Good morning, and can I welcome everybody to the first meeting of the Public Audit Committee in 2022? The first item on our agenda today is to take a decision on whether to take items 4 and 5 in private. My working assumption is that everybody agrees to do that, but if anybody disagrees, I wish that they could please indicate by raising their hand. I don't see any hands raised, so we agreed to take items 4 and 5 in private. The second item on our agenda this morning is to consider an Audit Scotland report, the 2020-21 Audit of Baudnau Gallic. Can I welcome our witnesses to the meeting this morning? I would like to introduce Stephen Boyle, Auditor General for Scotland. Graham Greenhill also joins us, who is a senior manager, performance audit and best value at Audit Scotland. Pat Kenney, who is a director of audit at Deloitte, joins us. I begin Auditor General by inviting you to make an opening statement. Good morning, members, many thanks. I am presenting this report this morning on the 2020-21 audit of Baudnau Gallic under section 22 of Public Finance and Accountability Scotland Act 2000. The previous Auditor General reported a report on the board's 2018-19 audit and highlighted a number of areas for improvement in its leadership and governance arrangements. My report on the 2020-21 audit has found that the board has responded well to previous concerns. It has changed the structure of its leadership team and introduced additional management capacity. A workforce plan is also now in place, which links to its corporate plan and identifies its future workforce requirements. The number of non-executive board members on the board has reduced, but skills gaps that were previously identified have now been addressed with the recruitment of two new board members with relevant financial experience. Bros and responsibilities of the senior management team, its committees, the board and the sponsor teams are now clearer following additional training. The board's framework document with the Scottish Government has also been updated. In being, our openness and transparency have significantly improved. All committees and board meetings are now held in public, with meetings advertised in advance on social media. There are also regular stakeholder engagement activities with the other Gallic organisations. The board of today is an improved organisation to the one subject to the 2018-19. The pace of improvement in addressing previous concerns is welcome. Given the long-term challenges that are required, it is likely that the full benefits of the improvements that we are reporting will emerge further over time. Therefore, it remains important for the board to monitor whether the changes are delivering long-term benefits with measurable impact and make appropriate adjustments if necessary. As ever, Pat, Graham and myself will do our best to answer the committee's questions this morning. Thank you for that opening statement. I have a couple of questions before I invite other members of the committee. It is worth recapping where things were back in 2018-19. The conclusions of that report spoke about ineffective leadership, a lack of clarity over roles and responsibilities, poor relationships and organisational culture and inadequate workforce planning. To such an extent that the auditor, in giving evidence to the predecessor committee of this one, said that, in terms of the findings and recommendations, I cannot think of another report that has raised such serious issues during my time in this role, so it is a pretty damning indictment of the way things were. When we turn to the report that has just been published, there appears to have been quite a considerable turnaround. My first question to the auditor general is, what has the catalyst been that has made such a transformative difference to the organisation? The first thing that I would agree with you convener is that I recognise that the report that the predecessor committee considered 2018-19 was incredibly significant and challenging and critical of a wide set of arrangements in the organisation. We have seen and Pat will, no doubt, give his views over the course of this morning on the various factors behind that. In terms of the catalyst, there is no doubt that public scrutiny in and of itself and the work of the Parliament and its committees and the section 22 reports can be catalysts for improvements in performance. As we have said in some of our comments, that is really welcome, but that has been the reaction to the previous section 22 reports. We are pleased to see some of the progress that we are seeing. That is not just about a number of small or minor changes. We look at the scale of the recommendations. Over 40 recommendations translated into 70-plus actions that were taken forward. Considerable effort has been made by the board using the audit findings, working in partnership with the Government and its stakeholders. We have all led to what we would say is an organisation that is now performing as it ought to. A range of factors and no doubt the hard work of the board and its board of governance have all been behind that. I would say that one little caution, if I may, is that the longer-term benefits of the impact over the short-term is where it really matters now that the board is functioning well and delivering for the Alex Beacon community. The board has done itself back to a position that perhaps ought to have been in the first place, and it now matters that it can take forward this momentum, delivering upon all that it is there to do for the Alex Beacon community and the country. If Graham or Pat wants to come in at any point, if they put an hour in the chat box or I am sure that the Auditor General will bring them in, it is often the case, is not it? It is not just making the changes, it is keeping the change going in an organisation that is critical. One of the things that I note from the report is that the board appointed an external change management expert in 2021 to 2022, as it says in the report, to embed its developing approach to continuous improvement and maintain the pace of change that goes to that point. Is that appointment a permanent one, that external continuous improvement expert, is that going to be a permanent part of the organisation going forward? If it is, what should they be prioritising in the months and years ahead? I am happy to start, and I will invite Pat to come in to supplement my response. Is there an understanding that it is not a permanent appointment to Borna Gaelic? I suppose that we got the point that it is not an unreasonable situation, but given the size of the organisation, what was standing the challenges that we previously reported? It remains a relatively small organisation in terms of the number of people that it employs. As we anticipate and expect to a stable, high-performing organisation, it can take a view as to the need for it to call on external support. I understand that it is a consultancy service that it is accessing that has supported the delivery of recommendations that were identified from previous audits and is beginning to move forward with what that now means for certain plans, as we talk about in parts of the report for its corporate plan and its connections to its workforce financial plans. It is a consultancy nature of appointment, convener, but I will turn to Pat just to say a little bit more about what he has seen in his views and on how well that arrangement is working. We made the initial recommendation three years ago that the board should consider the appointment of the external change management resource, because we felt that it was very important in delivering that continuous improvement that happened. It has made a massive difference, particularly in how the organisation engages with its stakeholders and how it manages the change process. It has introduced a very sound practice for ensuring that the benefits of change initiatives are delivered within the organisation and the benefits are realised. I would expect that the organisation is a consultancy resource and is not a permanent resource. I would expect the organisation to keep that under review and I know that they are doing that. It is very important that they do that going forward in ensuring that they continue that journey in terms of being as close to their customers as they possibly can be. I would say that that is the key imperative for the organisation in the next few years. I think that there is mention in the report of an improvement plan steering group. Is the expectation that that will continue for some time or is that a time limited part of the organisation's work as well? I do not know whether the party wants to come back in that and we can widen it out if other people have come on to commentary on that. It is happy to do so, chair. That group has transitioned to what is now called a continuous improvement steering group. I think that that is important because that is about the process of embedding that continuous improvement within the organisation. I would see that group continuing in place for the medium term, definitely. I think that that transition to continuous improvement is very important in terms of that changed journey. Thank you. Again, if anybody wants to come in if you just put an hour in the chat box, one of the things that I just wanted to round off this section of questions with Pat, and I think that I will start with you, is just to again clarify, is the continuous improvement plan that was produced, is that in the public domain, is that publicly available for members of the community, especially with an interest in the working of the board? Is that accessible to people publicly? Yes. Certainly within the board's annual report, there is strong visibility of the improvement plan in various parts of the annual report, and there is very good monitoring about the improvement plan's objective and how it is doing. I think that visibility, transparency and openness of the improvement plan, is good, chair, yes. Yes. Again, as previously identified, openness and transparency was a bit of an issue back in 2018-19, so that is a continuing area of interest for us. The final question that I have got is to go back to—I think that the Auditor General mentioned that there were 72 actions that came out of the recommendations, and of those 72, 71 have been implemented. The Public Audit Committee has been the nature of the beast that it is. I want to ask about the 72nd action that has not been implemented so far. I wonder whether somebody could give us an explanation as to why there has been a hold-up with that. Is it simply a matter of timing? Is it contingent on other issues? What is it, just so that we have a better understanding of what the outstanding action is? I am happy to start. I am happy to start. I am sure that Pat will want to come in as well. The outstanding action is in respect of, if my memory is correct, its engagement with the Gallic community's forward plans. It is not an insignificant action, but it was in the timeframe that was intended to be completed part of the plan, so it is not necessarily one that is overdue, bearing in mind that Covid will have had a bearing in the ability of the board and its stakeholders to engage. As ever, with our audit work, some of it will continue to monitor what it will do during its audit of the 21-22 year of the board, and it will continue to report publicly on progress. I recognise, convener, that 71 out of 72 is really remarkable progress, given that, as you said in your scene setting notes, there was a considerable job of work to be done, but all the one action that is remaining is important, and it does matter that that is followed through. Pat can just confirm that my understanding is correct. The one outstanding action is in relation to the multi-year funding agreements, which are obviously three or five years best. We recommended that there should be clear KPIs, clear alignment to the corporate plan, so that we could monitor the outcomes that those multi-year funding agreements were delivering. In relation to the timing of that, that will be action in line with the next negotiations on those multi-year funding arrangements. It is perfectly reasonable that that action is still outstanding. Okay. Thank you very much for that. We have further questions on engagement, which we will come up later on in this evidence session. However, I want now to turn to Colin Beattie, who has got some questions around board scrutiny. Thank you, convener. I look at the 2018-19 report. As a result of that, the number of non-executive board members was reduced from 11 to 7. Now, in the section 22 report, it states that consideration of the capacity of board members is an on-going issue for the board, given the