Failing NHS board raided £2.7m from charity fund
Cash-strapped Tayside took public donations to pay for office computer system
HOSPITAL bosses dipped into their charity fund and transferred millions of pounds usually spent on patient comforts such as children’s toys or armchairs to prop up its ailing finances.
Cash-strapped NHS Tayside used money donated by the public to bankroll a back office computer system in 2014 after running out of money, The Herald can reveal.
NHS Tayside is already under fire after it emerged executives “cooked the books” for six years from 2012 by transferring money earmarked for ehealth – an umbrella term for digital healthcare – to a general fund to improve the look of its balance sheet.
However, in a move likely to plunge the health board into deeper controversy, it has now emerged at least £2.71 million was also plundered from its charity pot to cover general NHS running costs.
Ironically, bosses used £2.3m of the charity cash to replenish the ehealth project they had already raided.
It is understood the money was spent on a new IT system.
The charity cash was transferred from a pot of money known as an endowment fund, which is made up of donations from the public or bequests in wills. It is ring-fenced for spending on extras such as toys for children’s wards, refurbishing day rooms or buying medical equipment not available on the health service.
Using it for routine costs that should be funded from the core NHS budget is highly controversial, although NHS Tayside has form for this practice. In 2004, it was condemned for taking £400,000 from its endowment fund to buy new nurses’ uniforms.
Professor Alan Boyter, a retired NHS executive who served on a number of health boards including NHS Lothian – but never Tayside – said: “One of the golden rules about endowment funds is you don’t ever use charitable donations to fund Exchequer spending. The idea of the endowment fund really is that it pays for the ‘extras’ the NHS can’t pay for itself.
“It pays for the Imperial Leather rather than the carbolic, so to speak. [An IT system] is not an appropriate use of the endowment fund.”
Papers reveal that when NHS Tayside was “faced with a funding deficit” in 2013-14, the trustees of the fund “were asked to retrospectively fund projects already approved by the [health board]” to the sum of £2.71m.
This was banned under the rules set out in the board’s own constitution. As a result, the constitution was suspended for one month to enable the transfer to go ahead.
Current chief executive, Lesley Mclay, was in charge at the time and is understood to have sat in the meeting where this was signed off.
The Herald understands several trustees were “very uncomfortable” and challenged the request.
However, the issue is complicated by the fact all executive and non-executive members of the health board automatically double up as trustees of the endowment fund. As the endowment funds are registered charities, trustees have a legal responsibility to act in its best interests.
However, one NHS source close to the events said trustees came under pressure to put the board’s deficit first. The source said: “The trustees of the endowment fund are the same
people who sit on the board of NHS Tayside. Although they try to wear a different hat when they’re sitting there, basically they were told on the day they authorised this transfer that if they didn’t, beds would be getting closed, wards would be getting closed.”
The source added the actual sum signed off was £4.3m, but only £2.71m of it was spent in 2013-14.
The case also exposes a potential frailty in the auditing of NHS Tayside’s accounts. Another NHS Tayside source said internal auditors from NHS Fife and Forth Valley questioned how endowment fund cash was being used, but were warned they risked losing their contract with NHS Tayside unless they backed off.
A spokeswoman for Scottish charity regulator, OSCR, said it would “consider” the case.
The current chairman of NHS Tayside, Professor John Connell, said, “I would stress the projects supported were appropriate for endowment funding but the retrospective decision making element of this will form part of the planned externally-led review of NHS Tayside’s financial governance.”