Lothian

DIRECTORS' REPORT & ANNUAL ACCOUNTS

Year Ended 31st March 2008

INDEX Page

Directors' Report 1-9

Operating and Financial Review 10-20

Remuneration Report 21-24 Statement of Chief Executive's

Responsibilities as Accountable Officer 25

Statement of Health Board Members' Responsibilities in respect of Accounts 26

Statement on Internal Control 27-30

Independent Auditor's report 31-32 Accounts and Notes to the Accounts 33-70

The Accounts were authorised for issue on 25 June 2008.

NHS LOTHIAN

ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2008

DIRECTORS' REPORT

1. Naming Convention

NHS Lothian is a common name for Lothian Health Board.

2. Approval of Accounts

The Directors Report and Annual Accounts were approved and authorised for issue by the Board on zs" June 2008.

3. Accounting convention

The Annual Accounts and Notes have been prepared under the historical cost convention modified to reflect changes in the value of fixed assets and in accordance with the Financial Reporting Manual (FReM). The Accounts have been prepared under a direction issued by Scottish Ministers, which is reproduced as an appendix to these Accounts.

The statement of the accounting policies, which have been adopted, is shown at Note 1.

4. Appointment of auditors

The Public Finance and Accountability (Scotland) Act 2000 places personal responsibility on the Auditor General for Scotland to decide who is to undertake the audit of each health body in Scotland. For the financial years 2006/07 to 2010/11 the Auditor General appointed Gillian Woolman, Assistant Director of Audit, Audit Scotland to undertake the audit of NHS Lothian. The general duties of the auditors of health

.. bodies, including their statutory duties, are set out in the Code of Audit Practice issued by Audit Scotland and approved by the Auditor General.

5. Board membership

Under the terms of the Scottish Health Plan, the Board of NHS Lothian is a board of governance whose membership will be conditioned by the functions of the Board. Members of Health Boards are selected on the basis of their position or the particular expertise which enables them to contribute to the decision making process at a strategic level.

The Health Board has collective responsibility for the performance of the local NHS system as a whole, and reflects the partnership approach, which is essential to improving health and health care.

The Board members' responsibilities in relation to the Accounts are set out in a statement following this report.

Chair:

Mr Robert Anderson, Interim Chair until is" April 2007 Dr Charles Winstanley, Chair from zo" April 2007

Executive Members:

Professor James Barbour OBE, Chief Executive

Dr Alison McCallum, Director of Public Health and Health Policy

Mr John Matheson, Director of Finance

Mrs Jackie Sansbury, Director of Strategic Planning and Modernisation

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Professor Heather Tierney-Moore, OBE, Director of Nursing

Mr Peter Gabbitas, Director of Health & Social Care, City of Edinburgh Council until 31st March 2008

Mr David Bolton, MBE, Chief Operating Officer, University Hospitals Division until ]'h August 2007

Mr Murray Duncanson, Chief Operating Officer, Primary Care Organisation until 31st August 2007

Dr Charles Swainson, Medical Director

Mr James T McCaffery, Director of Human Resources until so" November 2007 ( Director of Acute Services from 1st December 2007)

Mr Alan Boyter, Director of Human Resources from 1st December 2007

Non Executive Members:

Mr Robert Anderson

Mr Stuart Smith until 31st January 2008

Mr Robin Burley MBE

Mr Eddie Egan, Vice Chair and Employee Director

Mrs Pat Murray, Chair, Area Clinical Forum

Dr Ian McKay, Clinical Director, Edinburgh CHP

Professor Sir John Savill

Cllr lain Whyte

Cllr Kingsley Thomas, City of Edinburgh Council until so" April 2007

Cllr Paul Edie, City of Edinburgh Council from 23'd July 2007

Cllr Graeme Morrice, West Lothian Council until so" April 2007

Cllr John Cochrane, West Lothian Council from 3'd September 2007

Cllr Ann McCarthy, East Lothian Council until 30 th April 2007

Cllr Roger Knox, East Lothian Council from 2ndJuly 2007

Cllr Jack Aitchison, Midlothian Council from 23'd July 2007

Mr David Belfall

Mr David Crichton until so" June 2007

Mrs Theresa Douglas

Ms Lesley Jamie

Mr Stephen Renwick

Dr Rebecca Strachan until 30th September 2007

Dr Alison Tierney, CBE

Ms Moi Ali from 1st February 2008

Mr George Walker from 1st February 2008

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Professor Morag Ann Prowse from 1st February 2008

6. Corporate governance

The Board meets regularly during the year to progress the business of the Health Board. The Scottish Health Plan established that the following standing committees should exist at board level:

Clinical governance;

Audit;

Staff Governance;

Ethics;

Discipline (for primary care contractors);

Patient and Public Involvement

Healthcare Governance and Risk Management committee

The Healthcare Governance and Risk Management committee of the Health Board has three key roles:

Systems assurance - to ensure that clinical governance mechanisms are in place and effective throughout the local NHS system;

Public health governance - to ensure that the principles and standards of clinical governance are applied to the health improvement activities of the NHS Board; and

Patient and Public Involvement ­ to oversee all activities relating to public involvement in decisions impacting the delivery of healthcare to the local population.

The membership of the health governance and risk management committee comprises those listed below and was chaired by Mr Stuart Smith, until 31st January 2008, and Pat Murray from 1st February 2008.

Mr Robin Burley Non Executive Member

Mrs Theresa Douglas Non Executive Member (until 30th September 2007)

Mrs Pat Murray Chair, Area Clinical Forum

Dr Rebecca Strachan Non Executive Member (until so" September 2007)

i Cllr lain Whyte Non Executive Member I'

l Mr Eddie Egan Vice Chair and Employee Director

Professor Morag Ann Prowse Non Executive Member, from ze" March 2008

Ms Moi Ali Non Executive Member, from ze" March 2008

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Audit committee

The membership of the Audit Committee comprises those listed below and is chaired by Ms Lesley A. Jamie.

Mr Robert Anderson Non Executive Member

Mrs Theresa Douglas Non Executive Member

Mr Eddie Egan Non Executive Member

Mr Stuart Smith Non Executive Member (until 31st January 2008)

Mrs Pat Murray Non Executive Member (from 26th March 2008)

The Audit Committee meets 6 times per year to deal with strategic audit matters across NHS Lothian which could have a material impact on the overall performance of NHS Lothian and its operations. Detailed operational audit reports are handled by a supporting Operational Audit Committee chaired by Mrs Theresa Douglas. Unsatisfactory audit reports are automatically referred onto the Audit Committee for further exploration of management control issues and approval of action plans to address weakness in controls.

Staff governance committee

The committee has an important role in ensuring consistency of workforce policies and equity of treatment of staff across the local NHS system, including remuneration and health & safety issues, where they are not already covered by existing arrangements at national level. The membership of the staff governance committee comprises those detailed below and is chaired by Mr Eddie Egan:

Cllr J Aitchison Non Executive Member (from zs" September 2007)

Mr R Anderson Non Executive Member

Mr. A Boyter Director of Human Resources (from 1 December 2007)

Mr R Burley Non Executive Member

Cllr J Cochrane Non Executive Member (from 26th September 2007)

Mr J T McCaffery Director of Human Resources (until so" November 2007)

Ethics committee

The principal function of the committees is to provide independent advice as to whether a given piece of research is ethical, and whether the dignity, rights, safety and wellbeing of individual research subjects are adequately protected. The membership of the ethics committees, which comprise both clinical and lay members, is as listed below:

Lothian Research Ethics Lothian Research Ethics Committee 1 Committee 2

Mr N Grier (Chair) Professor P Hayes (Chair)

Dr J Walker Mrs 0 M A Chiswick Mrs A Tod Dr C MacKellar Mr W J Farquhar Mr A Neustein Mr B P Carey Rev D Stephen Mrs A Harvey Mr W 0 D Walker Dr G Steele Mrs V Prosser Mrs M Dewar Miss S Cameron Dr W Jack Mr L Murray Dr H Wallace MrJ Oliphant Dr E Hare Ms T Rye Dr S Moussa Professor G Siann Dr N Malden MrT Russell Dr K D Smith Ms L Ellis Dr D Semple Dr L Phillip

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Lothian Research Ethics Lothian Research Ethics Committee 3 Committee 4

Dr C West (Chair) Dr M Logan (Chair)

Mrs F Petrie MrW B Taylor Mrs M Granger Dr A Innes Dr M MacMillan DrY Freer Mr N G Masterton Mr Sandy McAfee Mr H J Olson Mr Vipin Zamvar Prof L Sawyer Miss C Murray Dr JAndrews DrANimmo Dr B Agrawal Dr L Schweizer Dr F Barry Dr RA Burt Dr C Greig Ms P Perry Mr Y Maidment Dr H Drewitt Dr H Ward DrG Howat Mrs H Vandore

7. Board members' and senior managers' interests

7a. Board members

Professor James J Barbour OBE, Executive Member Non-Executive Director, NHS National Services Board Honorary Professor, Queen Margaret University College Member, First Division Association Member of the University of Edinburgh Court

Dr Alison McCallum, Executive Member Member, British Medical Association Member, Medical Practitioners' Union Member, Common Purpose Advisory Board

John Matheson, Executive Member Wife was the Fundraising Manager at St Columba's Hospice until January 2008 Member, Managers in Partnership.

Jackie Sansbury, Executive Member No interests to declare

Professor Heather Tierney-Moore, OBE, Executive Member Member, Royal College of Nursing Visiting Professor, Napier University Member, Faculty Board, Faculty Health Informatics, Royal College of Surgeons, Edinburgh

Peter Gabbitas, Executive Member until 31st March 2008 Member, City of Edinburgh Council Senior Management Team Board Member, Capital City Homes

David Bolton, MBE, Executive Member until 7th August 2007 Member, MSF/Amicus Trade Union

Murray Duncanson, Executive Member until 31st August 2007 Trustee, Elizabeth Fitzroy Support, a national charity based only in England and Wales for people with learning disabilities (unpaid) Wife is employed as HR Director for NHS National Services Scotland Member, Institute of Health Service Managers Member, Managers in Partnership

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Dr Charles Swainson, Executive Member Occasional medico-legal work as expert advisor/witness Honorary Senior Lecturer, University of Edinburgh (Teaching) Fellow, Royal College of Physicians of Edinburgh and Faculty of Public Health Medicine Member, British Medical Association and elected Member to the Clinical and Medical Director Sub­Committee of the Central Consultants and SpecialistCommittee. Member, BritishAssociation of Medical Managers

James T McCaffery, Executive Member Non-Executive Director- Skills for Health:Honorarium payment PARCCraigmillar Limited - Community Representative

Alan Boyter, Executive Member from 1st December 2007 Non Executive Board Member, Dundee College UNITETrade Union Member

Robert Anderson, Interim Chair until 19th April 2007 and Non Executive Member Shareholder in Melville Housing Association Ltd Vice Chair and Member of the Management Committeeof Melville Housing Association Ltd Member, Alzheimer Scotland Action on Dementia Board Member of the Iron Mills Development Ltd Chair of the Friends of the Scottish Mining Museum

Dr C J Winstanley, Chair from 20th April 2007 Deputy Lieutenant, Greater London Divisional President, St John's Ambulance Justice of the Peace (England)

Stuart Hunter Smith, Non Executive Member until 31 January 2008 Non ExecutiveMember of NHS 24 Member, Stories in the air - Registered Charity for Deaf Children

Robin Burley MBE, Non Executive Member Chair, Built EnvironmentForum Scotland Non Executive Member, Margaret Blackwood HousingAssociation Ltd Non Executive Director, Blackwood Foundation Non Executive Director, Margaret Blackwood Technical Consultants Ltd Non ExecutiveMember, Edinburgh World HeritageTrust Partner, Eskhill & Co.

Eddie Egan, Non Executive Member Member, UNISON Member, Scottish Labour Party Member, Cooperative Party

Pat Murray, Non Executive Member No interests to declare.

Dr Ian McKay, Non Executive Member Partner, Rose Garden Medical Centre Clinical Director, Edinburgh CHP

Professor Sir John Savill, Non Executive Member Vice-Principaland Head of the College of Medicineand Veterinary Medicine, Edinburgh University Member of the Medical Research Council . Governor of the Health Foundation Fellow of the Academy of Medical Sciences Fellowof the Royal College of Physicians of London Fellowof the Royal College of Physicians of Edinburgh Fellow of the Royal Society of Edinburgh Member, UK Renal Association Member, American Society of Nephrology Member, Society of Leukocyte Biology

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Member, Medical Research Society Member, Association of Physicians

Cllr lain Whyte, Non Executive Member Elected Member, City of Edinburgh Council Governor, Fettes Trust Director, Edinburgh Leisure Ltd Director, EICC Ltd Member, Scottish Conservative Party

Cllr Paul Edie, Non Executive Member from 23rd July 2007 Elected member, City of Edinburgh Council Member, Dean Orphanage and Cauvin's Trust Member, Edinburgh and Leith Age Concern Member, Edinburgh Voluntary Organisations Council Executive Committee Member, Lothian Homes Trust Member, PARC Craigmillar Limited Member, Public Health Alliance in Scotland Member, TPAC Scotland Member, Volunteer Centre Scotland Member, Corstorphine Youth Association Member of Friends of Corstorphine Hill, Corstorphine Trust Member, Scottish Liberal Democrat Party

Cllr Kingsley Thomas, JP, Non Executive Member until 30th April 2007 Manager - Criminal applications, Scottish Legal Aid Board Councillor for Dairy and Executive Member for Health and Social Work, City of Edinburgh Council. Member, Labour Party Member, GMB Trade Union

Cllr Graeme Morrice, Non Executive Member until 30th April 2007 Elected Member, West Lothian Council Member, Scottish Labour Party Member, Unite Trade Union Member, Co-operative Party Member, Co-operative Society Director, Broxburn Family & Community Development Centre Director, West Lothian Housing Partnership

Cllr John Cochrane, Non Executive Member from 3rd September 2007 Elected member, West Lothian Council Member of Action to save St Johns Hospital Political Party

Cllr Ann McCarthy, Non Executive Member until 30th April 2007 Elected member, East Lothian Council Cabinet Member with responsibility for Joint Future & Community Care Director and Chair, Homes for Life Partnership (unremunerated) Member, Scottish Labour Party

Cllr Roger Knox, Non Executive Member from 2nd July 2007 Elected member, East Lothian Council Member, Scottish National Party

Cllr Jack Aitchison, Non Executive Member from 23rd July 2007 Elected member, Midlothian Council Member, Scottish Labour Party

David Belfall, Non Executive Member Member, Scottish Criminal Cases Review Commission Member, Scottish Government Fit For Purpose Complaints System Action Group Member, Management Committee, Abbeyfield Ltd

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Stephen Renwick, Non Executive Member Managing Director, Forensic Accounting Services (Edinburgh) Ltd - specialising in public sector consultancy Trustee, Novum Trust - small Edinburgh based charity

Lesley Jamie, Non Executive Member Business Consultant, Scott-Moncrieff, Chartered Accountants

David Crichton, Non Executive Member until 30th June 2007 Director and Chief Executive, Confederation of Forest Industries (UK) Ltd Director, Wood for Good Ltd

Theresa Douglas, Non Executive Member TMD Associates, Consultant NHS Education Scotland short term contracts from August 2006 - continuing Dementia Services Developments Centre

Dr Alison Tierney, CBE, Non Executive Member Adjunct Professor of Clinical Nursing, University of Adelaide Editor-in-Chief of Journal of Advanced Nursing, (Blackwell Publishing UK honorarium) Contract work, for universities, csa (SGHD) and other organisations Fellow of the Royal College of Nursing

Moi Ali, Non Executive Member from 1s t February 2008 Member of National Union of Journalists Vice president, NMC Member - Lord Chancellor's Review Body

George Walker, Non Executive Member from 1s t February 2008 Investment Director, Standard Life Investments Member-Unite

Professor Morag Ann Prowse, Non Executive Member from 1st February 2008 Professor, Napier University

Dr Rebecca Strachan, Non Executive member until ao" September 2007 Member, Action for Sick Children (Scotland) Trustee, Scottish Child Law Centre

All members of Lothian NHS Board are Trustees of NHS Lothian Endowment Funds.