workload associated with the position. Can you clarify what that workload involves? Does it derive from the fact that the number of non-executive board members was substantially reduced? Good morning, Mr Beattie. I am happy to start, and I am sure that Pat will say a word about it, too. You are right in your recollections that the 2018-19 report and evidence sessions highlighted concerns about the scrutiny that the board was undertaking. In particular, we have focused on, as the board has, two about whether it has the right skills in place. The skills are connected clearly to the capacity of the board to discharge its scrutiny functions. What we have seen is improvements in scrutiny, but also connections to the skills that it needed to discharge those functions well. It has brought in new board members with the relevant financial skills to discharge that gap in scrutiny that was reported previously. It has reduced the number of board members. We are neutral on it about the relative number of board members that ought to be in place in that particular board. It ultimately is a matter for the public body in discussion with the Scottish Government and the relevant sponsor teams about how that is operating. Over the years, Mr Beattie will have seen that the number of board members on a particular board is not necessarily indicative of its success in discharging scrutiny arrangements. The final comment that I made in my opening statement is that it is perhaps too soon to draw definitive conclusions about governance and scrutiny into the longer term. We welcome the progress that has been made in terms of governance and scrutiny. We have seen actions taken in terms of self-assessment, external assessment of the board's work and its committees. All those are giving positive signals, but I would hesitate before drawing definitive conclusions that that means that all will be well into the longer term. It is important that that is regularly checked and monitored, but it now has a platform with which to proceed with more effective governance than you saw in 2018. You have flagged the fact in the latest report that the capacity of board members is an on-going issue for the board. As I said, due to the workload associated with the position, what is this workload? What is this overwhelming workload that they have? The workload of any board member or public body will always be in respect of considering papers, attending meetings and the appropriate contribution to the board's strategy. I am finding the right balance and position for board members relative to executives. As you have and the committee have seen in this organisation and others, sometimes, if there is a lack of clarity in the boundaries of the executive relative to the non-executive, that can skew the workload of non-executive members. In matters that both the executive and the non-executive sponsor team are all clear on who is responsible for what. Although there may be on-going capacity workload challenges, what we are not doing in this report is flagging that as a red flag to the committee. Our overall impression is that, having invested in additional skills and capacity, particularly those areas that are lacking in the finance skills previous reports, is that they now have a stronger foundation with which to proceed. Clearly, yes, they still need to monitor the capacity issues, but we are not saying that that overrides the overall improvements that we are commenting on. The reduced from 11 to 7, five of the current board members were there in 2018-19. So there has been no change to the skills base there. All that has happened is that two people have been brought in with relevant financial experience. How does that balance the skills across the piece with the other five? That says one component of it. Certainly, bringing in new skills has made a big difference. Pat can come in at the moment and say some of the detail and perhaps more about the background of those new members. Any new members with relevant skills changes the dynamic of a board, the opportunity to learn from one another, and we expect that that is part of the component that we are seeing here. The other factor is that they have also changed some of the nature of their committees. They have evaluated committees, received training on their roles and duties and are now operating with a revised framework document. All of those are building blocks in our assessment, Mr Beattie, of the opportunities for improved governance that we are seeing. The number of board members has been new skills part of the story. When we add in the evaluation of how their governance has been operating in the board and the committee with some external assessment of that, along with the new framework document, we all feel that there is not one moving part. There are a range of combination of factors that have contributed to the improvement that we are seeing. If I may, I might like to bring Pat in just about his own interaction with the board and how that has his assessment of the conclusions that he made in support of Pat. Thanks, Mr General. A good example for me would be the new chair for the Audit and Assurance Committee with the financial background, a qualified accountant, who has made a big difference in overall governance and financial stewardship in the organisation. I think that that has been impressive and has made a big difference in overall governance in the organisation. I think that the overriding point that I would make just to back the Auditor General's comments up is that the reduction from 11 to 7 was obviously a fairly significant material reduction. The overriding comment in the report is that it is important that the board keeps the workload of the board members under constant review, given that fairly material change. As Stephen MacDonald said, we are not raising any red flags at this moment in time and it is something that I will keep under constant review in the audit going forward. You have emphasised the fact that you are not raising a red flag in a way that you have done by putting it in the report that it is an issue for the board. Can you confirm that the capacity of the board is not a risk factor at this time? We are not identifying in the Audit and Assurance Committee with the overriding changes that have been made to clarification of our roles and responsibilities for training, self-assessment and, as we have mentioned, the revised framework document. There are sufficient steps in place for the board's governance to operate effectively. Our comment about the reduction in the board members and the associated workload is appropriate as a seam setter and it would be appropriate for all public bodies that they are continually monitoring and reviewing it. However, in doing so, to continue the phraseology, we are not assessing that as a red flag in terms of the ability of Ornag Alex Governess to operate effectively. Put it more simply, do you consider the capacity of the board to be a risk to the board? We are not saying that there is a direct capacity threat to the board in the way that we think that there is a step change if I can put it in and try to keep it simply if I will do my best to do so. With the living board members, governance was weaker with the seven board members that it now has. Seven, albeit with a smaller board, governance is stronger and it has a stronger platform for effective good governance going forward. In the 2018-19 section 22 report, concerns were raised that the previous chair didn't carry out annual performance appraisals of board members. Can you confirm that that is now happening? I will turn to Pat just to update the committee on that point. Yes, I can give you that assurance and that is now happening. Good. One final question. The normal term of office for a non-executive board member is four years, although lens appointments can be varied for continuity purposes. Do you know when the recruitment process for new members is likely to commence? I am not sure. I have that information, but you raise four years. As you suggest, Mr Beattie, there is the opportunity for re-appointments of existing board members for continuity issues if that suits both the member and the public appointments arrangements. Again, I will ask Pat if he has that information. If he doesn't, we can come back to the committee. No, I do not have that detail, Mr General. Okay, so if he could come back to us with that information. Back to you, convener. Thanks, Colin. I want to switch on to the issue of leadership, which again was identified as an issue in the previous section 22 report. Craig Holly has a series of questions to put around the leadership of the organisation. Thank you, convener, and good morning, Stephen. OrderGallic is the principal public body for promoting Gallic development. We note that the leadership team role of head of communications and promotions, which was previously a vacant position, has now not been incorporated into the new leadership team structure. Given that, that is quite an important function, who is now responsible for the work at a senior level, and are you comfortable with that decision? Ultimately, in terms of responsibility, the chief executive board is the accountable officer and responsible for the board's discharge of its functions, public reporting and reporting to Parliament. We set out at exhibit 1 to the section 22 report, the revised structure. What we have reported on is a smaller executive team structure, headed by the chief executive, director of Gallic education and director of language planning communities, along with a head of finance and corporate services. He asked whether I was comfortable with it, and I was the ultimately for the organisation to determine its own structure and how best to discharge its responsibilities. What we have seen is that the Borne Gallic has reviewed its structure, and in part has addressed the findings of previous audit reports. There was a lack of capacity at management level, a lack of cohesion, and invested in both a changed top team, but also more capacity at the tier below of the organisation. The responsibilities of communication are ultimately of that of the chief executive, and I think that I will check with Pat again on the director of language planning, which is my assumption as to where those direct responsibilities at executive team level now sit. As ever, Mr Hoy, it will depend on the success of those arrangements going forward that the board can effectively demonstrate that it is meeting the requirements of the Gallic-speaking community in its structure and keeps that under close and continuous review. As ever, Pat might want to comment on his own interaction with the executive team. Yes. There has been a new appointment of a communication officer in the next layer of management, which has made a big difference in terms of how the organisation communicates with both its staff and its stakeholders. We noted a big improvement, for example, in staff engagement. It is now 87 per cent, which is significantly higher than it was, and that is above the civil service average. That has been a big improvement. Communication with stakeholders, external stakeholders, has also improved considerably. Use of social media has also improved a lot since the new communications officer has come in. I think that there has been that focus as communication. A lot of that has been driven by that new appointment, and I think that that has made quite a big difference to date. That is reassuring. I just wanted to get some assurance that the organisation was not looking in on itself and not engaging externally, but that sounds like some assurance from that. The 2018-19 section 22 report highlighted the leadership issues and identified that that led to a lack of confidence and a culture of mistrust throughout the organisation. As we know from other recent inquiries, organisational culture does not change overnight. It needs hard work and a lot of effort. What work has the board undertaken, Mr Boyle, to build back trust and to regain the confidence of its staff? I agree with your analysis, and I will say a few words in part that we might want to supplement with our assessment. It is incredibly difficult to recover trust in organisations once it has been exposed to challenge deficiencies. We reported that in the 2018-19 report that the board in a Gaelic had experienced deficiencies in its communication with its staff, the extent of which they were engaged in. Also, as Pat rightly mentioned, it was not confined as an internal matter, there were concerns of trust in the board's activities and the views of its key stakeholders. As Pat touched on a moment ago, the board is assessing the level of staff engagement through survey activity and reporting significant