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AGENDA FOR

Council of Governors Meeting Date: Wednesday 28 September 2016 Time: 3.15 p.m. – 5.10 p.m.

Venue: Aintree Racecourse – Papillon Suite, Ormskirk Road, Aintree, Liverpool, L9 5AS

No. Item Lead Details Timings

PART 1

A Council Business

A1 Welcome B Fraenkel Verbal 3.15 p.m.

A2 Apologies B Fraenkel Verbal to note

A3 Declarations of Interest B Fraenkel Verbal to note

A4 Minutes of the Previous Meeting held on 16 June 2016 B Fraenkel Paper for decision [ref COG16/17/017]

A5 Chairman’s Update B Fraenkel Paper to note [ref COG16/17/027]

3.20 p.m.

B Our Services

B1 Report on Financial and Activity Performance M Birch Paper for assurance [ref COG16/17/018]

3.25 p.m.

B2 Mersey Care Annual Report 2015/16 P Williams Paper to note [ref COG16/17/019]

3.45 p.m.

C Governance

C1 Process for Appraisal of the Chairman and Non-Executive Directors

S Jennings Paper for decision [ref COG16/17/021]

3.50 p.m.

C2 Process for the Appointment of an External Auditor S Jennings Paper for decision [ref COG16/17/022]

4.00 p.m.

Break 4.10 p.m.

C3 Appointment of the Lead Governor A Meadows Verbal to note 4.25 p.m.

PART 2 – TO BE HELD IN PRIVATE

D1 Remuneration and Terms of Services for the Chairman and Non-Executive Directors

A Oates Paper for decision [ref COG16/17/025]

4.30 p.m.

D2 Board Skills Review – paper to follow A Meadows Paper for decision [ref COG16/17/026]

4.50 p.m.

E Any Other Business

E1 Any Other Business Governors Verbal 5.05 p.m.

Please note that Council of Governor meetings are meetings held in public. Any member of

the public can attend these meetings, although they do not have the right to participate.

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Status of these minutes (check one box): Paper No: COG16/17/017

Draft for Approval: ☒ Report to: Council of Governors

Formally Approved: ☐ Meeting Date: 28 September 2016

MINUTES OF THE MEETING OF THE

Council of Governors Date: Thursday 16 June 2016 Time: 4pm-6pm

Venue: Bechers Suite, Aintree Racecourse, Ormskirk Road, Liverpool, Merseyside L9 5AS

Name Job Title (Division/ Organisation*) *if not Mersey Care

Present:

Beatrice Fraenkel Clare Austin Johanna Birrell Sara Finlayson Neil Frackelton Mandi Gregory Mike Jones David Kitchen Mark McCarthy Teresa McDonnell Hetalkumar Mehta Jayne Moore John Mousley Martin Murphy Brian Murphy Scott Parker Hilary Tetlow Veronica Webster Sandra Wright-Perkins

Chairman Appointed, Academic; Service User, Local (Liverpool, Sefton & Knowsley); Staff – Other Clinical, Scientific, Technical & Therapeutic Staff; Appointed, Voluntary Sector; Staff, Non Clinical Staff; Staff, Non Clinical Staff; Staff, Other Clinical, Scientific, Technical & Therapeutic Staff; Service User, Local (Liverpool, Sefton & Knowsley); Service user, Local (Liverpool, Sefton & Knowsley); Staff, Medical; Public, Liverpool; Public, Sefton; Service user, Local (Liverpool, Sefton & Knowsley); Carer, Local (Liverpool, Sefton & Knowsley); Staff, Nursing Staff; Carer, Local (Liverpool, Sefton & Knowsley); Appointed, Sefton, Local Authority; Public, Liverpool;

In Attendance:

Joe Rafferty Andy Meadows Sarah Jennings Justine Maher Dave Sproson Pam Williams Chris Lyons Paula Murphy

Chief Executive [from item B1] Trust Secretary Deputy Trust Secretary Head of Project Management Office Head of Finance Non Executive Director Acquisition Programme Director Corporate Governance Officer – minutes secretary

Apologies Received:

George Allen Jess Chittenden Debra Doherty Tony Leo Jane Lunt

Carer, Local (Liverpool, Sefton & Knowsley); Public, Liverpool; Service user, Local (Liverpool, Sefton & Knowsley); Appointed, NHS England; Appointed, NHS Liverpool CCG;

Agenda Item No: A4

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Ian MacFarlane Eileen Petrie Mark Tattersall Maria Tyson

Public, West Midlands, NW England & Wales; Public, Sefton; Public, Knowsley; Staff, Nursing Staff;

ISSUES CONSIDERED 2016

A1 WELCOME AND INTRODUCTIONS

1. Mrs Fraenkel (Chairman) welcomed all members to the second meeting of the Council of Governors.

A2 APOLOGIES 2. The apologies for absence received for this meeting are detailed on page one/two of

the minutes.

A3 DECLARATIONS OF INTEREST 3. No declarations of interest were made.

A4 MINUTES OF THE PREVIOUS MEETING – 6 MAY 2016 4. The minutes of the previous meeting held on 6 May 2016 were accepted as an

accurate record. No amendments were required.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Note the minutes of the previous meeting.

Further actions required: • None identified

B1 ACQUISITION OF CALDERSTONES PARTNERSHIPS NHS FT 5. Mrs Darbyshire outlined the background, process and benefits of the acquisition of

Calderstones Partnership NHS Foundation Trust (Calderstones) by Mersey Care NHS Foundation Trust (Mersey Care) and asked the Council of Governors to agree to progress a joint application to NHS Improvement for the acquisition.

6. Mrs Darbyshire described in detail the nature of the current services provided at Calderstones, the relevant national policy content driven by the publication of Homes not Hospitals for People with a Learning Disabilities (October 2015) and the announcement made by Simon Stevens in October 2015 in respect of the future of Calderstones as an NHS organisation.

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7. Mrs Darbyshire outlined the strategic approach adopted in considering and preparing for an acquisition in the development of a new clinical model and identification of the funding required to implement this new model. Benefits of the acquisition had been considered in the context of service user, families and carer, staff and commissioners to ensure acquisition would meet the needs of stakeholders.

8. Mrs Darbyshire outlined the process of Due Diligence undertaken both internally led

(commissioned from Deloitte and Hempsons) and that undertaken by NHS Improvement in considering the potential acquisition. NHS Improvement, as the regulator responsible for approving the acquisition had assessed this and provided, on 13 June 2016, an indicative risk rating of amber. A copy of this letter from NHS Improvement had been tabled at the meeting. An amber risk rating allows the trust to proceed with a joint application to seek approval of the acquisition, subject to following conditions: a) further assurance that capital for the transaction will be available; b) should assurance not be provided that capital will available, the PAE sought

evidence that Mersey Care’s Board had considered and approved an option for the acquisition of Calderstones without capital expenditure

c) a series of technical assurances including governance documentation and signed contract income.

9. Mrs Darbyshire advised that in light of the potential of limited capital monies being

available to the NHS as a whole, the allocation of which was currently being determined by NHS England, at the Board of Directors meeting on 14 June 2016, the Board considered three options for the acquisition as follows: a) Option A - full retraction of Whalley site, requiring £63 million capital b) Option B - partial retraction of Whalley site requiring £33 million capital c) Option C - retention of the Whalley site requiring £5 million capital this last one should no capital monies became available (in which case the trust would und this £5m internally).

10. Mrs Darbyshire informed the Council of Governors that at the meeting on 14 June 2016, the Board of Directors recommending proceeding with the acquisition of Calderstones, although further discussion with NHS England, commissions and NHS Improvement regarding capital monies would continue. The Board also received further assurance in respect of the outcome of the Due Diligence exercise which not identified any issues which would prevent the acquisition from proceeding.

11. Mrs Darbyshire outlined to the Council of Governors the recommendation they were

being asked to consider, namely: a) approve the making of a joint application with Calderstones Partnership NHS

Foundation Trust to NHS Improvement, in accordance with section 56(A)(1) of the National Health Service Act 2006, for the acquisition of Calderstones by Mersey Care (acquisition), noting that the acquisition is a significant transaction for the purposes of paragraph 48 of Mersey Care’s Constitution;

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b) in making such approval the Council of Governors are satisfied that the Board of Directors has: • been thorough and comprehensive in reaching its proposal (that is, has

undertaken proper due diligence) • obtained and considered the interest of trust members and the public as part of

the decision making process

12. Mr Kitchen referred to the existing Learning Disability Medium Secure Unit based on the Whalley site and queried whether under Option C (£5million capital), this would remain. In response, Mrs Darbyshire advised that Learning Disability Medium Secure services would continue to operate from the Whalley site should capital be limited. However, the trust would proceed with plans the re-development the Mental Health Medium Secure Unit (currently based at Scott Clinic, St Helens) by building a new facility in Maghull because the Board of Directors had prioritised such a development as it recognised that, despite the quality of care being provided, the Scott Clinic buildings were no longer fit for purpose going forward.

13. Mrs Birrell acknowledged the significant work undertaken by the trust in respect of

preparing for an application for acquisition and sought assurance that contingencies were in place should this acquisition not take place or issues arise. Mrs Darbyshire confirmed that such contingencies were in place and were detailed in the Risk Register including detailed mitigations for each risk identified.

14. In response to clarification sought by Mr Frackelton regarding the perspective of the

Governors within Calderstones in respect of the acquisition, Mrs Darbyshire advised that feedback had been positive. In the context of sustainability, Calderstones had identified issues regarding the long term viability of their organisation and had been supportive of Mersey Care in progressing the acquisition and had worked collaboratively with Mersey Care to do so. Calderstones’ Governors were currently meeting themselves to consider the proposal for a joint application.

15. Dr Mehta questioned the trust’s preferred option (para 5 above), in proceeding the

acquisition, to which Mrs Darbyshire confirmed that whilst the Board of Directors preference was partial retraction of the Whalley site (Option B), only full retraction from the site (Option A) would deliver the policy intention of Simon Stevens in respect of the removal of all learning disability services from the Whalley site. Dr Mehta raised concerns that full retraction of the Whalley site would require an additional £30 million and did not reflect the effective use of NHS funding.

16. Dr Mehta queried when confirmation of capital would be received. Mrs Darbyshire

confirmed that such discussion were on-going with NHS England and, regardless of the level of capital received, the trust would ensure it maintained its financial stability.

17. Mr McCarthy raised a concern regarding the discharging into the community of very

vulnerable patients with learning disabilities that had been institutionalised for a significant period of time. Mr McCarthy proposed that Non-Executive Director was

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identified to take responsibility for continually checking and monitoring the impact of acquisition on service users. Mrs Fraenkel welcomed this proposed and agreed to discuss this with the Board of Directors to take this forward. Mrs Darbyshire added that a new post for service user and carer engagement had been appointed to at Calderstones, who will closely with service users and carers to ensure the transition was undertaken safely and quality was maintained. Mr Meadows proposed to update the recommendations to be agreed by the Council of Governors to reflect the identified of a Non-Executive Director to monitor the service user experience of Calderstones post-acquisition and the Non-Executive Director would be discussed and identified at the forthcoming Board of Directors meeting to be held on 29 June 2016.

18. Mrs Gregory noted that all NHS organisations were currently facing significant financial challenges and advised Governors of the concerns of staff based at the Whalley site regarding its intended closure. Mrs Gregory advised that the impacts of this were wide-ranging including families, staff and the local community of Whalley. Staff have raised concerns regarding the discharge of patients at Whalley and questioned what assurances were available that this would be undertaken safely and service users discharged to appropriate and safe services. In response, Mrs Darbyshire confirmed that this as the responsibility of commissioners who must ensure the provision of safe services. Mrs Gregory highlighted the potential negative impact on Mersey Care’s reputation should these service users be discharged to an inappropriate service. Mr Rafferty acknowledged this concern but provided assurance that services commissioned by commissioners would be subject to the same standards and requirements for safety. Mr Rafferty informed Governors of his recent meeting with Sir Stephen Bubb, Chief Executive of the Association of Chief Executives of Voluntary Organisations, in which Sir Stephen was challenged regarding this issue. Mr Rafferty added that it was made clear that transparency was required regarding the quality of services that service users of Calderstones would receive treatment and care going forward.

19. Mr Rafferty informed the Council of Governors that whilst the pace of the acquisition was rapid, the clinical model and associated discharge of patients from the Whalley site would be implemented over a three year period.

20. Mrs Gregory raised concerns that closure of the Low Secure Unit on the Whalley site presented a very poor use of NHS funds. Mr Rafferty concurred and proposed that the issues in respect of capacity availability were discussed and progressed with NHS England separate to the acquisition. Whilst the request to close this service made by Simon Stevens did signify the need to cease the institutionalisation of service users with learning disabilities, the closure of a recently built and outstanding Low Secure Unit was not an effective use of finances.

21. Dr Finlayson referred to Option C (retention of Whalley site) and queried whether this would destabilise the Medium Secure Unit re-development. In response, Mrs Darbyshire advised that the trust would still proceed with the reprovision of the

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mental health Medium Secure Unit currently based at Scott Clinic regardless of the acquisition. Under Option C, the new Medium Secure Unit would provide 56 in-patient beds in addition to a number of crisis care beds to build in capacity and reduce the number of service users currently receiving treatment out of area. The designs for the new Medium Secure Unit were already in place and this would progress with the learning disability facilities removed should Option C be progressed.

22. In response to Mr Kitchen, Mr Rafferty advised that whilst the acquisition of Calderstones would not impact upon the trusts existing estates plans including those of Mossley Hill Hospital, the provision of limited capital would impact on the timescales of these developments.

23. Mrs Fraenkel sought a vote in response of the following recommendation, for which all 19 Governors presented voted in agreement of the recommendation: Approve the making of a joint application with Calderstones Partnership NHS Foundation Trust to NHS Improvement, in accordance with section 56(A)(1) of the National Health Service Act 2006, for the acquisition of Calderstones by Mersey Care (acquisition), noting that the acquisition is a significant transaction for the purposes of paragraph 48 of Mersey Care’s Constitution.

Action Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Approve the making of a joint application with

Calderstones Partnership NHS Foundation Trust to NHS Improvement, in accordance with section 56(A)(1) of the National Health Service Act 2006: • for the acquisition of Calderstones by Mersey

Care (acquisition) • noting that the acquisition is a significant

transaction for the purposes of paragraph 48 of Mersey Care’s Constitution.

• In making such approval the Council of Governors are satisfied that the Board of Directors has: • been thorough and comprehensive in reaching

its proposal (that is, has undertaken proper due diligence)

• obtained and considered the interest of trust members and the public as part of the decision making process

• As that the Board of Directors appoint a lead Non Executive Director to monitor the experience of service users within Calderstones (post-acquisition)

Further actions required: • Board of Directors to consider and appoint a lead

Non Executive Director to monitor the experience of service users within Calderstones (post-acquisition).

B Fraenkel/ A Meadows

29 June 2016

On agenda.

Agenda Item No: A4

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B2 REVISED CONSTITUTION

24. Mr Meadows outlined to Governors a series of proposed changes to the trust’s Constitution should the acquisition of Calderstones Partnership NHS Foundation Trust (Calderstones) by Mersey Care NHS Foundation Trust be approved by NHS Improvement. A working group of the Council of Governors had helped to develop and scrutinise the recommendations proposed in the paper supporting this item

25. Mr Meadows summarised the key changes proposed as follows:

a) Calderstones existing membership do not automatically transfer to Mersey Care, each member has to be asked whether they wish to join Mersey Care’s membership (or for staff that they wish to opt out). In addition the current Governors at Calderstones do not have the right to transfer, and Calderstones’ Council would be dissolved upon acquisition;

b) the proposed changes to the Constitution in terms of membership constituencies and additional Governors posts were outlined in Table 2 of the paper;

c) the public constituency would be extended (with three additional classes) to reflect the wider organisation footprint and allow representation from:

• Ribble Valley

• Cumbria, Lancashire (excluding Ribble Valley) & Greater Manchester

• Cheshire, St Helens, Wirral, West Midlands and Wales (amended constituency)

• Rest of England;

d) the staff constituency would be extended to reflect the wider organisational workforce and allow representation from:

• Medical Staff (transferred from Calderstones)

• Nursing Staff (transferred from Calderstones)

• Other Clinical and Clinical Support Staff (transferred from Calderstones)

• existing classes would be amended to only include staff already working within Mersey Care;

e) two of the service user and carer constituency classes would be amended to extend the geographical area beyond the rest of the North West, West Midlands and Wales so as to incorporate the rest of England and Wales (Mr Meadows noted that Calderstones did not include a service user constituency and that its carer constituency consisted of 32 members);

f) an additional Appointed Governor would be sought from the Local Authority, with Ribble Valley District Council to be approached.