7b. Senior managers

David Fraser Kelly, Director, West Lothian·CHCP Paid 50:50 by West Lothian Council/Lothian NHS Board

David White, General Manager, East Lothian CHP Wife undertakes short-term contract work for NHS Lothian, Local Authorities & Voluntary sector

Gerry Power, General Manager, Midlothian CHP Honorary research contract (NHS Lothian) in Podiatry

David Small, General Manager, Edinburgh CHP No interests to declare.

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8. Pension Liabilities

The accounting policy note for pensions is provided in Note 1 and disclosure of the costs is shown within Note 26 and the remuneration report.

9. Remuneration for Non Audit Work

During the year 2007/08 our auditors received no fees in relation to non audit work.

10. Comparative figures for Notes to Annual Accounts

I\lotes 4, 7 and 8 have been restated due to various changes made to the NHS Annual Accounts manual. These changes are presentational and do not impact on the outturn reported in the previous year.

11. Human Resources

As an equal opportunities employer, the Health Board welcomes applications for employment from disabled persons and actively seeks to provide an environment where they and any employees who become disabled can continue to contribute to the work of the Board.

The Health Board provides employees with information on matters of concern to them as employees and consults employees or their representatives so their views are taken into account in decisions affecting their interests. This is carried out principally through the NHS Lothian Partnership Forum, a regular programme of written and verbal briefings sessions in departments, and through the in-house newspaper Connections.

12. Related Party Transactions

Dr Ian McKay is a non-executive member of I\IHS Lothian and a partner in Rose Garden Medical Centre, Edinburgh. In 2007/08, NHS Lothian's Family Health Services payments to Rose Garden Medical Centre amounted to £1,017,719 (2006/07-£878,000).

As noted in section 7, the wife of Mr John Matheson was employed as a fundraising manager at St Columba's Hospice until January 2008. During 2007/08, NHS Lothian provided £2,445,000 (2006/07­£2,281,000) of revenue funding to St Columba's Hospice. No capital funding was provided in 2007/08 (2006/07- £74,000).

13. Payment Policy

The board endeavours to comply with the principles of the Better Payment Practice code by processing suppliers' invoices for payment without unnecessary delay and by settling them in a timely manner. In 2007/08 average credit taken was 46 days (2006/07 - 37 days). In 2007/08 the Board paid 42.96% (2006/07 - 49.74%) by value and 55.06% (2006/07 - 47.10%) by volume within 30 days. Following a move to a pan-Lothian approach, the accounts payable department have refocused their commitment to resolve outstanding issues in respect of historical invoices to enable them to be paid and significant progress has been made. A side effect of this is that the number of creditor payment days has temporarily increased as many of the historical invoices settled have been outstanding for over a year. It is anticipated that the position will significantly improve in 2008/09.

14. Disclosure of Information to Auditors

The Directors who held office at the date of approval of this Directors' Report confirm that so far as they are aware, there is no relevant audit information of which the NHS Board's auditors are unaware; and each Director has taken all the steps that they ought reasonably to have taken as a Director to make themselves aware of any audit information, and to establish the NHS Board's auditors are aware of that information.

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NHS LOTHIAN

ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2008

OPERATING AND FINANCIAL REVIEW

1. Principal activities and review of the year

The NHS Board was established in 1974 under the National Health Service Act 1974 and is responsible for commissioning health care services for the residents of Edinburgh and the Lothians, a total population of 801,310.

In December 2000, the Scottish Government published "Our National Health: A Plan for Action, A Plan for Change" (the Scottish Health Plan), which recognised the need to simplify, improve and rationalise local decision making arrangements. As a result, from 30 September 2001, 15 single unified NHS boards were established. In the case of the 11 mainland board areas, these new unified NHS boards replaced the separate structures of NHS Boards and Trusts.

NHS boards form a local health system, with single governing boards responsible for improving the health of their local populations and delivering the healthcare they require.

The overall purpose of the unified NHS Board is to ensure the efficient, effective and accountable governance of the local NHS system and to provide strategic leadership and direction for the system as a whole.

The role of the unified NHS Board is to:

improve and protect the health of the local people; improve health services for local people; focus clearly on health outcomes and people's experience of their local NHS system; promote integrated health and community planning by working closely with other local organisations; provide a single focus of accountability for the performance of the local NHS system; and deliver best value from the human, capital and financial resources available

The functions of the unified NHS Board comprise:

strategy development; resource allocations; implementation of the Local Health Plan; and performance management.

NHS Lothian again met all its financial targets in 2007/08 including achieving a reduction in the level of non recurrent support. This outcome was supported by a partnership approach both within NHS Lothian and elsewhere across NHS Scotland in respect of tertiary services.

Other highlights of the year included:

• Cash Releasing Efficiency Savings totalling £24.2 million were achieved in year, including £10 million in respect of Efficient Government targets, delivering the highest performance in Scotland for the last three years. A further £2.5m of additional in year financial flexibility was also delivered.

• Driving forward within NHS Lothian the use of LEAN methodology in delivering process redesign and enhancing productivity in areas such as diagnostics.

• The 6 months waiting time target for inpatient and day cases which had been achieved by December 2005 was maintained throughout 2007/08. NHS Lothian also achieved a zero target for inpatients and day cases waiting over 18 weeks in December 2006 - one year ahead of the national target.

• There were no patients where discharge was delayed over 6 weeks by 31st March 2008.

• NHS Lothian has entered into a unique partnership with the University of Edinburgh, City of Edinburgh Council, Scottish Enterprise and Alexandria Estates Inc (a company incorporated in the United States of America) to develop a high quality bioscience park adjacent to the Royal Infirmary

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of Edinburgh. Approval will be sought from SGHD during 2008/09 to enable I\lHS Lothian to invest directly in this enterprise and fully share in the benefits so that they can be re-invested in NHS services.

2. Financial targets

The Scottish Government set 3 budget limits at health board level on an annual basis. These limits are:

• Revenue resource limit - a resource budget for ongoing operations; • Capital resource limit - a resource budget for new capital investment; and • Cash requirement - a financing requirement to fund the cash consequences of the ongoing

operations and the new capital investment.

Health Boards are expected to stay within these limits, and will report on any variation from the limits as set.

3. Financial Performance and Position

Revenue Resource limit

2 Capital Resource limit

3 Cash Requirement

Memorandum for In Year Outturn

Limit as set by SGHD

£'000

1,080,060

40,254

1,082,108

Actual Outturn

£'000

1,079,696

39,874

1,082,102

Variance (Over)/Under

£'000

364

380

6

£'000

Brought forward surplus from previous financial year (4,634) Additional Cost over in year revenue resource limit (4,270)

Details of I\lHS Lothian's Net Operating Costs and RRL outturn are set out in notes 2 to 8 to the Accounts.

Capital Expenditure included revenue capital grants totalling £13m.

4. Counter Fraud Services

Through the work undertaken by Counter Fraud Services, a small sample of claims for patient exemption within NHS Lothian has been tested for validity. Based on the level of fraud within the sample, a projected figure of £2,097,861 (2006/07: £1,764,849) has been identified as being the potential total fraud committed against NHS Lothian in 2007/08, with the increase driven by higher levels of closed case write-ofts within the sample. Where fraud is known (and detected through the sampling process), recoveries are made wherever possible. For financial year 2007/08, a total of £35,980 (2006/07: £33,949) has been recovered.

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5. Key Performance Indicators

The Local Delivery Plan process was introduced in 2006/07 and replaced the previous Performance Assessment Framework. Performance outcomes in relation to key target measures in 2007/08 are summarised below. The tables of indicators refer to targets for !:!.ealth improvement, gfficiency, 8ccess to services and appropriate Ireatment (HEAT targets). The latest data relating to outcomes can lag the current period covered by the Director's Report from 8 to 18 months.

Key Performance Indicators and Outcomes

NHS Scotland Objective 1:

Health Improvement for the people of Scotland - improving life expectancy and healthy life expectancy.

HEAT Target Ref No.

LOP· Key Measure.

H.01T Crude CHD Mortality Rate (per 100,000 population), people <75, in the 20% most

Key Performance Target: Reduce health inequalities by decreasing Coronary Heart Disease (CHD) for the most deprived communities by 15%, from the baseline of 102 in 2004 to 97 for 2008.

deprived postcode sector areas in Scotland.

Outcome: Performance in CHD mortality rate has improved with rates dropping from 98.5 in 2005 to 97.3 in 2006.

H.02T Numbers smoking as a % of relevant population (+16

Key Performance Target: To reduce adult (16+) smoking rates from 25.7% in 2004 to 21.3% for 2010.

years). Outcome: The percentage of people smoking in Lothian has declined from 24.8% in 2005 to 23.1% in 2006. The pharmacy based programme was launched in December 2007 with pharmacists training in October/November 2007. Pharmacies involved have a good coverage across Lothian and representation in disadvantaged areas, which have high smoking rates. Initial numbers of people accessing the Pharmacy initiative indicate that this service can make a significant contribution to achieving the HEAT target.

The numbers of patients through the regular Stop Smoking Services have increased in the first quarter of the calendar year. It is anticipated with recruitment of new staff, and particularly the two hospital based posts, that throughput through these services will continue to increase.

Currently a review of the service is being undertaken that is aimed at producing improvements in performance to meet the stretched HEAT target. With increased clarity about funding for tobacco work, additional appointments have been made to vacant posts which will aid our efforts to improve service throughput.

H.05T MMR1 uptake rates (% at 5 years old).

Key Performance Target: 95% uptake target for all childhood vaccinations.

Outcome: Measles Mumps and Rubella 1 (MMR1) uptake rates have remained above 94% through 2007 with the most recent quarter ending December 2007 reporting uptake of 94.7% across Lothian.

H.06T Deaths caused by intentional self harm and events of

Key Performance Target: Reduce suicide rate in Lothian between 2002 and 2013 by 20% from 2002 baseline rate of 16.6 to 14.1.

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undetermined intent expressed as a rate per 100,000 population.

Outcome: The trajectory in relation to the reduction in the suicide rate is being met with 11.1 in 2006 against a milestone of 14.9. This measure is very sensitive to changes in small numbers, however, it is planned that the 20% reduction will be achieved by 2011 - two years early.

H.07T Pregnancy rate (per 1000 population) for 13-15 year olds.

Key Performance Target: NHSLothian will reduce by 20% the pregnancy rate in 13-15 year olds from 9.1% in 1996 to 7.3% by 2011.

Outcome: Provisional data due for final publication at end June 2008 indicates the taruet rate of 7.3 has been achieved for 2005/06.

H.08T Percentage of P1 children with no obvious decay experience.

Key Performance Target: 60% of 5 year old primary children (primary 1) will have no signs of dental disease by 2010.

Outcome: The percentage of primary 1 children caries free at five years increased by 5% on the previous year to 55% in 2005/06, confirming the long-term trend of improvement in this measure.

Further improvements are expected with the Child Smile initiative being implemented and embedded across Lothian.

NHS Scotland Objective 2:

Efficiency and Governance Improvements - continually improve the efficiency and effectiveness of the NHS

HEAT Target Ref No.

LOP - Key Measure.

E.01T Forecast deficit/surplus for 'End financial year' against total revenue

Key Performance Targets: NHS boards to operate within their agreed revenue resource limit, operate within their capital resource limit, and meet their cash requirement.

resource limit. Outcome: Financial Targets met in 2007/08.

E.02T Hours lost due to sickness absence expressed as a percentage of total

Key Performance Target: NHS Boards to achieve a sickness absence rate of 4% by 31 March 2008 (revised to April 2009). Source is the Scottish Workforce Information Standard System (SWISS).

hours available. Outcome: The sickness absence rate has remained under 5% throughout 2007. SWISS data for January and February 2008 shows progress is being made towards achieving this by the revised target date set by SGHD of March 2009.

E.02T Number of the British Association of Day Surgery (BADS) surgical procedures

Key Performance Targets NHS Boards to achieve an increase in consultant productivity by 1% pa over the next 3 years by 31 March 2008.

performed in a day case or outpatient setting expressed.as a percentage of the total number of BADS procedures including inpatients.

Outcome: Performance is steadily improving in this measure. Recent figures report a rate of 68.33% the quarter July to September 2007 compared to 66% for the same period the previous year.

E.04T Laboratory requests that include a CHI number, expressed

Key Performance Target: Universal use of Community Health Index number (CHI). NHS Lothian target 97% for all laboratory requests.

r. I

I

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as a percentage of all laboratory requests made.

Outcome: The percentage of laboratory requests that utilise a CHI number has grown steadily in the past year. By March 2008 compliance was at 98%, over 20% more than at the beginning of the financial year.

CHI compliance has improved due to initiatives including implementation of label printers across acute sites; frequent sampling; increased awareness through monitoring and promotion; improved CHI access through the TRAK Patient Administration System and availability of 24/7 Health Records CHI Help Desk. Electronic laboratory request ordering has increased CHI compliancy as TRAK Order Communications System has been implemented across main acute hospitals

NHS Scotland Objective 3:

Access to Services - recognising patients need for quicker and easier use of NHS services.

HEAT Target Ref No.

LOP - Key Measure.

Key Performance Target: Ensure that anyone contacting their GP surgery has guaranteed access to a GP, nurse or other health care professional within 48 hours from April 2004.

Outcome: This target has been maintained at 100% throughout 2006/07.

Key Performance Targets: No patient with a guarantee should wait longer than 6 months for inpatient or day case treatment from 31 December 2005, reducing to 18 weeks from 31 December 2007.

Outcome: NHSLothian achieved both of these targets in December 2006, meeting the 18 week target a year ahead of schedule.