improvements. Across the piece, we are two years on from the last report, and we are seeing progress across a range of fronts. Clearly, that is all really welcome. However, there is a slight note of caveat that I would continue with. Two years is not an incredibly long period of time, and it matters that the board is functioning well into the medium and the longer term. It can sustain the momentum that is built up over the course of the past two years. Although the staff survey results engagement have increased, matters that continue to work well and staff feel engaged, lots of trust that was previously reported, are sustained from the experience that they get as employees of the public body. Beyond those remarks, I will turn again to Pat, if there is anything that he wishes to add about his own staff of the organisation. I have nothing much further to add to the Auditor General's comments. Since my audit team picked up the issues, we are now almost three years from that time. Three years has allowed the organisation the time to make the changes in engagement and communication. There were always very good people in the organisation, good committed individuals. In the past, there was a lack of organisation, a lack of clear definition of roles and responsibilities. I think that all the ingredients were there for the organisation to perform as they should be performing three years ago. However, the systematic changes that the organisation has made has now allowed the organisation to perform the way that it should have been performing. On that point, Mr Kenny, it was encouraging and reassuring to read that performance appraisals have been introduced across the organisation. Do you know what proportion of the workforce has received those performance appraisals? Have you had any opportunity as of yet to assess the effectiveness of that process? I think that the process for performance appraisals is embedded throughout the organisation for all staff members, for all board members. It is one that we have not picked up any issues or concerns as of yet. We will keep it under review. The big thing that we have always been pushing in terms of those appraisals is a clear linkage to the organisational outcomes and the KPIs, particularly for board members. That is something that the KPIs journey to maximise performance is obviously work in progress. The organisation recognises that it still has work to do in delivering the organisation's outcomes and KPIs. I think that the performance appraisals have a clear linkage into achieving that. On recruitment challenges, bullet point 1 in the report highlights that the board has amended its policy on the recruitment of Gaelic speakers. After advertising a post twice before reviewing whether the essential skill and element of Gaelic is required, the board still includes a requirement for any new staff joining the organisation to commit to learning Gaelic if they are not already Gaelic speakers. That sounds to me to be a very reasonable approach. Do you know whether or not this has led to any tangible improvements in the board's recruitment process as of yet? I am not sure that I have that. I will make a star action in part if I can come in. I am not sure that we know that detail, Mr Hoy, in terms of how many numbers of staff it relates to and how many Gaelic learners the board has recruited to post that they were not able to fill or hard to fill posts. Packing can maybe supplement that. Before I have any minute, I want to say that there is welcome clarity on this point and that it is being able to report publicly how the board engages with recruitment. For us, there are previous conversations that we have heard that some of those posts were reserved for Gaelic speakers and a lack of clarity who were responsible for what they were doing. We have seen that it is clear as to how they will recruit is most welcome. However, as ever, Pat may have the detail on how many new employees that this covers. I do not have the detail. I can obviously come back to the committee on that. As the Auditor General states, it is welcome clarity, which was not there in the past. Again, it is early days and it is something that we have to keep under review in terms of the impact that that will have on the organisation going forward. However, I am happy to come back on the detail for that one. I will hand back to Richard. Thanks, Craig. Pat, it would be useful if we could get that information. That would aid us in our consideration of the report. Before I move on, on this area, Auditor General, you mentioned Exhibit 1 as something for us to have a look at in terms of the organisational chart. Mention has been made of the important additional resource that has now been put into the organisation by the appointment of a head of communications and promotions. However, when I look at the organisational chart, I see a chief executive below, which is a director of Gaelic education, a director of language planning and community developers, a head of finance and corporate services, but I do not see on the head of communications and promotions. Are they not at the same level? Are they not part of that more senior executive management team? That is our understanding, convener. There is a smaller senior management team in the organisation, but supported by an enhanced tier below in the organisation to deliver organisational priorities. Ultimately, it is for the board to decide on how they best structure themselves and where roles and responsibilities in terms of their staff carry out. It is for the chief executive's accountable officer to determine how best to deliver their structure. What we have seen as auditors is that they have made changes to their structure, brought in additional capacity at the tier below the executive team to deliver their organisational objectives. In a relatively early stage, it looks like that is working well as we have seen feedback from external stakeholders of improvement in their views of the board and higher staff satisfaction. Although the post that you mentioned is not part of the executive team, it is still clearly undertaking a very significant role in the organisation and it has input through reporting lines to the senior executive team. I would not necessarily say that that feels like the wrong structure or that there are deficiencies in it, but one for the board themselves to take a view on where best roles and responsibilities are. I want to turn now to Sharon Dowie, who has a number of questions that stem from the previous report and, of course, the current report about roles and responsibilities. Looking at the 2018-19 section 22 report, it highlighted issues around a lack of clarity over the respective roles and responsibilities of the leadership team, committees, the Scottish Government's sponsor team and the board, as well as board members being too involved in operational matters. It sounds a bit familiar to another report that we have read. What evidence have you seen that the updated framework document has addressed the lack of clarity? That was a very significant theme in the 2018-19 report. In the evidence sessions that the predecessor committee took from the board and from the Scottish Government's sponsor team as well, there is the heart of many of the issues that we reported previously about the lack of clarity around roles and responsibilities, excessive involvement of non-executives, taking decision making and a framework document that does not support what the Government should be doing as a sponsor team of the board. We commented in this report a number of steps that have been taken, all of which are equally important for training or for board members for the executive team, changing committee structure as well. We have seen a policy and resources committee alongside an audit and assurance committee, but evaluation of those arrangements feels really important. Some of those are self-assessment evaluations, others have been supported by external assessors as well as featuring on the internal audit programme. All signs of progress are now in terms of how the board itself is working on its internal arrangements. If I may say a word about the Scottish Government and the sponsor team as well and particularly about the framework document, I recall that it was at the beginning of last year that the Scottish Government director general wrote to the previous committee about some of the steps that the Government was taking in the advocacy of its sponsorship arrangements for board Magallac. He highlighted that he had also done some training and evaluation and peer review assessment to take place between other sponsor teams in Government and how sponsorship was working with board Magallac. Again, welcome signs of that they are treating the matter seriously and responding appropriately. All of those factors are translated into a revised framework document. Signs are that that is working well. We are seeing less visible presence of sponsorship teams at board meetings, because they have access to papers, minutes, corporate conversations with the chair of the board and the chief executive. All signs that the steps that were highlighted are really needing done in the previous report have been taken forward. Our conclusion today is that it gives the board the right foundation to move forward with effective governance and sponsorship arrangements. That was mentioned previously and I will do likewise. We will continue to monitor the report on progress, but it is saying that board Magallac's governance arrangements, his relationship with the Scottish Government, is back where it really ought to have been before the audit reports in 2018. Colin Beattie had mentioned earlier about when the recruitment was for the new board. He also mentioned that five of the board members were on the board at the last audit. Can I ask how long they have been in position? Are you aware of how long they have been in position prior to the audit in 2018-19? It is publicly available information. Unfortunately, I do not have my fingertips at the moment, but I am sure that it will be set out in the board's annual reporting accounts or available on its website. Usually, it states when individual board members were appointed, what the term of their appointment is, and when that date will end. We will come back to the committee in writing after the meeting just to confirm exactly which members are appointed on which dates are when they will be up for re-appointment. My further question on that was, depending on when they were appointed, why the issues had not been raised earlier in a previous audit. There were quite a lot of issues in there, so it was why they had not been raised at the head. It was just wondering if the board had quite a lot of new members on it, and that is why they had not been highlighted before. I think that our audit work is in part all in common. I am sure that we report on events that come to our attention during the course of the audit. In the 2018-19 audit, significant events were clear. In that year, Pat and his audit approach were extended to report public or many of those issues. Born and Galloch is a small organisation. It is albeit a very important one with the role that it has. Typically, our audit approach for small organisations is to look at the financial statements and aspects of its governance, but Pat, through discussion with Audit Scotland, we took a view that we needed a much wider enhanced audit approach during the 2018-19 light of the issues that were coming to our attention. Matters do change. An organisation cannot have very stable governance operating effectively without a change in board members or executive team, but events do happen that can lead to change. Although a change in board members can be a catalyst, it does not always need to be the case. As we have touched on, we will continue to report. I wonder whether, to invite Pat to say a word or two about his own experience, if it would be helpful from 2018-19 and how that moves into this year's audit report? We had some concerns in previous years, and they were reported in our annual audit report, but when it got to 2018-19, our risk assessment procedures really raised significant red flags, which seems to be the word of the morning. That was why, as Stephen mentioned, we undertook a much more in-depth audit in that particular year. I do not think that there was any direct correlation with the tenure of the board members or lent the service or how long they have been in the organisation. I think that there were other factors at play, which were spun demandally back to the lack of clarity and roles and responsibilities. I think that that was the key driving force, and that caused us to do a much more extensive audit in 2018-19. We