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MINUTE of MEETING of the ENDOWMENT FUNDS COMMITTEE
Board Room, Assynt House, Inverness / 4 July 2011–11.00 am

PresentMr Ian Gibson, NHS Board Vice Chair (In the Chair)

Mr Ray Stewart, Employee Director

Mr Bill Brackenridge, Non Executive Director

Mr Malcolm Iredale, Director of Finance

In AttendanceMr Iain Addison, Head of Area Accounting

Mrs Kelly Dallas, Endowments Support Officer

Mr Crawford Howat, Catering Manager

Mr Chris Lyons, General Manager, RaigmoreHospital

Mr Colin McEwen, Senior Building Officer

Mr Brian Mitchell, Board Committee Administrator

Ms Alison Rodgers, Directorate Accountant

1APOLOGIES

Apologies for absence were received from Mrs L Wormald.

The Committee agreed to consider the following two Items at this point in the meeting

4APPLICATIONS FOR APPROVAL

4.1Cafe Initiative, RaigmoreHospital

Mr C Lyons spoke to a circulated application seeking loan funding in the sum of £241,000 to be used to fund the upgrading of the existing catering outlet at the main entrance of RaigmoreHospital. The aim was to provide a high quality catering facility, the anticipated extra income from which would be used to repay any loan over a maximum five year period, at an interest rate of 1% above the standard interest rate. A detailed business case was available on request. On the point raised by Mr B Brackenridge, it was confirmed that the business case included an evaluation of external group franchise options, however on balance it had been considered appropriate to take an in-house approach thereby maintaining internal control. It was also confirmed that the business case did include aspects relating to the proposed pricing strategy. Mr C Lyons emphasised that the bid in question included aspects of upgrading the entrance of RaigmoreHospital and not only the existing cafeteria area. As capital work was involved this would be subject to the normal tender process.

Mr I Gibson referred to the current NHS Highland Endowment Funds Investment Strategy and stated that in order to take an informed decision the Committee would require to consider the relevant business case, available options, and associated risks. There would also be a need to consult with all Endowment Funds Trustees on the proposal.

After discussion, the Committee Agreed that a special meeting of the Endowment Funds Committee be held on 8 August 2011 to further consider the bid and associated business case documentation.

8Childrens’ Ward Appeal, RaigmoreHospital

At their meeting held on 4 April 2011 the Committee had discussed aspects of fundraising activity relating to the ARCHIE project at RaigmoreHospital, which sought to completely refurbish the Children’s Ward and associated Family Rooms. Mr C Lyons spoke to a circulated letter dated 23 June 2011 which outlined future actions including the proposed establishment of a Project Group and the development of concept designs etc by that Group and the ARCHIE Board. It was reported architects had been employed by the ARCHIE Board to develop concept designs and sketches. The architects in question were not included in the NHS Highland List of Approved Contractors. He stated that as the improvement work was to be undertaken in an NHS Highland facility, control over design specification should remain within this organisation and proposed to respond to the circulated letter accordingly. He proposed that the current process be halted and this be recommenced under the regulatory framework for NHS procurement.

During discussion, there was concern expressed that any refurbishment activity must be planned in association with clinical colleagues. There was also concern as to when any contract agreement was to be initiated, particularly if it was intended that this be the case prior to the desired Fundraising target being met fully. It was agreedthat there were a number of governance issues that required to be considered by the Raigmore Management Committee, including Project Board Chairmanship and membership, revenue cost implications, design compatibility, and procurement processes. There was a need to clarify the detail of the joint agreement signed by NHS Highland and the ARCHIE Board and look at lessons for any future fundraising partnerships which should be explicitly approved by the Endowment Funds Committee.

After discussion, the Committee:

  • Agreed the Raigmore Management Committee required to consider all aspects relating to this activity and in particular the various governance elements.
  • Agreed the Committee should review the joint agreement and discuss the process for establishing any future fundraising partnerships.
  • Agreed that similar arrangements in NHS Grampian be investigated.
2MINUTE OF MEETING HELD ON 4 APRIL 2011

The Committee Approved the Minute of the Meeting held on 4 April 2011.

3MATTERS ARISING

3.1Appointment of Lay Representatives to the Committee

Mr I Gibson advised that the process for identification and appointment of two lay representatives to join the membership of the Committee, and other NHS Highland Committees was to commence shortly. It was confirmed that lay members would be Trustees.

The Committee so Noted.

3.2Purchase of Bed Lockers, Over Bed Tables and Footstools at Raigmore Hospital

On the point raised, Mr M Iredale confirmed that the relevant tender process for the purchase of bed lockers etc for RaigmoreHospital had been initiated.

The Committee so Noted.

3.3Fundraising

Mr I Gibson raised the need for the Committee to further consider and discuss matters relating to fundraising activity, including targeted approaches.

The Committee Agreed fundraising activity be further discussed at a future meeting.

5INVESTMENT FUNDS

5.1Current Position

Mr I Addison advised that as at 30 June 2011 the NHS Highland Endowment Funds portfolio value stood at approximately £8,285,000, and stated that after taking into account relevant withdrawals the overall trend showed positive movement compared to the FTSE since March 2008.