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26. Mr Meadows advised that as a result of the above changes, the total size of the Council of Governors would increase from 30 to 37 (including the Chairman). Terms of office would be limited to 22 months for all new Governors elected / appointed to new seats to bring these terms of office in line with the initial elections and in the interim. It was recognised that the revised constituencies were an interim measure and the Constitution would be further through the Council of Governors in advance of future elections from 2018.

27. Mr Meadows advised Governors that in considering changes to Mersey Care’s Constitution discussions had been held with the Calderstones and Mersey Care Joint Oversight Group, Calderstones’ Council of Governors, the Lead Governor at Calderstones and a working group of Mersey Care’s Council of Governors who considered a range of proposals and whose recommendations were reflected in this paper to the Council and a similar paper to Mersey Care’s Board of Directors (which held it’s meeting on 14 June 2016).

28. Mr Meadows advised that any changes to the Constitution must to be approved by both Mersey Care’s Board of Directors and Mersey Care’s Council of Governors; and if approved, the updated Constitution must be submitted to NHS Improvement as part of the evidence to be considered during assessment of the acquisition. Mr Meadows also asked members to note that in Annex 3 of the Constitution, when referring to both the Service User and Carer constituency for the rest of England and Wales, the statement “Cumbria, Lancashire and Greater Manchester” needed to be amended to say “Cumbria, Lancashire (excluding Ribble Valley) and Greater Manchester”. Mr Meadows added that at the Board of Directors meeting, Mr Walker, Executive Director of Nursing had requested that the definition of the nursing class (staff constituency) be amended from “holding a recognised nursing qualification” to “registered nurse”. The Board of Directors had agreed these changes and the Council of Governors were asked to approve the Constitution subject to these amendments.

29. Mr Meadows informed the Council of Governors that the working group had also raised concerns in relation to the term ‘service users’ and ‘carers’. Owing to time constraints, this terminology would remain in place in the iteration of the Constitution presented, but agreement had been made to undertake an engagement exercise to review this going forward.

30. Mr McCarthy referred to section 27 of the Constitution pertaining to the appointment and removal of the Chairman and other Non-Executive Directors and raised concerns that the requirement for the approval of three-quarters of the members of the Council Governors to remove the Chairman or other Non-Executive Director diminished Governors decision making powers reducing Governor influence substantially. Mr McCarthy also raised concerns that currently, Calderstones’ Council of Governors included representation of Lancashire MIND and proposed that going forward provision was made for an addition appointed voluntary local authority representative, for example Mencap.

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31. With regard to Mr McCarthy’s concerns in respect of the arrangements for the appointment and removal of the Chairman and other Non-Executive Directors, Mr Meadows advised that under item D2, the Council of Governors would be asked to consider and agree the arrangements for the establishment of a Nomination and Remuneration Committee and proposed that the role of this Committee was expanded to enable review this section of the Constitution. Mr Meadows added that the Constitution was a live document and could be updated as necessary and could be considered at the September 2016 meeting of the Council. Mr McCarthy stated he would not wish to reduce the Council’s powers by approving section 27 of this Constitution. Mrs Birrell concurred, but acknowledged the timing was not appropriate and suggested the Constitution was approved subject to review at a later date as proposed by Mr Meadows. Mr Meadows agreed and confirmed that legal advice would be sought in relation to this issue.

32. With reference to proposed changes to appointed Governors (para 32 above), Mr

Meadows stated that the trust only had a legal requirement to appoint a Governor from a local authority and all other members were discretionary. It was important that a pragmatic approach was taken in considering the changes to the Constitution given the need to avoid increasing the Council of Governors to a size that became unmanageable or removing the existing representation from Sefton and noted that this could be reconsidered going forward.

33. Mrs Frankel highlighted that it was imperative to take time to consider the options but

to have a foundation to build upon. Mrs Fraenkel stated it was key that every Governor felt they were being heard and asked Governors to raise their concerns with either Mr Meadows or herself regarding any component of the Constitution.

34. Mrs Finlayson referred the amendment in relation to the staff constituency (nursing

staff, para 30 above) and queried whether this also applied to other clinical staff therefore requiring such staff were registered as appropriate. Mr Meadows confirmed this was not the case and the class for other clinical and clinical support staff provided for both registered and unregistered staff (excluding Registered Nurses and Medical staff).

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Consider and approve the recommended changes to

Mersey Care’s Constitution described in this paper (effective from 1 July 2016 if the acquisition of Calderstones by Mersey Care is approved) subject to the amendments outlined in paragraph 30 of the minutes.

Further actions required: • Further review of the Constitution to be scheduled

for discussion at a future Council of Governors meeting.

A Meadows

To commence in Sep-16

Due Sep-16

Agenda Item No: A4

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C1 CONTRACTS MEDIATION – ADDICTIONS SERVICE 35. Mr Sproson provided the Council of Governors with an update on funding issues for

Addiction Services. Mr Sproson advised that historically, Addiction Services had been commissioned and funded by the NHS, initially by Health Authorities and then subsequently PCT’s. In 2013/14, prior to the introduction of CCG’s, the responsibility for commissioning Addictions Services then transferred to local authorities. All of the associated funding should have transferred at this time, however, in respect of the Liverpool service, at the request of Liverpool CCG, only £4.6m of the £6.5m was transferred to Liverpool City Council (LCC). The CCG continued to pay the Trust the £1.9m for Addictions Services with the stated aim of protecting it from local authority planned and future budget cuts.

36. Mr Sproson confirmed that at the start of 2015/16, Liverpool CCG informed the Trust that it would withdraw the £1.9m funding for Addictions Services, as it did not commission them and advised that LCC would need to pay the £1.9m going forward as the commissioner of these services. As a result, the Trust commenced dispute resolution proceedings however this did not go ahead following agreed funding of £1.9m non-recurrently from Liverpool CCG.

37. As part of the contract offer for 2016/17, Liverpool CCG again informed the Trust that it intended to withdraw the £1.9m funding for Addictions Services. The Trust subsequently commenced dispute resolution proceedings, which led to joint mediation facilitated by NHS England and the Trust Development Authority (TDA). As a result, the Trust had to accept a compromise offer from Liverpool CCG of £0.75m in 2016/17 and £0.25m in 2017/18. Mr Sproson confirmed that this funding was not sufficient and therefore the Trust had agreed to work with the Local Authority to review the addictions service provision across Liverpool. Mr Sproson added that the Addiction Services were essential and needed to be provided safely.

38. Dr Mehta queried the source of funding to bridge this funding gap for 2016/17. Mr Sproson advised that the Trust had a £1m contingency reserve and £700k unused reserved which would be utilised to ensure the service continued to operate safely. In response to clarification sought by Dr Mehta regarding the review of option for the future provision of the service, Mr Sproson confirmed that a number of options were being considered and discussed however plans were already in place to amalgamate the services offered fro the Kevin White Unit and Windsor Clinic in order to generate savings.

39. Mrs Gregory raised concerns in relation to the level of funding being withdrawn from a key service providing care for very vulnerable service users at short notice, highlighting that this would destabilise the service and put it at risk. Mrs Gregory also noted that staff were very concerned regarding the future safety of the service users within the Addiction Service and their future employment within the trust. Mr Rafferty concurred stating that the intention was to make a very strong case against the withdrawal of funds and this issue had been reported to the Board of Directors at its meeting held in

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May 2016. Mr Rafferty confirmed the intention to pursue this vigorously and noted that the Healthy Liverpool Programme led by Liverpool CCG had defined improvement in mental health services as a key priority which was not reflected in their commissioning of services. Mr Rafferty highlighted that service users faced this same stigma on a regular basis and the Trust would do everything within its power to reverse the decision made to withdraw this funding.

40. Mr McCarthy queried the potential number of compulsory redundancies that may be

made due to the impact of the reduction in funding for the Addiction service. Mr Sproson confirmed this had not yet been modelled and advised that as the funding gap would be bridged internally for 2016/17, no redundancies were anticipated. Work with commissions and staff would continue to review the services required and how these could be provided differently going forward. (Mr Frackleton left the meeting at this point).

41. Mr Martin Murphy queried the commissioning arrangements for addiction services

within Sefton, to which Mr Sproson confirmed that he would obtain this information and report back to the Council.

42. In response to Mr Kitchen, Mr Rafferty confirmed that the Trust were aware that this

was the one remaining addiction inpatient service and should it be de-commissioned, it was unlikely that there would ever be opportunity to reinstate the service.

43. Mrs Gregory raised concerns that going forward, a third sector provider may provide

this service and it wasn’t clear whether this would be of satisfactory quality. Mrs Gregory proposed that Governors support the escalation of this issue.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • the contents of the paper; • the transitional funding of £0.750m provided by

LCCG in 2016/17; • that the Trust will need to use internal resources to

keep the service safe. These resources have been identified in 2016/17;

• that a Strategic Steering Group has been set up to redesign the service within affordable levels; and that

• the Council of Governors will be updated on progress.

Further actions required: • Clarify commissioning arrangements for addictions

services in Sefton.

D Sproson

July 2016

On-going

D1 INDUCTION AND VISITS 44. Mr Meadows noted that at the inaugural meeting of the Council of Governors in May

2016 and at the individual meetings of Governors with Beatrice Fraenkel, Governors

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had noted that they would benefit from further induction which focused on the work of Mersey Care as well as opportunities to visit Mersey Care’s services.

45. Mr Meadows advised that the report provided outlined the arrangements being put in place up to the end of November 2016 to facilitate the following: • additional induction sessions focussed on the work of the trust; • visits to services and participation in the quality review visits programme; • further sessions on the roles and responsibilities of Governors; • training for those Governors who will be involved in the panels to

appoint non-executive directors.

46. Mrs Darbyshire advised Governors that Justine Maher had been asked to support delivery of the arrangements for induction and training and would contact all Governors going forward to discuss training requirements and facilitate these.

47. Following discussion, Governors welcomed the opportunity to meet socially, without an agenda, in order to facilitate engagement and relationship-building. Mr Meadows confirmed that in advance of the next meeting scheduled to take place in late September, (which coincided with the Annual General Meeting and a Public Board meeting, which would include the opportunity for some social interaction) a social gathering would be arranged as requested.

48. Mrs McDonnell sought further clarification in respect of Quality Review Visits (QRVs).

Mr Meadows outlined the visits process, noting that visits were undertaken at any time of the day or night and treated as spot checks of services across the organisation. Mr Meadows asked any Governors interested in taking part, to contact a member of the Corporate Governance team.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Consider and comment on the proposals in this

paper; • Let the Corporate Governance Team know if

Governors wish to be involved in the quality review visits.

Further actions required: • Governors to contact Corporate Governance Team

to request to be involved in quality review visits;

All

July – Sept 16

On-going

D2 APPROVAL TO ESTABLISH A NOMINATION AND REMUNERATION COMMITTEE

49. Mr Meadows sought the approval of the Council of Governors to establish a Nomination and Remuneration Committee and to identify Governors who would become members of this new Committee. The report outlined the areas of work for the Remuneration and Nomination Committee so that the Council could begin to consider: • the remuneration of the Chairman and Non-Executive Directors,

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• the advertisement of Non-Executive Directors, • the advertisement of Non-Executive Director post(s) • and the possible re-appointment of Non-Executives coming to the end of their

terms of office over the coming 18 months.

50. Mr Meadows advised that in order to inform their recommendations the Committee will be asked to agree the scope for two pieces of work that will be commissioned from third parties, namely: a) an independent review of the pay and conditions of the Chairman and Non-

Executive Directors, which will take into account of public sector market factors, the pay across north west FTs and the pay at other similar FTs across the country;

b) an independent review of the skills, capabilities and experience of future Non-Executives, which will take account information such as the skills of the existing Non-Executives, the views of the Chairman and other members of the Board of Directors, the future scope of the trust.

51. Mrs Fraenkel noted that not all Governors were present at today’s meeting and asked

that a request for nominations of membership be circulated to all Governors following the meeting. Mrs McDonnell requested that this included information on the role of the Committee and the associated time commitment requirement to assist in governor’s decision regarding nomination.

52. Following discussion it was agreed that there would be no limit on the size of the membership of the Committee.

53. Mrs Moore put herself forward to become a member of the Nomination and

Remuneration Committee.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Approve the establishment of a Nomination and

Remuneration Committee; • Agree the membership of the Committee; • Approve the terms of reference for the Committee

(Appendix A).

Further actions required: • Circulate outline of work/time commitments involved

in becoming a member of the Remuneration and Nomination Committee

A Meadows

Jul-16

Due Jul-16

D3 GOVERNOR HANDBOOK 54. Mr Meadows provided Governors with the ‘Governor’s Handbook’ previously circulated

at the inaugural meeting of the Council in May 2016. Mr Meadows sought approval of the document with the provision that the Council of Governors could propose and consider any changes to the Handbook at its meetings based on the recommendations of the committees/working groups being established.

Agenda Item No: A4

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55. Mr Meadows confirmed that the Council of Governors would be asked to elect a lead

Governor at the September 2016 meeting which would allow Governors time to engage and build relationships thus make an informed decision. Mrs McDonnell requested that nominations were circulated 1 month prior to the vote for Lead Governor to provide sufficient time to review Governors profiles. Mrs McDonnell also requested contact details of nominees to permit one to one discussions to take place in advance of the election. Mr Meadows agreed to provide the information in a timely manner, and would provide contact details of those Governors who had agreed to share their contact information.

56. Mr Meadows referred to agenda item D1 and confirmed that the Trust were holding

further training sessions and induction sessions through which, there would be an opportunity for Governors to engage. Non Executives would be included in some of these sessions which would assist in building relationships. Mrs Fraenkel proposed that Non Executives should be invited to the social event being arranged for early September 2016.

57. Mrs Darbyshire highlighted that Mrs Maher would be engaging with all Governors

individually to see how help can be provided. The Trust were very conscious this was a learning curve and were keen to ensure Governors were comfortable with what was being asked of them.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Approve the Governor’s Handbook

Further actions required: • None identified

D4 CORPORATE GOVERNANCE STATEMENT – NHS IMPROVEMENT SELF-

CERTIFICATION 58. Miss Jennings provided an opportunity for the Council to comment on the Corporate

Governance Statement (appendix A), a self-certification which all NHS Foundation Trusts were required to submit to NHS Improvement. The statement provided regulators with assurance that the Trust had robust systems of corporate governance in place.

59. Miss Jennings explained that in normal circumstances, this would be submitted by the end of June each year, but NHS Improvement had asked that this was submitted by 20 June 2016 as part of the evidence they will consider in respect of the acquisition of Calderstones Partnership NHS Foundation Trust (Calderstones). The Statement must be approved by the Board of Directors taking account of the views of the Council of Governors.

Agenda Item No: A4

Page 15 of 16

60. Miss Jennings highlighted an amendment to be made in relation to page 13 of the report and confirmed that the Board of Directors had agreed that this be updated to reflect the Trusts work with Liverpool Health Partners as an Academic Health Science Centre.

61. Mr Meadows advised Governors that additional assurance could be provided on the

robustness and effectiveness of the corporate governance arrangements through the Trusts recent authorisation as a NHT Foundation Trust.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Comment on the Corporate Governance Statement

and associated declarations noting the amended in respect of page 13.

Further actions required: • None identified

D5 FUTURE MEETING ARRANGEMENTS & ANNUAL CYCLE OF BUSINESS 62. Mr Meadows provided Governors with a schedule of future meeting dates/times along

with the proposed annual cycle of business to be transacted at those meetings. Venues for the meetings were yet to be confirmed.

63. Mr Meadows proposed that the election of the Lead Governor take place at the Council’s meeting in September 2016. The role of Lead Governor was described in section 6B of the Governor’s handbook (agenda item D3), together with the process to appoint the Lead Governor. In response to a query raised by Ms McDonnell, it was agreed that Governors would be contacted in August with a view of submitting their nomination (and supporting statement) so they could be circulated at the social event now proposed for the beginning of September.

64. Mr Meadows highlighted that the September Council of Governors meeting coincided

with the Trusts Annual General Meeting and a Public Board of Directors meeting which would all take place at Aintree Racecourse. The day would consist of ‘market stalls’ which would present various stands, including a Calderstones stand, all aimed at providing further information and an understanding of the services. All Governors were welcome to attend the whole day’s events.

Action

Lead Timescale Status

Recommendations approved by the Council of Governors, namely: • Note the dates for future meetings and the

provisional annual cycle of business.

Further actions required: • Request nomination for Lead Governors and

circulate these prior to the social event planned in early September 2016

A Meadows

Aug-16

On-going

Agenda Item No: A4

Page 16 of 16

E1 ANY OTHER BUSINESS

65. Mrs Darbyshire advised that communication had been received in respect of Calderstones’ Council of Governors approval of the acquisition.