A.On Primary Care Team - 48 hour access. The percentage of practices, in a health board area, claiming to meet the requirements for Directly Enhanced Services payment.

A.03T Number of inpatients waiting over 18 weeks excl Availability Status Codes (ASCs).

A.03T Number of inpatients/day cases on waiting list with an

Key Performance Targets: NHSLothian target to reduce patients waiting for inpatient or day case treatment with an Availability Status Code (ASC) to 2044 by December 2007.

ASC. Outcome: Performance exceeded the target of 2044 with only 1819 patients waiting with an ASC code at the end of the year. ASCs have now been abolished and the implementation of New Ways waiting times monitoring is well underway with the first reports expected in May 2008.

A.04T Number of outpatients waiting over 18 weeks excluding ASCs; GP/GDP referrals.

Key Performance Targets: By the end of 2005, no patient will wait longer than 6 months from General Practitioner (GP) or General Dental Practitioner (GDP) referral to an out-patient appointment, reducing to 18 weeks from 31 December 2007.

Outcome: Concerted efforts in this area saw Lothian meet the target of zero waits by December 2007. This represents a reduction of over 2,400 patients waiting over target since March 2007.

A.05T The percentage of patients seen waiting no more than 4 hours from arrival to

Key Performance Target: By end 2007 no patient will wait more than 4 hours from arrival to admission, discharge or transfer for Accident and Emergency treatment.

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admission, discharge or transfer for A&E treatment.

Outcome: NHSLothian achieved the target of 98% compliance in January 2008 and performance has been sustained at this level since then. This is an 11% rise compared with the same period in 2007.

The proactive management of inpatient capacity has been crucial to improving 'patient flow' and reducing bed waits. The bed management operation has been radically overhauled and redesigned, with a focus on a predictive, pan-Lothian approach.

The 4-hour journey has been tightly managed on all sites, aided by the use of flow navigators and explicit escalation systems that are employed if delays and/or queues occur.

Sustaining the high level of performance will be a challenge, set against continuing rises in A&E attendance. Current work with GP's, includes reviewing the interface with NHS24, Scottish Ambulance Service and the primary care out-of-hours services to progress alternatives to hospital attendance and admission.

A.06T The outpatient chunk of the total wait for

Key Performance Targets: By end of 2007 the maximum wait for cataract surgery will be 18 weeks from referral to completion of treatment.

cataract surgery; number waiting over 11 weeks for first outpatient appointment.

The inpatient/day case chunk of the total wait for cataract surgery; number waiting over 7 weeks for first treatment.

Outcome: By December 2007 no patients were waiting over 11 weeks for the first outpatient appointment, or over 7 weeks as an inpatient/day case for first treatment from the decision to proceed to surgery. Performance has been sustained and continues to meet the targets.

A.07T Percentage of Hip Fractures operated on within 24 hours.

Key Performance Target: By end of December 2007, the maximum wait from admission to a specialist unit to hip surgery, following fracture, will be 24 hours.

Outcome: 100% compliance was achieved in December 2007, exceeding the target of 98%. Performance continues to meet the target for this measure in 2008.

A.08T Percentage of women treated for breast cancer within

Key Performance Target: Women who have breast cancer and need urgent treatment will get it within one month where appropriate.

one month. Outcome: At the latest provisional quarter report ending March 2008 performance for all Lothian was 68.4% compliance with the target. There is however, variation in performance across sites and in the overall trend, and planning is underway within the service to identify the root cause of this variation and appropriate actions to make improvements.

A.08T Percentage of patients treated for cancer within 62 days of urgent referral.

Key Performance Target: The maximum wait from urgent referral to treatment for all cancers is two months.

Outcome: Overall compliance with the 62 day treatment target for all cancers has been steadily increasing with the latest Quarter 3 2007 results reporting 89.5%, up on 80.4% in Quarter 1. The target of 95% compliance was met for both lung and breast cancer patients. In addition, figures for colorectal cancer patients improved by almost 20% in the year. Quarter 42007 (Oct - Dec) Cancer audit data published at the end of May 2008 indicated the NHS Lothian headline figure for all cancers at 94.5% compliance. This shows a continuation of the steady improvement trend.

15

A.11T The number of inpatients/day cases waiting more than 5 weeks for angiography

Key Performance Targets: By end 2007, the maximum wait for cardiac intervention will be 16 weeks from GP referral through rapid access chest pain clinic or equivalent and no patient will wait more than 16 weeks for treatment after they have been seen as an outpatient by a heart specialist and the specialist has recommended treatment.

The number of inpatients/day cases waiting more than 10 weeks for angioplasty and CABG surgery.

Outcome: As of December 2007 no patients have waited more than five weeks for angiography treatment or more than ten weeks for angioplasty and Coronary Artery By-pass Graft (CABG) surgery.This target continues to be maintained in 2008.

A.12T Number of patients waiting over 9 weeks for: MRI /CT /barium studies /ultrasound non-obstetric.

Number of patients waiting over 9 weeks for: gastroscopy/ sigmoidoscopy/ colonoscopy/ cvstoscoov.

Key Performance Targets: By December 2007 no patient will wait more than nine weeks for any Magnetic Resonance Imaging (MRI) or Computerised Tomography (CT) scans or other key diagnostic test.

Outcome: NHSLothian achieved the target of zero waits over nine weeks for diagnostic scopes and also for diagnostic scans by July 2007, six months ahead of the planned target date. This measure continues to be monitored under the New Ways tracking system.

16

NHS Scotland Objective 4:

Treatment Appropriate to Individuals: ensure patients receive high quality services that meet their needs.

HEAT Target Ref No.

LOP· Key Measure.

T.01T The total number of people waiting more than 6 weeks to be discharged.

Key Performance Targets: The number of people waiting more than 6 weeks to be discharged from hospital into a more appropriate care setting will be reduced to zero by April 2008. In addition, the number of patients delayed in short-stay beds will be reduced to zero for the same period.

Outcome: Both targets have been met for this measure with no patients delayed over six weeks or in a short stay setting by April. NHSLothian also set a target for all delays of no more than 66 delayed discharges overall. At April 2008 census performance exceeded this target with only 50 in the category being reported as delayed.

T.02T The number of patients aged 65+, admitted, for any reason, two or more

Key Performance Target: By 2008/09, we will reduce the proportion of older people (aged 65+) who are admitted as an emergency inpatient 2 or more times in a single year by 20% to 3239.

times in one calendar year, as emergency to acute specialties.

Outcome: The number of emergency re-admissions as defined by this measure increased by approximately 200 from 2005/06 to 2006/07. Plans are in place to improve performance in this area.

T.02T The number of emergency bed days, in acute

Key Performance Target: NHSLothian will reduce emergency inpatient bed days for people aged 65 and over 10% to 396,143 by 2008/09.

specialties, for patients aged 65+.

Outcome: NHSLothian exceeded this target ahead of schedule, reporting 331,313 bed days in 2006/07.

T.03T The percentage of women in the 20-60 year old group

Key Performance Target: A minimum of 80% of women aged 20-60 are screened at least once every five years.

attending a cervical screening in the last 5.5 years.

Outcome: NHSLothian has continued to meet this target on an ongoing basis since 2001.

T.04T Number of points achieved (max 12) for 3 standards within

Key Performance Target: Improve Quality Improvement Scotland (QIS) clinical governance and risk management standards.

QIS Clinical Governance and Risk Management assessment.

Outcome: In August 2007 NHSLothian scored 5 in the National Comparative Report on Clinical Governance and Risk Management. Progress has been made towards achieving the reports recommendations

In two key areas, strategies have now been approved by the Board, allowing NHSLothian to demonstrate achievement of the Implementation stage and progress to monitoring of Equality and Diversity and External Communications. NHSLothian continues to Develop Business Continuity Planning. A self assessment will be reported at end June 2008 to assess improvements.

T.05T The rate of increase of DDDs, per capita, for anti-depressants.

Key Performance Target: Reduce the annual rate of increase of defined daily dose (DDD) per capita of anti-depressants to zero by 2009/10.

Outcome: This measure has been making very good progress in recent months. Data for January 2008 shows a rate of 1.07% increase in prescribing anti-depressants, down from 1.72% in the Quarter to September 2007.

17

T.06T Number of readmissions (within one year) for those

Key Performance Target: Reduce the number of readmissions by 10% to 698 by the end of December 2009.

that have had a psychiatric hospital admission of over 7 days.

Outcome: Good progress has been made in this measure and further enhanced community services will continue to improve performance by providing alternatives to admission.

T.07T Number of identifications of Staphylococcus aureus bacteraemias (SASs) (including MRSA and MSSA) as detailed in Health Protection Scotland Healthcare Acquired Infection Programme surveillance protocols.

Key Performance Targets: To reduce all Staphylococcus aureus (SA) bacteraemia (including Meticillin Resistant SA (MRSA) and Meticillin Sensitive SA (MSSA)) by 30% to 283 by 2010.

Outcome: Sacteraemia rates for MRSA and MSSA have remained stable and within control limits throughout the year. Since 2006 there has been an overall reduction of 17.5% in SASs.

A root cause analysis tool is being applied to identify key risk areas to target resources.

18

6. Sustainability and Environmental Reporting

NHS Lothian promotes sustainable practice at all levels in the organisation. Sustainability seeks to ensure that finite resources are used in a manner that has zero impact on the ecosystem. Action to address climate change is managed by a Sustainable Development Management Group under the chairmanship of the Director of Facilities. This was the first such management group to be formed in an NHS Scotland organisation

NHS Lothian measures the output of C02 as part of its participation in the EU Carbon Emissions trading scheme, and also as part of good environmental practice. In all environmental activity, the C02 index is the lowest common denominator and reference to this ensures the most efficient use of resources.

There are significant barriers to carbon reduction in an essential service, operating 24hours per day and 7 days per week. Strict compliance standards have to be met on heating, ventilation and cooling. Within these constraints, NHS Lothian has a track record of success in achieving key national targets for reduction in energy consumption. NHS Lothian consumption has been less than the national targets up to and including 2007/08. The group has overseen major successes in reduction of energy consumption, by 14%, with equivalent reduction in carbon dioxide emission and of reduction of waste to landfill where recycling initiatives in our hospitals have seen recycling rates rise by more than 15%. Our transport and fleet management continues to demonstrate commitment to sustainability issues. An example is the conversion of fleet vehicles to more fuel efficient engines and automatic speed limitation, and with regard to capital developments, NHS Lothian has policies in place to ensure sustainable issues are at the fore during the design stage.

Although expenditure on energy has risen from £7.8m in 2004/05 to £12.4m in 2007/08, the main rise occurred in 2005/06 due to extreme volatility in the energy market. Temperature-adjusted consumption is showing a reduction in 2007/08. The graph below shows that, after a period in 2003/04 where double running site costs were incurred, energy consumption per unit of space is also on a declining trend.

Annual Energy Consumption Compared with National Target

1400000 .. 100

.....Actual Consumption -'-Target Consumption -.ll-GJ/100m3 95

1300000 +-------------------------------___l

90

1200000 +-----------",.""---"""""'........::::-----'\;;------------------1

1100000 +-------------+-----"'....,------~--~ ------I-

g 1000000 +---.----------'~--___#_----------~.......-------___l

900000 +----------------------------=--.=-----"""---___l

..,.., 85 E 0~ 0...... ::;:;

80 eo.... .s ci3'" .= 75 :a E enc :::Jo c=a 0

70 0§ u en Ii:

'<;..o 65 Q. m

60

55

800000 +-----t-------j-----;-----j------+-----t-----+------j- 50 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08

St. John's Hospital has for several years achieved the ISO standard 14001 - a worldwide business standard designed to assist in managing an organisation's environmental risks, and the site was re­accredited during 2007/08. NHS Lothian's Environmental Strategy outlines the intention to achieve this standard at the Western General Hospital within one year and within 3 years for the rest of NHS Lothian.

Energy issues have been featured in both the staff newspaper Connections and the regular staff briefings to raise employee awareness. I\JHS Lothian has also strengthened its partnership arrangements with the Carbon Trust. This is expected to assist NHS Lothian achieve an improvement in staff awareness and encourage them to take responsibility as individuals in addition to the corporate

19

commitment. The focus of the partnership will be on energy efficiency, travel arrangements, good housekeeping and on renewable energy technology as part of our investment programme. NHS Lothian is also a fully participating member of the Edinburgh Partnership on Climate Change and is co-operating with other Boards in energy efficient joint investment programmes.

NHS Lothian has spent £1.1m in the three years to 2007/08 on energy efficiency projects, with expected cumulative revenue savings of over £344,000 per annum. The estimated annual saving in carbon emissions from this investment is 2,662 tonnes. We have completed a number of initiatives embracing investment in energy efficient projects utilising a Scottish Government Central Energy Efficiency Fund (CEEF). These projects were selected following a 3 year programme of investigative work in partnership with the Carbon Trust. Our full commitment within this fund has been allocated and invested in the last 2 years (£lOOk). Lothian Health Board was one of the few Boards in Scotland to fully take up their allocation.

The major investments have been in automatic heating and ventilation controls (including Boiler Maintenance Systems), high efficiency boilers and heat exchanger systems, insulation of plant and improvements to steam and condensate systems and some automatic or high efficiency lighting projects. The success of this investment has been a key element, along with other housekeeping initiatives, in achieving the major reduction of energy consumption to mitigate the effect of unit tariff increases in energy.

In addition investment of an equivalent sum has been met from NHS Lothian's own capital resources. These have been used to support CEEF projects where additional funding has been required and where additional revenue savings have arisen from water and maintenance cost savings. NHS Lothian has also invested in projects on domestic hot water heat exchange / storage systems to meet statutory compliance on control of legionella; with collateral energy and carbon savings.

NHS Lothian actively participates in the following national energy management groups:

• Health Facilities Scotland - Engineering Technology Advisory Board and its sub-groups • National Services Scotland - Commodity - Advisory Panel for Supply of Utilities

The above demonstrates NHS Lothian's organisational commitment to sustainable development. The most recent internal audit, completed in April 2007, found clear evidence of best practice in a significant number of areas and arrangements are in place to address recommendations arising from the audit.

20

NHS LOTHIAN

ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2008

REMUNERATION REPORT

1. Board Members' and Senior Employees' Remuneration

Information disclosedJn this report relates to the remuneration of Board Members and senior employees. Other disclosures in these accounts provide details of the interests of Board Members and senior managers, and information about related party transactions.

Board Members and senior managers are remunerated in accordance with approved national pay rates. All posts at this level are subject to rigorous job evaluation arrangements and the pay scales applied reflect the outcomes of these processes. All extant policy guidance issued by SGHD has been appropriately applied and agreed by the Remuneration Committee. Determination of individual salary placement on appointment is guided by the terms of circulars HDL (2006)23 and HDL (2006)59 as amended by subsequent directives issued by SGHD.