know that, although the Scottish Government's sponsor division is not required to attend board meetings, it receives an invitation. In fact, going by the stuff that I read in the report, it would seem that it receives an invitation, and although it gets the minutes from the meetings, it does not seem to read them. I would think that, based on the serious issues identified two years ago, do you think that there is merit on the sponsor division attending, if not all, at least some of the meetings to demonstrate its commitment to supporting the board and to maintain the pace of change? It is a balance in my judgment whether the sponsor team should be visible at board meetings or otherwise. It is a judgment that should be reached in discussion between the public body and the sponsor team. As we have seen in other cases, there can be too much involvement of the sponsor team or not enough. That feels like a considerative decision that is in the right place, depending on the issue of the public body. It is one that should be kept under a regular review. You can gauge from minutes in board mate papers and organisations processes and challenges only up to an extent, so attending those board meetings would bring benefits. For the sponsor team to be a permanent fixture at a board meeting, it can bring a blurring of responsibilities, if it is the scene that the accountable officer, the chair of the board, is unable to discharge their own responsibilities without being under the watch of the sponsor team. It is a little bit of horses for courses. I need to be iterative to support the development of the organisation. I know that Willie Coffey has further questions to explore in the context of openness and transparency. Willie, over to you. Thank you very much, convener. Good morning, everyone. I would like to say that I am well done to the board. I remember convener the previous session that we had at the audit committee with Gordon Gallaghan. It was a really difficult session for members of the board at that time. It is really important to recognise the progress that has been made and reflected in the auditor general's report. I am well done to the character, the chair and the chief exec in the progress that has been made. I would like to ask a couple of questions, if I may, on the theme of openness and transparency, auditor general. You will recall that it is only a couple of years ago that these basic principles were not being met at all. We are still wondering why the sponsor division itself did not pick up on those issues. Do you say that the sponsor division has played an active role in addressing those issues and made some kind of contribution to achieving the progress that we have seen? Good morning, Mr Coffey. First, we welcome the progress, and we welcome the progress specifically on openness and transparency. I will ask Graham Greenhill to say a bit more about the sponsor team's role and the extent to which that has influenced some of the openness and transparency steps that we have seen. We are reporting this morning that there has been a step change in the openness and transparency of this public body that, previously, that was not the feedback that it got from its key stakeholders. Whether it is a combination of all of us, the way that we are operating the pandemic, the more visible use of technology through the streaming of public meetings as we are doing this morning, or whether it is a more conscious response to the previous audit reports, Graham and Pat may want to express a view. What we have seen is that both committee meetings and board meetings are publicly available meetings. For that change, we are welcoming and commending the board's progress. Having gone from an organisation that was not open and transparent on how it conducted affairs, it has now moved up to one of being one of the most open and transparent public bodies in Scotland with how it discharges its responsibilities. It is a real sense of progress. I will pause and invite Graham to share any insights that he has on the influence that the Government has brought to bear on that. Thank you, Stephen. As Stephen said earlier, it is important that the sponsorship division acts in a proportionate and risk-based way. Clearly, the Government's involvement in reviewing, along with Portugal, the framework document has been a key step in allowing it to reconsider the way in which it contributes to the activities of the board. We can say that they have had a role. They have fully engaged with the board, subsequent to the committee's previous examination of the 2018-19 section 22. On the law, we can say that the sponsorship division has played a full part in supporting the board as it takes its improvement agenda forward. In the last session, you might remember that the director-general for education said that there might be greater scope for the Government to engage more directly with the Gallic community, to gauge their views of the board and how their relationship was. Has that been picked up naturally as a result of the work in the action plan that the board has been working through? I am not sure that I know the specifics of the Government's interaction over and above the board's own activity. I will invite Graham and Pat if they can add anything on that and put that on the action plan. The point that I would make about the work of the board in engaging with the stakeholders has been a key part of the progress that we have seen. Earlier this morning, some of the feedback and the survey results that the board has had in its interaction with its key stakeholders has changed for the better over the course of the past now two and a half, three years. That is really welcome, because you are right that that was a key theme of the last evidence sessions, which was that a disconnect or a breakdown in a relationship with key stakeholders. Again, another clear sign of progress is that there is confidence that there is an improving trust between the board and its key stakeholders. That really matters well, because looking at the organisation, it spends around £5.5 million, £6 million per year with just over £1 million on staff costs. It is predominately a grant giving a public, a supporting organisation on behalf of other organisations discharging activities to support the Gallic language. The relationships that it has with those organisations are essential for it to discharge its purpose. There are signs of progress, but I will turn to Graham and Pat, if they can add anything about what specifics the Government has done on that. I do not think that I can give specific examples. Pat, is there anything that you might be able to add? Not in the specific of the Government or the sponsor role, but to give the committee the assurance that we have picked up again big improvements in terms of how the organisation engages with external stakeholders. For example, monthly meetings are held with the major Gallic organisations such as NGLBA. There has been very good consultation on how Gallic impacts in early years and on the young people of Scotland. Again, as I said earlier, the social media has improved dramatically. The organisation also did an external stakeholder survey during the year, and the results of that were positive. I am notwithstanding the specifics of the sponsor division, the organisation as a whole has driven that agenda forward in terms of how it consults with its stakeholders. There has certainly been a significant improvement in that regard. That is really positive. My questions are about how we have engaged with the wider Gallic community. Is there a key part to any of the progress that can be made? There has been great progress, and it sounds very much like it. In terms of the improvement plan and the recent continuous improvement plan, is there a direct reach out to the Gallic stakeholders and the Gallic community on that, or is it the process that the board engages with to deliver them? It is probably important that they reach out and engage with the wider community to get their agreement and to work alongside them with that. Was there evidence that that took place, would you say? I am happy to start on that part to come in in a moment, too. We have seen 71 to 72 recommendations progressing and the real evidence of engagement with Gallic-speaking organisations. The recipients of funding from the board and regular meaningful engagement are clearly signs of progress. How that is translated into the views of—perhaps people who are not represented or members of organisations also matter—the views of the community themselves. We have seen, as we have put appendix to the report about the KPIs of the board this year, that not all of those were met during 2020-21. Clearly, the pandemic has played a part in that, so it will have changed the way that the board might wish to have engaged directly with some of the Gallic-speaking community and some of the restrictions that will have impeded its ability to do some of that work. Add in when they are able to—or perhaps using alternative engagement mechanisms—it will be for the board to decide how they look to get feedback, expand their reach and make sure that the grants and funding that they are giving have the most significant impact. I will pause there for a moment to see if Pat can supplement beyond the interaction with NG Alibah and other grant receiving organisations, whether they have been able to speak directly to the Gallic-speaking community. Absolutely. I will go back to your initial question, Mr Coffey. It was a dual process within the improvement plan. The improvement plan and the initial audit identified an issue with consultation with external stakeholders that the organisation had to improve. The organisation accepted that and took that on board and really tried to significantly improve its approach. The initial improvement plan was a driver for that, but all credit to the organisation for rolling its sleeves up and working very hard to make big changes in how it engages with external stakeholders. We have now no concerns. We think that they are doing what they should be doing, but to be fair, what they should have been doing all along. Thank you for that. Probably just lastly, when we convener to Stephen, do you think that as a result of the good work that has been done, do you think that the board has now regained the confidence of stakeholders, Stephen? Certainly, the feedback that the board has received from both the staff and also from the organisations that it is key stakeholders that it interacts with is that its approval ratings are far better than they were. It is never a given, Mr Coffey. I think that the board has to continue to work hard internally with its colleagues and with the funding organisations to ensure that it is doing all that it ought to and meeting its expectations. Although it has recovered, as Pat has suggested, perhaps to where it ought to have been, you can never take that for granted. It has to continue to work hard, engage and ensure that it delivers on its performance indicators and what it is there to do to support the Galaxbydian community. Thank you for that. That is a good answer on why his words are usual from the auditor general. I think that I have done a big well to the board, convener, and back to you. Before we finish up the evidence session, there was just one other area that I wanted to touch on very briefly. One of the recurring themes of the committee and its predecessor committees has been a regular acquaintance with organisations that are not meeting the standards that we would expect because of a failure to plan the workforce requirements of the present and the future. Again, I recall that, in the 2018-19 report, insufficient workforce planning and excessive vacancies was an issue that was seen to be part of the fundamental problems that the organisation faced. I wanted to check in, beginning with you, Stephen, on where things now are with workforce planning. Have there been improvements? Are there any other workforce priorities that the board needs to consider in your opinion? Yes, there have been improvements. We now have a workforce plan that is connected to a corporate plan. Similarly, as I spoke earlier this morning, the organisation will evolve from the improvement plan in response to the previous audit into a more continuous form of improvement. Workforce is a component of that alongside a dedicated workforce plan. We have also talked about a revised approach to some of the hard-to-fill vacancies in the organisation and plans for broadening those out to Gallic learners, as opposed to fluent Gallic speakers. With any organisation, they have to keep their workforce plan under continuous review that they can respond to events, planning for the future and that is