66. No other items of business were discussed.

67. The meeting closed.

Agenda Item No: A5

Page 1 of 4

COUNCIL OF GOVERNORS Report provided (check necessary boxes): Paper No: A5

To Note: ☒ For Decision ☐ Meeting Date: 28 September 2016

Chairman’s Update

Report Author(s): Beatrice Fraenkel, Chairman Andy Meadows, Trust Secretary

Summary of Key Issues:

• Mersey Care was successful in acquiring Calderstones Partnership NHS Foundation Trust (Calderstones), with approval being granted by NHS Improvement with effect from 1 July 2016.

• Mersey Care has submitted 2 bids to provide some of the community services currently provided by Liverpool Community Health NHS Trust. It is expected that Mersey Care will be notified if it has been successful in achieving Preferred Bidder status in the first week on October 2016, with the intention that it will assume responsibility for the LCH service bundles from 1 April 2017.

• Since the last meeting we have received the resignations of two members of the Council of Governors.

• Since our last meeting two additional officer appointments have been made to Mersey Care’s Board of Directors by Joe Rafferty, Chief Executive, in order to strengthen the skill set of the officers on the Board.

• Recommendation:

The Council of Governors is asked to: 1) note the contents of this paper.

PURPOSE

1. The purpose of this report is to update the Council of Governors on a range of issues arising since the last meeting of the Council of Governors.

ACQUISITION OF CALDERSTONES

2. Thanks to the support of Governors at our last meeting, Mersey Care was successful in acquiring Calderstones Partnership NHS Foundation Trust (Calderstones), with approval being granted by NHS Improvement with effect from 1 July 2016.

3. Calderstones has now become the Specialist Learning Disability Division while work continues to fully integrate this service into Mersey Care. As a result of this approval the revised Constitution agreed at the last meeting has come into force.

Agenda Item No: A5

Page 2 of 4

LIVERPOOL COMMUNITY HEALTH NHS TRUST

Background

4. An inspection by the Care Quality Commission (CQC) raised concerns about the quality of care at Liverpool Community Health NHS Trust (LCH) and led to the commissioning of an independent report and a decision by LCH to withdraw from seeking Foundation Trust approval. Together with the then NHS Trust Development Authority (now NHS Improvement) and local commissioners (Liverpool Clinical Commissioning Group and South Sefton Clinical Commissioning Group) a decision was taken to break LCH up into 7 bundles of healthcare services and seek alternative providers.

5. Mersey Care is seeking to become the Preferred Bidder in respect of 2 of these 7 bundles currently provided by LCH, namely: a) community health and children’s services for the Liverpool bundle; and b) community health services for the South Sefton bundle.

6. We are bidding in partnership with 5 Boroughs Partnership NHS Trust (5 Boroughs) for

these two bundles so as to provide a better service to local people, which means that if we are successful Mersey Care will be the lead contractor, sub-contracting a range of services to 5 Boroughs based on their existing experience of providing these services (i.e., walk-in services, phlebotomy services, wheelchair / community equipment services and children’s services)

7. Unlike the usual process for bidding for services, for these 2 bundles the process is a

acquisition transaction as opposed to a tender for services and hence the successful bidder will be acquiring the assets and liabilities, or in this case part of the assets and liabilities, of LCH. This means that as well as assessing the 2 bids, should we achieve Preferred Bidder status for either the Liverpool or South Sefton bundles we will then be subject to an acquisition assessment process by NHS Improvement, which is similar to the process we underwent when we sought to acquire Calderstones.

8. It is expected that Mersey Care will be notified if it has been successful in achieving Preferred Bidder status in the first week on October 2016, with the intention that it will assume responsibility for the LCH service bundles from 1 April 2017.

Significant Transaction

9. As Governors will recall from the Calderstones acquisition, paragraph 48.3 of Mersey Care’s Constitution calls for the approval, by at least half of the Governors, should any proposed transaction be deemed a ‘significant transaction’. As our Constitution has essentially adopted the same definition of a ‘significant transaction’ as NHS Improvement, their acquisition assessment process will help determine whether these bids will be regarded as significant,

10. The Liverpool bundle is circa £80m and the South Sefton bundle is circa £20m, which means that if we are successful in obtaining Preferred Bidder status by the beginning of October 2016, we will need to embark on a process to allow Governors to consider the ‘significant transaction’ prior to acquiring these services. The purpose of this

Agenda Item No: A5

Page 3 of 4

section of the update is therefore to alert Governors to the possibility of having to consider the acquisition of LCH in the near future.

11. Governors should be aware that if we do achieve Preferred Bidder status we will then be required to prepare a Full Business Case which will need to be approved by the Board of Directors and then be subject to scrutiny and assessment by NHS Improvement. This will involve Mersey Care undertaking a range of due diligence activities in order to provide the Board, and then Governors, with assurance that the acquisition of these services is the right thing for Mersey Care to do.

12. The Board of Directors must help the governors decide whether to approve an acquisition by providing sufficient information to enable them to be able to make an informed judgement, consistent with the general requirement for Foundation Trusts to ensure that their governors are equipped with the skills and knowledge they need to fulfil their role. Unlike the Calderstones acquisition, we will be in a better position to inform and engage Governors as we develop the Full Business Case, should we become the Preferred Bidder.

GOVERNOR RESIGNATIONS

13. Since the last meeting I have receive resignations from two Governors for personal reasons, these are:

a) Eileen Petrie, one of the two public governors for the Sefton public constituency;

b) Ian MacFarlane, the public governor for the Cheshire, St Helens, Wirral, West Midlands and Wales constituency

14. These vacancies will be advertised for election at the same time as we run the elections for the expansion of the Council of Governors following the acquisition of Calderstones.

APPOINTMENTS TO THE BOARD OF DIRECTORS

15. Since our last meeting two additional officer appointments have been made to Mersey Care’s Board of Directors by Joe Rafferty, Chief Executive, in order to strengthen the skill set of the officers on the Board (please see the table below).

Mark Hindle Executive Director of Operations Mark was appointed as a voting member of the Board of Directors in July 2016 and was formerly Chief Executive of Calderstones Partnership NHS Foundation Trust. Mark’s previous roles include Chief Operating Officer at Lancashire Care NHS Foundation Trust; Managing Director of Community Services across Blackburn with Darwen, Central Lancashire and East Lancashire PCT; Preston PCT’s Director of Corporate Development; and Director of Operations at Lancashire Teaching Hospitals. Mark’s background is as a biomedical scientist and he has a Masters in Business Administration.

Agenda Item No: A5

Page 4 of 4

Trish Bennett Director of Integration Trish was appointed as a non-voting member of the Board from 1 August 2016 Trish has worked in the NHS for over 30 years in various nursing leadership positions in Leeds, Liverpool and Manchester in both provider and commissioning roles and joined Mersey Care from NHS England, were she was the Director of Nursing for the Lancashire & Greater Manchester Sub Region responsible across the Sub Region for professional nurse leadership, oversight and leadership to safeguarding adults and children, clinical leadership to the transformation service change programmes as well as providing system leadership for quality and safety (including quality surveillance processes. In her previous roles Trish has been responsible for the professional leadership of the Merseyside nursing workforce. She was also responsible for service improvement, incorporating quality and safety, safeguarding, resilience and emergency planning, continuing healthcare, equality and diversity, Choose and Book, children’s commissioning, mental health, urgent care, dementia, offender health and substance misuse. Trish is passionate and committed to delivering high quality safe patient care and thrives in working collaboratively to secure results. She enjoys developing clinical leaders across the system and command respect and loyalty from her peers.

RECOMMENDATION 16. The full Council of Governors is asked to:

a) note the contents of this paper.

Agenda Item No: B1a

Page 1 of 1

COUNCIL OF GOVERNORS

Report provided (check necessary boxes): Paper No: COG/16/17/018

To Note: ☒ For Decision ☐ Meeting Date: 28 September 2016

Report on Financial and Activity Performance

Report Author(s): Wendy Copeland-Blair Head of Performance Improvement and Customer Relationship Management

Summary of Key Issues: The care at a glance report supports the council of governorsrequirements for succinct and relevant strategic performancereporting that confirms the trust’s achievements; providesinformation on actions to address adverse performance and theimpact on service users.

The care at a glance report also contains information relating tothe safe staffing fill rate indicator.

The trust continues to perform well in respect of externalassessments and financial performance. The trust is compliantwith CQC registration requirements (achieving “Good” in themost recent Chief Inspector of Hospitals inspections).Performance improvement plans are in place for key areas ofperformance improvement. The content of the care at a glancequality dashboard reflects quality priorities for 2014/15. Phase1 of the new quality reporting system has been implementedand a demonstration was delivered to the quality assurancecommittee in September 2016. The new indicators will bereported from Q2 2016/17.

The report provides assurance against a number of strategicallysignificant risks and these are detailed within the relevantsections.

Key Performance Issues

Physical Health (Escalation Section 1)

Safer staffing - fill rates against clinical requirement

Contract Performance - Talk Liverpool (Escalation Section 2)

Early Intervention in Psychosis Waiting Times – NHSImprovement

Bed Management - Unplanned out of area treatments anddelayed discharges (Escalation Section 3)

Sickness Absence (Escalation Section 4)

Recommendation: The Council of Governors is asked to: 1) note the assessment of performance contained within this

report and the performance improvement actions detailed in theperformance escalation sections.

Key Performance Issues

Recommendations

The council of governors is asked to note the assessment of performance contained within this report and the performance

improvement actions detailed in the performance escalation sections.

Council of Governors B1a (COG16/17/018)

Physical Health (Escalation Section 1)

Safer staffing - fill rates against clinical requirement

Contract Performance - Talk Liverpool (Escalation Section 2)

Early Intervention In Psychosis Waiting Times - NHS Improvement

Bed Management - Unplanned out of area treatments and delayed discharges (Escalation Section 3)

Sickness Absence (Escalation Section 4)

The report provides assurance against a number of strategically significant risks and these are detailed within the

relevant sections.

The trust continues to perform well in respect of external assessments and financial performance. The trust is compliant with CQC

registration requirements (achieving “Good” in the most recent Chief Inspector of Hospitals inspections). Performance improvement

plans are in place for key areas of underperformance. Phase 1 of the new quality reporting system has been implemented and a

demonstration will be delivered to the quality assurance committee in September 2016. The new indicators will be reported from Q2

2016/17.

Care at a Glance (Report on Financial and Activity Performance)

Month 4 2016/17

Period ending 31July 2016

Page 1 of 14

ObjectiveReporting

Frequency

Previous

Data

Period 2

Previous

Data

Period 1

Current

Data

Period

Actual

Forecast

next data

period

Kite-mark

Safe Q

Timely Q

Effective Q

Equitable Q

Person-Centred Q

Triangle of Care Q

Safer staffing levels M

QUALITY AND SAFETY OF SERVICES (QUALITY DASHBOARD)

Quality dashboard: The position reported relates to Q1 2016/17 with the exception of equitable which relates to Q4

2015/16. This excludes information on Specialist Learning Disabilities division, which will be reported from Q2

2016/17. Key issues:

• Safe: The proportion of incidents that result in death or severe harm is above the benchmark.

• Effective: The trust continues to underperform against a number of physical health indicators, including those

detailed within the quality dashboard. Improvement plans are in place. An update on the delivery of these plans and

physical health indicator performance is provided in Escalation Section 1.

• Equitable: The key improvement areas for inpatients are: BME, Muslims and under 34 year olds. The key

improvement areas for community are: BME and under 34 year olds.

• Person-Centred: An increase in the aggregate "overall care score" has been observed for both divisions this quarter

however the target of 95 set as part of the strategic initiative outcomes measures has not been achieved 92.43); the

local division score was 90.86 (amber) and secure was 95.75 (green).

•Triangle of Care: The trust wide performance for triangle of care for both community and inpatients has increased

this quarter.

Phase 1 of the quality reporting system has been implemented and a demonstration will be delivered to the quality

assurance committee in September 2016. The new indicators will be reported from Q2 2016/17.

Safer staffing: In July 2016, the secure division reported that there were 615 occasions (n=1,953) when they had

less staff than they clinically required (a deterioration on June 2016). The local division reported that on 300

occasions (n=1,840) they had less staff than they clinically required (an improvement on June 2016). The RAG rating

detailed above is based on the position against clinical requirement of 96.74% (Amber) (>=100% green; >=90%

amber, <90% red) and does not include the specialist learning disability division. This is a deterioration when

compared with June 2016 when the fill rate was 96.97%. The fill rate against clinical requirement has continued to be

below target for some months and is subject of a piece of performance improvement work sponsored by the Executive

Director of Nursing and supported by the Head of Performance Improvement and Customer Relationship

Management. In July 2016, the trust achieved a fill rate of 108% against the budgeted planned establishment

(including the specialist learning disability division).

Cleanliness: The clinical divisions undertake cleanliness audits in line with the national standards for cleanliness on

a thirteen week basis (for non-clinical areas the frequency is reduced to six monthly or annually). The latest data

shows that for the secure division the median average score for clinical areas was 98.00% (based on June’s data for

high secure services and April’s data for the low and medium secure units). For the local division, the median average

for clinical areas was 96.00% and for non-clinical areas 92.09% (the data reported was the latest available and

reflected the outcomes of audits undertaken between 29/06/2015 and 24/06/2016; all clinical areas have had an audit

undertaken during Q1 2016/17 with the exception of Windsor Clinic for whom the results relate to 16/03/2016). Both

divisions are achieving the standards required to achieve a green rating in both clinical and non-clinical areas.

Reporting for the specialist learning disability division will commence from Q2 2016/17.

Strategically significant risks associated with this domain are:

SRR.64 - Risk that the trust will be unable to provide safe staffing on wards (Safe-staffing).

SRR.60 - Risk that the focus on the drivers for financial sustainability and quality improvement become out of balance.

A

A

A

A

G

G

G

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Reporting

Frequency

Previous

Data

Period 2

Previous

Data

Period 1

Current

Data

Period

Actual

Forecast

next data

period

Kite-

mark

Contracts M

CQC registration M

Commissioning for Quality and Innovation

(CQUIN)Q

High Secure (Licence, Annual prison

service audit, Social Care Standards)A

Information Governance Toolkit A

NHS Improvement - Governance Risk

RatingM

Contracts:

CQUIN:

EXTERNAL

The trust submitted its quarterly CQUIN reports to commissioners on 29 July 2016 and reported green for quarter one.

Discussions with Liverpool CCG and City Council regarding addictions redesign will continue via the Addictions

Working Group.

The trust is working with commissioners from Liverpool and Sefton to develop a joint business case for liaison psychiatry

services. This has been sent to the respective clinical commissioning groups for approval of the additional funding required.

Interim funding for the existing services has been agreed to 31 October 2016 pending a decision on the business case.

The NHS England Intensive Support team carried out a deep dive of the Talk Liverpool service and the trust awaits a draft

report on the findings. Further information on Talk Liverpool performance is provided in Escalation Section 2.

Representatives from the Specialist Learning Disabilities Division meet fortnightly with Lancashire CCGs and Manchester

CCGs to manage the transfer of Enhanced Support service users into community placements. Negotiations are underway

to extend the contract to March 2018.

The medical lead has been identified for the national physical health CQUIN.

There is some risk of the local division not delivering the national physical health CQUINs. The national physical health audit

will take place during quarter two 2016/17, with results available in quarter four. The maximum financial risk to the trust of

not achieving the CQUIN is £0.08m.

Strategically significant risks associated with this domain are:

LOC.095 - LCCG support for Addiction services.

LOC.081 - Talk Liverpool (IAPT) Performance (Contract).

SRR.63 - Risk that due to the block contract we experience an increase in demand for services (Contract).

The third party concerns - In July there were no third party concerns reported. This incorporates information for the

Specialist Learning Disabilities division.

In Q1 2016/17, the trust failed to achieve the 50% target for referral to treatment for early intervention in psychosis within

two weeks. The July 2016 interim position suggests that we are on track to achieve this in Q2 2016/17, however delivery

continues to be a risk due to awaiting confirmation of additional funding by Liverpool Clinical Commissioning Group. The

decision on this is expected in September 2016.

NHS Improvement - Governance Risk Rating:

Following the approval of the acquisition Calderstones Partnerships NHS Foundation Trust (CPFT), the trust anticipated

increased levels of delayed discharges. An investment adjustment was submitted to NHS Improvement (NHSI) to set aside

the national target of 7.5% for the five quarters from 1 July 2016 through to 30 September 2017 inclusive. The trust agreed

an expected level of performance not to exceed 15% in this time. The investment adjustment application was approved

subject to submission and agreement of detailed recovery plans and a trajectory of phased improvement for this measure

within two months of the transaction. The trust has completed this piece of work and this will be submitted to NHS

Improvement by 31 August 2016. The current level of performance is 9.25% (equivalent to 49 beds occupied by delayed

discharges during July 2016). Further information is provided in Escalation Section 3.

