Poor leadership and weak corporate governance contributed to NHS Highland’s financial difficulties


Poor leadership and complacency about budgetary oversight contributed to NHS Highland requiring an additional £2.5 million from the Scottish Government in order to break even in 2013/14, a Scottish Parliamentary Committee found today.

Reporting a number of observations and recommendations, the Public Audit Committee has raised concerns around issues of financial management and reporting, Board communications and vacancy management. 

The report - ‘NHS Highland 2013-14: Financial Management’ – follows evidence gathered from the Auditor General for Scotland (AGS), Audit Scotland, the Scottish Government and NHS Highland - who provided evidence on two separate occasions.  Last October, the AGS had laid a report entitled ‘The 2013/14 Audit of NHS Highland: Financial Management.’ 

Public Audit Committee Convener Paul Martin MSP said: 

“In 2013/14, for the first time in 11 years, NHS Highland requested a loan - brokerage - from the Scottish Government to enable it to break even against its revenue and capital budgets. 

“Given this we expected to find a robust and transparent system of checks and balances that showed exactly how that situation had developed and how and why the decision to request brokerage was arrived at. This was not the case.  

“Instead the evidence from NHS Highland about when brokerage was agreed to and by whom was unclear and contradictory to an extent that we question how well informed the Board were and when they decided to seek brokerage.   

“The fact that, for example, Raigmore Hospital continued to overspend year on year, despite £5 million extra funding in 2012/13, suggests to us a culture of complacency about budgetary oversight at the hospital and at the NHS Highland Board. The slow progress in addressing the causes of the overspending at Raigmore was exacerbated by the practice of creating compensatory underspends elsewhere in NHS Highland in order to break even.   

“What was clear to the Committee was that without brokerage there could have been serious repercussions for patients.  The lack of transparency about the need to seek brokerage meant there was little opportunity for the public and staff to understand early on why brokerage was being sought and the potential impact on services of paying it back over three years.  

“Whilst we acknowledge that NHS Highland has taken steps to improve its financial management and reporting to the NHS Highland Board, it is essential for the future financial health of NHS Highland that all the actions and recommendations identified in the internal and external audit reports it has received to date are acted upon.”

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