The CommitteeNoted the position in relation to Investment Funds.

5.2Approval of Current Reserve Policy

Mr I Gibson spoke to the circulated Investment and Reserves Policy and advised this should be reviewed at this time. This was prudent in light of the investment broker re-tender exercise currently underway. Mr B Brackenridge suggested the Policy be amended to reflect that the Endowment Funds Committee is able to take decisions on matters relating to investment. Mr M Iredale also suggested reference to investment in health related research and development activity, and associated potential income generation. On this latter point Mr I Gibson agreed that the Policy should make reference to the potential for independent investment considered acceptable to the Committee. He added that the Policy should also make reference to the current minimum reserves policy of maintaining a an unrestricted reserve of £2.5m.

The Committee:

  • Agreed the Investment and Reserves Policy be amended to include reference to the ability of the Committee to take decisions on investment.
  • Agreed the Policy reference potential investment in health related research and development opportunities.
  • Agreed the Policy include reference to the current minimum reserves policy of maintaining a capital base of £2.5m.

6FINANCIAL REPORTS

6.1Financial Position to 31 May 2011

There had been circulated Financial Report outlining that the balance of the Unrestricted Funds as at 31 May 2011 was£4,604,140.39 and that for 2011/2012 Budget Funds, some £235,854.73 remained unspent. There had also been circulated a Restricted Fund Summary Analysis indicating those Specific Funds that had shown no activity in the last year/two years. Mrs K Dallas confirmed that there continued to be a process of rationalisation of Specific Funds for RaigmoreHospital.

During discussion, there was reference to those Specific Funds that had shown no activity in the previous two years and there was general agreement that where this was the case then consideration should be given to transferring relevant resource into a General Fund. It was agreed that General Managers should be requested to provide plans for spend of resource where there has been no activity over the previous two years, including in relation to the Argyll and Bute Staff Lottery Fund.

The Committee:

  • Noted the financial position.
  • Noted those Funds where there had been no activity in the previous two years.
  • Agreed that General Managers be requested to provide plans for spend in relation to those Specific Funds where there had been no activity in the previous two years.

6.2Exception Report

There had been circulated report detailing expenditure from Endowment Funds in excess of £5,000 to 31 May 2011. There was reference made to the funding of a Pharmacy Technician for Cancer Clinical Trials from the Raigmore Cancer General Fund as opposed to funding from a Specific Research Fund and Mrs K Dallas undertook to obtain further detail on this point.

The Committee otherwise Notedthe report.

7HIGHLAND HEALTH BOARD ENDOWMENT FUNDS 2010/2011

7.1Management Letter

Iain Addison spoke to the previously circulated letter from Mackenzie Kerr, Accountants which was part of the annual auditing process. This gave notification to Trustees of NHS Highland Endowment Funds as to views on qualitative aspects of accounting practices and financial reporting, expected modifications to the Annual Report, material weaknesses in internal control identified during the audit process, matters specifically required by other International Standards on Auditing to be communicated to those with governance, and any other audit matters of governance interest. The letter indicated that there were no matters of interest to report.

The CommitteeNoted the Management Letter.

7.2TRUSTEES REPORT AND FINANCIAL STATEMENT 2010/2011

Mr Addison spoke to the circulated Trustees Report and Financial Statements in respect of Highland Health Board Endowment Funds for 2010/2011, the net movement in funds for the year showing a gain of £70,909 giving the total fund position as at 31 March 2011 as £7,856,357. Expenditure during the year totalled £1,510,092 offset by income of £955,082.

Mr I Addison advised that the Trustees Report and Financial Statements were to be amended as follows:

Opening Pages – inclusion of Mrs L Wormald in the List of Trustees

Page 1, Recruitment and appointment of new Trustees – Add “a new Trustee appointed from the staff joined the Trustees during the year. The Trustees have started the process of recruiting two members of the public as Trustees.”

Page 1, Financial position and strategies – amend to read “... year were £197,246 but gains on disposals and investment valuations resulted in an increased balance of £177,000. The net outgoing resources on Restricted Funds during the year were £357,764 but gains on disposals and investment valuations resulted in the balance reducing by £106,000.”

Page 1, Principal funding sources – amend to read “... donations, legacies, disposals and investment income.”

Page 1, Plans for the future – add “Funds will be closed when the balance is used.”

After discussion, the Committee:

  • Notedthe proposed amendments
  • Approved the amended Trustees Report and Financial Statements.

9ANY OTHER COMPETENT BUSINESS

It was advised that NHS Lothian was to present to the next Directors of Finance meeting on issues relating to Endowment Funds and matters of interest to NHS Highland would be reported to the next meeting by Mr I Addison.

The Committee so Noted.

10DATE OF NEXT MEETING

It was agreed that the Committee next meet on Monday 8 August, 2011 at 11.30am in the Board Room, Assynt House to consider the Raigmore Hospital Cafe Initiative Application for loan resource.

The next scheduled meeting of the Committeewill be held on Monday31 October 2011 at 11.00am in the Board Room, Assynt House.

The meeting closed at 12.20pm

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