All senior manager posts have been evaluated using the HAY methodology through the National Evaluation Committee.. NHS Lothian Board Members are appointed and graded within the new Executive Cohort in accordance with HDL (2006)23. Other senior managers, other than those in transitional grades as determined by NHS MEL (2000)25, are appointed and graded to a new Senior Manager cohort in compliance with HDL (2006)59. Managers within transitional grades have been re­evaluated to grades within Agenda for Change pay-scales.

Details of Board Members' remuneration are disclosed in notes 2a and 2b of the remuneration report and have been subject to audit.

21

NHS LOTHIAN

ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2008

REMUNERATION REPORT

2(a). BoardMembers'and Senior Employees' Remuneration - 2007/08 Total accrued

Salary (bands of £5,000)

Real increase inpensionat

age 60 (Bandsof £2,500)

pension at age 60 at31

March (Bandsof £5,000)

Remuneration of: Executive Members Prof James J Barbour,Chief Executive 190-195 2.5-5.0 55-60

Dr Alison McCallum, Directorof PublicHealth 125-130 0.0-2.5 0-5

Mr John Matheson,Directorof Finance 145-150 2.5-5.0 45-50

Mrs J Sansbury,Directorof HealthcarePlanning 110-115 2.5-5.0 30-35

Ms HeatherTierney-Moore, Directorof Nursing 140-145 0.0-2.5 0-5

Mr Peter Gabbitas, Directorof Health& SocialCare' 65-70 2.5-5.0 35-40

Mr DavidA Bolton,Chief OperatingOfficerUHD 55-60 2.5-5.0 55-60

Dr Charles P Swainson, Medical Director 225-230 5.0-7.5 80-85

Mr James T McCaffery, Directorof Acute Services 155-160 2.5-5.0 25-30

Mr Alan Boyter,Directorof HR2 40-45 2.5-5.0 35-40

Mr MurrayDuncanson, Chief OperatingOfficer PCD 100-105 2.5-5.0 40-45

Non Executive Members Mr ChartesWinstanley, Chairman 35-40 nla nla

Mr RobertAnderson 15-20 nla nla

Mr Stuart Smith,ChairmanUHD 15-20 nla nla

Mr Robin Burley, 15-20 nla nla

Mr Eddie Egan,EmployeeDirector' 75-80 5.0-7.5 20-25

Mrs Pat Murray,Chair of LothianArea Clinical Forum4 80-85 0.0-2.5 20-25

Dr Ian McKay,LNCForumRepresentative' 110-115 2.5-5.0 25-30

Prof John Savill,Head of Collegeof Medicine- UoE 5-10 nla nla

Cllr lain Whyte 10-15 nla nla

Cllr Paul Edie, Cityof EdinburghCouncil 5-10 nla nla

Cllr KingsleyThomas,City of EdinburghCouncil 0-5 nla nla

Cllr John Cochrane, West LothianCouncil 0-5 nla nla

Cllr GraemeMorrice,West LothianCouncil 0-5 nla nla

Cllr Roger Knox,EastLothianCouncil 5-10 nla nla

CllrAnn MeCarthy,EastLothianCouncil 0-5 nla nla

. Cllr Jack Aitchison,MidlothianCouncil 5-10 nla nla

Mr David Belfall 15-20 nla nla

Mr StephenRenwick 10-15 nla nla

Ms Lesley Jamie 5-10 nla nla

Mr David Crichton 0-5 nla nla

Mrs TheresaDouglas 5-10 nla nla

DrAlison Tierney 5-10 nla nla

Dr RebeccaStrachan 0-5 nla nla

Ms MoiAli 0-5 nla nla Prof MoragAnn Prowse 0-5 nla nla GeorgeWalker 0-5 nla nla

Other Senior Employees Mr David Kelly,Director,West LothianCHCP' 70·75 0.0-2.5 nla

Mr DavidWhite,GeneralManager,EastLothian CHP 70-75 0.0-2.5 15-20 Mr Gerry Power,GeneralManager,MidlothianCHP 70-75 0.0-2.5 20-25 Total

1 50% of the costsfor PeterGabbitasare charged to the City of EdinburghCouncil. 2 Alan Boytersalaryfor periodfrom 1~ December2007 , Eddie Egan's salaryincludes£70,000in respect of non-boardduties. 4 Pat Murray'ssalaryincludes£77,000in respect of non-boardduties. sDr Ian McKay'ssalaryincludes£103,000in respect of non-boardduties

Cash Equivalent Transfer Value

(CETV) at31 March 2007

£'000

868

38

687

402

26

422

947

1,360

373

470

688

nla

nla

nla

nla

314

149

166

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

174

252 7,336

Cash Equivalent Transfer

Value (CETV) at31 March2008

£'000

1,006

58

803

471

. 51

489

1,033

1,565

458

550

773

nla

nla

nla

nla

428

158

208

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

204

291 8,546

Realincrease in CETVin

year

£'000

83

17

69

38

21

36

35

131

64

45

47

nla

nla

nla

nla

93

-1

27

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

16

20 741

Benefitsin Kind

£'000

11.4

2.0

3.0

o 3.8

1.5

1.2

o 2.4

o 2.9

nla

nla

nla

nla

3.3

1.8

o nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

nla

0.7

1.8 35.8

'50% of the costsof DavidKellyare chargedby West LothianCouncil. David Kelly is in the CouncilPensionScheme

22

NHS LOTHIAN

ANNUAL ACCOUNTS AND NOTES FOR YEAR ENDED 31 MARCH 2008

REMUNERATION REPORT

2(b). Board Members' and Senior Employees' Remuneration - 2006/07

Salary (bands £5,000)

of

Real increase in pension at age 60 (Bands of £5,000)

Total accrued pension at age 60 at 31 March (Bands of £5.000)

Cash Equivalent Transfer Value (CETV) al31 March 2006 £'000

Cash Equivalent Transfer Value (CETV) at 31 March 2007 £'000

Remunerationof:

Executive Members Prof James J Barbour, Chief Executive 170-175 0.0-2.5 50-55 847 868

Dr Alison McCallum, Director of Public Health 120-125 0.0-2.5 0-5 20 38

Mr John Matheson, Director of Finance 125-130 0.0-2.5 40-45 676 687

Mrs J Sansbury, Director of Healthcare Planning 100-105 0.0-2.5 25-30 358 402

Ms HeatherTierney-Moore, Director of Nursing 130-135 0.0-2.5 0-5 26

Mr Peter Gabbitas, Director of Health & Social Care 1 60-65 0.0-2.5 30-35 373 422

Mr David A Bolton, Chief Operating Officer UHD 120-125 0.0-2.5 50-55 883 947

Mr Murray Duncanson, Chief Operating Officer PCO 125-130 0.0-2.5 40-45 645 688

Dr Charles P Swainson, Medical Director 205-210 2.5-5.0 70-75 1237 1360

Mr James T McCaffery, Director of HR 135-140 2.5-5.0 20-25 286 373

Non ExecutiveMembers Mr Brian Cavanagh, Chairman unlil15/09/06 15-20 nla nla nla nla

Mr Robert Anderson, Chairman from 25/09/06 20-25 nla nla nla nla

Mr Robert Anderson until 15/09/06 5-10 nla nla nla nla

Mr Stuart Smith, Chairman UHD 20-25 nla nla nla nla

Mr Robin Burley, Chairman PCO 15-20 nla nla nla nla

Mr Bill Bennett - deceased 0-5 nla nla nla nla

Mr Eddie Egan, Employee Direclor' 60-65 0.0-2.5 15-20 343 314

Mrs Pal Murray, Chair of lothian Area Clinical Forum' 80-85 0.0-2.5 20-25 138 149

Dr Ian McKay, Clinical Director, Edinburgh CHP' 95-100 7.5-10.0 20-25 98 166

Prof John Savill, Head of College of Medicine - UoE 5-10 nla nla nla nla Cllr lain Whyte 5-10 nla nla nla nla

Cllr Kingsley Thomas, City of Edinburgh Council 15-20 nla nla nla nla

Cllr Graeme Morrice, West lothian Council 10-15 nla nla nla nla

Cllr Ann Me Carthy, East lothian Council 15-20 nla nla nla nla

Cllr Daniel Molloy, Midlothian Council 10-15 nla nla nla nla

Mr David Belfall 10-15 nla nla nla nla

Mr Slephen Renwick 5-10 nla nla nla nla

Ms lesley Jamie 5-10 nla nla nla nla

Mrs Erica Hughes until 30106/06 0-5 nla nla nla nla

Mr David Crichton 5-10 nla nla nla nla

Mrs Theresa Douglas from 01/07106 5-10 nla nla nla nla

Dr Alison Tierney from 01/07106 5-10 nla nla nla nla

Dr Rebecca Strachan from 01/07106 5-10 nla nla nla nla

Other Senior Employees Mr David Kelly, Director, West lothian CHCps

70-75 nla nla nla nla

Mr David White, General Manager, East lothian CHP 65-70 0.0-2.5 10-15 159 174 Mr Gerry Power, General Manager, Midlothian CHP 65-70 0.0-2.5 15-20 226 252

Mr David A Small, General Manager, Edinburgh CHP 75-80 0.0-2.5 15-20 224 251

Total 6514 7117

1 50% of the costs for Peter Gabbitas are charged to the City of Edinburgh Council. , Eddie Egan's salary includes £56,000 in respect of non-board duties. a Pat Murray's salary includes £74,000 in respect of non-board duties. , Dr Ian McKay's salary includes £89,000 in respect of non-board duties. 5 50% of the costs for David Kelty are charged by West lothian Council. David Kelly is in the Council Pension Scheme.

Real increase in CETV in Benefits in year Kind

£'000 £'000

-15 11

14

-29 3

22 o 21 3

22

22 4

3 3

53 o 62 2

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

-41

o 55 o nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

nla nla

4 1

10 1

12 o

215 36

23

3. Remuneration Committee

The remit of the NHS Lothian Remuneration Committee is to review the performance management and pay arrangements for the Chief Executive, executive directors and senior managers within NHS Lothian.

Committee Membership:

Dr Charles Winstanley (Chair) Mr Stuart Smith (until 31st January 2008) Mr Robert Anderson Ms Lesley Jamie Mr Robin Burley Mr Eddie Egan

-i !

During 2007/08 the Remuneration Committee met four times.

4. Senior Managers' Remuneration

The NHS Lothian policy on senior managers' remuneration is in line with MEL (2000)25 and subsequent guidance, with particular reference to HDL (2006)23 and HDL (2006)59.

The Board operates an appraisal system for all staff where personal development plans and objectives are agreed. Performance is assessed at half-yearly and at annual appraisals. Appraisals of Executive Directors are done by the Chief Executive. Appraisal of the Chief Executive is carried out by the Chairman. Outstanding Performance Awards are robustly reviewed and approved by the Remuneration Committee. The Committee also approves the individual objectives and assessment of those objectives of the Executive Directors within NHS Lothian.

By order of the board

25- June 2008(::1:-11.. ... ... .... ... .... hie! Executive

....'

24 . !

NHS LOTHIAN

ANNUAL ACCOUNTS 2007/08

STATEMENT OF THE CHIEF EXECUTIVE'S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OFTHE HEALTH BOARD

Under Section 15 of the Public Finance and Accountability (Scotland) Act, 2000, the Principal Accountable Officer (PAO) of the Scottish Government has appointed me as the Accountable Officer of Lothian Health Board.

This designation carries with it responsibility for the propriety and regularity of financial transactions under my control, for the economical, efficient and effective use of resources placed at the Board's disposal, and the safeguarding of the assets of the Board.

In preparing the accounts I am required to comply with the requirements of the Government's Financial Reporting Manual (FReM) and in particular to:

• Observe the accounts direction issued by Scottish ministers including the relevant accounting and disclosure requirements and apply suitable accounting policies on a consistent basis.

• Make judgements and estimates on a reasonable basis

• State whether applicable accounting standards as set out in the FReM have been followed and disclose and explain any material departures

• Prepare the accounts on a going concern basis.

I am responsible for ensuring proper records are maintained and that the Accounts are prepared under the principles and in the format directed by Scottish Ministers. To the best of my knowledge and belief, I have properly discharged my responsibilities as accountable officer as intimated in the Departmental Accountable Officer's letter to me of the 29 August 2001.

By order of the board

.... ~.....Chief Executive

25

NHS LOTHIAN

ANNUAL ACCOUNTS 2007/08

STATEMENT OF HEALTH BOARD MEMBERS' RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS

Under the National Health Service (Scotland) Act 1978, the Health Board is required to prepare Accounts in accordance with the directions of Scottish Ministers which require that those Accounts give a true and fair view of the state of affairs of the Health Board as at 31 March 2008 and of its operating costs for the year then ended. In preparing these Accounts the Directors are required to:

• Apply on a consistent basis the accounting policies and standards approved for the NHS Scotland by Scottish Ministers.

• Make judgements and estimates that are reasonable and prudent.

• State where applicable accounting standards, as set out in the FReM, have not been followed where the effect of the departure is material.

• Prepare the Accounts on the going concern basis unless it is inappropriate to presume that the Board will continue to operate.

The Health Board members are responsible for ensuring that proper accounting records are maintained which disclose with reasonable accuracy at any time the financial position of the Board and enable them to ensure that the Accounts comply with the National Health Service (Scotland) Act 1978 and the requirements of the Scottish Government Health Directorate (SGHD). They are also responsible for safeguarding the assets of the Board and hence taking reasonable steps for the prevention of fraud and other irregularities.

The NHS Board me bers confirm they have discharged the above responsibilities during the financial

year and in prepar" ')Ih:Ar?" Is.

; ~U --­Director of Finance

Chairman

Date zs" June 2008

26

STATEMENT ON INTERNAL CONTROL

As Accountable Officer, I have responsibility for maintaining a sound system of internal control that supports the achievement of the organisation's policies, aims and objectives, set by Scottish Ministers, whilst safeguarding the public funds and assets for which I am personally responsible, in accordance with the responsibilities assigned to me.

Purpose of the System of Internal Control

The system of internal control is designed to manage rather than eliminate the risk of failure to achieve the organisation's policies, aims and objectives; it can therefore only provide reasonable and not absolute assurance of effectiveness.

The system of internal control is based on an ongoing process designed to identify and mitigate the principal risk to the achievement of the organisation's policies, aims and objectives, to evaluate the nature and extent of those risks and to manage them efficiently, effectively and economically. This process has been in place throughout the year ended 31 March 2008 and up to the date of approval of the annual report and accounts and accords with guidance from Scottish Government Health Directorate (SGHD).

Risk and Control Framework

As Accountable Officer I also have responsibility for reviewing the effectiveness of the system of internal control. The following processes have been established to inform my review of the effectiveness of the system of internal control.

The Lothian NHS Board meets regularly to develop and monitor its plans and strategic direction. The Board comprises the Chair and Chief Executive of NHS Lothian, non-Executive Board Members, and the Executive Directors of the organisation (including the Director of Acute Services of the University Hospitals Division (UHD) and, until 31 March 2008, the Director of Health and Social Care of City of Edinburgh Council).