The local division has achieved the new cases for early interventions in psychosis indicator in Q1 2016/17 following

underperformance in Q4 2015/16. This will continue to be closely monitored by the performance improvement team and the

local division to mitigate any risks to future underachievement.

The primary care liaison CQUIN leads have raised concerns that due to the temporary nature of the new posts the overall

delivery of the CQUIN could be compromised. The forecast for the quarter two targets is that the milestones can be

achieved. A meeting will take place early in quarter three to review progress and assess any financial risk.

G

G

G

G

A

A

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IndicatorReporting

Frequency

Previous

Data Period

2

Previous

Data

Period 1

Current

Data

Period

Actual

Forecast

next data

period

Kite-mark

Better payments practice code

(cumulative)M

Capital cost absorption A

Capital resource limit A

External financing limit A

Financial position (breakeven duty) M

Strategic financial plan M

NHS Improvement - Financial

Sustainability Risk RatingM

To the end of July, the trusts expenditure on qualified agency nursing was 0.19% of all qualified nurse staffing expenditure,

against a target of 3.0%. In 2016/17 a price cap on all agency expenditure was introduced. The price cap for the trust is

£5.841m. At the end of July the price cap is £1.704m and the trust has spent £2.887m. If this continues the agency price

cap will not be delivered. Workforce are producing an action plan to address this.

Following the Calderstones acquisition the trust surplus of £8.425m will reduce to £6.686m. The trust has agreed with

commissioners to provide transitional funding. The trust is mapping the impact on income and expenditure to agree

investment accordingly. The secure and corporate division forecast outturn position is breakeven. IM forecast outturn is

£0.200m underspent. The local division forecast outturn has reduced from £0.500m underspent reported last month to

breakeven. The trust still plans to achieve the year end surplus and the impact on the overall trust position will be taken to

the next executive committee.

Within the local division there are overspends in medical budgets due to high locum medical costs, nurse bank and agency

costs (covering vacancies and sickness in inpatient areas), acute out of area treatments. The division are working on an

action plan by the end of the month to address the medical budget overspend. The division will need to continue to monitor

the Liverpool IAPT contract and budget as failure to reduce the waiting list may result in financial penalties. Within the

secure division, high secure is breakeven, low secure and offender health are underspent by £0.009m and £0.002m

respectively, and the medium secure unit is overspent by £0.011m. Within the specialist learning disabilities division there

are overspends on nursing and support worker agency costs due to the high levels of nurse vacancies, a continuing level of

sickness and increased clinical observations in the low secure service. The divisional clinical management team continue to

work on an action plan to address pay overspending and are developing a contraction plan that targets both the HR

problems and the contraction of the site in line with the new model of care for Learning Disabilities.

The trust plans to achieve all financial performance targets in 2016/17. As at the end of July, the trust has a £2.798m

surplus before technical adjustments. The secure division is breakeven. The local division and Informatics Merseyside (IM)

are £0.002m and £0.067m underspent respectively. The corporate division is £0.079m overspent due to costs associated

with Liverpool Community Health. The trust has achieved an NHS Improvement (NHSi) financial sustainability risk rating of

4. On 1 July 2016 the trust acquired Calderstones NHS Foundation Trust. Calderstones has a planned deficit of £1.739m

and as at the 31 July the deficit is £0.457m. The planned deficit for July is £0.279m, the overspend of £0.178m is due to

redundancy costs of £0.215m. The Specialist Learning Disabilities division is £0.047m overspent, corporate division is

£0.048m underspent, central and reserve budgets £0.026m underspent and Calderstones income is £0.010m

overachieved.

The 2016/17 CIP target is £12.770m. At the end of July, the trust target is £3.633m of which £3.480m has been delivered.

The undelivered scheme of £0.043m is in corporate division and £0.110m in the secure division. If no action is taken the

2016/17 CIP target will be underachieved by £0.843m. The underachieved includes a £0.446m CIP from the addictions

community services redesign scheme, a service which is subject to a loss of commissioner income in 2016/17. The

Specialist Learning Disabilities Division currently has no approved CIP plans, however they have draft plans of £1.087m of

which £0.071m has been delivered.

FINANCE

At the end of July capital expenditure is £1.777m. NHSi have informed Trusts that no capital loans will be available in

2016/17. The trusts capital programme will be reprioritised and discussed at the next Trust Board.

The 31 March 2017 cash target has increased to £12.018m. The acquisition of Calderstones FT has resulted in a increase

in the cash target by £0.982m and the trust has also been notified that it will receive £1.655m Sustainability and

Transformation funding in 2016/17.

G

4

G

G

G

G

A

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IndicatorReporting

Frequency

Previous

Data Period

2

Previous

Data Period

1

Current Data

Period

Actual

Forecast

next data

period

Kite-

mark

Objective 1 (Workforce): Corporate induction M

Objective 1 (Workforce): Statutory Training M

Objective 1 (Workforce): Actual bank and agency

utilisation versus required (NEW)M

Objective 1 (Workforce): Monitoring of WTE against

workforce plans M

Objective 1 (Workforce): Staff turnover M

Objective 2 (Health and Wellbeing): Staff sickness (in

month)M

Objective 3 (Reward and Recognise): Completion of

personal achievement and contribution evaluation (PACE)M

Objective 3 (Reward and Recognise): Medical staff

appraisal in line with revalidation standardsAnnual

Objective 3 (Reward and Recognise): Well structured

personal development review (Quarterly staff survey)Q

Objective 4 (Staff satisfaction and engagement):

Percentage of staff that would recommend the trust as a

place to work (Quarterly staff survey)

Q

Objective 4 (Staff satisfaction and engagement):

Percentage of staff that would recommend the trust as a

place to receive treatment (Quarterly staff survey)

Q

Continued areas that require performance improvement include statutory training, achievement of the bank and agency utilisation against

requirement, staff turnover, which have mostly deteriorated when compared with last month with the exception of PACE . Staff sickness has

seen a slight deterioration in the in-month position. Further information relating to staff sickness (to the end of July 2016) is provided in

Escalation Section 4.

The statutory and mandatory data reflected within Care at a Glance and the embedded workforce report are currently being examined. The

trusts raw data for statutory and mandatory training (for reasons undetermined at this point in time) are not being pulled through into the

overarching report. This technical issue is being reviewed internally and assurance from an external technical expert is being sought to

ensure this matter is addressed urgently and appropriately. A time frame for completion is yet to be confirmed.

In July 2016, performance against bank and agency utilisation within the Specialist Learning Disability division was 229% (red). The Specialist

Learning Disability division safe staffing system does not currently capture “clinical requirement”, thus the data reported here in terms of hours

required does not reflect any additional staffing needs to cover e.g. increased observations.

The trust position as at 31 July 2016 for PACE completion was 72.80%. This is a improvement on month 3 when the trust achieved 61.62%.

The PACE completion for Specialist Learning Disability division was 87.56% (red) in July 2016.

There has been an improvement in corporate induction performance this month with the trust achieving 90.32% (green), this includes data for

Specialist Learning Disability division.

With the inclusion of data for the Specialist Learning Disability division staff turnover has increased to 18.63% in the month of July 2016. The

turnover rate for Specialist Learning Disability division was 41.63%.

Strategically significant risks associated with this domain are:

SRR.56 - Risk that the People Plan including WFP, H&WB Plan and Engagement Plan will not be implemented effectively.

CS-Project-W02 - Retention of staff to ensure safe wards and effective workforce planning.

LOC098 - Long Term Consultant Vacancy at Windsor CMHT (Baird House)

CS-Programme17 - Insufficient qualified/unqualified staff retained at Calderstones

LOC092 - Community unsafe staffing levels

WORKFORCE

R

R

G

A

A

R

G

A

G

R

R

Page 5 of 14

STRATEGY - TRANSFORMATION PROGRAMMES

Strategically significant risks associated with strategy delivery are:

SRR.61 - Risk that the large scale transformational programmes are not managed effectively.

SRR.62 - Risk that the Trust approaches to Perfect Care will not be implemented effectively.

SRR.54 - Risk that the Trust will not embrace its appetite for risk in the areas of growth.

SRR.50 - There is a risk that the Trust will not embrace its appetite for risk in innovation.

SRR.55 - Risk that we will fail to engage effectively with primary and social care and we will not formally agree a

pathway approach to integrated care.

SRR.68 - There is a risk that robust planning will not be put in place to manage the transition arrangements with

Calderstones (subject to the Board agreeing the acquisition).

SRR.58 - Risk that we fail to deliver sustainable redesign plans.

CS-Programme16 - Target number of transfers of secure Service Users on the Calderstones site into community

care programmes is not possible to achieve, within the three year implementation period.

CS-Programme19 - Insufficient capital funding will be available to secure the restructuring of clinical services.

SHP.027 - Affordability of the development of the Medium Secure Unit.

SD 092 - Proposed reconfiguration of admission/high dependency service in high secure is not funded

SRR.53 - Risk that the trust Research and Development agenda is not aligned to Perfect Care

LOC87 - Trust being unable to enforce the Nicotine Management Implementation Policy there is a risk of staff being

exposed to secondary smoke in specific locations (DISH and SLS housing)

LOC002 - Delays in Access to Beds

Local Division: All three transformational projects reported as green.

Secure Division: Three projects rated as amber and one agreen.

Specialist Learning Disability Division: Progress will be reported from Q2 2016/17.

Key risks identified at the end of quarter one in relation to our strategic deliverables for 2016/17 are summarised

below.

a. Capacity in local services to deliver significant workplan identified for August 2016, in relation to discharge and

recovery menu, implementing community pathways, and completing inpatient, learning disabilities and addiction

pathways.

b. Impact of lack of capital to support Haigh Road developments on personality disorder pathway.

c. Delay in refurbishment to Kevin White Unit caused by lack of receipt of planning permission and associated

slippage in CIP scheme (c£350k in 2016/17).

d. Ability to cover £200k shortfall in secure CIP (targeted from rehabilitation review) through other schemes.

e. Impact on service users of delay in implementing new psychology model in secure services.

f. Risk of difficulties in securing capital for planned development works across the Trust.

g. Inability to go-live with RiO and PACIS deployment if interpendencies and hardware upgrade issues are not

addressed and funded.

h. Lack of clarity regarding accountabilities and responsibilities in relation to physical health care deliverables and

associated risk to delivery of CQUIN schemes.

i. Failure to deliver PACE target across the Trust and lack of solution to forthcoming closure of face to face training

venue at Mossley Hill.

j. Impact of competing demands upon clinical teams resulting from improvement initiatives including engagement in

carer champion roles, Aston team and leadership development and Perfect Care initiatives.

k. Failure to focus appropriate resources and expertise on creating a high quality bid for Liverpool Community Health

services.

Page 6 of 14

INTELLIGENCE

Trust wide performance against Performance Assurance Framework (PAF) indicators: The graph below shows the proportion of

key performance indicators in the PAF rated red, amber and green each month since April 2015. The current (M4 position) is 66.97%

green, 8.26% amber and 24.77% red. Where data is available, this position includes performance for the specialist learning disability

division. Overall, this is a deterioration on M3.

Performance Assurance Framework 2016/17: The trust’s performance assurance framework is revised at least annually to ensure its

continued relevance. This review enables current commissioner and national requirements to be reflected and includes updates to local

indicators set by the trust to reflect strategic, quality and operational requirements. In 2016/17, this review has also included revisions

relating to the acquisition of Calderstones Partnerships NHS Foundation Trust. The performance and investment committee were asked

to approve the amendments to the framework on 26 August 2016.

Out of area treatments: The total number of service users who spent part or all of July 2016 in an out of area treatment placement

(planned and unplanned) is 126; 105 of these relate to the secure services division and 21 relate to the local services division. The

number of unplanned Adult Mental Health out of area treatments for July was nine.

Page 7 of 14

Performance Escalation Section 1

PREVQuality Physical health

Key Performance

Indicator Reference

Key Performance Indicator

Target/Description

Reporting

FrequencyTarget/Thresholds Trust Wide Trend Movement

Local Services

DivisionTrend Movement

Secure Services

DivisionTrend Movement

PHYSCOM21

All smokers to be offered brief intervention

advice within seven days of admission (if

a person is unable to or does not want to

talk about smoking, note this in their

records and ask about their smoking

status at the first available opportunity)

and first available opportunity in the

outpatients settings. (NICE PH48, Rec

3). Applied to patients on CPA only.

Quarterly (In

Quarter)>=95% green; <95% red. 95.76% q 95.70% q 95.88% tu

PHYSCOM22

All Smokers to be offered referral to an

intensive Stop Smoking Specialist Service

which provides at least 4 weeks of

treatment. Applied to patients on CPA

only.

Quarterly (In

Quarter)>=50% green; <50% red. 69.69% p 69.35% p 80.41% tu

PHYSCOM23

All appropriate (includes CPA and non

CPA) service users to be offered brief

intervention advice as per the 'Every

Contact Counts' training received by

frontline staff

Quarterly (In

Quarter)>= 90% green; <90% red 50.47% p 50.47% p

PHYSCOM24

Improving Physical Healthcare to Reduce

Premature Mortality in People with Severe

Mental Illness (SMI) (National CQUIN):

Cardiometabolic assessment and

treatment for patients with psychoses

(inpatients)

Quarterly (In

Quarter)

By Q4 2015/16 >=90%

green; >=50% amber;

<50% red. For Q2 to Q3

2015/16, to report On

track = green; concerns

identified one division =

amber; concerns identified

both divisions = red.

Greentu

Greentu

Greentu

PHYSCOM28

Percentage of diabetic patients who have

had diabetic retinopathy screening in the

last 15 months (QOF DM 21).

Quarterly (In

Quarter)

>=100% green; <100%

red 100.00% tu 100.00% tu

PHYSCOM29

Percentage of asthma patients who have

had asthma review in the last 15 months

(QOF Asthma 6).

Quarterly (In

Quarter)

>=100% green; <100%

red 100.00% tu 100.00% tu

PHYSCOM30

Percentage of patients with hypertension

who had blood pressure recorded in

previous 9 months which was 150/90 or

less (QOF BP 9).

Quarterly (In

Quarter)

>=100% green; <100%

red 78.79% q 78.79% q

PHYSCOM31

Percentage of patients offered a dental

examination within three months of the

date determined / indicated by the

dentist.

Quarterly (In

Quarter)

>=100% green; <100%

red 100.00% tu 100.00% tu

PHYSCOM32

Percentage of patients with coronary

heart disease who had blood pressure

recorded in previous 15 months which

was 150/90 or less (QOF CHD 6).

Quarterly (In

Quarter)

>=100% green; <100%

red 100.00% tu 100.00% p

PHYSCOM34

Smoking Status recorded for all patients

on CPA for first face -to-face contact

(Local division only)

Quarterly (In

Quarter)

>=95% green; <95% red.

(Sefton require >=90%

green; <90% red)87.55% p 87.55% p

PHYSCOM35Adult in-patients screened for malnutrition

on admission using the MUST tool

Quarterly (In

Quarter)>=95% green; <95% red 97.60% q 97.60% q

PHYSCOM36Patients with a score of 2 or more (nUST)

to receive an appropriate care plan

Quarterly (In

Quarter)

>=100% green; <100%

red 97.03% q 97.03% q

PHYSCOM37Patients with a score of 2 or more (nUST)

are referred to dietician

Quarterly (In

Quarter)

>=100% green; <100%

red 62.14% p 88.24% p

PHYSCOM6

Number of patients who did not have a

physical health check within 24 hours of

admission.

Quarterly (In

Quarter)0 green; >0 red 0 tu 0 tu

PHYSCOM7

Number of patients who have not had a

physical health check within the last 12

months.

Quarterly (In

Quarter)0 green; >0 red 0 tu 0 tu

PHYSLOC1

Percentage of long term inpatients who

have had their physical health needs

assessed in line with locally agreed

standards as reflected in the Trust's

Physical Health Policy

Quarterly (In

Quarter)

>=95% green; >90%

amber; <90% red 92.86% q 92.86% p 100.00% tu

PHYSLOC2

Percentage of patients admitted for whom

addiction status has been recorded (Local

services only).

Quarterly (In

Quarter)

>=95% green; >=90%

amber; <90% red 96.56% q 96.56% q

PHYSLOC3

Percentage of community patients on a

CPA for whom an annual health check

has been completed (either by primary

care or by Trust staff) in line with the

Trust's Physical Health Policy.

Quarterly (In

Quarter)

>=95% green; >90%

amber; <90% red 89.50% q 89.39% p 97.37% p

PHYSLOC4

Percentage of patients admitted for whom

BMI has been recorded (includes High

Secure).