connected to how they will deliver services now and in the future. As we know, Borneo Valley is not a big organisation. In such circumstances, there is an inevitability that they will have key personal dependencies just with the nature of how they will deliver services. Succession planning is a key component of that. Where they are able to, they can look to the future, look at the age profile, look at the career ambitions of their people and marry up all of those factors so that the workforce plan is supporting the development and delivery. In short, it can be a real science of progress so that they have a workforce plan and that that is a central part of their future decision making. On that positive note, that concludes the questions that the committee has got. As always, the Auditor General Graham and Pat for joining us this morning to give your evidence and your insights into the progress that has been made with the Borneo Galaxy. I will now draw this session to a close and I will suspend the meeting briefly. I welcome people back to the first meeting of the Public Audit Committee in 2022. For this part of our deliberations, we are receiving evidence on an audit Scotland report recently completed into NHS Ireland. I am delighted to welcome to give evidence in this session the Auditor General, Stephen Boyle. Welcome back, Stephen. Stephen Boyle is joined by Lee Johnson, who is a senior manager of performance audits and best value at Audit Scotland. I am pleased to extend a welcome to Joanne Brown, who is a partner in Grant Thornton, who has been involved in working on the audit. I begin the Auditor General by inviting you to make a short opening statement. I have prepared the report on the 2020-21 audit of NHS Ireland under section 22 of the Public Finance Act 2000. This is the fifth report on issues of financial sustainability in NHS Ireland in the past eight years. Previous reports have highlighted issues, terms covering finance, performance and governance. Today's report sets out the progress that NHS Ireland has made in those areas over the past two years. The external auditor has given an unmodified opinion and highlighted that their boards operated within its financial resource targets. It has done so while responding to the operational and financial challenges of Covid-19 on its service delivery. NHS Ireland's financial position has been challenging in recent years. It has required additional financial support from the Scottish Government in each of the last three financial years in order to achieve financial balance. Nonetheless, NHS Ireland is making progress and a more stable leadership team and financial management arrangements are strengthened alongside improvements in governance and aspects of service delivery. Health services in NHS Ireland are more expensive than in other parts of Scotland and the board has needed to develop a more sustainable approach. It has made some progress in reducing its reliance upon locum. The established programme management office set up in 2018-19 to proceed service transformation. Recovery plans have also played an important part in the board's financial recovery. On-going progress will be needed to ensure sustainability and performance improvement. The steps have also been taken to improve NHS Ireland's culture following the 2019 CERC review. Two key actions were progressed being the completion of a culture survey in the Engel and Bute area of NHS Ireland's activity and the development and approval of a healing process for current and former employees. As with all NHS boards, the pandemic has played a significant impact on the focus and priorities of NHS Ireland. Its effect on the board's longer-term financial position remains uncertain. Achieving a balanced financial position depends on the successful delivery of a cost improvement plan. The board has acknowledged that the plan developed 21-22 challenging. Many of those challenges will be shared by health boards across Scotland. As ever, Johann Thee and I will do our best to answer all the committee's questions this morning. Thank you very much indeed, Stephen, for that opening statement. As you will understand, we have got quite a number of questions on everything from the implications of the STIRIC report and the progress that has been made in addressing the issues identified in it through to the funding formula and the recurring challenges that are faced by a health board that is operating in the most rural part of Scotland in delivering services that need to be as far as possible accessible to the population that it serves. I want to start by turning to paragraph 14 of the report on page 5, where we are reminded that NHS Highlands has moved down in the escalation framework from level 4 down to level 3. That, certainly on face value, appears to be a very positive development. I wonder whether you could give us a summary of the improvements that have been made as you understand it, that have seen the de-escalation of the health board's status. Perhaps, in so doing, could you give any assessment that you have got as to whether you think it is moving in the direction of level 3 down to level 2 or are there still bigger challenges to be overcome? Stephen, I will ask you to open up on the evidence on that. I will bring colleagues in to share their perspective. I agree with your assessment. It is a positive step that NHS Highlands has dropped down from level 4 to level 3 in terms of its escalation status. The basis for that also looks reasonable in terms of the judgment that the Government has made bearing in mind some of the progress that we are also reporting in today's report. We have seen progress, as we mentioned in the paragraph, in terms of its financial management sustainability, and some of the governance aspects of the organisation, similarly in leadership and culture and aspects of its mental health services. There is not just one factor, convener, that has helped the Government to reach decision on the escalation status of NHS Highlands. The level 4 to level 3 would be consistent with some of the progress that we are reporting today. How that translates into whether there will be an even lower escalation status will be a matter for NHS Highland, the progress that it makes and any judgment that the Government arrives at. What we are saying in today's report is that whilst progress has been made across a number of fronts, there are still very many challenges for the board to address around its finance service delivery. Service delivery, as you say, in your European reverse in a remote and rural setting, brings challenges with its cost base, its access to services, all of which the board will want to ensure that it is satisfied. Of course, not just about the escalation status or number, but about the patience and the experience that they expect from their health board in the Highlands. I will pause and maybe turn to Lee who may wish to say a bit more about the escalation status and steps that might need to happen to move to an even lower number, Lee. I do not have much to add to what the Auditor General has already said. It will be a decision for Government to make in terms of whether it moves down. As the Auditor General has said, we have seen improvements, so we think that the move from 4 to 3 is a fair reflection. However, as the Auditor General has also indicated, it still has some challenges and it will be in terms of the board working to address those challenges. Then it will be up to the Scottish Government to make a decision about any further de-escalation of the board. Okay. Thank you very much indeed. I want to move on now to look in a bit more depth at financial management of the board. I want to invite Craig Hoy to pose a number of questions to probe into that area. Craig, I turn to financial management and financial stewardship. The report in paragraph 15, page 5, comments on NHS Highland delivering a break-even position while operating in a period of considerable uncertainty and while responding to the operational and financial challenges that are posed by the Covid-19 pandemic on service delivery. Given those circumstances and the backdrop, Mr Ball, how much of an achievement do you consider this to be on part of NHS Highland? Good morning, Mr Hoy. It is important that all health boards meet their financial targets. Their requirements for boards are to break even against their revenue resource limit, their capital resource limit, and within the confines of any cash requirement that they agree with the Scottish Government. It is welcome that NHS Highland has managed to break even and that it is reporting a small surplus of £700,000 for the year. John Brown might want to come in a moment or two just to say a bit more about the nature of that break-even. However, as we go on to report in the report that 2020-21 was an incredibly unusual year for all that we have lived through over the course of the pandemic, that is obviously then translated into the finances of health boards in NHS Highland and really all health boards across Scotland. NHS Highland has received significant additional funding, as we would expect, to cope with the challenges of the pandemic. Bill of Paragraph 17 received £57.3 million from the Government to cope with some of those challenges. On top of that, NHS Highland also received a further £8.8 million for its financial position. In the previous years, the committee will have seen that NHS Highland, in a recipient of brokerage funding or end-year loan funding from the Government, so that is not brokerage that the board received, but it was additional funding to support its position. As I have heard, the context for 2021 was clearly all about the pandemic and its impact upon services. That has played through directly into its financial position, but positive nonetheless that NHS Highland has broken even in it. I will invite John Brown if she wishes anything she wants to. Thank you, Stephen. The only thing that I would add to Stephen's outline is the success of the PMO. What we did see in 2021 was the PMO continuing to operate in what was quite a difficult environment due to Covid and anticipating the delivery of the savings. While it started the year with financial savings of £37 million, it still required additional funding as Stephen set out of the £8 million to help support break-even. The PMO itself delivered on a number of savings, and increasingly we started to see more of those savings recurring of nature. I would pinpoint particularly that the PMO is being a key success factor for 2021 in terms of financial planning and then achievement of the financial position. Mr Boy, you have almost read my mind in respect of the next question, but perhaps I will seek confirmation from you. You referred to the fact that the Scottish Government provided an additional funding of £8.8 million, which would have been anticipated through brokerage. Can you confirm and tell us why the Scottish Government provided that £8.8 million as additional funding and not as brokerage? I think that we will be able to give a objective on that, but it might be that there will only be that, Mr Hoy. The committee might want to inquire directly with Government on NHS Highlands as to the subtle difference that we are seeing between additional financial support as distinct from what we were previously known as brokerage funding. The history has changed around brokerage funding, and the previously financial support that the Government gave to health boards for brokerage had to be repaid in subsequent years. That arrangement ended three years ago, if memory serves me correct. The previous brokerage no longer had to be repaid. That was significant for NHS Highlands, because many millions of pounds were due to be paid. However, the Government's decision—I am sure, but I would only be speculating so that the context of Covid has changed how health boards have worked. I made progress with savings. Their ability to operate in a normal environment was severely constrained, and that would have impacted the extent to which they would have made savings a normal way before the pandemic. Some of that will have flowed through to the financial position when the Government has arrived at the decision not to give brokerage but an extent to give year-end financial support. Obviously, on the issue of savings, the report explains that the board delivered a total efficiency savings of £20.7 million in 2021, of which 5.4 million, which is 26 per cent, were recurring. Does that mean that 74 per cent, nearly three quarters of the total savings, can be counted as non-recurring? Yes, it does. If I may say that, historically, that has been an on-going challenge, and it is quite right that one of the key steps that the programme management office in the