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Trust ordered to recover thousands of pounds paid to non-execs

Royal Liverpool and Broadgreen University Hospitals NHS Trust has been ordered to recover thousands of pounds paid to non-executive directors (NEDs) after it admitted it “did not have the authority” to make the payments.

Judith Greensmith, former chair of the trust, was paid an additional £20,000 on top of her salary of £23,600, while five non-executive directors, including the vice-chairman Frank Kerkham, were also given £5,000 each on top of their £6,157 pay. In addition, another one-off payment was also given to Kerkham in April of £3,078.

The trust said that the payments were made for extra work put in by the NEDs to prepare the business case for a new hospital. The Royal is currently being rebuilt at a cost of £329m.

But David Flory, the chief executive of the NHS Trust Development Authority (TDA), has written to the chief executive of the Royal, Aidan Kehoe, about the lack of authority to make this payment, saying the TDA expects the money to be repaid.

The TDA has ordered the trust to commission an independent review of the payments and the authorisation process to see if they breached strict rules.

If the rules have been broken it could potentially lead to disciplinary action – although whether this would be against the person who authorised the payments, the trust, against the recipients themselves, or all three is unclear. It would be the job of the externally-led review to decide.

Rosie Cooper, MP for West Lancashire, told the Liverpool Echo the rules are quite clear that payments to NEDs can only be authorised by the secretary of state.

It is understood that this is to prevent any quid-pro-quo between the executive and the board members, who are meant to oversee the executive and hold it to account, while also having strategic responsibilities.

The trust’s own policy also implies the same. Sections of RLBUHT’s own Standing Financial Instruction document, approved by the board, reviewed by John Graham, director of finance, in April 2014, states:

• Failure to comply with the trust’s standing financial instructions and standing orders is a disciplinary matter that could result in dismissal;
• The trust will remunerate the chairman and non-executive directors in accordance with instructions issued by the Secretary of State for Health.

The trust’s previous chief executive, Tony Bell, agreed the payments, apart from one made in April this year to an NED which is understood to have been authorised by Greensmith. Her contract at the hospital ended in November and she has not sought re-appointment.

Rosie Cooper MP said: “They seem to be running a private business with public money. The rules are made by the Secretary of State and they chose not to abide by them.”

Health minister Dr Dan Poulter told Cooper by letter that the money would be paid back: “David Flory…has now written to the chief executive of RLBUHT about the lack of authority to make these payments and has made it clear that he expects the sums to be recovered.

“He has also instructed the trust to commission an external review of its financial governance arrangements.”

An NHS TDA spokesperson said: “The TDA wrote to the trust in order to better understand the circumstances surrounding the additional payments made. Having considered the trust's reply, the TDA has advised that it should take steps to recover the sums paid and undertake an independent review of the payments and the authorisation processes. The trust has confirmed to us that it is taking action on both these points.”

The trust’s previous position, in September 2014, was to say: “These payments were made as a result of the chairman and the NEDs working a significant number of additional hours over a long period to ensure completion and approval of our business cases for the new Royal – a major project for the city. These additional payments meant that the remuneration for these individuals was in line with the pay awarded to chairs and NEDs at other NHS hospital trusts.”

But following the national intervention, a spokesperson for Royal Liverpool and Broadgreen University Hospitals NHS Trust told NHE today: “Following discussions with the NHS TDA, the trust accepts that it did not have the authority to make additional payments. The trust is taking steps aimed at recovering the payments and is working with an external body to review the process surrounding the payments.

“Our first priority as an organisation is and always has been providing excellent patient care. We continue to work on our exciting plans for the new Royal that will help tackle some of the long standing health issues that the people of Liverpool face and build a better future for the city.”

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