The Primary and Community Partnership Committee (PCPC) supports integration across health and other agencies, and enable the CHPs and CHCP to coordinate and influence Lothian wide strategy and decision-making.

The Executive Directors of the Board and the CHCP and CHP General Managers meet on a fortnightly basis as the Executive Management Team to progress the delivery of the Board's agenda alternating between reviewing performance against key targets and a general business meeting. I also review performance and service delivery issues on a regular basis with each of my direct reports.

Lothian I\JHS Board has an established Finance and Performance Review Committee, which met seven times during the year ended 31st March 2008. This committee enables detailed consideration and discussion to take place on delivering financial and other performance targets, and ensuring value for money is achieved; including review of business cases to assist in informing the decisions of the Board. The operation of this committee has been recognised as good practice by Audit Scotland.

The Board has established a Performance Management Review system throughout NHS Lothian. This enables the Board to review performance against the requirements of the Local Delivery Plan, HEAT targets, and other aspects of organisational performance. This has been enhanced by the introduction of the MIDAS (Management Information Dissemination and Action System) reporting suite.

The Staff Governance Committee met four times during the year, continually assessing NHS Lothian's compliance with the NHS Scotland Staff Governance standards. The Committee also took forward and reviewed work on workforce planning, sickness absence management, the delivery of Pay modernisation benefits, and the updating of HR policies and procedures. Its remuneration sub­committee met on four occasions in its specific role to:

• Approve performance appraisal assessments for senior managers; • Consider any redundancy, retirement or termination arrangements in respect of NHS Lothian staff

and;

27

• Approve discretionary points to eligible specialist medical and dental staff based on competent recommendations from appropriate advisory bodies.

An established joint board of governance together with City of Edinburgh Council takes forward matters of mutual concern and interest on health and social care issues, with particular reference to the areas of child protection and vulnerable adults, which are standing items on the agenda. Policies are implemented through a joint appointment of a Director of Health and Social Care. The operation of the West Lothian Community Health & Care Partnership is subject to a similar approach with joint representation by NHS Lothian and West Lothian Council. Legal processes to complete the partnership agreement have yet to be finalised, but NHS Lothian has operated within the terms of the agreement. During the year management of the East Lothian and Midlothian CHPs was integrated.

The system of internal financial control is based on a framework of regular management information, administrative procedures and a system of delegation and accountability. In particular it includes:

• Comprehensive budgeting systems with an annual budget signed off by the Board, with a specific focus on public value

• Regular reviews by the Board and executive directors of periodic and annual financial reports, which indicate financial performance against forecasts

• Targets set to measure financial and other performance information, including cash releasing efficiency targets

• Clearly defined capital investment control guidelines • Formal capital project management disciplines • Regularly reviewed and updated standing orders, scheme of delegation and standing financial

instructions which were last updated and approved in August 2007. • Procedures within the finance department that continue to be documented and the operation of key

financial controls, which are reviewed by internal audit following update and implementation. • A quarterly review of the Corporate Risk Register.

The Internal Audit function provides the Board with regular reports together with recommendations for improvement. In addition the Chief Internal Auditor provides an annual report which includes his independent opinion on the adequacy and effectiveness of the system of intemal control across NHS Lothian. External Auditors have carried out a review of the internal audit function and have concluded that the function operates generally in accordance with the NHS Internal Audit standards.

The NHS Lothian Audit Committee met six times during the period ended 31st March 2008, supported by regular meetings of its Operational Audit Committee. The Operational Audit Committee was established in April 2007 to take forward detailed operational control issues formerly handled by the two divisional audit sub-committees. The NHS Lothian Audit Committee operates in line with the requirements of the NHS Scotland Audit Committee handbook.

The Chair of the Audit Committee submits an annual Statement of Audit Assurance to the Board. The Audit Committee routinely invites management to its meetings when audit reports from the managers' areas of responsibility are being considered.

The Healthcare Governance and Risk Management Committee met on a monthly basis during 2007/08. This committee provides assurance to the Board regarding the discharge of its responsibilities in respect of Clinical Governance, including the adoption of Scottish Inter-collegiate Guideline Network (SIGN) guidelines in the improvements to clinical practice. The Committee reviewed updates to the Risk Register, arrangements for Emergency Planning, Critical Incident Policies, Health & Safety matters and Business Continuity planning. Risk awareness sessions and prioritisation methodologies based on risk ranking and cost benefit analyses continue to improve the effectiveness of operational and clinical controls. This will assist progress to fully implement the NHS Quality Improvement Scotland (QIS) Standards.

The Chairs of the Staff Governance, Healthcare Governance and Risk Management and Financial & Performance Review Committees attend the Audit Committee. Minutes of all committees are also shared to further strengthen the overall governance controls on crosscutting issues. Annual reports from these committees inform the Board of its overall compliance with corporate govemance standards within NHS Scotland.

The minutes from all sub-committee meetings are reviewed and approved by the Board.

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The Board has in place a procedure for identification and communication of legislation, NHS Circulars and other guidance documents. The Board maintains a central register of documents circulated to appropriate staff for information and action.

A performance appraisal system is in place for all staff with personal objectives and development plans designed to support the Board in the attainment of corporate objectives approved by the Board.

Review of Effectiveness

My review of the effectiveness of the system of internal control for 2007/08 has continued to be informed by certification on internal controls by Director and General Management direct reports to the Chief Executive. This process became part of mandatory guidance for NHS Scotland from SGHD during 2007/08. The Chief Internal Auditor continues to lead the work on compliance with the system of control. This work is directed through an audit plan agreed by the Audit Committee and focuses on perceived control risk areas. Variations from the audit plan in year are reviewed and approved by the Audit Committee.

NHS Lothian has also been proactive in driving forward the use of LEAN methodology in delivering process redesign and enhancing productivity in areas such as diagnostics.

Highlighted in the previous statements on Internal Control were actions required to improve the control environment. Detailed below are updates on these actions that were outstanding at 31st March 2007. The Audit Committee and the Executive Management Team regularly monitor progress with implementation of audit recommendations from both internal and external auditors, including those carried forward from previous years.

During 2007/08 the Records Management Strategy was further developed by the Board's information management steering group with Partnership Forum support and completed in October 2007. A records retention policy to support this was approved by the Board in January 2008.

Work to enhance the control over payroll payments to junior doctors was completed by end of July 2007. Monitoring of the position is continuous with regular updates to senior managers in clinical management teams. Overpayment levels year on year have been reduced by 45% and 80%'. of prior year overpayments have been recovered. Only 2 doctor training rotas within NHS Lothian' remain non­compliant to European working time Directive regulations. All directorates will be compliant by August 2009.

Roll out of the NHS Lothian Northgate/Empower HR system was completed by November 2007.

The NHS Lothian Emergency Planning Strategic Advisory Group completed its work to formalise emergency planning arrangements within NHS Lothian in November 2007. This incorporated the role and responsibilities of the CHP/CHCP organisations and the Royal Edinburgh Hospital and Associated Services (REAS) elements of the former Primary Care Organisation. The planning arrangements are currently being subjected to an update review. The testing of the robustness of the Major Incidence Plans within the CHPs, CHCP and REAS remains outstanding with particular emphasis on the co­ordination of work with local authorities. NHS Lothian will progress this to completion by August 2008.

2007/08 issues

For issues highlighted by internal and external auditors in 2007/08, a plan is in place to address weaknesses and continuously monitor implementation. Two unsatisfactory internal audit opinions were received as part of the 2007/08 internal audit programme. These related to capital project management arrangements on developments at the Prosthetic Bioengineering, Wheelchair and Associated Services facility at Astley Ainslie Hospital and the Cancer Centre Development at the Western General Hospital. The reports highlighted in particular the need for regular and clear project cost and progress reports and a clear role for the project sponsors. The follow up actions on more effective project management arrangements for the capital programme are to be reported to the Audit Committee in August 2008. "

The Practitioner Services Division (PSD) of NHS National Services Scotland has responsibility for calculating and making payments to Primary Care practitioners on behalf of NHS Boards. Assurance has been provided from the NHS National Services Scotland Service Auditor that no business critical issues have been identified from their work during 2007/08.

29

My review of the effectiveness of the system of internal control is informed by the work of the internal auditors and the Executive Directors and managers within the organisation, who have responsibility for the development and maintenance of the internal control framework, and comments made by the ext rnal auditors in their management letters and other reports.

.. . ... .. ... ...~.....Chief Executive 25th June 2008

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Independent auditor's report to the members of Lothian Health Board, the Auditor General for Scotland and the Scottish Parliament

I have audited the financial statements of Lothian Health Board for the year ended 31 March 2008 under the National Health Service (Scotland) Act 1978. These comprise the Operating Cost Statement and Statement of Recognised Gains and Losses, the Balance Sheet, the Cash Flow Statement and the related notes. These financial statements have been prepared under the accounting policies set out within them. I have also audited the information in the Remuneration Report that is described in that report as having been audited.

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 123 of the Code of Audit Practice approved by the Auditor General for Scotland, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Respective responsibilities of the board, Accountable Officer and auditor

The board and Accountable Officer are responsible for preparing the Annual Report, which includes the Remuneration Report, and the financial statements in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder by the Scottish Ministers. The Accountable Officer is also responsible for ensuring the regularity of expenditure and income. These responsibilities are set out in the Statement of the Chief Executive's Responsibilities as the Accountable Officer of the Health Board.

My responsibility is to audit the financial statements and the part of the Remuneration Report to be audited in accordance with relevant legal and regulatory requirements and with International Standards on Auditing (UK and Ireland) as required by the Code of Audit Practice approved by the Auditor General for Scotland.

I report to you my opinion as to whether the financial statements give a true and fair view and whether the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder by the Scottish Ministers. I report to you whether, in my opinion, the information which comprises the directors' report and that part of the operating and financial review which covers principal activities and financial performance and position, included in the Annual Report, is consistent with the financial statements. I also report whether in all material respects the expenditure and income shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.

In addition, I report to you if, in my opinion, the body has not kept proper accounting records, if I have not received all the information and explanations I require for my audit, or if information specified by relevant authorities regarding remuneration and other transactions is not disclosed.

I review whether the Statement on Internal Control reflects the board's compliance with the Scottish Government Health Directorate's guidance, and I report if, in my opinion, it does not. I am not required to consider whether this statement covers all risks and controls, or form an opinion on the effectiveness of the body's corporate governance procedures or its risk and control procedures.

I read the other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises only those elements of the operating and financial review other than principal activities and financial performance and position and that part of the remuneration report which is not subject to audit. I consider the implications for my report if I become aware of any apparent misstatements or material inconsistencies with the financial statements. My responsibilities do not extend to any other information.

Basis of audit opinion

I conducted my audit in accordance with the Public Finance and Accountability (Scotland) Act 2000 and International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board as required by the Code of Audit Practice approved by the Auditor General for Scotland. My audit includes examination, on a test basis, of evidence relevant to the amounts, disclosures and regularity of expenditure and income included in the financial statements and the part of the Remuneration Report to be audited. It also includes an assessment of the significant estimates and judgements made by the board and Accountable Officer in the preparation of the

31

financial statements, and of whether the accounting policies are most appropriate to the body's circumstances, consistently applied and adequately disclosed.

I planned and performed my audit so as to obtain all the information and explanations which I considered necessary in order to provide me with sufficient evidence to give reasonable assurance that the financial statements and the part of the Remuneration Report to be audited are free from material misstatement, whether caused by fraud or error, and that in all material respects the expenditure and income shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers. In forming my opinion I also evaluated the overall adequacy of the presentation of information in the financial statements and the part of the Remuneration Report to be audited.

Opinions

Financial statements

In my opinion

• the financial statements give a true and fair view, in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder by the Scottish Ministers, of the state of affairs of the board as at 31 March 2008 and of its net operating cost position, recognised gains and losses and cash flows for the year then ended;

• the financial statements and the part of the Remuneration Report to be audited have been properly prepared in accordance with the National Health Service (Scotland) Act 1978 and directions made thereunder by the Scottish Ministers; and

• information which comprises the directors' report and that part of the operating and financial review which covers principal activities and financial performance and position included in the Annual Report is consistent with the financial statements.

Regularity

In my opinion in all material respects the expenditure and income shown in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers.

Gillian Woolman Assistant Director Audit Scotland Osborne House 1/5 Osborne Terrace EDINBURGH EH125HG

June 2008

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NHS LOTHIAN

OPERATING COST STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

Note 2008

£'000 2008

£'000 2007

£'000

Clinical Service Costs Hospital and Community Less: Hospital and Community Income

4 8

1,070,907 186,045

884,862

1,028,132 169,824 858,308

Family Health Service Less: Family Health Service Income

5 8

311,465 15,971

295,494

300,842 15,431

285,411

Total Clinical Services Costs 1,180,356 1,143,719

Administration Costs Less: Administration Income

Other Non Clinical Services Less: Other Operating Income

6 8

7 8

8,036 0

15,451 41,317

8,036

(25,866)

7,579 0

7,579 14,896 60,330 (45,434)

Net Operating Costs 19 1,162,526 1,105,864

SUMMARY OF REVENUE RESOURCE OUTTURN Net Operating Costs (per above) Less: Capital Grants to Public Bodies Less: FHS Non Discretionary Allocation Less: Other Allocations

9

£'000

1,162,526 (12,993) (65,505) (4,332)

£'000

1,105,864 (18,241) (59,360)

0

Net Resource Outturn Revenue Resource Limit Saving against Revenue Resource Limit

1,079,696 1,080,060

364

1,028,263 1,032,897

4,634

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NHS LOTHIAN

STATEMENT OF RECOGNISED GAINS AND LOSSES . i

FOR THE YEAR ENDED 31 MARCH 2008 !

2008 2007

Note £'000 £'000

Net gain/(Ioss) on revaluation of tangible fixed assets 11 11,620 4,067

Net gain/(Ioss) on revaluation of intangible fixed assets 10 0 (177)

Movement in Donated Asset Reserve due to receipts 20 460 1,628

Total recognised gains and (losses) for the year 12,080 5,518

i .

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NHS LOTHIAN

BALANCE SHEET

AS AT 31 MARCH 2008

FIXED ASSETS Intangible Fixed Assets Tangible Fixed Assets Total Fixed Assets

Debtors falling due after more than 1 year

CURRENT ASSETS Stocks Debtors Investments Cash at bank and in hand

CURRENT LIABILITIES Creditors due within 1 year

Net current assets/(Iiabilities)

Total assets less current liabilities

CREDITORS DUE AFTER MORE THAN 1 YEAR

PROVISIONS FOR LIABILITIES AND CHARGES

FINANCED BY: General Fund Revaluation Reserve Donated Asset Reserve

Note

10 11

13

12 13 14 15

16

16

17

19 20 20

2008 2007

£'000 £'000

689,284

1,900 682,962 684,862

17,204 6,658

14,883 112,957

1 5,964

133,805

(159,599 )

(92,952) (25,794 )

613,536 665,726

(182,258 )

(49,046 )

(229,419) (231,304 )

384,117 434,422

217,723 279,117 148,796 139,499

17,598 15,806

384,117 434,422

2008

£'000

3,988 685,296

13,382 68,832

1 651

82,866

(175,818)

(181,178)

(48,241 )

The No~ . to the Accounts, numbered 1 to 26, form an integral part of these Accounts.