round has to make is to deliver a secure financial position. What matters is longer-term service change or transformation and ending a reliance on non-recurring savings to secure the financial position. That is, of course, challenging the non-recurring, some of which can be opportunistic or circumstances led, but you are right that the ratio is either one or the other. Is that non-recurring or recurring? Can you just perhaps flesh out a little or perhaps Joanne might be able to say how those non-recurring financial savings were made? Do you have any insight at this point in time to how the board plans to take that forward in respect of planned savings into future financial years? I will ask Joanne to come in at the moment, but I might just say a bit about the detail, both in the 2020-21 financial year and also looking forward to the current financial year and beyond. As we said at the Exhibit 2 to the report, there is a welcome change of emphasis on the savings of £32.9 million planned for the 2021-22 financial year, with only an identified £4.5 million of those being non-recurring. If the board can deliver on that, that is not made certain given the unpredictable environment that we are in. That will be a very significant step forward. However, as you suggest, Mr Doyle, I will turn to Joanne if anything that she wishes to do. In terms of the PMO and the bulk of the savings programmes that make up the £25 million, there are 186 schemes that sit within them. The ultimate aim of the PMO is to focus in on what it can achieve around recurring savings. There are a number of bigger schemes in there that are based on service redesign and change, rather than on-off gains, such as improving procurement and prescribing that programme, such as theatre productivity. They are aiming to get those recurring savings through the PMO. Within the PMO itself, all savings go through effectively a five-stage approach. They continue to report on risk assessments on those savings, and, as part of that risk assessment, they identify the recurring or non-recurring nature of those savings. It continues to be a challenge, as the auditor general said. They typically have struggled on recurring savings, but we have started to see an improvement and a number of service redesigns are planned to support that. Obviously, Covid will have an impact on that, but they are very much focused on turning those to recurring savings. Thank you. It strikes me that there is a very similar position to many local authorities in certain respects. That was great. I will hand you back to the convener. Thank you very much indeed. We want to further interrogate the financial position of the board, not just in terms of its management but sustainability. Colin Beattie has a whole series of questions to ask about that. General, your report explains that the NHS's budget uplift of £16.4 million is at share of the £30.2 million being provided nationally to maintain NHS boards within 0.8 per cent of NRAC parity. A simple calculation seems to tell me that the NHS receives over half the funding that is available nationally. Is that correct? Partly, I think, is the answer, Mr Beattie. We are referring to the national resource allocation funding model, which is the overall model with which the Scottish Government in conjunction with NHS boards uses to distribute funds to health boards across the country, based on a range of factors, depending on population size, deprivation levels, geographical factors and so forth. In terms of the uplift of £16.4 million, we are referring that as the NHS Highlands' share of £32 million to support NHS boards moved to within 0.8 per cent part of the Government's model of what they call NRAC parity. There is a long history to all of this, Mr Beattie, in terms of boards' views on their financial position and where they ought to be relative to the funding that they received. The overall story suggests that NHS Highlands is moving closer to its view of getting the share of overall resources that are required to deliver health services, and of the overall allocation, it received more than 50 per cent of that uplift arrangement during the course of the financial year. The answer is yes. In short, yes, it received more than half of that particular component of NHS fund. It seems extraordinary that one health board gets such a significant uplift. I am not questioning whether they deserve it or not, but I am just saying that it seems disproportionate. It probably reflects—there is much history behind this—the use of the funding model to allocate resources to particular health boards and many reviews over the years. He might want to say a bit more about some of the history of that, but there was a point that came to the Government's approach, which was to resolve the views and unease in different health boards across the country about their share. The revised arrangement could be, well, we need to move to a point that there is parity and within 0.8 per cent of that parity, because a number of boards, while I am being one of them, were adrift from the parity. I think that what we are seeing is a catch-up style arrangement being played out, and additional funding being provided by the Government of Highlands to support that. If it is helpful, Mr Beattie might invite Lee just to give a bit more detail on how that is working. I would be interested to know if, in your opinion, it reflects the fair situation, as far as NHS Highlands. I will answer that question and then I will turn to Lee. I think that NHS Highlands view would be—and, of course, it can speak for itself—that it has been a factor in terms of its financial challenges in years gone by, where it is sat effective to enrack parity compared to other boards. The additional funding that it has now received will help to move both towards parity and, more importantly, its financial sustainability and the services that it provides to its communities. Mr Beattie Lee, I will invite him to say a bit more about how that is all working. I do not have much more to add to what the Auditor General said. I think that the main point being that Highlands has had a significant uplift this year, but it is because, historically, it has been further from parity compared to other boards. That is reflected in that quite significant uplift this year. I will move on to another question. Paragraph 21, page 7, your report tells us that the boards recognise that elements of costs that are included in the financial plan may potentially become part of core services in the future, but the longer-term funding position does not seem very clear—it is not clear. Can you provide some detail as to why the longer-term funding position is unclear? We will do our best, and I am happy to say a word or two about that. I might highlight to the committee that, in addition to today's report, we will also be publishing our overview of the NHS in Scotland next month, which looks at a much wider look at the financial position service delivery challenges and how the NHS will remobilise its services, living with Covid, beyond Covid and so forth. That is a component of the judgment that we reach in this report, too, on how NHS Highland will deliver services and service delivery options will evolve as a result of the pandemic. We have spoken at previous committees about some of the changes that are already happening, such as the increase in the use of digital technologies in service delivery, and what the remobilisation plan looks like and how that will be delivered. The Highlands will be one of the sites for one of the new national elective centres for the NHS in Scotland to deliver services. All of that will play through into what feels like an uncertain and potentially quite volatile service and funding norm. I was just thinking there, actually. Looking at this report, there is one significant thing that is missing from it. In all the previous reports about NHS Highland, great mention has been made of, I think, Regmore hospital, which had significant overruns on prescriptions, on staffing and almost everything that he could think about. However, it has vanished completely. Does that mean that everything is good there, that everything is under control? You are right. We have not focused on Regmore hospital in this report. I want to say a little bit more about the financial impact of Regmore on NHS Highland's overall position. However, it is not an unconscious choice, Mr Beattie. I should say that, whilst Regmore will be a very significant component of the programme management office, the need for savings service changes in the future is the largest single hospital in the Highlands where it delivers much of its acute activity. We felt that it was not the overall story in the way that it has been in previous years, particularly in light of the pandemic, forward look for savings, service change and so forth. Regmore will remain part of our focus, so we will continue to audit and report through our work. As we follow up through both the NHS overview report and future audit reporting, how does that all mean for Regmore's impact in the year in question? I will pass to Joanne if there is anything that she wishes to say. The only comment that I would add to that is what we have seen in terms of Regmore is the appointment of a new deputy chief officer, and there has been some changes in the senior clinical team and the leadership team within Regmore. As the Auditor General outlined, a number of those savings within the PMO relate to Regmore, but we have started to see positive change around Regmore and the achievement of savings, which, in the past, they have not been able to make. That is something that we will continue to consider in our external audit work in the long-term position around Regmore. We would have been interested to have seen the continuity on the Regmore side in terms of the progress that it is making. No doubt that that will come up again in the future. Paragraph 23, page 7. The report tells us that the financial plan requires £32.9 million of savings to be delivered through the cost improvement programme. Where are those savings likely to come from? In the past, as Highlands had great difficulty in getting recurring savings, so many of them seem to be one-offs that are patched up. Where are those savings going to come from? I will have to start. I must admit that I am sure that 32.1 million is a significant savings to be made. I think that that informs our overall judgment on NHS Island in the report, is that, while progress has been made, it needs to continue that progress to deliver on a recurring basis some of the service change and associated savings. We have pointed in the report, and Joanne has rightly mentioned the role of the programme management office that combines both service change and associated financial savings, in a way that allows the board, we hope, to move on from some of the non-recurring emphasis savings that we have reported on in previous years. Some of the savings can be embedded and built upon from one year to the next. Exhibit 2 to the report. We give the three high-level categories of savings, where the £32.9 million will come from. As you will see, most of that is through the programme management office, along with a smaller component of non-recurring savings and some of it to do with its adult social care arrangements with the Highland Council. Joanne previously mentioned prescribing on other components, but she may wish to elaborate on some of the more detail of where the recurring savings will be made as part of that £32.9 million. On what I could add to that, there are a number of thematic areas where they are looking at the service redesign to get their recurring savings. I do not have to hand for 2122 how much of what is within the PMO has been achieved today and on the basis of what is recurring in nature. However, my understanding is that about at least 80 per cent of what is set out to try to save within the PMO feel confident that they will achieve during 2122. There are a number of thematic areas in there around prescribing procurement. There are certainly some recurring savings that they have been able to make within corporate services and estates and facilities. As we have seen through the Covid pandemic, NHS Highland has naturally had to change how it has delivered services. One of the key things for them will be digital clinical engagement and the continuation of near me, where they have seen a different service model, which is in turn benefiting them in terms of the financial savings that they need to make. However, there is still risk there around the recurring, non-recurring nature and that is something that is routinely reported through the financial savings board and through the PMO itself. Did you find