The Courier & Advertiser (Perth and Perthshire Edition)
NHS chiefs warned over big bonuses
Funding black hole grows after false accounting cover-up
Health chiefs have been warned against pocketing bonuses as the bail-out bill for NHS Tayside soared past £40m.
MSPs quizzed the board’s chief executive, Lesley McLay, over the failure to ask basic questions that could have exposed false accounting, which was revealed last week to have played down Tayside’s financial problems.
The predicted black hole in Tayside’s finances has now tripled to £12m for 2017-18.
NHS Scotland boss Paul Gray said the Tayside board’s failures mean they must think “very hard” about awarding themselves performance-related payments like last year.
At a meeting of the board yesterday, chairman Professor John Connell said they are “gravely disappointed” by the accounting issue and are “very keen to find out exactly what happened and how it happened”.
Investigations are being held to see who was involved in the misreporting and the extent of the collusion with NHS National Services Scotland.
The boss of NHS Tayside failed to ask basic questions to uncover a six-year conspiracy hiding the true scale of the board’s financial crisis, say MSPs.
Chief executive Lesley McLay appeared before a Holyrood committee yesterday over the false accounting scandal that came to light earlier this month and coincided with the departure of the health board’s finance director.
The misreporting of digital healthcare funding, in which cash was “recycled” since 2012, presented Tayside’s financial picture as £5.3 million better than it really was.
A review by independent auditors Grant Thornton found the practice was known about at a national level, with finance directors at both NHS Tayside and NHS National Services Scotland aware.
Jenny Marra, the convener of the public audit committee, told Ms McLay of her shock the chief executive did not ask for more detail on the section of the budget that included the recycled cash.
“I think most people would expect that level of accountability to rest with you,” Ms Marra said.
“It strikes me that if you did not ask what that deferred expenditure includes then you weren’t asking the right questions.”
Ms McLay said the e-health allocations involved small sums, which made it difficult to detect.
“There was never any risk identified that there were inappropriate allocations coming into our board,” she said.
She trusted her finance director and did not receive a line-by-line breakdown of the accounts.
Asked why she did not ask for that, she said: “In terms of the size and scale of the reports, it would not be appropriate for me to ask for a single line.
“Our budget for our board is clearly about £800m. I don’t have a line-by-line account, I wouldn’t expect to have that.”
Ms McLay added: “There isn’t anybody more disappointed to be here in front of the committee on this issue.
“There is a level of accountability, clearly I am the chief accountable officer, but I also delegate and there is a level that you have to trust.”
Grant Thornton found NHS Tayside’s ex-director of finance Lindsay Bedford was aware of the accounting practice.
It said the health board had “misrepresented” its financial performance by “holding” £5.3m that had been allocated by the Scottish Government for eHealth initiatives.
Paul Gray, the chief executive of NHS Scotland, said there has been “deliberate obscuring” of the financial information given to the “misled” Tayside board.
Troubleshooters led by Sir Lewis Ritchie were brought in last year to help Tayside find £175m of savings over five years. The assurance and advisory group reported last month that £44.5m must be cut in 2018/19 to break even.
Health Secretary Shona Robison said: “This is a serious situation and the Scottish Government will continue to work with NHS Tayside to provide additional brokerage, ensure stability and protect patient care.
“The financial governance of national eHealth funds now resides solely within the Scottish Government and both NHS Tayside and NHS National Services Scotland are putting measures in place to ensure this doesn’t happen again.”
Over the coming months, the full scale of the changes NHS Tayside must implement to return to true financial equilibrium will become clear. Since 2012 it has required loans, known as brokerage, from the Scottish Government to balance its books each year.
Depressing as that picture is, it has since emerged the financial hole was even deeper and that £5.3 million of funds intended for digital health programmes had been used to mask the true extent of the financial crisis at the health board.
Given NHS Tayside’s annual budget is some £750 million, £5.3 million may seem like small change.
But the health board faces huge financial challenges as it seeks to return to something approaching financial normality and has to find around £45 million of savings next year.
Achieving this will require massive changes to the way NHS Tayside operates and the way it delivers services.
While it seems the former finance director of NHS Tayside knew about the misrepresentation of ehealth funds – as did NHS National Services Scotland – the board did not.
This, and the continuing reliance on Scottish Government brokerage, will hardly inspire public confidence in either NHS Tayside’s ability to make the savings necessary to cut its deficit or to maintain the level of health care the people it serves demand.