Hansard

I have asked for parliamentary time today to make a statement about the Executive's proposals for the future of Argyll and Clyde NHS Board. This follows the Scottish Executive Health Department's response to the Audit Committee's report at the beginning of the week.

Members will recall the background to the Audit Committee's report. Three or four years ago, there was considerable concern about the performance of the health board, the size of the financial deficit that was emerging and the ability of the management team to tackle the issues effectively. My predecessor, Malcolm Chisholm, took action at the time. A support team was brought into the health board and provided a report to the minister. Subsequently, the chief executives of the board and the three national health service trusts in the area left and a new board chief executive was appointed. The trusts were wound up and NHS services in Argyll and Clyde were planned and delivered on a single-system basis.

Since then, good progress has been made on a range of financial and other performance issues. We want to record our appreciation of that. There have been significant improvements in important areas such as waiting times and delayed discharges. Key services have been sustained and augmented for the benefit of local people. The fact that local staff and management have managed to achieve so much in the face of well-documented financial pressures is a tribute to their professionalism and dedication. We thank them for that.

However, the issue of financial balance has proved to be long running and deep-seated. The report by the Auditor General for Scotland, which was published in September last year, predicted that the cumulative deficit might rise to as high as £80 million to £100 million. Although I acknowledge the progress that has been made, I do not think that the Executive can justify allowing a publicly funded body to spend so much more than its income. That would be unacceptable. We have concluded that a fresh start is required and that the building of renewed confidence is necessary. I am therefore announcing that the Executive intends to consult on the dissolution of Argyll and Clyde NHS Board.

It is proposed that NHS Greater Glasgow and NHS Highland assume responsibility for the relevant areas in Argyll and Clyde. In addition, it is my intention to clear the accumulated financial deficit. I make it clear that the changes are being proposed in order to secure high-quality, safe and sustainable services for local people. That remains our absolute priority. However, I am conscious that my proposal may cause concern and anxiety in the local community. People will be worried about how it may affect services, and local staff will be worried about their jobs. Let me explain the reasoning behind the proposal and what the next steps will be.

I mentioned the Audit Committee's report on NHS Argyll and Clyde's finances, which we have studied carefully. One of its conclusions was that there had been a failure between the Health Department and NHS Argyll and Clyde to agree the board's financial recovery plan. I agree that that was unacceptable and acknowledge and accept the department's share of responsibility in the matter. The chamber can be assured that lessons have been learned and that procedures will be revised. I am happy to confirm that the existing board has approved a financial recovery plan that the Health Department has since agreed.

However, we must address the board's financial position. Over the past two years, good progress has been made on achieving planned savings against the board's plans. The board made total savings of £13.2 million in 2003-04 and £18.2 million in 2004-05. However, the issue of financial balance has proved to be long running and deep-seated. It is only proper that the Executive expects all NHS boards to sustain a sound financial footing and to meet their statutory financial duties. That is essential in preserving the delivery of high-quality, safe and sustainable local services. Plainly, it is unacceptable for a public body to allow the accumulation of debt that was taken on by NHS Argyll and Clyde. The situation cannot be allowed to continue.

It has also become increasingly clear that the geography of the NHS Argyll and Clyde area precludes effective management by a single health board. It is simply not a natural geographical area for one board. That is why we have discounted the option of retaining NHS Argyll and Clyde, while writing off the accumulated debt. Although a financial plan has been agreed, it is apparent that true recovery cannot take place unless structural issues are properly addressed. I am afraid that, despite the efforts of the current management team, NHS Argyll and Clyde has become associated with failure. I have no doubt that it has become necessary to dissolve the board and to move on, free from the millstone of the recent past. We have therefore agreed to provide £80 million in funding to clear the deficit and to enable the management teams to tackle their new responsibilities, free from the shortcomings of the past.

I assure the chamber that the provision of funding to clear Argyll and Clyde's deficit will not have an adverse effect on health funding in Scotland generally. Of the £80 million that we have decided to make available, £53 million will come from central Executive resources. The remaining £27 million will come from unallocated Health Department underspend that has been carried forward from the previous financial year. No planned health initiatives have been cut back to make the proposal happen.

Rightly, the condition that is attached to this action by my Cabinet colleagues is that financial balance in the Argyll and Clyde area needs to be restored as quickly as possible. As I have reported, NHS Argyll and Clyde has reached agreement on the details of the board's financial recovery plan. I will now look to all three boards to ensure that the plan is implemented on time. They have assured me that, when implementing the plan, they will maximise non-clinical savings.

We recognise that the coming months will be difficult for Argyll and Clyde, but momentum on implementing the recovery plan must not be lost. Spending reductions on the scale that is required in Argyll and Clyde cannot be made without service change, but that should be seen in a positive light. There will have to be change and we should not be afraid of it.

Next week, Professor David Kerr will report on his national review of service change. The review will provide boards with an opportunity to take a truly radical, modernising approach to service provision. However, our approach must be to continue to ask what we can deliver safely and sustainably in our local communities. In this case, there is an opportunity to redesign fundamentally the way in which the workforce is organised and services are delivered in Argyll and Clyde, in order to achieve tangible benefits for patients. There is an opportunity for services in communities in the Argyll and Clyde NHS Board area to become an example to the rest of Scotland of the way in which health care should be delivered in the 21st century, for the benefit of patients.

There is no doubt that tough decisions will be needed. I am sure that the reconfigured boards will need support to take and implement those decisions. Members should be assured that, when the case is made, the Executive will not shirk any action that will ensure high-quality, safe and sustainable services for local people.

I make it clear that the proposal to redraw the boundaries is intended to speed up the rate of modernisation in the areas concerned and not to reopen the debate on decisions that have already been taken. That would merely set back the implementation of important improvements in Argyll and Clyde, Glasgow and the Highlands. The proposal is also not intended to signal further structural change. In our view, that would be an unnecessary distraction at this time.

We want effective regional planning to be the norm throughout Scotland. Local people throughout Argyll and Clyde can be assured that patient services will be maintained, necessary health care provision will continue and the services on which they rely will be there for them. We acknowledge that removing the boundaries between Argyll and Clyde and Glasgow may heighten concerns over the future of the Royal Alexandra hospital in Paisley, given its proximity to the Southern general hospital. Such concerns would be misplaced. The RAH is a valuable resource that contributes significantly to the delivery of first-rate services to local communities. We expect that to continue.

After I have made this statement, I intend to spend the rest of the day in Argyll and Clyde meeting local staff. I recognise that local people and staff will be anxious about the statement. I will tell them that services will go on, people will continue to be cared for and staff will continue to be needed to provide services and care. I know that the three health boards concerned will work together closely to provide certainty to all staff about their future roles and responsibilities as quickly as possible. I expect the boards to take that work forward through the partnership arrangements that are already in place in NHS Scotland. That will ensure that trade unions and professional organisations that support staff are actively engaged.

We acknowledge that there will also be questions over where the redrawn board boundaries should lie. Local communities can be assured that our proposals will be detailed in a forthcoming consultation paper, which will be subject to three months of formal public consultation, commencing in late June. We are determined that it will be a genuine consultation that will take place with the full co-operation of the three health boards. We are keen to hear the views of all communities, staff, unions, local campaign groups and elected representatives. I assure members that we will consider carefully all representations and available information before coming to a final decision. Fundamentally, the situation is about people and services, not bureaucracy, boundaries or borders.

What we have announced today is about securing the future. It is a fresh start with a clean slate. It is about making real and effective change to support first-class health care facilities in our communities.