35

NHS LOTHIAN

CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2008

2008

Note £'000

NET OPERATING CASHFLOW Net cash outflow from operating activities

CAPITAL EXPENDITURE Payment to acquire fixed assets Receipts from sales of fixed assets

(28,985) 2,313

Net cash (outflow) for capital expenditure

Net cash (outflow) before financing

FINANCING Funding Movement in general fund working capital

19 19

1,087,415 (5,313)

Cash drawn down Capital element of finance lease and PFI payments

1,082,102 1,052

Net cash inflow from financing

Increase/(decrease) in cash in year

NOTES 1. Reconciliation of operating cost to operating cash flow Net operating cost for the year Expenditure not involving payment of cash Net movement on working capital

3 18

Operating cash outflow

2. Reconciliation of net cash flow to movement in netdebtlcash Increase/(decrease) in cash in year Net cash at 1 April 15

Net cash at 31 March 15

2008

£'000

2007

£'000

(1,061,795) (1,084,232)

(33,859) 5,824

(26,672) (28,035)

(1,088,467) (1,112,267)

1,110,025 5,005

1,115,030 2,242

1,083,154

(5,313)

1,117,272

5,005

(1,162,526) 47,265 53,466

(1,061,795)

(1,105,864) 28,546 (6,914)

(1,084,232)

(5,313) 5,964

5,005 959

651 5,964

36

1.

1.

2.

3.

4.

i , l .. ­

5.

, . r

NHS LOTHIAN

NOTE TO THE ACCOUNTS

FOR YEAR ENDED 31 MARCH 2008

ACCOUNTING POLICIES

Authority

The Accounts have been prepared in accordance with the Financial Reporting Manual (FReM) issued by HM Treasury. The particular accounting policies adopted by the Health Board follow UK generally accepted accounting practice (UK GAAP), as applied to the public sector in the FReM to the extent that they are appropriate and are described below. They have been applied consistently in dealing with items considered material in relation to the Accounts.

Going Concern

The Accounts are prepared on the going concern basis, which provides that the entity will continue in operational existence for the foreseeable future.

Accounting Convention

The Accounts are prepared on a historical cost basis modified to reflect changes in the value of fixed assets at their value to the business by reference to their current costs.

Funding

Most of the expenditure of the Health Board as Commissioner is met from funds advanced by the Scottish Government Health Directorate (SGHD) within an approved revenue resource limit (RRL). Cash drawn down to fund expenditure within this approved RRL is credited to the general fund.

All other income receivable by the board that is not classed as funding is recognised in the period in which it is receivable.

Non discretionary funding out-with the RRL is allocated to match actual expenditure incurred for the provision of specific pharmaceutical, dental or ophthalmic services identified by the Scottish Government. . Non discretionary expenditure is disclosed in the Accounts and deducted from operating costs charged against the RRL in the Statement of Resource Outturn.

Funding for the acquisition of fixed assets received from the Scottish Government Health Directorate is credited to the general fund when cash is drawn down.

Fixed Assets

The treatment of fixed assets in the Accounts (capitalisation, valuation, depreciation, particulars concerning donated assets) is in accordance with the t\lHS Capital Accounting Manual.

Title to properties included in the Accounts is held by Scottish Ministers.

5.1 Capitalisation

All assets falling into the following categories are capitalised:

1) Tangible assets which are capable of being used for a period which could exceed one year, and have a cost equal to or greater than £5,000.

2) In cases where a new hospital would face an exceptional write off of items of equipment costing individually less than £5,000, the Board has the option to capitalise initial revenue equipment costs with a standard life of 10 years.

37

3) Assets of lesser value may be capitalised where they form part of a group of similar assets purchased at approximately the same time and cost over £20,000 in total, or where they are part of the initial costs of equipping a new development and total over £20,000.

4) Intangible assets which can be valued, are capable of being used in a Board's activities for more than one year and have a replacement cost equal to or greater than £5,000.

5.2 Valuation

Fixed assets are valued as follows:

Specialised NHS Land, buildings, installations and fittings are stated at depreciated replacement cost basis for their existing use, other than surplus land and buildings which are stated at open market value for their alternative use. Non specialised land and buildings, such as offices, are stated at the lower of their replacement cost or recoverable amount.

Valuations of all land and building assets are re-assessed by valuers at each year and adjusted up to 31 March in each year to take account of movements in prices since the valuation. The valuations are carried out in accordance with the Royal Institute of Chartered Surveyors (RICS) Appraisal and Valuation Manual insofar as these terms are consistent with the agreed requirements of the Scottish Government Health Directorate.

Equipment is valued at the lower of its net replacement cost or the recoverable amount. The net replacement cost is the replacement cost of the asset as new depreciated in respect of its remaining useful life. The recoverable amount will only be used when the decision has been made to dispose of the asset.

Assets in the course of construction are valued at current cost. This is calculated on the expenditure incurred to which an appropriate index is applied to arrive at current value.

To meet the underlying objectives established by the Scottish Government Health Directorate, the following accepted variations of the RICS Appraisal and Valuation Manual have been required:

Specialised operational assets have been valued on a modified replacement cost basis to take account of modern substitute building materials only.

No adjustment has been made to the cost figures of specialised operational assets in respect of dilapidations; and

Additional alternative Open Market Value figures have only been supplied for specialised operational assets scheduled for imminent closure and subsequent disposal.

Impairment:

Losses in value reflected in valuations are described as impairments. These are accounted for in accordance with Financial Reporting Standard 11. Where these relate to the consumption of economic benefits, they are charged to the operating cost statement. Where these relate to fluctuations in market prices, or where the reason for impairment is uncertain, these are first charged to the element of the revaluation reserve relating to the asset, and part of the loss is recognised in the Statement of Recognised Gains and Losses. Further losses, beyond the level of the revaluation reserve relating to that asset, are charged to the operating cost statement except where it is anticipated that the reduction in value will reverse in the foreseeable future.

38

5.3 Depreciation

Depreciation is charged on each main class of tangible asset as follows:

1) Freehold land and assets in the course of construction are not depreciated.

2) Buildings, installations and fittings are depreciated on their current value over the assessed remaining life of the asset as advised by the appointed valuer. The actual remaining lives of the building elements are assessed on the context of the maximum useful lives for building elements.

3) Equipment is depreciated over the estimated life of the asset.

Depreciation is charged on a straight line basis.

The following asset lives have been used:

Asset Category/Component Useful Life

Buildings - Structural 5-40 years Buildings - Engineering 15-35 years Vehicles 7 years Furniture 10 years Office & IT Equipment 5-8 years

Tangible assets, with a life of more than one year and cost greater than £5k, and intangible assets, are amortised over the estimated lives of the assets.

5.4 Donated Assets

Fixed assets that are donated or purchased using donated funds are included in the Balance Sheet initially at the full replacement cost of the asset. The value of donated assets is credited to the donation reserve, and the accounting treatment, including the method of valuation, follows the rules in the NHS Capital Accounting Manual. Where a donation covers only part of the total cost of the asset concerned, only that part element is included in the Donated Asset Reserve.

5.5 Sale of Fixed Assets

Disposal of fixed assets is accounted for as a reduction to the value of fixed assets equal to the net book value of the assets disposed. When set against any sales proceeds, the resulting gain or loss on disposal will be recorded in the Operating Cost Statement.

Where. assets are scheduled for disposal and their net book value exceeds their open market value, accelerated depreciation is applied so that the asset reaches open market value at the point at which the asset is taken out of operational use.

5.6 Leasing

Assets held under finance leases are capitalised at the fair value of the asset with an equivalent liability categorised as appropriate under creditors due within or after more than one year. The asset is subject to indexation and revaluation and is depreciated on its current fair value over the shorter of the lease term and its useful economic life. Finance charges are allocated to accounting periods over the period of

.. the lease so as to produce a constant periodic rate of charge on the remaining balance of the obligation ,

for each accounting period, or a reasonable approximation thereto.

Rentals under operating leases are charged on a straight-line basis.

5.7 Intangible Assets

Intangible assets, such as software licences, are capitalised when they are capable of being used in a Board's activities for more than one year, they can be valued and they have a cost of at least £5,000.

39

Intangible fixed assets held for operational use are valued at historical cost and are depreciated over the estimated life of the asset on a straight line basis. The carrying value of intangible assets is reviewed for impairments at the end of the first full year following acquisition and in other periods if events or changes in circumstances indicate the carrying value may not be recoverable.

Purchased computer software licences are capitalised as intangible fixed assets where expenditure of at least £5,000 is incurred. They are amortised over the shorter term of the licence and their useful economic lives.

5.8 Carbon Emissions (Intangible Assets)

A cap and trade scheme gives rise to an asset for allowances held, a government grant (income) and a liability for the obligation to deliver allowances equal to emissions that have been made.

Intangible Assets, such as EU Greenhouse Gas Emission Allowances intended to be held for use on a continuing basis whether allocated by government or purchased are classified as intangible assets. Allowances that are issued for less than their fair value are measured initially at their fair value.

When allowances are issued for less than their fair value, the difference between the amount paid and fair value is revaluation and charged to deferred income. The deferred income account is charged with the same proportion of the amount of the revaluation, which the amount of the grant bears to the acquisition cost of the asset.

A provision is recognised for the obligation to deliver allowances equal to emissions that have been made. It is measured at the best estimate of the expenditure required to settle the present obligation at the balance sheet date. This will usually be the present market price of the number of allowances required to cover emissions made up to the balance sheet date.

6. Research and Development

Expenditure on Research and Development is written off to revenue as it is incurred, except insofar as it relates to a clearly defined project, for which related expenditure is separately identifiable, the outcome of the project has been assessed with reasonable certainty as to its technical feasibility and affordability in the context of the Health Board's operations, and adequate resources exist, or are reasonably expected to be available, to enable the project to be completed and to provide any consequential increases in working capital; the benefits from which can reasonably be regarded as assured. Expenditure so deferred is limited to the value of future benefits and is amortised through the operating cost statement on a systematic basis over the period expected to benefit from the project.

7. Debtors and Creditors

Debtors and Creditors have been assessed on the basis of goods and services supplied or received up to and including 31 March 2008 for which payment had not been received or made by that date. Where the Health Board has a positive net cash book balance at the year end, a corresponding creditor is created and the general fund debited with the same amount to indicate that this cash is repayable to the SGHD. Where the Health Board has a net overdrawn cash position at the year end, a corresponding debtor is created and the general fund credited with the same amount to indicate that additional cash is to be drawn down from the SGHD.

8. Stocks

Taking into account the high turnover of NHS stocks, the use of average purchase price is deemed to represent the lower of cost and net realisable value. Work in progress is valued at the cost of the direct materials plus the conversion costs incurred to bring the goods up to their present degree of completion.

9. Losses and Special Payments

Operating expenditure includes certain losses which would have been made good through insurance cover had the NHS not been bearing its own risks. Had the NHS provided insurance cover, the insurance premiums would have been included as normal revenue expenditure.

40

10. Pension Costs

The Board participates in the NHS Superannuation Scheme for Scotland, providing benefits based on final pensionable pay. The assets and liabilities of the scheme are held separately from those of the Board. Contributions to this Scheme and other schemes are determined on the basis of recommendations made by the Government Actuary. The Board is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS 17 "Retirement Benefits", accounts for the scheme as if it were a defined contribution scheme. As a result the amount charged to the operating cost statement represents, primarily, the contributions payable to the scheme in respect of the year.

11. Clinical and Medical Negligence Costs

Health bodies in Scotland are responsible for meeting medical negligence costs up to an annual limit based on the revenue resource limit. Costs above this limit are reimbursed to NHS Boards from a central fund held by the Clinical Negligence and Other Risks Indemnity Scheme (CNORIS) on behalf of

. the Scottish Government Health Directorate. Clinical negligence costs may also be reimbursed in part by the Scottish Government Health Directorate.

12. Related Party Transactions

Material related party transactions are disclosed in the Directors' Report in line with the requirements of FRS 8. Transactions with other NHS bodies for the commissioning of health care are summarised in note 4.

13. Value Added Tax

Most of the activities of the Board are outside the scope of VAT and, in general, output tax does not apply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevant expenditure category or included in the capitalised purchase cost of fixed assets. Where output tax is charged or input VAT is recoverable, the amounts are stated net of VAT.

14. PFISchemes

The NHS follows HM Treasury's Technical Note 1 (Revised) 'How to Account for PFI Transactions' which provides practical guidance for the application of the FRS 5 amendment.

Where the balance of the risks and rewards of ownership of the PFI property are borne by the PFI operator, the PFI payments are recorded as an operating expense. Where the Board has contributed assets, a prepayment for their fair value is recognised and amortised over the life of the PFI contract by charge to the Operating Cost Statement. Where, at the end of the PFI contract, a property reverts to the Board, the difference between the expected fair value of the residual on reversion and any agreed payment on reversion is built up on the balance sheet over the life of the contract by capitalising part of the unitary charge each year.

Where the balance of risks and rewards of ownership of the PFI property are borne by the Board, it is recognised as a fixed asset along with the liability to pay for it which is accounted for as a finance lease. Contract payments are apportioned between an imputed finance lease and a service charge.

15. Provisions

The Board provides for legal or constructive obligations that are of uncertain timing or amount at the balance sheet date on the basis of the best estimate of the expenditure required to settle the obligation. Where the effect of the time value of money is significant, the estimated cash flows are discounted using the discount rate prescribed by HM Treasury.

41

16. CorrespondingAmounts

Corresponding amounts are shown for the primary statements and notes to the financial statements. Where the corresponding amounts are not directly comparable with the amount to be shown in respect of the current financial year, FRS 28 'corresponding amounts' requires that they should be adjusted and the basis for adjustment disclosed in a note to the financial statements.

i --,

42

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

2. (a) STAFF NUMBERS AND COSTS

STAFF COSTS Salaries & Wages Social security costs NHS scheme employers' costs Other employers' pension costs Inward secondees Agency staff

Compensation for loss of office Pensions to former board members

TOTAL

STAFF NUMBERS

8K~W

B~~

Membe~

~OOO

Non Executive Members

£'000

Permanent Staff

£'000

Inward Secondees

£'000

1,299 146 170

0 0 0

1,615 0

214 15 0 0 8 0

237 0

558,755 45,901 65,583

0 0 0

670,239 0

0 0 0 0

571 0

571 0

o 1,615

0 237

0 670,239

0 571

(EMPLOYEES BY WHOLE TIME EQUIVALENT)

Administration Hospital and Community Services Non Clinical Services Inward Secondees Outward Secondees

Board Total Average Staff

Disabled staff Note: Staff pension benefits are provided through the NHS Superannuation Scheme for Scotland.