Quarterly (In

Quarter)

>=95% green; >90%

amber; <90% red 97.95% q 98.51% p 71.43% q

PHYSLOC5

Percentage of community service users

on CPA reviewed during the reporting

period to have addiction status recorded

(local services only).

Quarterly (In

Quarter)

>=95% green; >=90%

amber; <90% red 99.80% q 99.80% q

PHYSLOC6

Percentage of community service users

on CPA reviewed during the reporting

period to have BMI recorded (local

services only).

Quarterly (In

Quarter)

>=95% green; >=90%

amber; <90% red 89.11% p 89.11% p

PHYSLOC7

Standard 37: smoking cessation support-

proportion of new admissions offered

smoking cessation within 24 hours - High

Secure

Quarterly (In

Quarter)

>= 95% green; >=90%

and <95% amber; <90%

red100.00% tu 100.00% tu

PHYSCOM40

Improving physical health - Supporting

improvements in physical health for

Addictions service users. (Liverpool Public

Health CQUIN)

Quarterly (In

Quarter)

Achieve quarterly

milestones to

Commissioner satisfaction

= green; quarterly

milestones not achieved

to Commissioner

satisfaction = red

Achievedtu

Achievedtu

PHYSCOM41

Physical Health Care of all Mental Health

and Learning Disability Services Users

across Mersey Care NHS Trust

Quarterly (In

Quarter)

Achieve quarterly

milestones to

Commissioner satisfaction

= green; quarterly

milestones not achieved

to Commissioner

satisfaction = red

Achievedtu

Achievedtu

PHYSCOM42

Supporting service users in secure

services to stop smoking: Low and

Medium Secure (CQUIN)

Biannual

Achieve biannual

milestones to

commissioner satisfaction

= green; milestones not

achieved to commissioner

satisfaction = red.

Achievedtu

Achievedtu

MEWSLOC1Percentage of short form audit standards

achieved for audited patients.

Monthly (In

Month)

Green 100%; Amber

>=90%; Red <90% 91.33% q 82.81% tu 92.68% q

PHYSLOC8

% of new admissions who have had

physical health screening completed

(NAS Standard)

Monthly (In

Month)>=95% green; <95% red Not available

tuNot available

tuNot available

tu

PHYSCOM43

Health lifestyles: nutritional monitoring of

the patients' shop, high secure services

(CQUIN)

Quarterly (In

Quarter)

Achieve quarterly

milestones to

Commissioner satisfaction

= green; quarterly

milestones not achieved

to Commissioner

satisfaction = red

greenp

greenp

PHYSCOM39

Improving Physical Healthcare to Reduce

Premature Mortality in People with Severe

Mental Illness (SMI) (National CQUIN):

Communication with General Practitioners

(Local Division Only)

Annual

By Q2 2015/16 >=90% =

green; >=50% = amber;

<50% = red. On track =

green; concerns identified

= red.

58.00% tu 58.00% tu

PHYSCOM44

Improving Physical Healthcare to Reduce

Premature Mortality in People with Severe

Mental Illness (SMI) (National CQUIN):

Cardiometabolic assessment and

treatment for patients with psychoses

(community EIP)

Quarterly (In

Quarter)

By Q4 2015/16 >=80%

green; >=40% amber;

<40% red. For Q2 to Q3

2015/16, to report. On

track = green; concerns

identified = red.

greenp

greenp

greenp

Page 8 of 14

Performance Escalation Section 1 (cont/d…)

PREVQuality Physical health

What is driving the reported under performance? What actions have we taken / do we plan to take to improve performance?

The performance improvement deep dive session identified five primary drivers that affect the trust's

ability to achieve improvements in physical health for our service users and achieve the requirements

of the physical health key performance indicators. These related to policy, staff, clinical information

system, indicator design / reporting and resources.

The table above shows performance against the physical health indicators as at 30 June 2016 or

Quarter 1 2016/17 (unless otherwise indicated). The data in the tables does not include the Specialist

Learning Disability division.

Based on the data currently available, the trust-wide position has shown improvement in seven of the

indicators and a deterioration in six of the indicators. Further work is required to achieve a number of

the measures.

In relation to PHYSCOM23 (service users to be offered brief intervention advice as per “every contact

counts” training), the brief intervention for weight management was not included within the new

inpatient physical health form on ePEX. An improvement has been observed in Q1 2016/17 (50.47%

red), however, this will continue to be monitored throughout 2016/17.

A new indicator was added to the framework in 2015/16 auditing the compliance with our Early

Warning System for physical health observations (MEWSLOC1). MEWSLOC1 has been updated to

incorporate local division information for the first time. Trust wide performance in July 2016 was

91.33% (amber). This will continue to be monitored. Data completeness has significantly improved

since implementation.

Secure division

MEWSLOC1 continues to be monitored monthly with this month achieving 92.68% for the secure

division. There are plans to change the way in which the audit is completed, with the responsibility

changing to Physical Care department on a quarterly basis. This is due to commence in September.

Dr Feelwell continues to be used across the division as part of the health and well being agenda. A

workshop displaying the works of Dr Feelwell with be delivered at the 3 hospitals conference due to take

place in Cardiff in November.

Initial meetings have taken place to look at the issue of refusals in relation to accessing physical health

care / monthly well man checks.

Baseline data has been gathered for patients refusing to attend the Health Centre for physical health

interventions.

Local division

The local division's physical health policy is being amended following a review of the inpatient pathway;

the date for ratification is yet to be confirmed. The division are now undertaking a review of the

community physical health pathway and this will inform a further iteration of the division's physical health

policy later this financial year (December 2016). Additional monies have been secured around physical

health; job descriptions for a modern matron and data quality and performance roles have been put

together. The job description for the Modern Matrons role has been ratified through agenda for change.

We are currently in the process of recruiting to the Modern Matron and Performance posts. A strategic

physical health meeting has been established to lead on the physical health agenda for the trust. There

will also be additional physical health posts for support to community and inpatient teams. Design of the

service model for physical health is underway. Weekly compliance monitoring of completion of physical

health checks within inpatient settings has identified some issues around junior medical staff completion

(partially as a result of availability). The lead consultant has put an aide-memoir together to support out

of hours doctors around their requirements. Issues around access to investigation results have been

raised with CCGs and with the trust's medical director. Discussions are underway around finding a

technological solution. The dietitians continue to support inpatient wards with completion of the relevant

fields within the physical health observations form around MUST, nutritional care planning and referral to

dietitians. A BiT report is in place to support ongoing monitoring. There is training available to staff on

MUST and nutrition (which is also being delivered directly to wards due to issues in releasing staff to

attend, staff shortages). The dietitians are working with learning and development and the local division

(via the division's quality meeting) to agree solutions.

Page 9 of 14

Performance Escalation Section 2

PREVExternal CONTRACTS - TALK LIVERPOOL

What is driving the reported under performance?What actions have we taken / do we plan to take to improve

performance?

In 2015/16 the trust received a performance improvement

notice from Liverpool CCG in relation to continued under

performance in the Talk Liverpool service. A number of

actions remain outstanding and these will continue to be

monitored during 2016/17 through the service development

improvement plan and in CQPG meetings between the trust

and commissioners.

The local division have identified 14 areas of concern that

affect the trust's ability to achieve the Talk Liverpool

indicators. These related to waiting times, centralised

booking system, access/entering treatment, staff training and

development, complex care referrals, capacity and demand

modelling and system development, data analyst,

recruitment, marketing and promotion, hub and spoke

utilisation, data quality, HSCIC reporting , IAPT Analyst

Network and Recovery Rate.

The table above shows performance against the Talk

Liverpool indicators as at 31 July 2016. There are three Talk

Liverpool indicators that do not have the information flows

finalised and work is on-going in relation to this.

From the 11 indicators reported above, eight are not being

achieved and three are being achieved. In July 2016, two of

the eight indicators not being achieved have improved, two

have stayed the same and four have deteriorated when

compared to the previous month.

The national referral to treatment indicators for IAPT services

(WAITNAT2 and WAITNAT3) have been achieved.

The updated action plan as at 15 August 2016 includes:

- Waiting times. The internal waiting list has increased to

3,317. All patients waiting over 18 weeks are contacted by

the operational lead to make sure they still require an

appointment.

- The review of the service by the national intensive support

team identified some good practice areas (e.g. around

booking processes) and some areas for improvement e.g.

waiting list management processes and referral criteria.

Workshops in conjunction with the intensive support team and

clinical commissioning group representatives have been

arranged to progress the waiting list and referral work. An

action plan specific to the outcomes of the review has been

developed. The implementation of this will be monitored via a

dedicated task and finish group.

- Further roll out ensuring equitable access to therapies for

both new clients and long waiters to following discussion with

IAPT Improvement Team.

- Work is ongoing through clinical supervisors and case

managers to maximise adherence to NICE/IAPT protocols

and pathways following workshop with senior staff and

supervisors.

- Recruitment is on-going in relation to permanent and

temporary positions. Interviews are scheduled in August in

conjunction with universities for three psychological wellbeing

practitioner trainees and three high intensity therapist

trainees.

- The CCG have contacted the service regarding the GP

newsletter with suggested improvements after the IST

feedback.

Key Performance

Indicator

Reference

Key Performance Indicator

Target/Description

Reporting

FrequencyTarget/Thresholds Trust Wide Trend Movement

FOLLCOM4Talk Liverpool - The average number of treatment

sessions received after assessment by step 2.

Monthly (In

Month)=6 green; <>6 red 4.00 tu

RECOCOM1

Talk Liverpool - The number of people who are

"moving to recovery" (of those who have

completed treatment, those who at initial

assessment achieved "caseness" and at final

session did not) during the reporting month.

Monthly (In

Month)>50% green; <=50% red 35.00% q

CANCCOM3

Talk Liverpool - The number of booked

appointments that are cancelled (Total)

expressed as a percentage.

Monthly (In

Month)<10% green; >=10% red 17.00% p

DNACOM4

Talk Liverpool - The number of booked

appointments that are DNA'd expressed as a

percentage.

Monthly (In

month)<10% green; >=10% red 13.00% q

ACCECOM1

Talk Liverpool - The number of people who have

entered psychological therapies (av the end of the

reporting month) as a proportion of prevalence.

Monthly (In

Month)

Annual target is 16%

(13650 people). Monthly

target has been issued by

commissioners.

71.00% q

WAITCOM19

Talk Liverpool - The number of referrals that have

been waiting more than 28 days from referral to

treatment.

Monthly (In

Month)<5% green; >=5% red 18.00% q

WAITCOM20Talk Liverpool - The number of days from receipt

of referral to entering treatment.

Monthly (In

Month)

<28 days green; >=28

days red 7.00 p

WAITCOM21Talk Liverpool - The number of days from receipt

of referral to entering treatment in Step 2.

Monthly (In

Month)

<28 days green; >=28

days red 9.00 p

WAITCOM22Talk Liverpool - The number of days from step up

to starting treatment in Step 3.

Monthly (In

Month)

<28 days green; >=28

days red 117 p

WAITCOM23Talk Liverpool - The number of days most people

wait for treatment.

Monthly (In

Month)

<28 days green; >=28

days red 7.00 tu

FOLLCOM5Talk Liverpool - The average number of treatment

sessions received after assessment by step 3.

Monthly (In

Month)=6 green; <>6 red 7.00 tu

Page 10 of 14

Performance Escalation Section 3

Green

<=15%

External Delayed transfers of Care PREV

Indicator

Source

Latest

performance

Expected date to

meet standard

National 9.25% Achieved *

Next update to performance and investment

committee / board

By exception

Data period

Jul-16

Forecast (next data period

"in quarter")

Green

* Following the approval of the acquisition Calderstones Partnerships NHS Foundation Trust (CPFT), the trust anticipated increased levels of delayed discharges. An investment

adjustment was submitted to NHS Improvement (NHSI) to set aside the national target of 7.5% for the five quarters from 1 July 2016 through to 30 September 2017 inclusive. The

trust agreed an expected level of performance not to exceed 15% in this time. The investment adjustment application was approved subject to submission and agreement of

detailed recovery plans and trajectory of phased improvement for this measure within two months of the transaction. The trust will be be required to submit data to NHSI in respect

of this measure on a monthly basis against the revised trajectory until October 2017 or compliance with the national target of 7.5% is achieved, whichever is later. If this is not

satisfactorily dealt with or performance falls below trajectory and NHSI judges that insufficient mitigations have been effected, then regulatory action may be taken. This could include

rescinding the investment adjustment.

The trust has completed the work to develop a trajectory of phased improvement for this measure. This was based on discharge plans currently in place with commissioners for the

services provided by the specialist learning disability division and assuming similar levels of delayed discharges to the baseline period (July 2016) are experienced within the other

two clinical divisions. The assumptions underpinning this trajectory are laid out below.

Assumptions

The majority of ESS beds are due to close by April 2017, as service users are discharged but one individual is expected to remain in a bed beyond this point and discharge is

assumed for March 2019.

The current contract for LSU is for 82 beds at 93% occupancy but there are currently 76 beds available. The total OBDs are therefore calculated based on 76 beds at 93%

occupancy with the exception of April to July 2016 which is based on bed occupancy. Commissioners are expected to review the contracted number of beds for LSU as part of

contract negotiations for 2017/18. This modelling will need to be revisited following confirmation of bed numbers for 2017/18 onwards.

The full business case for the new MSU on the secure campus at Maghull assumes 40 block contract MSU LD beds at 95%. The total occupied bed days are based on this with the

exception of April to July 2016 which is based on actual occupancy.

Stepdown beds will close as service users are discharged. The contract for stepdown is due to end March 2017, spot purchase arrangements are proposed for the remaining

service users after this date.

For the purposes of occupied bed day calculations associated with delayed discharges, we are assuming that where a delay ends in month that the impact will be observed the

month after. The impact of this assumption is that there are likely to be more OBDs associated with delays estimated than the detailed plans would indicate i.e. we are prudently

estimating percentage of OBDs.

In addition to the current delayed discharges we are building in an assumption of one additional delayed discharge per month for MSU and two additional delayed discharges per

month for LSU from September 2016 onwards to take account of people who may become fit for discharge but for whom there may be difficulties in discharges to the appropriate

placement / package.

For local and secure division (low and medium secure) the April to June 2016 monthly positions are based on the average per month for the quarter. The level of delayed

discharges forecast for the local division from July 2016 is based on the July 2016 position as no significant change is anticipated at the current time. The secure division figures

from July 2016 through September 2016 are based on July's data as no significant change is anticipated until October 2016 when we anticipate data flows to Unify2 to commence in

relation to high secure delays. From October 2016, the secure division delayed discharge numbers and occupied beds will include high secure services. For the purposes of the

modelling we are including all anticipated delays but it should be noted that Unify2 does not require delays relating to the Ministry of Justice to be reported.

Page 11 of 14

Performance Escalation Section 3 (cont/d…)

What is driving the reported performance?

For the period 1 to 31 July 2016, the local division had (on average) 20.3 beds

occupied by delayed discharges, equating to 7.26% of occupied bed days.

The secure division (low and medium secure) had an average of 6.5 beds occupied by

delayed discharges, equating to 6.93% of occupied bed days. In addition to the delays

in low and medium secure services, the secure division reported nine delayed

discharges within high secure services as at the end of July 2016. The shortage of

medium secure beds nationally has now started to impact on the ability of high secure

services to promptly move people on (historically the average number of delayed

discharges is reported as two at any one time).

The specialist learning disability division had an average of 22 delayed discharges

during July 2016, equating to 14.29% of occupied bed days.

Actions include:

Secure division

The process for monitoring delayed discharges within the secure division has been reviewed

and updated to minimise delays. Increased contact with commissioners in relation to

potential and actual delayed discharges has been implemented.

Work is underway to systematically capture data for and officially report upon delayed

discharges within high secure services via Unify2. Once high secure delays are officially

reported upon and the denominator for the indicator extended to include the high secure

service; this is expected to positively impact on the overall percentage of occupied bed days

associated with delayed discharges. Work is underway to support this; with official reporting

of high secure delays commencing from 1 October 2016.

Local division

• The introduction of a number of processes to aid recording and reporting of delayed

discharges.

• Each week Sefton and Liverpool have local radar meetings. These are attended by

inpatient community staff to update on the recorded delays and possible new delays for the

coming week.

• Each week (Thursday), the division has an overarching delayed discharge meeting with the

Local Division Social Care Lead and representatives from Liverpool. Within the meeting

every patient is discussed and the meeting is action orientated.

• Since this system was introduced in February, the division can confidently predict the

number of delays and has reduced the number from 45 to the current average figure of 20.

