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Thank you. I am sure plenty of people would argue about the security of having data in the cloud versus holding it on hard drives in your own office, but that may be a discussion for another day. Thank you, chair.

Good morning to our guests. Auditor General, you talked a bit about Government intervention or escalation. There are 14 territorial NHS boards. The intervention levels range from stage 1 to stage 5—stage 1 is the most hands-off and involves the least intervention, and stage 5 is the highest level. I understand that nine of the 14 boards have been elevated to an intervention level of stage 3 or stage 4—eight are at stage 3 and one is at stage 4. Does that surprise or concern you?

One of my colleagues is going to delve into that issue a little bit more, so I will park it and let others come back to the blueprint for good governance.

I want to come back to the issue of oversight. Auditor General, you said in your opening comment that NHS boards in Scotland are certainly not undergoverned. Does that imply that they are overgoverned? I will maybe pose a simpler question: is there a piece of work that could be done to see whether we need 14 NHS boards in Scotland? We are a country of 5.5 million people, but we have 22 different authorities managing the health service.

I am sure that most members of the public would not know the difference between NHS Scotland and Public Health Scotland if you were to ask them in the street. The point is that some of the issues that have come up and some of the escalation problems have clearly arisen from issues of leadership and governance, yet we have 14 chief executives, 14 boards, 14 board chairs and a raft of leadership positions in each board, presumably costing huge amounts of money. Do we simply have too many NHS boards?

That is very good, and it is very helpful to hear that it is an issue that you are looking at and will be paying close attention to.

My last question is a brief one. It is about something that you flagged concern about in your report and have mentioned twice today. It is that some of the smaller NHS boards feel that the sponsorship relationship is not as good as it could be. Do you think there could be a place for a more in-depth audit of NHS sponsorship effectiveness and arrangements? I know that the issue is touched on at a very high level in the report, but could there be a bigger piece of work in which someone—perhaps even Audit Scotland—could look at the direct relationship between the Government sponsorship team and individual boards and see whether there are any specific issues that need to be addressed, because it is unclear as to what the underlying issues are behind some of those concerns?

Is the situation also an indication of the relationship between the Scottish Government’s sponsorship teams and the individual boards? How can things get to the point where the Government has to escalate a board to stage 4? According to the Government’s description, that is when the Government has identified significant weaknesses that pose a risk to things such as quality of care, patient safety, institutional reputation and financial sustainability. What is your gut feeling as to whether the Government is maintaining adequate oversight of individual boards? Surely things should not get to that point before the Government intervenes.

I look forward to reading that. Do you have a sense of whether any of the external auditors are facing challenges in carrying out their duties given that, of the 14 territorial NHS boards, eight have required brokerage loans? That is surely a reflection on their ability to manage their ingoings and outgoings financially. There are various numbers kicking around about the overspend across many boards. It is hard to pinpoint exactly what the total is, but it is in the hundreds of millions for sure although, presumably, there will be variation from board to board. How comfortable is Audit Scotland that the external auditors are able to do their job to get a proper and accurate picture of the state of the finances of boards?

I appreciate that. Thank you.

I hear what you are saying—the idea is that, if a board’s level is escalated, that is a sign of success of the oversight from the sponsorship team, but it is also a sign of weakness or failure on the part of the NHS board. If a board gets to stage 3, I presume that it is put on a plan to remediate that and bring it back to stages 2 and 1 and be fully sufficient. If a board’s level is constantly being escalated, there is clearly a failure in the system—in the board, the leadership, the management team or the oversight and governance in the board. Where do things go wrong? What requires the Government to keep escalating a board’s level up and up?

Leading on from that, what is the relationship between what would be a national plan for Government and local delivery across NHS boards? We often hear about the so-called postcode lottery in the delivery of service or access to services. There is clearly no universality to services, given that access to services depends on where you live in Scotland, as a direct result of the fact that there are 14 health boards operating differently and performing to different levels of governance. In producing your report, have you identified any conflicts between the national mission, strategies or targets, for example, and local delivery? Has there been any pushback from local NHS boards as to their ability to deliver on what are clearly Government national targets?

Thank you for that explanation. It is refreshing and nice to see a positive report that identifies good governance and operational practice. I am sure that other committee members will cover some of the areas that you raised, particularly around potential improvements to impact reporting and awareness of the bank’s activities.

It is interesting that, in your answer to me and in your opening statement, the areas of risk to the investment bank’s long-term success that you mentioned are external factors. The first area of risk relates to the bank’s mission to be a perpetual investment fund. You mentioned that the barriers to that are Treasury rules, as opposed to the bank’s own operations. The other external factor relates to the annual capital allocation of funds from the Scottish Government, which, again, is outside the bank’s control, albeit that the bank is owned by the Scottish Government. How will it be able to address those external factors?