any indications that NHS Highland is using staff vacancies, particularly at consultant level, to manage its savings, in other words, delaying appointments? No. There will be some non-recurring savings that naturally happen due to difficulties in appointing to physicians. However, in the medical, clinical workforce side of things, that is still at an area of cost pressure for them as they deliver their services, and that is not an area that they are looking to achieve non-recurring, one-off savings. One last question, paragraph 25, page 8. The report tells us that NHS Highland is not currently budgeting for a financial brokerage requirement from the Scottish Government. That is for the 2021-22 financial year. Do you think that it is possible that NHS Highland will require some level of brokerage from the Scottish Government in the current financial year, given the other things that we are taking into account? I think that it is possible, Mr Beattie, that we may require additional funding or financial support from the Scottish Government. As we said in the report, that was a component of £8.8 million of additional financial support from the Government in the 2021 year. As we have just discussed, there are significant challenging savings plans to be delivered, along with the uncertainty about how the pandemic will evolve further for the rest of this year. It is possible, and it will be a matter for NHS Highland and the Government to keep the financial position under really close review so that that does not come as any surprise later on towards the end of the year. I am sorry, but I might want to come in and say your thoughts. The only thing that I was going to say was that, from my perspective of 2021-22, at this point in time, NHS Highland is forecast in break-even, potentially a slightly small surplus. At the moment, that does not involve what would be traditionally referred to as brokerage within the NHS. It is acknowledged, though, that, as the Auditor General set out, there are a number of additional Covid monies around the NHS at the moment and sitting with NHS Highlands, which I think will support the achievement of break-even, similar to what we have seen in 2021. In effect, the Covid monies are masking, to some extent, the underlying financial issues. Would that be correct? I must say that, again, Joanna, I will have a perspective on that, but I do not think that there is a lack of transparency about the financial position challenges that NHS Highland is looking to address. It is clear that there is a significant financial savings plan, with steps out to deliver upon nearly £33 million, which is part of that. Like all health boards, NHS Highland has received considerable Covid funding from the Scottish Government, which is shaping and influencing its position. As and when the pandemic ends, there will be a need to recalibrate what that means in terms of financial position service delivery. Probably likely it will not go back to how it was before the pandemic. Joan Wightley mentioned, as we have discussed at the committee previously, that the adoption of different service models near me being one of them is an essential factor. As Audit Scotland said, my predecessor rightly pointed out that, before the pandemic, the NHS in Scotland was not in a sustainable financial position. Therefore, all of the learning to transform to deliver both service delivery requirements and financial sustainability are ever more important. Covid monies are shaping that at the moment. When the pandemic subsides, that will be the time to restate what that means in terms of service delivery and associated financial. I am bound to reflect on the evidence that there has been a lot of controversy in the Highlands about the centralisation of services. When Joan Wightley speaks of service redesign, the question that many people in the Highlands will be asking is that clinically led and financially led? It may not be honest to general for you to necessarily offer a commentary on that, but any reflections that you or Joan Wightley have got would be useful to get your inside track on what is really pushing those changes. I am happy to start. The nature of service delivery and design should primarily be led by a clinically safe combination of appropriate access services and treatment for patients across the Highlands. How that the best model for delivering that is ultimately a matter for the NHS Highlands Scottish Government. It is important that that is part of proper engagement consultation that is effectively done with the community's services. What we are doing as auditors is looking to express a view on how well public money is being spent, what has been spent and the impact that is being achieved from that. As we are looking to do in today's report is to set out that there are still some significant financial challenges within NHS Highlands that are making progress. We are doing so that it is able to deliver a financial position and deliver appropriate, safe healthcare for the people of the Highlands. That is always a balance. Ultimately it will be for clinicians to determine the model of healthcare that best exists within the Highlands. Probably all I would say in that convener again, but I am happy to invite Joanne if she wishes to. The only thing that I would add is that I touched on it earlier around the impact digital services have on NHS Highlands and in particular near me. NHS Highlands would say that before the pandemic there were roughly 88 near me consultations a week. At the moment that is now averaging out a thousand near me consultations over the week. From their perspective that has opened up a different clinical way of working and reaching patients, particularly in the remote rural locations that NHS Highlands has, and what they want to do in their strategy going forward is to retake that platform and link that to their planned service redesign. They are already re-looking again at their strategy and service redesign beyond Covid, taking all the positives that have happened and how they can continue to embrace this way of working compared to how they have worked in the past. Great, thank you, that's very useful. I want to now turn to Sharon Dowey, who's got a series of questions, again returning to the theme of the cost pressures that are demonstrated in the audit report into NHS Highlands. Sharon? Good morning again. Audra, your report provides welcome information on the progress that NHS Highlands has made in respect of tackling its reliance on locum and agency staff, which has been raised in previous section 22 reports. We have said that we will fill 21 hard-to-fill consultant positions and the board has also took the management of locums back in house in October 2020 to control spending and rates. Is that sufficient or do you believe that there is still more work to be done in this area? I would share your assessment. I think that it is welcome progress and that they have managed to fill challenging posts in some of its consultant positions in some of its rural general hospitals. That was a really consistent theme of our reporting on NHS Highlands. In living with hard-to-fill vacancies, the health board had to incur huge costs to sustained services, very significant locum and agency. That is done so on a permanent basis and is really welcome. The insourcing of locum arrangements to the board is also another sign of progress. We are also reporting similarly that turnover has dropped during the year too. A number of welcome signs, Ms Dowie, but will it be enough? I suspect that it is one of the things that NHS Highlands, particularly the Highlands, but it is true of all boards to keep under constant review as to the working patterns and preferences of clinicians. We have seen and will continue to report in our overview report that there is enormous strain and pressure upon for working in the NHS and that the wellbeing of people who work in the sector needs to be carefully managed. In delivering an essential service, they are also looked after. They are given the right working conditions and it remains an attractive place to work. Those are key long-term challenges built into the workforce plans that NHS Highlands and really all health boards will have to keep under close review. Do you think that it is the processes that have been put in place that have encouraged people to take up those positions or is there maybe a bit of the pandemic in there where people might not have been able to move about because of lockdowns or restrictions and that is what has kept them in position? I think that it is a bit of both. The pandemic, as we have seen, has changed some of people's preferences that they may have made before Covid, so whether they want to lower rural areas and benefit from a different lifestyle, I would speculate that that will have influenced the decisions of some of the people who have moved into some of those posts that were long-term hard-to-fill posts. That will stay in the post is the most important thing. That links back into, as we touched on the report about Highlands having made progress with an attraction, recruitment and retention strategies. That is really key for the board, but it can build on the benefits of filling those posts and have a model that makes NHS Highlands an attractive place for people to work. It perhaps speaks back to the convener's point about how they can deliver services in the Highlands that, if they can attract highly skilled people who can really work anywhere in the world for some of those posts, it allows them to have a model of delivering services that does not rely on centralisation and can access services in all parts of the Highlands. The attraction retention strategy is a key component of the long-term sustainability of health service delivery in the Highlands. Is it maybe a bit too early to work out if there is a base practice in there to see whether that could be passed on to other health boards that have got the same issues? That is a fair conclusion. Some of the benefits that we are seeing in the Highlands in filling those posts in recent years is great for NHS Highlands. There will be other examples of parts of the country in south of Scotland and other parts of the Highlands in Scotland. Whether that means that this is a new model that you want to roll out across the country, albeit to who, years into the pandemic, is something that perhaps too soon to draw any real conclusions. I am quite sure that NHS Highlands will be sharing its learning with other health boards. Your report sets out the progress that has been made in relation to recruitment and staffing of the programme management office. Are you content with that progress? I did note earlier that Joanne had mentioned the success of it in delivering the number of savings, so it does seem to be a success. Apologies, I must end on your question. I think that it is an important contributor to NHS Highlands service delivery and financial position. We set out in the report that we now have permanent staff who are benefiting from mentoring and knowledge transfer arrangements from consultants who had set up the office. It is an absolute sign of progress, but we have a big important job to deliver the financial savings and transformation that NHS Highlands requires. If I may ask Joanne to offer a perspective as well, she will have interacted with the programme management office. I think that what we have seen is over the journey of the establishment of the PMO to how it is not operating now. It has now become much more embedded in NHS Highlands wider arrangements and across the organisation. What we have seen is a move away from temporary consultant short-term support to those posts in the PMO being filled on a permanent basis with suitable skills and experience in that PMO. What it has now got in place is a reasonable reporting structure, where it regularly reports and tracks those savings using dashboards. It has embraced the set-up of that PMO, and it is now fully operational with permanent staff of all NHS Highlands employees. That is a good place to continue to take the PMO forward into the future years. It certainly seems to have been a success. I am just reading the paper, so it says that a substantive PMO director is now in place with short-term mentoring support being provided by the previous appointee. Do you have any concerns about the previous appointee leaving, and will we continue to monitor progress once they have left? Again, do you want to answer that better? The short-term mentoring arrangement that NHS Highland put in place was just to support the incoming permanent director. That support is now no longer required, and the permanent director is now in charge of that PMO and operating that PMO. Something that we will continue