Other Staff Outward Secondees

2008 Total

2007

£'000 £'000 £'000 £'000

0 0 0 0 0

13,794 13,794

0

(2,548) 0 0 0 0

(0) (2,548)

0

557,720 46,062 65,753

0 579

13,794 683,908

0

529,732 44,349 61,595

0 1,928

17,588 655,192

0 0

0 13,794

0 (2,548)

0 683,908 655,192

2008 ANNUAL

MEAN

2007 ANNUAL

MEAN

110.1 19,558.1

120.2 15.0

(65.5)

109.4 18,737.2

130.5 0.0 0.0

19,737.9 ~977.1

Details of the scheme in note 26 107.6 64.0

43

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

2. (b) HIGHER PAID EMPLOYEES REMUNERATION

2008 2007

Number Number

Other employees whose remuneration fell within the following ranges: Clinicians £50,000 to £60,000 217 211 £60,001 to £70,000 148 165 £70,001 to £80,000 114 119 £80,001 to £90,000 96 65 £90,001 to £100,000 90 109 £100,001 to £110,000 113 127 £110,001 to £120,000 77 61 £120,001 to £130,000 54 47 £130,001 to £140,000 51 42 £140,001 to £150,000 30 25 £150,001 and above 57 50

Other £50,000 to £60,000 79 39 £60,001 to £70,000 42 17 £70,001 to £80,000 12 3 £80,001 to £90,000 6 9 £90,001 to £100,000 6 0 £100,00~ to £110,000 1 0 £110,001 to £120,000 0 0 £120,001 to £130,000 0 0 £130,001 to £140,000 0 0 £140,001 to £150,000 1 0 £150,001 and above 0 0

44

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

3. OTHER OPERATING COSTS

2008 2007

Note £'000 £'000

Expenditure Not Paid in Cash

Depreciation 11 29,216 24,890 Cost of Capital 19 13,717 14,181 Impairment Charge 11 4,332 2 Impairment Reversal 0 0 Revaluation loss/(gain) on fixed assets charged to OCS 0 0 Revaluation EC Carbon Emissions taken to Govt Grant 0 177 Loss/(Profit) on disposal of intangible fixed assets 0 0 Loss/(Profit) on disposal of purchased fixed assets 0 (10,716 ) Other non cash costs 0 12 Total Expenditure Not Paid in Cash 47,265 28,546

Research and Development Written Off 1 0

Travel, Subsistence and Hospitality 4,751 5,849

Interest Payable Interest on late payment of commercial debt 0 0 Bank and other interest payable 0 0 Finance lease charges allocated in the year 0 0 Other Interest 0 0

Total 0 0

Operating Lease Rentals: Hire of equipment (including vehicles) 6,407 7,300 Other operating leases 3,238 3,683

Total 9,645 10,983

Aggregate Rentals Receivable Total of finance & operating leases (3,140) (3,177)

Statutory Audit External auditor's remuneration and expenses 439 442

PFI/PPP and Similar Contracts Interest charge relating to on-balance sheet PFI/PPP contracts 25,274 24,740 Other charges relating to on-balance-sheet PFI/PPP contracts 13,615 8,454 Service charge relating to off-balance-sheet PFIIPPP contracts 3,681 3,459

Total 42,570 36,653

45

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

4. HOSPITAL AND COMMUNITY HEALTH SERVICES

BY PROVIDER Treatment in Board area of NHSScotland Patients Other NHSScotiand Bodies Health Bodies outside Scotland Private sector Community Care Resource Transfer

Services provided by Voluntary Bodies

Total NHSScotland Patients

Treatment of UK residents based outside Scotland

Total Hospital & Community Health Service

BY SERVICE CATEGORY Acute Services Maternity Services Geriatric Assessment Mental Health Services Learning Disability Geriatric Long Stay Young Physically Disabled Other Community Services Other Services

Total Care Expenditure

Other HCH Expenditure Additional Costs of Teaching Research and Development UK Residents based outside Scotland Other

Total as Above

2008 2007

£'000 £'000

1,009,670 6,245 1,020 1,780

968,954 6,292 1,392 4,230

34,618 32,132

14,532 12,780

1,067,865 1,025,780

3,042 2,352

1,070,907 1,028,132

535,640 38,418 63,686

116,538 34,154 44,669

3,313 165,988 21,832

587,504 41,399 41,461

127,209 30,022 39,915

4,394 105,181

9,806

1,024,238 986,891

25,672 17,955 3,042

0

25,506 13,383 2,352

0

1,070,907 1,028,132

I - i

46

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

5. FAMILY HEALTH SERVICE EXPENDITURE

Primary Medical Services

Pharmaceutical Services

Unified Budget

£'000

115,460

121,371

Non Disc

£'000

0

15,743

2008 TOTAL

£'000

115,460

137,114

2007

£'000

112,870

134,331

General Dental Services 501 46,659 47,160 43,977

General Ophthalmic Services 198 11,533 11,731 9,664

Total 237,530 73,935 311,465 300,842

47

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

6. ADMINISTRATION COSTS

2008 2007

£'000 £'000

Board members' remuneration Note 2 (a) 1,852 1,800 Administration of Board Meetings and Committees 27 98 Corporate Governance and Statutory Reporting 934 1,193 Health Planning, Commissioning and Performance Reporting 3,757 3,129 Treasury Management and Financial Planning 313 220 Public Relations 549 494 Other 604 645

Total Administration Costs 8,036 7,579

48

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

7. OTHER NON CLINICAL SERVICES

Nurse Teaching Closed Hospital Charges Compensation Payments - Clinical Compensation Payments - Other Pension Enhancement and Redundancy Patients' Travel - Attending Hospitals Patients' Travel - Highlands & Islands Scheme Health Promotion Public Health Public Health Medicine Specialists in Training Emergency Planning Post Graduate Medical Education Shared Services Loss on disposal of fixed assets Other Board Services

Total other Non Clinical Services

2008

£'000

222 o

993 345

2,815 136

o 1,706 4,492

248 61 o

609 o

3,824

15,451

2007

£'000

217 o

4,720 186

1,532 150

o 1,590 4,127

249 56 o

628 o

1,441

14,896

'.

49

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

8. OPERATING INCOME ..1

2008

£'000

2007

£'000

, :.,I

HCH Income NHSScotland Bodies -SGHD - Boards

0 178,327

79 162,582

NHS Non-Scottish Bodies 3,042 3,191

Non NHS - Private Patients - Compensation Income - Other HCH Income

3,286 1,386

4

3,065 895

12

Total HCH Income 186,045 169,824

FHS Income Discretionary 7,541 7,499

·1 I I

Non Discretionary General Dental Services General Ophthalmic Services

8,419 11

7,921 11

Total FHS Income 15,971 15,431

Administration Income 0 0

Other Operating Income NHS Scotland Bodies NHS Non-Scottish Bodies SGHD Contributions in respect of Clinical/Medical Negligence Claims Profit on disposal of fixed assets Transfer from Donated Asset Reserve in respect of Depreciation Transfer from Donated Asset Reserve in respect of Disposals Transfer from Donated Asset Reserve in respect of Impairment Interest Received Shared Services Other

0 0

59 1,245

0 991

0 0 0

753 38,269

0 0

39 3,866

10,716 836

0 0 1

683 44,189

Total Other Operating Income 41,317 60,330

Total Income 243,333 245,585

Of the above, the amount derived from NHS bodies is 181,368 161,690

50

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

9. ANALYSIS OF CAPITAL EXPENDITURE

"0'

Note

EXPENDITURE Acquisition of Intangible Fixed Assets 10 Acquisition of Tangible Fixed Assets 11 Capital Grants to Public Bodies

Gross Capital Expenditure

INCOME Net Book Value of disposal of Intangible Fixed Assets 10 Net book value of disposal of Tangible Fixed Assets 11

Capital Income

Net Capital Expenditure

SUMMARY OF CAPITAL RESOURCE OUTTURN

Net capital expenditure as above Capital Resource Limit

Saving against Capital Resource Limit

2008 2007

£'000 £'000

2,262 24,619 12,993

1,430 27,945 18,241

39,874 47,616

0 0

0 5,639

0 5,639

39,874 41,977

39,874 41,977 40,254 42,614

380 637

51

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

10. INTANGIBLE FIXED ASSETS

Software EC Carbon Licences Emissions Total

£'000 £'000

Cost or Valuation:

As at 1 April 2,992 3 2,995 Additions 1,962 300 2,262 Donations 0 0 0 Transfers 382 0 382 Disposals 0 0 0 Revaluation 0 0 0 Impairment Charge 0 0 0 Impairment Reversal 0 0 0

As at 31 March 5,336 303 5,639

Amortisation As at 1 April 1,093 2 1,095 Provided during the year 556 0 556 Transfers 0 0 0 Disposals 0 0 0 Revaluation 0 0 0 Impairment Charge 0 0 0 Impairment Reversal 0 0 0

At 31 March 1,649 2 1,651

Net Book value at 1 April 1,899 1 1,900

Net Book Value at 31 March 3,687 301 3,988

52

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008 11(a) TANGIBLE FIXED ASSETS (Purchased Assets)

Land & Buildings Assets

(excluding Transport Plant & Information Furniture & Under dwellings) Dwellings Equipment Machinery Technology Fittings Construction Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cost or valuation At 1 April 615,199 3,283 2,222 93,203 21,660 477 17,369 753,413 Additions 5,738 0 36 13,098 1,751 2 3,994 24,619 Completions 0 0 0 0 0 0 0 0 Transfers 15,194 0 0 1,661 0 0 (17,237) (382) Revaluation 9,168 129 0 0 0 0 0 9,297 Impairment Charge (4,332) 0 0 0 0 0 0 (4,332) Impairment Reversal 0 0 0 0 0 0 0 0 Disposals 0 0 (1,412) 0 0 0 0 (1,412) At 31 March 640,967 3,412 846 107,962 23,411 479 4,126 781,203

Depreciation At 1 April 16,769 114 2,053 51,715 15,266 340 0 86,257 Provided during the year 17,311 113 28 9,549 1,634 25 0 28,660 Transfers 0 0 0 0 0 0 0 0 Revaluation 0 0 0 0 0 0 0 0 Impairment Charge 0 0 0 0 0 0 0 0 Impairment Reversal 0 0 0 0 0 0 0 0 Disposals 0 0 (1,412) 0 0 0 0 (1,412)

At 31 March 34,080 227 669 61,264 16,900 365 0 113,505

Net book value at 1 April 598,430 3,169 169 41,488 6,394 137 17,369 667,156 Net book value at 31 March 606,887 3,185 177 46,698 6,511 114 4,126 667,698

Open Market Value of Land and Dwellings Included 21,115 0 Above

53

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

11(b) TANGIBLE FIXED ASSETS (Donated Assets)

Buildings (excluding Transport Plant & Information Fixture & Under dwellings) Dwellings Equipment Machinery Technology Fittings Construction Total

£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Cost or valuation At 1st April 14,692 0 210 5,842 767 16 0 21,527 Additions 0 0 3 457 0 0 0 460 Completions 0 0 0 0 0 0 0 0 Transfers 0 0 0 0 0 0 0 0 Revaluation 2,323 0 0 0 0 0 0 2,323 Impairment 0 0 0 0 0 0 0 0 Disposals 0 0 0 0 0 0 0 0

At 31 March 17,015 0 213 6,299 767 16 0 24,310

Depreciation At 1 April 467 0 154 4,357 727 16 0 5,721 Provided during the year 513 0 13 455 10 0 0 991 Transfers 0 0 0 0 0 0 0 0 Revaluation 0 0 0 0 0 0 0 0 Impairment 0 0 0 0 0 0 0 0 Disposals 0 0 0 0 0 0 0 0

At 31 March 980 0 167 4,812 737 16 0 6,712

At start of year 14,225 0 56 1,485 40 0 0 15,806 At end of year 16,035 0 46 1,487 30 0 0 17,598 Open Market Value of Land and Dwellings Included Above 0 0

54

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

11. (c) FIXED ASSET DISCLOSURES

2008 2007

£'000 £'000

Net book value of tangible fixed assets at 31 March Purchased 11a 667,698 667,156 Donated 11b 17,598 15,806

Total 685,296 682,962

Net book value related to land valued at open market value at 31 March 20,775 24,091

Net book value related to buildings valued at open market value at 31 March 340 175

Total value of assets held under: Finance Leases and Hire Purchase Contracts 0 0 PFI/PPP contracts 165,976 179,548

165,976 179,548

Total depreciation charged in respect of assets held under: Finance leases and hire purchase contracts 0 0 PFI and PPP contracts 3,950 3,968

3,950 3,968

Land and buildings were fully revalued by a consortium led by James Barr Limited at 31st March 2008 on the basis of existing use or market value (where no longer in use) and Depreciated Replacement Cost (where the specialist nature of properties precludes an assessment of open market value and existing line value. Other tangible fixed assets were revalued on the basis of indices at 31 March 2008.

The net impact was an increase in value of £9.2m, which was credited to the revaluation reserve.

55

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

12. STOCK AS AT 31 MARCH 2008

2008 2007

£'000 £'000

Raw Materials and Consumables 13,382 14,883 Work in Progress 0 0 Finished Goods 0 0

Total Stock 13,382 14,883

56

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

13. DEBTORS AS AT 31 MARCH 2008

2008 2007

£'000 £'000

DEBTORS DUE WITHIN ONE YEAR NHS Scotland -SGHD 291 421 - Boards 11,015 26,113

Total NHSScotland debtors 11,306 26,534

NHS Non-Scottish Bodies 1,077 0 General Fund Debtor 0 0 VAT recoverable 1,689 7,162 Prepayments and accrued income 35,660 34,254 Other Debtors 7,971 16,488 Reimbursement of Provisions 6,527 21,265 Other Public Sector Bodies 4,602 7,254

Total Debtors due within one year 68,832 112,957

DEBTORS DUE AFTER MORE THAN ONE YEAR NHS Scotland -SGHD 0 0 - Boards 0 0 Other Public Sector Bodies 0 0 Prepayments and accrued income 0 1,670 Other Debtors 0 0 Reimbursement of Provisions 17,204 4,988

Total Debtors due after more than one year 17,204 6,658

TOTAL DEBTORS 86,036 119,615

The total debtors figure above includes a provision for bad debts of: 917 914

57

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008 . !

14. INVESTMENTS AT 31 MARCH 2008

2008 2007

£'000 £'000 Government securities o o Bank Deposits o o Other 1 1

TOTAL 1

The investment comprises 1000 shares of £1 each in TMRI limited, a company incorporated in Scotland.