• The division has historically encountered some difficulties in consistently capturing the

required information on Epex. The Local Division Social Care Lead has attended ward

managers meetings to explain the system and the Division Capacity and Flow manager

sends reminders to the ward managers on coding when errors occur.

• The division has held a series of Multi Agency Discharge Events (MADE).

Specialist Learning Disability Division

• All new delayed discharges are identified by the multi-disciplinary team, logged onto

carenotes and monitored through the Referrals, Capacity and Flow Meeting.

• All delayed discharges are monitored weekly by the multi-disciplinary team through ward

round meetings.

• All areas submit a weekly discharge planning information log to the Operational Support

Manager that monitors the current position of all service users.

• All actions that need addressing are actioned, progressed and monitored by the multi-

disciplinary team.

• The Operational Support Manager escalates blockages and issues to NHS England or

CCG leads

What actions have we taken / do we plan to take to improve performance?

Page 12 of 14

Performance Escalation Section 4

PREV

Green

<=4.8%

Staff sickness year to dateWorkforce

What is driving the reported performance? What actions have we taken / do we plan to take to improve performance?

Amanda Oates September 2016

Next update to performance and

investment committee / boardExpected date to meet standard

Forecast signed

off by:

TBC

Forecast

(next data

period "in

Red5.96% 6.38%

Rolling twelve

months

Latest performance

(in month)

The graph above shows that in 2015/16, the trust saw a step change in the

levels of sickness absence which resulted in a move from an average “amber”

position to “red”. The trend graph incorporates information for the Specialist

Learning Disability division.

The in month absence rate of 5.96% is equivalent to 256.41 WTE staff off sick at

any point in time. The rolling 12 month absence rate of 6.38% is equivalent to

282.55 WTE staff off sick at any point in time. The highest levels of staff

sickness are observed within inpatient settings. Analysis of the data shows that

long-term absence drives the majority of sickness within the organisation.

Inpatient areas show the highest levels of sickness absence:

- Local division at 7.21% in month and 8.76% rolling twelve months

- Secure division at 8.17% in month and 9.72% rolling twelve months.

- Specialist learning disability division at 9.05% in month and 9.42% rolling

twelve months.

Internal

Indicator Source

Actions include:

Improved timescales for inputting sickness absence into ESR.

Benchmark and improve compliance rates for completion of return to work interviews.

RAG rate completion of sickness reviews (long term sickness and unsatisfactory attendance).

Increased uptake of staff support / physiotherapy services through early communication with

staff.

Achieve and maintain Trust's sickness absence target.

1

2

3

4

5

6

7

8

9

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb-

15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Jan-

16

Feb-

16

Mar

-16

Apr

-16

May

-16

Jun-

16

Jul-1

6

Per

cent

age

sick

ness

rat

e

Staff Sickness - April 2014 to July 2016 (Trust Wide)

Page 13 of 14

Escalation Status

NEW New Escalation

PREV Update on previous

escalation

Reporting Frequency

M Monthly

Q Quarterly

A Annual

Care at a Glance Legend

Legend / key

Forecasts

Graph Legend

R A G

Shows whether next month position will meet the standard

Data Quality Indicator (Kite mark)

Insufficient

Sufficient

Not yet assessed

Trend Movement Arrows - Performance

Escalation Tables and Supplementary Reports

pPerformance Improving

qPerformance Deteriorating

tuPerformance Maintained

Trend Movement Arrows - Summary Sheet

Performance improved (arrow

colour indicates performance level

achieved)

Performance maintained (arrow

colour indicates performance level

achieved)

Performance deteriorated (arrow

colour indicates performance level

achieved)

Relevance

Timeliness

Monitoring

Completeness

Validation

Audit

Reliability

Agenda Item No: B2

Page 1 of 2

COUNCIL OF GOVERNORS

Report provided (check necessary boxes): Paper No: COG16/17/019

To Note: ☒ For Decision ☐ Meeting Date: 28 September 2016

Mersey Care Annual Report 2015/16

Report Author(s): Elaine Darbyshire, Executive Director of Communications and Corporate Governance

Summary of Key Issues:

• This year’s report gives an account of the trust’s service and financial performance, and service development during 2015/16.

• The report reflects feedback received from readers of previous reports.

• Internal and external auditors have considered the contents of the report.

Recommendation:

The Council of Governors is asked to: 1) Consider and note the 2015/16 Annual Report.

PURPOSE

1. To allow the Board of Directors to formally approve the Trust’s Annual Report for 2015/16 which had been considered and recommended by the Audit Committee.

BACKGROUND

2. One of the statutory roles of the Council of Governors is to be presented with the trust’s Annul Report.

3. It is a statutory obligation that every NHS organisation produces an annual report, the contents of which are directed in part by national guidance, particularly in respect of the annual accounts, information about the Trust Board and senior manager remuneration, the quality account and the annual governance statement.

4. The Trust’s Annual Report draws on information the Trust Board has received throughout the year, in particular the following documents that the Trust Board considered this year, namely:

a) The annual accounts for the year ended 31 March 2015 [approved by the Board in May 2015]

b) The Quality Account for 2014/15 [approved by the Board in June 2015]

c) The annual governance statement for 2014/15 [approved by the Board in May 2015]

Agenda Item No: B2

Page 2 of 2

5. A draft of the Annual Report was considered by the Audit Committee in August 2016. Subject to alterations, all of which have been included, the Audit Committee has recommended the report to the Board of Directors for approval.

ANNUAL REPORT 2016/17 6. It should be noted that the annual report should identify the members of the Council of

Governors, including a description of the constituency or organisation that they represent, whether they were elected or appointed, and the duration of their appointments. The annual report should also identify the nominated lead governor.

7. Whilst this is not applicable to the 2015/16 Annual Report (a Council of Governors as not in place at this time), this will be reflected in the next Annual Report for 2016/17.

RECOMMENDATION

8. The Council of Governors are asked to:

a) Consider and note the 2015/16 Annual Report.

ELAINE DARBYSHIRE EXECUTIVE DIRECTOR OF COMMUNICATIONS AND CORPORATE GOVERNANCE September 2016

Annual Report2015/16

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INTRODUCTIONWelcome to our annual report for the financial year 2015/16 and an opportunity to celebrate our achievements, activity and performance across Mersey Care, and also importantly, share our vision and priorities.

Although this report covers the financial year 2015/16, it’s important to read it in the context of our five year plan and continuing efforts to build on our reputation for working side by side with service users and carers.

This ongoing story of involvement and co-production enabled us to ‘bring the outside in’ through greater use of volunteers. During the year numbers of volunteers grew from 443 to 660, giving hundreds of hours of assistance and commitment to a wide range of services each month. Significantly, 287 volunteers have experience of our services as either service users or carers, which helps us in harnessing their lived experience in support of quality, recovery and wellbeing. It echoes the growing influence of other methods of involvement such as the Service User and Carer Assembly, and by training and employing experts by experience in our own services.

Our aim for excellence by providing perfect care gathered momentum in a number of ways as we strove to improve quality, safety and care, transform existing services through innovation and develop new services and facilities that support recovery. Our partnership with the Risk Authority at Stanford University Medical Network is an indication of the ways we are searching out new opportunities as part of the Centre for Perfect Care and Wellbeing to push at the edges of innovations and improvement.

Providing perfect care also means thinking about how we do things and not just accepting the status quo as the best way of operation. A good example of all of this is No Force First (NFF), our initiative to minimise distress and injury to both patients and staff through use of restraint, either physical or medical. No Force First rightly won a national Patient Safety Award in July 2015 and we are now seen as the ‘go to’ organisation by NHS, prison and police services for guidance on reducing restraint. This work was a co-produced activity and goes to show that patients and staff working together is much greater than the sum of the parts.

Please note: Mersey Care NHS Trust became Mersey Care NHS Foundation Trust on 1 May 2016

Welcome to ourannual report for

2015 to 2016

Contents Introduction 2

Overview 4

Risk management 5

Performance analysis 6

Annual governance statement 10

Finance director’s report 28

Off-payroll engagements 38

Staff in post and policies

Sickness absence 40

Stakeholder engagement 41

Inclusion and participation 42

Independent auditor’s report 44

Notes to the accounts 50

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Our anti-stigma message also shone through, winning health and innovation awards for our Big Brew campaign and new Clock View Hospital. Events such as the Aintree Racecourse Talk Walk and World Mental Health Day activities in October 2015, ensured our local communities were fully behind us.

Our medium and high secure services and their recovery-based models of care also impressed awards panels, visitors and regulators alike for the quality of care they provided and their ability to combat stigma. Our secure services have made real strides in the reduction of average length of stay for patients, for instance just three years ago the average length of stay at Ashworth Hospital was 7.1 years; this has now fallen to around 5.6 years, a notable improvement by any standard, even more so when considering that back in 2002 it was 10.9 years.

In 2015 we launched our Zero Suicide policy and during the intervening period have worked hard to explain why we wanted to achieve zero suicide among those in our care and how we planned to achieve this goal. It has proved a difficult problem to penetrate, but we are developing and fine tuning our approach all the time. We owe that to the family and friends left behind by a suicide and the impact it often has on those who have cared for the patient. Many bereaved relatives have quietly but firmly indicated their support for what we are trying to achieve – for us, they have the most legitimate voice in ensuring we don’t ever step away from this work.

We set new targets to improve our service users’ physical health, recognising that people with a mental health condition can have a life expectancy 10 to 15 years lower than the UK average. This built on a range of therapeutic inpatient and community programmes we have continued to develop both in-house and with the help of other health, partner and cultural organisations. This is a complex area of care to deliver and there are a number of work streams across the Trust whose focus is to improve physical health for the people we care for. There’s a way to go before we can evidence that we are truly making a difference to the physical health of individuals and closing down the gap in equalities of health.

The way we care and support the biggest proportion of our service users, who are community based, has been at the forefront of recent remodelling of our clinical services. New community hubs and spokes were introduced to provide a base for community mental health teams which are less reliant on the traditional out-patient model and more rooted in agile working and home visits.

We started our new Talk Liverpool service in April 2015 providing a range of psychological interventions or ‘talking therapies’ for common mental health problems. This community initiative works with and builds on closer and productive working relations with GPs right across our local services. The service has encountered lengthy waiting times, particularly for Step 2, one to one therapy and Step 3, counselling for depression and cognitive behavioural therapy. A dedicated service lead has since produced an action plan focussing on access, waiting lists, assessment, recovery and patient experience within the care pathway. Developments have also been made in respect to aligning the entire integrated pathway within the Trust thus improving the service user experience and reducing duplication of assessments.

Our newest hospital had its first birthday in March 2016 and what is really great about Clock View is that it has become an anti-stigma statement – put simply, it is right and proper that those experiencing mental illness should have access to NHS

facilities of the highest standard. Lots of people including public figures and politicians, national and regional media, health and social care professionals, and people from the local community and schools, bear wider witness to its impact at helping break down the myths associated with mental health in a way that has made Clock View Hospital a valued part of the Walton landscape.

But Clock View has set a high benchmark as we strengthen our pledge for parity of esteem for all inpatients. Progress in providing modern facilities of a high standard that utilise therapeutic, healing environments also included the official opening of the Sid Watkins Building run by The Walton Centre NHS Foundation Trust where our Brain Injury Rehabilitation Service relocated to; and the STAR Unit, for people with a learning disability needing to access mental health inpatient services, moved to a fully refurbished unit at Rathbone Hospital. We brought forward proposals to build a new medium secure unit at Maghull, a new addictions unit at the Smithdown Health Park in Liverpool, and for two new mental health hospitals, in south Liverpool and Southport.

The Trust is regularly monitored and has many statutory obligations. In June 2015 we were rigorously inspected by the Care Quality Commission (CQC), the independent regulator of health and adult social care in England that exists to ensure health and social care services provide people with safe, effective, compassionate, high quality care. We achieved a ‘good’ rating which puts Mersey Care in the top 20 per cent of all hospitals – not just mental health trusts – that have ever been inspected by the CQC. This made us immensely proud as leaders of Mersey Care and is due to the dedication of our staff, their eagerness to improve, and the innovation within this organisation which has been achieved with the co-production of service users and carers.

Going hand in hand with all of this has been organisational change. We undertook elections for a Council of Governors in order to work towards becoming a foundation trust, which we formally gained authorisation for from 1 May 2016. This step was also important as it was suggested, due to our innovative reputation, that we apply to acquire Calderstones Partnership NHS Foundation Trust by NHS England’s Chief Executive Simon Stevens, as part of NHS England’s policy direction for learning disabilities.

Building a reputation for innovation can be beneficial in other ways too, and we were honoured that our organisation had two senior managers recognised within the top NHS leaders by the Health Service Journal.

We are thankful for the continued support of our staff, service users and carers, commissioners, regulators and other partners for helping us through such a busy time and building our aspirations for the future. Staff have always been our greatest asset and interestingly, more staff than the previous year (59 per cent against 56 per cent) responded to the annual NHS staff survey. This was 17 per cent higher than the national average for a mental health trust.

Among Mersey Care’s many achievements, challenges and approaches during 2015 to 2016 perhaps the words of Napoleon Bonaparte are most relevant when he said: “A leader is a dealer in hope.” That’s because hope is a recurring theme that service users and carers raise with us and we recognise it is incredibly important as a staging point in the journey to recovery. Mersey Care’s Board is totally committed to converting that hope into recovery, as often, and for as many, as possible.

Beatrice Fraenkel, Chairman Joe Rafferty, Chief Executive

ANNUALREPORT15/16

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OVERVIEW Mersey Care provides: adult and older people’s mental health, learning disability, addiction, psychological and low secure services for Liverpool, Sefton and Kirkby, medium secure services across Cheshire and Merseyside and high secure services to the North West of England, West Midlands and Wales.

The Trust is three years through a five-year programme of organisational and service transformation in order to significantly improve the quality of the services we provide and safely reduce cost as we do so. We call this continuous improvement in quality and cost, striving for perfect care. We also aim to play a full part in the health and social care economies we serve, by promoting and driving greater integration between mental and physical health and social care.

Our transformation programmes are designed, planned and delivered alongside our commissioners’ with considerable input from service users, carers, staff and our clinical leaders. We are a responsive, accountable organisation and we recognise it will be more important than ever to continue to account to our stakeholders as we implement significant change in our services throughout the final two years of our five-year plan.

As we make necessary improvements to our services, we support our clinical teams to maintain quality and safety during a period of increased demand on all mental health trusts. The task of balancing this need for service continuity and safety with the need to deliver necessary transformation of our services is never underestimated, and will continue to be a strong theme for our organisation.

Some of the Trust highlights from 2015/16 in our constant efforts to improve care for the people we serve are listed below:

• Mersey Care received a rating of ‘Good’ from the Care Quality Commission in 2015, putting our Trust in the top 20% of trusts nationally. The Trust’s services were rated as good for being effective, caring, responsive and well led. Both Mersey Care’s staff, and work on the management of falls were rated as ‘Outstanding’ and the CQC found there were impressive levels of co-production (working closely with patients, carers and service users). This is the start of the work we need to do as we continue on our journey to be outstanding.

• 2015/16 saw the Trust implement its Zero Suicide and No Force First initiatives which are being adopted across all of our services. This includes suicide prevention training for all staff, agreeing a safety plan with all service users, and working collaboratively with partners such as primary care to prevent suicide in those at risk.

• Mersey Care funded a restoration of Walton Library into a base for a range of life opportunities. The ‘Life Rooms’ are for service users, carers, staff and public and provide services to the wider community in a way that challenges stigma and promotes positive mental health and wellbeing. The much-loved building on Evered Avenue, off Rice Lane in Walton hosts a variety of ‘life rooms’ as well as retaining

popular library facilities. An employment and enterprise hub is helping Mersey Care service users get back to work, through volunteering opportunities and further education.

• pioneered by the Secure Division, the Dr Feelwell initiative takes the health messages that most of us hear in everyday life - eating well and keeping active - and turns them into lesson plans that can be put into practice within a secure environment. The design, with its cheery caricatures, was created by a graphic design group of patient recovery champions - patients who volunteer to talk about their recovery to their peers who may be feeling all hope is lost.

• the Trust moved several services to better buildings during 2015/16, to improve quality for the people we serve but also to reduce cost. New service moves include the move of community mental health teams to new hubs at Baird House and Norris Green and the move of the psychotherapy service to Haigh Road, Waterloo.

Providing high quality services in safe environments is our core purpose. We hold a strong position on quality as is reflected in the mental health benchmarking undertaken by the NHS Benchmarking Network (Benchmarking Network, 2015), and in our CQC ‘Good’ rating. Ensuring safe, high quality care means reducing unwarranted variation that is not due to clinical need or service user preference. Our transformation programmes in the local services division and the secure division, tackle variation in care to improve outcomes and patient experience.

