NHS Tayside finances remain unsustainable despite leadership changes, warns auditor

Beleaguered health board NHS Tayside has shown a worsening financial position despite being placed under special measures by the Scottish Government, Audit Scotland has reported.

The public spending watchdog said the fact its loans from government were to be written off does not address “underlying financial problems”.

The brokerage loans to NHS Tayside amount to £50.2m since 2012/13, but Audit Scotland said £45.9m has not been repaid.

Health secretary Jeane Freeman announced in October that brokerage loans to all boards will be written off and accounting will be moved from annual to three-year to allow for longer term planning.

Audit Scotland said the board’s performance against national targets was also deteriorating, with seven national standards out of 20 met or exceeded in 2017/18, compared to nine in 2016/17.

Auditor General Caroline Gardner said: “NHS Tayside financial position has been unsustainable since 2013 and urgent action is needed to turn around the organisation.

“The Cabinet Secretary's announcement that all outstanding loans will be written-off at the end of 2018-19 reduces the pressure on Tayside to make repayments. But it does not address the underlying financial problems.

“Changing the ways services are delivered will be critical in reducing NHS Tayside's operating model and comparatively high staff costs.

“However, to date there is limited evidence of this happening, increasing the need for effective leadership to drive home the board's plans for change.”

Today’s report also revealed former NHS Tayside chief executive Lesley McLay, who was replaced by ministers after the board had misused charity endowment funds, was paid £32,000 more than she was entitled to in her golden handshake.

Audit Scotland said there had been "several errors in the process and a lack of good governance" surrounding McLay's £90,000 settlement.

The scale of the payoff was raised by the convener of Holyrood’s Public Audit committee, Jenny Marra, at the time.

Freeman said the report used accounts from before the leadership team had been replaced.

“The Scottish Government is continuing to provide specific support to NHS Tayside to help it recover its financial position,” she said.

“In addition and as part of our new deal for NHS boards, we will not seek to recover brokerage from the four territorial boards with outstanding amounts, including Tayside. This will allow them to start 2019/20 with a clean slate.

“We are also giving boards greater flexibility by requiring financial break-even over a three year period rather than one, and giving them the option of over-spending by one per cent each year.

“These changes will allow boards to focus on operating within the resources available, while also maintaining the necessary levels of performance.”