TMRI limited is a company incorporated by the nine Scottish partners in a research collaborative including four Scottish universities, four teaching NHS Boards and Scottish Enterprise. Scottish Enterprise and Wyeth Pharmaceuticals Inc. provide research project funding. The company seeks to exploit research discoveries in the commercial market in non-therapeutic fields such as diagnostics.

NHS Lothian is entitled to recover the full economic cost of activity in support of TMRI limited and has no requirement to under-write any reported trading losses of TMRllimited.

58

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

15. CASH AT BANK AND IN HAND

Note

At 01/04/07

£'000

PGO account balance Cash at bank and in hand

Total cash - balance sheet Overdrafts

Total cash - cash flow statement

16

1,183 4,781

5,964 o

5,964

Cash Flow £'000

At 31/03/08

£'000

(723) (4,590)

460 191

(5,313) 651 0 0

(5,313) 651

59

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

16. CREDITORS AT 31 MARCH 2008

CREDITORS DUE WITHIN ONE YEAR NHS Scotland -SGHD - Boards

Total NHSScotland Creditors

NHS Non-Scottish Bodies General Fund Creditor FHS Practitioners Trade Creditors Accruals Agenda for Change Payments received on account Interest payable Net obligations under Finance Leases Net obligations under PFI Contracts Bank overdrafts Income tax and social security Superannuation Clinical/Medical negligence claims VAT Other Public Sector Bodies EC Carbon Emissions Grant Other creditors

Note

24 25 15

2008

£'000

111 7,693

7,804

1,264 651

29,995 22,454 60,754 26,297

0 0 0

995 0

15,123 8,246

0 0

525 0

1,710

2007

. £'000

158 6,041

6,199

1,629 5,964

24,972 17,116 48,635 30,056

0 0 0

838 0

14,355 7,956

0 0

46 0

1,833

-.!

Total Creditors due within one year 175,818 159,599

CREDITORS DUE AFTER MORE THAN ONE YEAR NHSScotland -SGHD - Boards Other Public Sector Bodies Net obligations under Finance Leases due within 5 years Net obligations under Finance Leases due after 5 years Net obligations under PFI Contracts due within 5 years Net obligations under PFI Contracts due after 5 years EC Carbon Emissions Grant Other

Total Creditors due after more than one year

TOTAL CREDITORS

24 24 25 25

0 0 0 0 0

10,843 169,062

0 1,273

181,178

356,996

0 0 0 0 0

7,077 174,037

0 1,144

182,258

341,857

60

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

17. PROVISION FOR LIABILITIES AND CHARGES

Pensions £'000

Clinical & Medical

£'000

EC Carbon Emissions Other

£'000 Total £'000

2007 Total £'000

At 1 April 21,746 27,300 Arising during the year 2,253 2,470 Utilised during the year (2,403) (1,123) Reversed unutilised 0 (2,002)

0

o

oooo

49,046 51,572 4,723 11,636 (3,526) (9,431 ) (2,002) (4,731 )

48,241 49,046

0 0 0

At 31 March 21,596 26,645 0

The amounts shown above are stated gross and the amount of any expected reimbursements are separately disclosed as debtors in note 13.

61

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

18. MOVEMENT ON WORKING CAPITAL BALANCES

STOCK Balance Sheet Net Decrease/(Increase)

Note

12

Opening Balances

£'000

14,883

Closing Balances

£'000

13,382

Net Movement

£'000

1,501

2007 Net

Movement £'000

(1,501)

DEBTORS Due within one year Due after more than one year

Less: Capital included in above Less: General Fund Debtor included in above

13 13

112,957 6,658

119,615 (10,531 )

(0 )

68,832 17,204 86,036 (8,218)

(0)

44,125 (10,546)

33,579 (2,313)

(0)

(34,339) 4,306

(30,033) 10,531

(0)

Net Decrease/(Increase) 109,084 77,818

31,266 (19,502)

CREDITORS Due within one year Due after more than one year Less: Capital included in above Less: Bank Overdraft Less: General Fund Creditor included in above Less: Lease and PFI Creditors included in above

16 16

16 16

16

159,599 182,258

(0 ) (0 )

(5,964 )

(181,952 )

175,818 181,178

(0) (0)

(651)

(180,900)

16,219 (1,080)

0 0

5,313

1,052

21,683 (2,305)

0 0

(5,005)

2,242

Net (Decrease)/Increase 153,941 175,445

21,504 16,615

PROVISIONS Balance Sheet Net (Decrease)/Increase

17 49,046 48,241 (805) (2,526)

NET MOVEMENT (Decrease)/1 ncrease

53,466 (6,914 )

62

NHSLOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

19. GENERAL FUND

2008 2008 2007

Note £'000 £'000 £'000

General Fund at 1 April 279,117 260,762

Opening General Fund Creditor / (Debtor) Add: Cash Drawn Down Closing General Fund (Creditor)/Debtor Net Funding Net Operating Cost for the Year Cost of Capital Transfer of Realised Element of Revaluation Reserve Proceeds of Sale of Donated Assets Transfer of Fixed Assets from other bodies Other adjustments

3 20 20 11

5,964 1,082,102

(651) 1,087,415 (1,162,526)

13,717 0 0 0 0

959 1,115,030

(5,964 ) 1,110,025

(1,105,864 ) 14,181

0 0 0

13

Net increase I (decrease) in General Fund (61,394) 18,355

General Fund at 31 March 217,723 279,117

63

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

20. MOVEMENT ON RESERVES

Revaluation Reserve Balance at 1 April Indexation/Revaluation of fixed assets Transfer of realised element to general fund

Balance at 31 March

Donated Asset Reserve Balance at 1 April Indexation/Revaluation of fixed assets Additions of donated assets Release to the Operating Cost Statement Transfer of realised element to general fund

Balance at 31 March

Note

11a 19

11b 11b

19

2008 2007

£'000 £'000

139,499 132,672 9,297 6,827

(0) (0)

148,796 139,499

15,806 17,774 2,323 (2,760 )

460 1,628 (991) (836 )

(0) (0 )

17,598 15,806

64

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

21. CONTINGENT LIABILITIES

The following contingent liabilities have not been provided for in the Accounts:

(a) Non - Clinical/Clinical and Medical Negligence 2008 £'000

2007 £'000

Clinical and medical compensation payments Clinical and medical negligence contingent assets

21,730 (19,597 )

24,197 (16,518 )

In the normal course of business, medical incidents may have occurred but may not yet be reported to the Board and so cannot be quantified with sufficient degree of certainty to allow an assessment to be made as to whether or not provision is required. Accordingly no provision has been reported in these Accounts.

(b) Equal Pay

NHS Bodies in England have recently settled equal pay claims. At 31 May 2008 there are 5,950 (2007-2508) grievances and 1,907 (2007- 1551) Employment Tribunal claims registered against Lothian Health Board. The legal process remains at a very early stage and the Central Legal Office has been unable to provide sufficient information to quantify the potential liability.

(c) Waste Electronic and Electrical Equipment Regulations

The Waste Electronic and Electrical Equipment Regulations 2006 came into force on 1 July 2007. Where waste arises from assets obtained prior to 13 August 2005, the Board are responsible for the costs of collection, treatment, recovery and environmentally sound disposal after 1 July 2007, unless a direct replacement is purchased, when the costs fall on the suppliers. The Board's current accounting policy is to incur such costs as they fall due. It is not possible to quantify the potential additional costs that the Board might be exposed to in respect of disposal of equipment purchased prior to 13 August 2005, as there is no reliable disposal cost per item of equipment and it is unknown what items will be directly replaced.

65

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

22. POST BALANCE SHEET EVENTS

There were no Post Balance Sheets events having a material effect on the accounts.

66

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

23. COMMITMENTS

Capital Commitments

The Board has the following Capital Commitments which have not been provided for in the Accounts

Contracted EDI Clinical Training Facility Bonnyrigg Dental Access and Mental Health Base Picture Archiving and Communications System Statutory Compliance Cardiology Redesign Diagnostic Waiting Times Equipment IT & Communications MRI Scanner Radiotherapy Equipment Energy Efficiency Mammography Units LUCS Accommodation Rillbank Terrace Others Total

Authorised but not Contracted

2008 2007

£'000 £'000

1,240 1,510 762 1,221

1,215 1,283 906 949

0 325 0 386

60 348 685 234

1,359 0 774 0

0 233 678 0 192 0 300 0 531 384

8,702 6,873

Positive Emission Tomography Scanner Musselburgh Primary Care Centre

oo

750 1,662

Chalmers Hospital 453 Dalkeith Medical Centre 300

Total 753

oo

2,412

Other financial commitments

The payments to which the Board is committed during 2007-08, analysed by the period during which the commitments expire are as follows: Expiry within 1 year Expiry within 2 to 5 years Expiry after 5 years

Total

ooo

o

ooo

o

67

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

24. COMMITMENTS UNDER LEASES

Operating Leases Commitments under operating leases to pay rentals during the year following the year of these Accounts are given in the table below, analysed according to the period in which the leases expire.

2008 2007

Obligations under operating leases comprise: £'000 £'000

Land and Buildings Within one year Between two and five years (inclusive) After five years

0 0 0

0 0 0

Other Within one year Between two and five years (inclusive) After five years

2 1,708

391

81 1,700

445

Finance Leases Commitments under finance leases to pay rentals in years following the year of these Accounts are given in the table below.

68

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

25. COMMITMENTS UNDER PFI CONTRACTS

The Board has entered into the following PFI contracts.

OFF BALANCE SHEET Description of Start Date End Date Estimated Scheme capital value

£'000 Ferryfield This service provides a 30 bedded facility for frail 01/10/96 01/10/21 2,500

elderly and dementia patients and replaced the 100 year old Northern General Hospital

Ellens Glen This service provides a 60 bedded facility for frail 01/11/99 01/11/29 2,650 elderly and dementia patients

Findlay House This services provides a 60 bedded facility for 13/06/03 12/06/33 3,000 frail elderly and dementia patients in the grounds of the Eastern General Hospital

Tippethill This service provides a 60 bedded facility for frail 06/09/00 05/09/25 2,100 elderly and dementia patients at Whitburn

Bathgate This service provides a Primary Care Centre 01/10101 30109/26 2,100 Primary Care which accommodates 3 GP Practices and the Centre CHP's community activities in the locality

ON BALANCE SHEET

Royal Infirmary of Edinburgh at Little France Acute teaching hospital facilities completed in 2003.

The balance of the risks and rewards of ownership of on balance sheet PFI/PPP property are borne by the Board and included in the Board's accounts as a fixed asset. The liability to pay for the property is in substance a finance lease obligation. Contractual payments therefore comprise two elements; imputed finance lease charges and service charges. The imputed finance lease obligation is as follows:

2007-08 2006-07 £'000 £'000

Imputed finance lease obligation under on-balance-sheet PFI/PPP contracts comprises: Rentals due within 1 year 26,126 25,997 Rentals due within 2 to 5 years 107,694 104,0'83 Rentals due thereafter 533,109 545,705

666,929 675,785 Less interest element (486,029) (493,833 ) Total 16 180,900 181,952

Future Commitments The payments to which the Board is committed during 2007-2008 in respect of PFI/PPP transactions, analysed by the period during which the commitment expires, are as follows:

2007-08 2006-07 £'000 £'000

Expiry within 1 year Expiry within 2 to 5 years Expiry within 6 to 10 years

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Expiry within 11 to 15 years Expiry within 16 to 20 years Expiry within 21 to 25 years Expiry within 26 to 30 years

1,170 958

42,091

714 41,698

617 Total 44,219 44,024

69

995

NHS LOTHIAN

NOTES TO THE ACCOUNTS

FOR THE YEAR ENDED 31 MARCH 2008

26. PENSION COSTS

The I'JHS board participates in the National Health Service Superannuation Scheme for Scotland which is a notional defined benefit scheme where contributions are credited to the ' Exchequer and the balance in the account is deemed to be invested in a portfolio of Government securities. The pension cost is assessed every five years by the Government Actuary; details of the most recent actuarial valuation can be found in the separate statement of the Scottish Public Pensions Agency (SPPA).

The National Health Service Superannuation Scheme for Scotland is a multi-employer scheme where the share of the assets and liabilities applicable to each employer is not identified. The NHS board will therefore account for its pension costs on a defined contribution basis as permitted by Financial Reporting Standard 17.

For 2007-08, normal employer contributions of £65,753,000 were payable to the SPPA (prior year £61,595,000) at the rate of 14% of total pensionable salaries. In addition, during the accounting period the NHS board incurred additional costs of £2,266,000 (prior year £144,000) arising from the early retirement of staff. The most recent actuarial valuation discloses a balance of £934 million to be met by future contributions from employing authorities.

Provisions amounting to £21,596,000 are included in the Balance Sheet and reflect the difference between the amounts charged to the Operating Cost Statement and the amounts paid directly.

The scheme provides benefits on a 'final salary' basis at a normal retirement age of 60. Annual benefits are normally based on 1/80th of the best of the last three years pensionable pay for each year of service. In addition, a lump sum equivalent to three years' pension is payable on retirement. Members pay contributions of 6% (5% for manual staff) of pensionable earnings. Pensions are increased in line with Retail Prices Index.

On death, pensions are payable to the surviving spouse at a rate of half the member's pension. On death in service, the scheme pays a lump sum benefit of twice pensionable pay and also provides a service enhancement on computing the spouse's pension. The enhancement depends on length of service and cannot exceed 10 years. Child allowances are payable according to the number of dependant children and whether there is a surviving parent who will get a scheme widowlwidower's pension. Medical retirement is possible in the event of serious ill health. In this case, pensions are brought into payment immediately where the member has more than 2 years service. Where service exceeds 5 years, the pension is calculated using specially enhanced service, with a maximum enhancement of 10 years.

Members aged 50 or above may take voluntary early retirement and receive a reduced pension. Alternatively, if the employer agrees to this the member will be able to retire on the full pension and lump sum which they have earned.

2007-08 2006-07 £'000 £'000

Pension cost charge for the year 65,753 61,595 Additional Costs arising from early retirement 2,266 144 Provisions included in the Balance Sheet 21,596 21,746

70

Lothian Health Board

DIRECTION BY THE SCOTTISH MINISTERS

1. The Scottish Ministers, in pursuance of sections 86{1), (1B) and (3) of the National Health Services (Scotland) Act 1978, hereby give the following direction.

2. The statement of accounts for the financial year ended 31 March 2006, and subsequent years, shall comply with the accounting principles and disclosure requirements of the edition of the Government Financial Reporting Manual (FReM) which is in force for the year for which the statement of accounts are prepared.

3. Subject to the foregoing requirements, the accounts shall also comply with any accounts format, disclosure and accounting requirements issued by the Scottish Ministers from time to time.

4. The accounts shallbe prepared so as to give a true and fair view of the income and expenditure and cash flows for the financial year, and of the state of affairs as at the end of the flnanclalyear,

5. This direction shall be reproduced as an appendix to the statement of accounts. The direction given on 30 December 2002 is hereby revoked.

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