Our strategy for perfect care requires service and workforce transformation and evidence tells us that leaders are the major influence on the success or failure of strategy implementation. We have adopted the collective leadership model, where it is acknowledged that all staff are leaders, impacting either positively or negatively on the outcomes of delivery processes.

We have invested significantly in the Aston team support programme and will continue to use this programme to enable our transformation programmes within the clinical divisions. This will support managers and build effective teams – working towards the establishment of team objectives, building on our Personal Achievement and Contribution Evaluation (PACE) performance and development review process.

Our Staff Engagement Plan continues, building on the established Your Voice, Your Change, Mega Conversations, Tell Joe and other initiatives informed by strategic themes of safe staffing, staff health and wellbeing and transformation.

Planning the size and configuration of the workforce has been divisionally led with specialist advisory support from relevant corporate teams to ensure models are aligned with our strategy for perfect care, our long term financial models and our cost improvement plans.

Our focus on reducing sickness absence through robust systems and processes continued during 2015/16 and particular attention will now be placed on sickness in inpatient settings across both secure and local services, where the analysis identified higher sickness absence rates than in community services. Long term sickness is also an area of concern and we will maintain our

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initiatives that focus on this, informed by intelligence from the clinical divisions. Human resources, staff sickness and occupational health teams will work together to identify innovative ways to help our staff to stay well.

Working side by side with service users and carers and taking a human rights based approach to providing services is embedded in our Trust values of continuous improvement, accountability, respect and enthusiasm and is of critical importance if we are to deliver large-scale transformation. Our People Participation Programme is based on the principles of volunteerism, recovery and social inclusion which enable transformation in clinical services through the development of our Recovery College programme, peer support and volunteering programmes.

We continue our progress to date in increasing service user and carer engagement and are a member of the Triangle of Care scheme (good practice in carer involvement and support in mental health services).

The refurbishment of the Kevin White Unit commenced in 2015/16, allowing the Trust to vacate Windsor Clinic on the Aintree Hospital site. The co-location of the addictions service will create efficiencies of £0.7m per annum.

Our five year digital strategy sets out the way in which we will put in place technology that helps us to provide better care. Our priority to date has been on establishing firm foundations; we have invested in new clinical information systems in local and secure services and in an electronic prescribing solution. Implementation will continue in 2016/17 and we will also focus on delivering interoperability; sharing information and starting to offer service users life enhancing digital technologies.

RISK MANAGEMENTRisk management enables individuals and the Trust as a whole to deal competently with all key risks, clinical and non-clinical, providing confidence that the Trust will achieve its objectives.

The Trust Board has overall responsibility for:

1. Ensuring robust systems of internal control are in place and are appropriately resourced.

2. Encouraging a culture whereby risk management is embedded across the Trust.

3. Routinely considering risks and collectively being assured that risks are being effectively managed.

4. Through its plans, set out its appetite and priorities in respect of the mitigation of risk when delivering a safe and high quality service.

The following committees have the key risk responsibilities:

1. The Executive Committee, the Performance, Investment and Finance Committee and the Quality Assurance Committee – on behalf of the Trust Board undertake the detailed scrutiny of those strategically significant risks that fall within their terms of reference, as well as recommending the inclusion of new or revised risks (and action plans) for matters where further assurance is required.

2. The Audit Committee – on behalf of the Trust Board, gains assurance on the robustness of the Trust’s risk management system and the adequacy of the underlying assurance processes and controls used to inform the Board and its committees about the management of risk.

3. The Risk Management Group – accountable to the Executive Committee, this group: i) oversees the Trust’s Risk Register (advising on the completeness and standardisation of risks, their controls, mitigation, action plans and assurance through the Trust’s governance systems), ii) ensures the risks recorded take account of the Trust Board’s risk appetite; iii) taking account of the Risk Register, advises the Board (via the Audit Committee, the Executive Committee, the Performance, Investment and Finance Committee and the Quality Assurance Committee) on the strategically significant risks for inclusion or review in the Trust’s Board Assurance Framework (taking account of the risk appetite).

They are supported by the following Board committees and a range of sub-committees, including, but not limited to:

• Remuneration and Terms of Service Committee

• Mental Health Act Manager’s Committee

• Health and Safety Sub-Committee

• Infection Control Sub-Committee

• Drugs and Therapeutics Sub-Committee

• Joint Senior Information Risk Owner and Caldicott Sub Committee

• Centre for Perfect Care Sub-Committee

• Local Services Division Governance Board

• Secure Division Governance Board

• Corporate Division Governance Board.

Since June 2015 the Executive Director of Nursing assumed responsibility for overseeing the Trust’s risk management arrangements, supported by the Head of Emergency Planning Risk and Resilience who is responsible for implementing effective systems and processes of risk management across the organisation including the identification, management and monitoring of risks; and providing reports, information and training as appropriate. Other senior Trust staff, managers and individual staff members, as well as executive and non-executive directors, clinical leads and other senior managers, are responsible for ensuring that they engage with risk management objectives in order to ensure that their clinical and managerial responsibilities for risk management are met.

Each of the three divisions has established governance arrangements in place; the divisional governance lead is responsible for implementing the Trust’s risk management processes on a local basis, as well as facilitating the sharing of best practice.

The development of effective risk management across the organisation is underpinned by clear processes and procedures which include:

• overarching strategic aims for risk management

• the Trust’s Risk Management Strategy (which was revised in September 2015)

• the adoption of a risk appetite statement in November 2015

• organisational risk management objectives

• the framework for achieving risk management objectives

• the organisational process for risk identification and analysis

• organisational risk management structures

• the development and application of risk registers within the organisation

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• incident reporting

• the accountability and responsibility arrangements for risk management

• the Board Assurance Framework.

Risks that were listed in the Board Assurance Framework as at March 2016 are shown in Table 4: Board Assurance Framework (March 2016) in the Annual Governance Statement further on in this document.

Embedding risk management as a core activity within the organisation is achieved through multiple systems and processes and 2015/16 has seen:

• a revised Board Assurance Framework

• the development of electronic risk management software across the organisation

• development and scrutiny of divisional risk registers

• work to improve the systems and processes that support the Board Assurance Framework

• changes to organisational committee structures to improve effectiveness and ensure all committees actively support the risk agenda

• reviews of, and improvements to, the complaints, claims and adverse incident functions

• registration from the Care Quality Commission.

The development of the Board Assurance Framework has enabled the Trust to systematically identify, record and action the key risks it faces in relation to the achievement of its overarching strategic objectives. An opinion on the assurance framework has been provided by Mersey Internal Audit Agency. The opinion (review) states that:

“The organisation’s Assurance Framework is structured to meet the NHS requirements, is visibly used by the Board and clearly reflects the risks discussed by the Board”.

PERFORMANCE ANALYSISThe Trust measures and reports performance in the following areas:

• quality

• external assessment

• finance

• workforce

• strategy and major programmes.

The performance reports confirm our achievements and provide information on actions to address adverse performance and impact on service users. The Trust’s approach to performance reporting is supported by a focus on performance improvement that utilises nationally recognised quality improvement methodologies.

Mersey Care has implemented a data quality kite-marking system to provide assurance of all key performance indicators used within the main performance reports for the Trust.

Fact fileThe Trust provided care, treatment and support to 41,934 service users in 2015/16 (41,173 in local services and 761 in secure services). It is dispersed across over 32 sites both of its own and premises rented from others. As at 31 March 2016 it had 639 inpatient beds and had 377,150 outpatient attendances and contacts in 2015/16.

As at 31 March 2016, the Trust was achieving the equality objective targets of 95% data completeness for protected characteristics of service users across gender, date of birth and preferred language. Further work is required to achieve the standard for ethnicity, disability, sexual orientation, marital status and religion. Source: ePEX and PACIS.

As at 31 March 2016, 21,297 patients were being provided with a service by Mersey Care, of which ethnicity was known for 19,190 (90.1%). 92% of service users with known ethnicity were white British. 89.7% of the local population served by the Trust are white British. Source: ePEX, PACIS and Census 2011 (Liverpool, Sefton and Knowsley Unitary Authorities).

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Ethnicity Number of Service Users % of Total Service Users

African 82 0.4

Arab 68 0.4

Asian other 85 0.4

Bangladeshi 16 0.1

Black British 215 1.1

Black African 0 0.0

Black Caribbean 0 0.0

Black other 54 0.3

Caribbean 30 0.2

Chinese 85 0.4

Indian 35 0.2

Mixed other 89 0.5

Other ethnicity 105 0.5

Pakistani 22 0.1

Somali 39 0.2

Turkish/Cypriot 11 0.1

White British 17,618 92.2

White European 159 0.8

White Irish 158 0.8

White other 80 0.4

White Welsh 7 0.0

White Asian 31 0.2

White/Black African 60 0.3

White/Black Caribbean 60 0.3

Total Service Users with Known Ethnicity 19,109

Number of Service Users

Patient chose not to answer 430

Not known 1,758

Total Service Users with Unknown Ethnicity 2,188

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The graph below shows that the greater majority of males on the caseload at 31 March 2016 were in the age group 40 to 49 (20%), whereas the larger majority of females were in the 80 to 89 (21%) age group. Although there is some activity for the younger age groups, most of these are in the 17 to 18 age bracket. There are 9.3% more females on the caseload than males, despite high secure services who have a male only service (190 residents at 31 March 2016). Source: ePEX and PACIS.

The Trust continues to work towards the achievement of the cluster view period adherence target. At 31 March 2016, the Trust was achieving a compliance rate of 52.03% against the target of 90%. Delivery of this standard is a key area for performance improvement in 2016/17. Source: ePEX.

There has been a 2.8% decrease in admissions in 2015/16 with an average of 276 admissions across the Trust per month compared with 326 admissions per month in 2014/15. Source: ePEX and PACIS.

Mental health trusts are required to demonstrate that service users are assessed (gatekept) prior to admission by crisis resolution home treatment (CRHT) teams to avoid unnecessary admissions to inpatient units. During 2015/16, 99.34% of service users admitted to acute inpatient wards were gatekept by CRHT, compared to 99.1% in 2014/15. The chart shows the percentage of admitted service users who were gatekept against the national target each month. Source: ePEX.

Mental health trusts are required to demonstrate that service users discharged on a care programme approach (CPA) are followed up within seven days of discharge. 98.74% of service users discharged on a CPA in 2015/16 were followed up within seven days, compared to 97.55% in 2014/15. The chart shows the percentage of service users followed up within seven days of discharge against the national target each month. Source: ePEX.

In 2015/16 an average of 20 delayed discharges were reported at the end of each month, the same as during 2014/15. These figures include delays attributable to the NHS and social care. The majority of service users delayed (42%) were awaiting nursing home placement. Source: ePEX.

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Local Services, Medium Secure, Low Secure and Offender Health Data

High Secure Services Data

The high secure service operates with wards of a maximum of 20 patients. The patient population as at 31 March 2016 was 195, compared to 190 as at 31 March 2015. In addition to the 195 inpatient population, there were 17 patients on leave as at 31 March 2016 (compared to 15 patients on leave as at 31 March 2015). Source: PACIS.

The table below shows the number of patients admitted to high secure services in 2015/16, and where they were admitted from. 41 patients (15% increase) were admitted in 2015/16, compared with 35 in 2014/15. Source: PACIS.

During 2015/16 the service received 85 referrals, which is a 24.7% increase on 2014/15 when the service received 64. Of the 85 patients referred for admission to the service in 2015/16, 44 were accepted (51.8%). This is a decrease compared with the proportion accepted in 2014/15 (56.25%). Source: PACIS.

The table below shows the number of patients accessing high secure services in 2015/16 based on the region from which they came. The majority of patients came from the North West, West Midlands and Wales (96.3% of patients in total). Source: PACIS.

Total number of patients provided with a service by Local Services Division in 2015/16 41,934

Total number of patients provided with a service by Medium Secure, Low Secure and Offender Health Services in 2015/16 695

Admission Source No. Patients % of Admissions

Prison 30 73.2

High secure hospital 0 0.0

Medium secure unit 9 22.0

Hospital 0 0.0

Low secure unit 0 0.0

Police station 2 4.9

Total 41 100.00

There were 42,227 consultant outpatient attendances and face to face consultant community contacts in 2015/16, compared with 38,953 in 2014/15 which is an 8% increase. Source: ePEX.

There were 334,923 face to face community contacts not carried out by a consultant in 2015/16, compared with 443,231 in 2014/15 which is a 24% decrease due to the offender health Liverpool prisons contract being awarded to another provider and a revision to the data reporting methodology for face to face contacts. Source: ePEX.

Region No. Patients % of Population

London 2 0.9

Northern including North West 123 57.2

Northern Ireland 1 0.5

South East 1 0.5

Wales 39 18.1

West Midlands 49 22.8

Total 215 100.00

Total number of patients provided with a service by high secure services in 2015/16

215

Source: PACIS.

The high secure service operates with wards of a maximum of 20 patients.

ANNUALREPORT15/16

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ANNUAL GOVERNANCE STATEMENTScope of responsibility

1. The Board is accountable for internal control. As Accountable Officer, and Chief Executive of this Board, I have responsibility for maintaining a sound system of internal control that supports the achievement of the organisation’s policies, aims and objectives. I also have responsibility for safeguarding the public funds and the organisation’s assets for which I am personally responsible as set out in the Accountable Officer Memorandum.

2. The Trust Board is ultimately accountable for the management of all risks in the organisation. The Chief Executive, supported by Board Members, has responsibility for the implementation of the Risk Management Strategy. These responsibilities are met in a variety of ways, with the advice of the executive lead for risk management who is supported by the Risk Management Group.

3. I, as Chief Executive, with overall responsibility for risk within Mersey Care NHS Trust, ensure the work of the Executive Committee and other specialist sub-committees is reviewed by the Trust Board. The Chief Executive has overall responsibility for having effective risk management systems in place within the Trust, and for meeting all statutory requirements and adhering to guidance issued by the Department of Health and the NHS Trust Development Authority in respect of risk and governance.

4. The Trust Board has overall responsibility for consideration of the Board Assurance Framework and resource allocation relating to the ‘significant risks’ of the Trust. The recommendations from Board Committees, taking account of advice from the Risk Management Group and relevant sub-committees, are made to the Trust Board where competing priorities are debated and agreed or accepted.

5. The capacity of the Trust to handle risk is achieved through delegated responsibilities in place as defined in the Scheme of Reservation and Delegation and the Risk Management Strategy, both documents being approved by the Trust Board. The Strategy outlined the Trust’s approach to risk, accountability arrangements and the risk management process including identification, analysis and evaluation.

6. The accountability arrangements for risk management in 2015/16 involved the following:

a. the Trust Board has overall responsibility for ensuring robust systems of internal control, encouraging a culture of risk management, routinely considering risks and defining its appetite for risk

b. the Executive Committee, the Performance, Investment and Finance Committee and the Quality Assurance Committee undertake the detailed scrutiny of those risks that fall within their terms of reference on behalf of the Trust Board, recommending new or revised risks to the Trust Board as appropriate

c. the Audit Committee on behalf of the Trust Board ensures that the Trust’s risk management systems are robust

d. the Risk Management Group, although accountable to the Executive Committee, reports and advises all Board Committees on potential/existing strategically significant risks, as well as liaising with the Divisional Governance Boards to ensure the consistency of risk reporting and also overseeing the Trust’s Risk Register

e. the Chief Executive, as the Trust’s Accountable Officer, has overall responsibility for the risk management processes and Risk Management Strategy

f. the lead Executive Director has responsibility, on behalf of the Chief Executive, for managing the Trust’s risk management process:

• until the end of May 2015, the Medical Director held this role

• from the beginning of June 2015 this responsibility was transferred to the Executive Director of Nursing

g. each Executive Director has responsibility for the identification and management of risks within their executive portfolios. Since April 2015 the following changes have been made to the executive portfolios:

• in September 2015 responsibility for strategy development transferred from the Executive Director of Communications and Corporate Governance to the Chief Executive (who is supported in discharging this responsibility by the Director of Strategy)

• in November 2015 responsibility for health and safety transferred from the Executive Director of Nursing to the Executive Director of Finance

• in February 2016 responsibility for IM&T and performance management transferred from the Executive Director of Finance to the Chief Executive (who is supported in discharging these responsibilities by the Director of Informatics and Performance Improvement)

• in April 2016 responsibility for the Freedom of Information Act and non-financial record management transferred from the Executive Director of Communications and Corporate Governance to the Chief Executive (who is supported in discharging these responsibilities by the Director of Informatics and Performance Improvement)

• in April 2016 responsibility for information governance (including the Senior Information Risk Officer) passed from the Executive Director of Finance to the Chief Executive (who is supported in discharging these responsibilities by the Director of Informatics and Performance Improvement)

h. the Executive Director of Finance (Deputy Chief Executive) was responsible for ensuring that the Trust had sound financial arrangements that were controlled and monitored through robust audit and accounting mechanisms

i. the Deputy Director of Nursing, as Director for the Prevention and Control of Infection (DIPC), was accountable for the management and prevention of health care associated infection

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j. the Director of Patient Safety was the Nominated Individual with the Care Quality Commission (CQC), and

the Executive Director of Nursing was accountable for CQC registration.