to look at is that the PMO plays a key role in the financial sustainability of NHS Highlands going forward. That will continue to feature within our external audit, but I have not got any concerns with the previous experience leaving and the change in the now permanent set-up. Thank you. Back to you, convener. Thank you very much indeed, Sharon. Without further ado, I will ask Willie Coffey to come in at this point. Willie, over to you. I have only got a couple of short questions for Stephen on leadership and governance, but I will go back to what Joann said earlier on the near media digital stuff. Joann, did you say that we were doing about 88 consultations a week and now it is about 1,000 a week? That is a fantastic transformation and it has been brought about by Covid, has it not? Do you get a sense that that will remain in place if and hopefully when we get through the Covid emergency? Will that kind of digital mechanism and model be retained? It would seem to be a good one and particularly successful for NHS Highland. Coffey, do you ask Joann directly on that? Yes, I. If she could just come back on that, Stephen, that would be really helpful. Thank you. NHS Highland has seen a marked change in near media and that is very much at the forefront of how they plan to consider technology and going forward, taking account of how well it has worked for them within NHS Highland through the pandemic. I think that what NHS Highland has seen is confidence in the clinicians on using near media and how that can be used by the clinicians but also confidence from the patient perspective on how well that has worked for them, particularly given the remote rural nature and the amount of travelling that was having to take place previously to go and see the relevant clinician. That is very much part of their future strategy in terms of taking that forward beyond the pandemic. Good to hear that. Thanks for that. Just a couple of questions, Stephen, on broader leadership and governance. Your report is really positive about the improvements and the stability of NHS Highland's leadership. That is really welcome, as is the comments that you made on succession planning. I think that there was a comment in your report that the first round of that was due to be done or completed in December. Has that been done? Do you know or is it still in progress? Joann might know or Lee might know whether NHS Highland was able to deliver on the first round of succession planning by the end of last month after our report. If we have that detail, we will share it with Mr Cofi if not we are happy to come back to the committee on writing. Before they say a word or two, I want to emphasise that the stability of leadership in NHS Highland is one of the key catalysts for the progress that it has made in service delivery, governance and aspects of its financial position feeding into the work of the programme management office. That is all really welcome. The workforce planning succession arrangements are really key for all the things that we have spoken about already this morning, that given the workforce challenges that it has had in terms of some of the hard-to-fill posts, the nature of diverse service delivery across a wide geography is such an important component of how NHS Highland will deliver services in the future. If we know more about that, I will turn to the team to see whether that deadline has achieved it. From my perspective, I have nothing that I can add to that update. I am happy to update the committee after this meeting on what progress has happened and did the plan happen as planned in December. I do not know that to date. Oh, okay. If you could possibly find that information out for us, that would be appreciated, so I'll answer that. Thanks for that. Steven, just a second question from me, of course. On Paragraphs 3941 in your report, you remind us about the Sturrock report itself and its review into allegations of bullying and harassment and so on, and part of the on-going programme to transform the board's culture. You mentioned in your opening remarks about the key actions that were taken, including the survey and the development of a healing process. Could you say a wee bit more for us about how that is going and how you might monitor that aspect of the issue in your programme of going forward? Thanks, Mr Coffey. The Sturrock review into allegations of bullying and harassment was a really significant event for NHS Highland, which culminated after many years of concerns by people who worked in the organisation about the experience that they had and how they were treated. You mentioned that two of the actions that were due to take place were done so that there was a similar review of the experience of people who work in the area of NHS Highland through a survey and that their feedback was consistent with the experiences of NHS workers in the Highland area of NHS Highland. The second part of it was a healing process, so the opportunity for people who work in the Highlands to share their perspective, to receive feedback and to have their voices heard is a very important part of John Sturrock's recommendations for the board to take forward. How that translates into the future? The registration date for the healing process has now passed to report that there were over 300 people sought to register to be part of that process. With an independent panel review, 136 people at the end of May last year have been recommended for our remuneration payment as a result of the experiences that they had. To date, 118 financial payments have been made at a total of £1.7 million. Highlands has provided for the remainder of future payments as part of the process. However, a very difficult process, a difficult part of NHS Highland's history, Mr Coffey, is important that they have gone through it. As ever, the learning, the experience, the sharing of that changes the culture for the better. The people who work in NHS Highland, both on the Highlands and their Gaelin bute part of the health board, experience what we all expect to experience at our work, but they are treated fairly with kindness. Thank you so much for that, Stephen. I think that the convener may want to continue to develop the questions in that area. If that is the case, convener, I am back to you. Thanks, Willie. You are absolutely right, Auditor General, to talk about the human dignity and respect that is at the centre of the stirrup report and recommendations. However, if I could just turn and finish by looking at the overall cost of it and some of the nuts and bolts of it, I mean, first of all, do you have any indication of how many further recommendations for financial payments there are likely to be? Could you clarify who is putting the bill for that? Is it coming from the health board itself or is there any additional Scottish Government funding being made available? I don't know whether you or Joanne or Lee could shed any light on what the division is between the value of the compensation payments that have been made and the cost of the process itself and the administration of it. I wonder, Stephen, whether you could begin by addressing those points. Thanks very much, convener. I am happy to start on that and I am sure that Joanne will want to come in as well. I will continue the discussion on Mr Coffey. £1.7 million of payment recommendations have been made across 118 people. All the costs of running the process are being met by the Scottish Government, in addition to £1.7 million. The cost of setting up, running and administering the healing process, other than the healing payments, has been £1.1 million. Both the two components suggest that one is the cost of administering process and the other is the payments to individual members of staff. It is not an insignificant amount of public spending, I am sure that you agree, convener, but one that is necessary for NHS Highland to have gone through and that people's experiences, particularly where those who are negative and detrimental, are reflected in compensation and that they are able to move on, both as individuals and as an organisation, with the right learning and changes to the culture that they will want to make in the back of John Sturrick's report. If I have missed anything, I will turn to Joanne if there is anything that she wishes to add to your question. The only thing that I would add is that NHS Highland is expecting those final cases to be heard by the end of March this financial year. Therefore, any remaining financial cost will be shown in the 21-22 accounts. As Stephen said, we are tracking around the set-up costs and the costs of running the healing process alongside the actual financial payments made. There is a commitment and a plan in place for NHS Highland to take a board paper in July this year, wrapping up effectively the healing process. As part of that paper, I expect them to consider how well that process has been applied, whether it has achieved the aims and objectives that it is intending to, but it is also part of that, considering the value for money aspect around the set-up and the payments. That is something that will be very visible through the board in July, as the timetable that NHS Highland is working to for that. Thank you very much indeed. That is very useful. I think that there is a continuing public interest in the costs of the operation and administration of the healing process and the balance between that and the pay-outs themselves. The one final, very quick point that I wanted to ask about was that the report states that further work is required to review and redefine some of the risks and the escalation process within the board risk assurance framework. I wonder whether you could just tell us a little bit more about what further work is required on that. I do not know whether that is for Joanne or for Stephen. I may say a word of introduction, convener, but Joanne can say anything additional that she wishes. We are reporting signs of progress on NHS Highland's governance arrangements, both in terms of how it is running, its risk management arrangements and the effectiveness of its audit committee, which are all a key part of the driver for internal control environment. It is really important that that has happened, especially given some of the judgments that were made previously by Joanne and Audit Scotland about how effective governance and risk management was in the board. How that translates into the board risk assurance framework and the ownership of risks, as we are reporting by executive team, is really important. It matters that there is visibility and ownership of particular risks in the risk management developed, given the very significant responsibility and challenges that all health boards have in Scotland. Joanne might want to say a bit more about the components and the workings of the risk assurance framework in the board. A lot of work has taken place as outlined in the report on the risk management framework. It was acknowledged by NHS Highland that it needed to consolidate on the strategic risks that were facing the organisation and ensure that there was clarity around how risks were reported. We have certainly seen a big impact through the risk management steering group, which reviewed its membership and its role in the governance structure and the link in terms of risk to the various subcommittees and the board. What it still needs to do in terms of that is how that is then embedded. We are comfortable that we can see that it has put the right design of the controls and governance in place, but as part of our 2021-22 audit, we will be looking at how that has now been embedded in the governance structure. One of the areas that it continues to look at to further develop, which is not dissimilar to other NHS boards, is about risk appetite and the link to risk appetite and how it mitigates and manages its risks. However, we have seen a positive improvement around risk management, and that is something that we will now look to ensure that it is fully embedded as it takes risks forward. Thank you very much indeed. I am extremely sorry, but we have run out of time for this evidence session. I am sure that there is quite a lot of work to follow up, not least in the points that Joanne Ewing was just addressing there. Can I take this opportunity to once again thank you, Joanne, for your time and your evidence this morning, which has been very illuminating? I also thank Lee for your input, and, as always, I thank Stephen Boyle, Auditor General, for your work on this, and I am quite sure that there are many themes here that we will return to, not least in light of the overall NHS Scotland audit report that you will be producing next month. Can I bring this public session of the committee to a close?