would find that slightly unusual. The audit committee, you wouldn't discuss an issue like this with them? After we have reported the issues, we would take them to the audit committee for discussion. This is the first time this has been reported because our annual audit report was issued at the end of June as part of the sign-off of the accounts, and it obviously only came to light after the chief executive's departure, so we did our work in August, and this is the first time this has been reported publicly. We will now expect the findings to be presented to the audit committee, and we will be involved in those discussions. What would you expect that they might do with this information? I would expect that they would apply an appropriate range of scrutiny and ask questions of the appointed officer, the accountable officer in the board, on the issues that are reported here. That is one final point, and that would you have expected the chief executive to raise this with the audit committee when an issue like this came up? I think Fiona mentioned but hasn't stressed that the errors in this were identified by her and her audit team in reviewing what had happened after the sign-off of the accounts at the end of June leading up to the formative executive's departure at the end of July. It will be discussed with the audit committee as part of the closure of the 18-19 audit accounts. I think that it does raise questions about the way in which advice was provided and the extent to which the overall controls were operating effectively in the board during this period. I'm not sure that that's entirely lost your answer to your question. I think that it says there's some sort of gap in the governance here. Bruce, thank you. Thank you. I think that the audit committee is receiving the statute in section 22 report for consideration today, so I would imagine that there would be quite a bit of scrutiny around this at the meeting today. It's probably an uncomfortable meeting. Just following on from Bill Bowman's question, the remuneration committee were asked to approve retrospectively just last month the change from three months to six months. Bill Bowman asked about the audit committee and if the new members of the board are on the audit committee, is the remuneration committee a subcommittee of the audit committee? I think that what I'm asking is that the same new personnel that were asked to approve this retrospective payment or retrospective contractual change. The remuneration committee of any board is a separate committee in its own right. It's not a subcommittee of the audit committee. I'm not sure whether we can answer about the overlap of membership between the two now, but we can certainly provide that to the committee after the meeting. Can you provide that information? The point that I'm trying to drive at is that we're concerned about governance, and if we find ourselves with new members of the board who were asked then in November to approve this contractual arrangement retrospectively, then I think that that would indicate a problem as well. It would be good to have that membership of the audit committee and the remuneration committee just for clarity if you can provide that information. Do members have any further questions for Audit Scotland on this NHS T-side report this morning? I thank you very much indeed for your evidence. I now close the public session as we move into private.