7. The development of effective and appropriate risk management processes within Mersey Care NHS Trust has been monitored by the Trust Board and through the various performance review processes of the NHS. The Chief Inspector of Hospitals report noted “the process for monitoring of risk was robust and the Board was clearly sighted on both the corporate and operational risks facing the organisation. These were presented in Board meetings via a risk register.”

8. Although already having a robust process, the Trust’s risk management processes were significantly revised in September 2015 with the adoption of the Risk Management Strategy 2015/2017 following an external review of the Trust’s clinical governance and risk management systems commissioned from the Good Governance Institute (see paragraph 27 below). The adoption of this new Strategy has involved a fundamental review of the strategically significant risks facing the Trust, which culminated in the replacement of the Board Assurance and Escalation Framework with the Board Assurance Framework in November 2015. The Risk Management Strategy was updated in November 2015 to take account of the Trust Board’s risk appetite statement and again in March 2016 to take account of changes to executive portfolios and governance arrangements.

9. The Board Assurance Framework and Risk Register have been regularly scrutinised and reviewed through the Trust’s governance structure and have been subject to various internal and external reviews. The Trust’s strategic intentions, policies, procedures, Board Assurance Framework and supporting documentation are openly accessible via the Mersey Care website to internal and external stakeholders for comment, scrutiny and reference.

2015/16 CONTRACTS10. During 2015/16, the Trust contracted with:

a. NHS Liverpool Clinical Commissioning Group (with Liverpool City Council) and NHS South Sefton Clinical Commissioning Group (and associates), for local mental health, learning disability and addiction services across the Liverpool, Sefton, Knowsley, Halton, St Helens areas

b. Liverpool, Sefton, Knowsley, Halton, St Helens and Lancashire Local Authorities for addiction services

c. NHS England (through its regional and various sub-regional teams) for:

• low, medium and high secure services and colleagues from NHS Wales in respect of high secure services

• a consultant psychiatry service to HMP Altcourse

• personality disorder services at HMP Garth

• mental health and addictions services in HMP Liverpool and HMP Kennet (although these contracts ceased at the end of May 2015)

d. Aintree University Hospitals NHS Foundation Trust for the Liverpool Community Alcohol Service and psychological support for Weight Management and Bariatric Services

e. Walton Centre NHS Foundation Trust for Neuropsychology and Neuropsychiatry services

f. Manchester Mental Health and Social Care Trust for psychiatry services to HMP Manchester

g. National Probation Service for community personality disorder services, Resettle and Psychologically Informed Planned Environment (PIPE) services.

11. Formal contract monitoring meetings and strategic commissioning meetings are established between commissioners and the Trust, where risks relating to the contract and/or the performance and delivery of services were addressed.

12. Commissioners were notified, and involved in the monitoring (as appropriate), of all serious incidents relating to circumstances involving service users of Trust services.

13. The Trust has a fully functioning Infection Control Committee which is co-chaired by the Deputy Director of Nursing (as the Trust’s Director for the Prevention and Control of Infection (DIPC)) and a Consultant Microbiologist from Aintree University Hospitals NHS Foundation Trust, who is employed on a sessional basis to undertake the role of Infection Control Doctor.

The governance framework of the organisation

14. The governance framework of the organisation is designed to manage operational and strategic risk and minimise the risk of failure to deliver the Trust’s strategy for perfect care.

15. The Trust Board is responsible for providing strategic leadership to the organisation and ensuring that the Trust exercises its functions effectively and efficiently. The Trust Board monitors the arrangements that are in place to maintain the quality and safety of the Trust’s services, including ensuring processes are in place for the management of risk.

Board committee structure and corporate governance arrangements

16. The terms of reference for all Board Committees were reviewed, updated and then approved by the Trust Board in March 2015. A further review of terms of reference for the Quality Assurance Committee was undertaken with revised terms of reference approved by the Trust Board in January 2016, whilst the terms of reference for other Board Committees were revised and approved by the Trust Board in March 2016. Both the Trust Board and its Board Committees have agreed annual cycles of business in place which outlined the area of business to be considered throughout the financial year.

17. The committee structure, to support achievement of the organisation’s strategic objectives, is outlined in Table 1 overleaf. Any Board Committee can request that a risk be considered for inclusion on the Trust’s risk register in line with the Trust’s risk management and risk escalation arrangements set out in the Risk Management Strategy.

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Table 1: NHS Trust Board Committee Structure

Committee Role

Audit Committee • acts as the central means by which the Trust Board is assured that effective internal control arrangements are in place as part of its annual cycle of business

• provides a form of independent check upon the executive arm of the Trust Board

• provides independent verification to the Trust Board on internal financial controls based on reports from internal and external auditors

Performance • provides assurance that the key performance and outcome measures for assessing delivery of the Trust’s Investment and strategic framework and annual operating plan are appropriate and that performance is consistent with Finance Committee those measures

• oversees and scrutinises financial strategically significant risks on behalf of the Trust Board, proposing new or revised risks where necessary

• ensures that financial plans, investment policy and major investment proposals are robust and that there are measures in place to identify and mitigate the risks and keep under review the management and status of those risks

• scrutinises in year financial performance (against the Trust’s budgets and plans), strategic financial plans and the delivery of cost improvement plans in both the short and long term

Quality Assurance • provides assurance to the Trust Board that the quality of service provision across the organisation is of Committee the highest standard

• oversees the delivery of action plans resulting from independent inquiries into serious untoward incidents

• oversees and scrutinises quality strategically significant risks on behalf of the Trust Board, proposing new or revised risks where necessary

Executive Committee • supports the Trust Board in setting and delivering the organisation’s strategic direction and priorities

• oversees the effective operational management of the Trust and delivery of continuous improvement in quality and to assess and control risk

• oversees and scrutinises regulatory and reputational strategically significant risks on behalf of the Trust Board, proposing new or revised risks where necessary

Foundation Trust • oversees the project being undertaken to ensure delivery of the Trust’s ambition to be a Project Board NHS Foundation Trust

• keeps under review the plans to mitigate risks associated with this project

• determines the policy on executive and very senior manager remuneration and contracts

• ensures that appropriate performance management arrangements are in place for Executive Directors and work with the Chief Executive to relate performance judgements to pay

• advises on the Trust’s overarching reward and benefit strategy for all staff, the arrangements in the wider NHS and any relevant guidance from the Treasury and regulators

Remuneration andTerms of Service Committee

18. Significant changes to the Trust’s governance arrangements from April 2015 relate to the appointment of additional members of the Trust Board, namely:

a. from 15 June 2015 the appointment of a new Non-Executive Director (Pam Williams) who subsequently became the Chair of the Audit Committee prior to the resignation of the existing Audit Committee Chair (Neil Willcox)

b. from 1 April 2016 the appointment of an additional Non-Executive Director post (Dr Robert Beardall) in line with the recommendations of the Board Skills Review (see paragraph 28 below)

c. from 1 September 2015 the appointment of the Director of Strategy to the Trust Board in a non-voting capacity

d. from 1 February 2016 the appointment of the Director of Informatics and Performance Improvement to the Trust Board in a non-voting capacity.

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19. In respect to the membership of Board Committees, the following significant changes have been made since April 2015:

a. the new Non-Executive Director (Pam Williams) becoming the chair of the Audit Committee as well as a member of the Remuneration and Terms of Service Committee and the Foundation Trust Project Board (from June 2015)

b. the resignation of a Non-Executive Director (Neil Willcox) from the Trust Board, the Audit Committee, the Remuneration and Terms of Service Committee and the Foundation Trust Project Board (from August 2015)

c. the additional Non-Executive Director (Dr Rob Beardall) joined the Quality Assurance Committee, the Remuneration and Terms of Service Committee and the Foundation Trust Project Board (from April 2016)

d. the Executive Director of Workforce became a voting member of the Executive Committee, the Performance, Investment and Finance Committee, the Quality Assurance Committee and the Foundation Trust Project Board (April 2015)

e. the Executive Director of Corporate Governance and Communications was removed from the Quality Assurance Committee (April 2015)

f. the Executive Director of Nursing was removed from the Performance, Investment and Finance Committee (April 2015)

g. the Director of Strategy became a voting member of the Executive Committee (April 2016)

h. the Director of Performance Improvement became a voting member of the Executive Committee (April 2016).

20. In respect of the role of the Board Committees, the following significant changes have been made since April 2015:

a. Audit Committee – in line with model terms of reference for Audit Committees contained in the NHS Audit Committee Handbook, the Audit Committee took on responsibility for reviewing the effectiveness of the Trust’s whistleblowing arrangements from April 2015

b. Executive Committee – from April 2016 the terms of reference have been amended to reflect the role of the Committee in receiving reports on risks in respect of regulatory and reputational matters as part of the revision of the Trust’s risk management processes following the adoption of the new Risk Management Strategy and those sub-committees and working groups that report to it

c. Performance, Investment and Finance Committee – additional duties were reflected in the Committee’s terms of reference in respect of the oversight of the Estates Framework and detailed scrutiny of major business cases were added from April 2016. As part of the February 2016 review of its terms of reference the Committee was renamed the Performance, Investment and Finance Committee (previously the Performance and Investment Committee) and the terms of reference updated to reflect two major changes:

• the outcome of the Ernst and Young due diligence report that was commissioned as part of the assessment process by Monitor of the Trust’s application for Foundation Trust status, which resulted in this Committee taking a more significant role on behalf of the Trust Board in scrutinising in year financial performance (against the Trust’s budgets and plans), strategic financial plans and the delivery of cost improvement plans in both the short and long term (see paragraph 30(b) below)

• the role of the Committee in receiving reports on risks in respect of financial matters as part of the revision of the Trust’s risk management processes following the adoption of the new Risk Management Strategy.

d. Quality Assurance Committee – from April 2015 an additional duty was added to reflect the assurance this Committee provides to the Audit Committee on the Trust’s clinical audit arrangements. In January 2016, the terms of reference have been amended to reflect the role of the Committee in receiving reports on risks in respect of quality matters as part of the revision of the Trust’s risk management processes following the adoption of the new Risk Management Strategy and those sub-committees and working groups that report to it

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e. Standing Committee of the Service User and Carer Assembly – from April 2015 this became an advisory committee of the Trust Board to provide a mechanism through which service users and carers can engage with Trust Board through the Chief Executive; to provide a mechanism through which service user and carer representatives can be recruited to Trust committees and groups; and allow the Standing Committee to advise who are asked to present the service user/carer story item at every Public Board Meeting. The issues discussed at the Standing Committee and with the Chief Executive are included in the Chief Executive’s Report to the public Board meeting.

21. The chairs of the Board Committees routinely present written and verbal reports to the Trust Board, to highlight any key issues, concerns and decisions at their meetings. Approved minutes of each Board Committee are also presented at public Board meetings (with the exception of the Remuneration and Terms of Service Committee which instead provides a highlight report to the Trust Board).

22. At the Audit Committee in April 2016, the Director of Audit Opinion and Annual Report 2015/16 from Mersey Internal Audit Agency (the Trust’s internal auditor) provided significant assurance for the period 2015/16 that there was a generally sound system of internal control designed to meet the organisation’s objectives, and that controls are generally being applied consistently. This Opinion was based upon the Assurance Framework which “is structured to meet the NHS requirements [and] is visibly used by the Board and clearly reflects the risks discussed by the Board”.

Attendance at Board and Board Committee Meetings

23. The Trust Board met a total of ten times in public in 2015/16 (in May, June, July, August, September, October, November, December 2015 and January, March 2016). Attendance was monitored throughout the year and is detailed in the table attached at Annex 1.

24. The Trust Board achieved an average attendance level of 86% by its members in 2015/16, with the various Board Committees achieving average attendance levels of between 72% and 88% by their members in 2015/16 (an average across all Board Committees of 79%).

Assessing Board Effectiveness Board and Organisational Reviews

25. Since April 2015 the Trust’s governance arrangements were subject to a series of external reviews, the findings of which were utilised to inform a number of the changes to the Trust’s governance framework (which are outlined in paragraphs 26 to 30 below). Such reviews included:

a. a Well-led Governance Framework review undertaken by the NHS Trust Development Authority

b. a Quality Governance and Risk review which the Trust commissioned from the Good Governance Institute

c. an independent review of Board skills undertaken by external auditors

d. the Chief Inspector of Hospitals Inspection

e. assessment of the Trust’s application for Foundation Trust status by regulators.

26. Well-led Governance Review – in March 2015 the NHS Trust Development Authority identified Mersey Care as one of four trusts across the country to take part in its pilot assessment process against the Well-led Framework for Governance Reviews which had been introduced by Monitor. This involved the Trust being assessed against the well-led framework, which included the TDA observing Trust Board and Board Committee meetings, scrutinising documents, interviewing members of the Trust Board and key staff and asking members of the Trust Board to complete various surveys. The TDA reported its finding from this pilot in May 2015, finding the Trust to be a “strongly led organisation with the evidence and findings indicating a professional, capable and effective Trust Board”. The review also identified

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a series of recommendations for which the Trust developed an action plan which was taken to the Trust Board, with the Quality Assurance Committee tasked with seeking assurance on completion by the Trust Board.

27. Quality Governance and Risk Review – this was a review commissioned by the Trust from the Good Governance Institute (GGI), initially as an assessment against the Quality Governance Assurance Framework and then against the Well-led Governance Framework when regulators indicated that would be the new standard. This review involved the GGI observing Trust Board and Board Committee meetings, scrutinising documents, interviewing members of the Trust Board and key staff and asking members of the Trust Board and staff to complete various surveys. In June 2015 the GGI found the Trust to be a “well performing organisation with excellent leadership and a clearly defined and well-articulated strategy”. The main recommendations focused on the handling of risk which help inform the review of risk management processes which culminated in the new Risk Management Strategy and Board Assurance Framework (see paragraph 8 above). An action plan was combined with the action plan for the well-led governance review above and approved by the Trust Board, with the Quality Assurance Committee tasked with seeking assurance on completion by the Trust Board.

28. Board Skills Review – the Trust commissioned this review from its external auditor, Grant Thornton, and the review involved interviews with all members of the Trust Board together with observations of Board Committee meetings. The report of this review was received in October 2016 and one of its conclusions was “we concur with the main findings of the two previous governance reviews (by the TDA and the Good Governance Institute), that [Mersey Care] has an experienced and capable board”. The Trust has now appointed a new Non-Executive Director who is an experienced clinician (Dr Rob Beardall) and ensured that quality risks and representatives from each of the clinical divisions are part of the agenda for the Quality Assurance Committee.

29. Chief Inspector of Hospitals Inspection (Care Quality Commission) – the inspection took place at the beginning of June 2015, with the Quality Summit and report being published in October 2015. The Trust received an overall rating of ‘Good’ as a result of the inspection with the report noting that: “The Trust was well led …. the Board was highly aspirational and committed to delivering services which were of high quality and where every person matters. It was clear most staff across the organisation understood, and were committed to, the vision and values of the organisation. These were well communicated and the work to win both the hearts and minds was apparent”.

“We concluded that the Board worked well together and were professional and respectful in their interactions. They were able to offer high challenge, without rancour or defensiveness. They were passionate about people and committed to understanding, first and foremost, the lived ‘experience’ of people who use services.”

An action plan to address the issues identified in the Inspector’s report has been approved by the Trust Board, with the Quality Assurance Committee receiving assurance on its delivery on behalf of the Trust Board.

30. Assessment of the Trust’s Foundation Trust (FT) application – the overall ‘Good’ rating from the CQC Inspection triggered the rapid assessment of the Trust’s FT application which has involved the following external reviews since July 2015:

a. NHS Trust Development Authority (TDA) – as part of its process to assessing Mersey Care’s readiness to proceed to the Monitor assessment process the TDA, using the Well-led Governance Framework as well as other tools, observed Trust Board and Committee meetings, interviewed key staff and reviewed the Trust’s Integrated Business Plan, together with holding a Board to Board meeting between the Trust and the TDA at the end of October 2015. At the TDA’s Board meeting on 19 November 2015 the TDA approved the referral of the Trust to Monitor for assessment toward FT authorisation

b. Historic Due Diligence, review of working capital and financial reporting procedures – as part of its assessment process Monitor requires all applicants to undergo this due diligence exercise and Ernst and Young were commissioned to undertake this work. It involved detailed scrutiny of the Trust’s financial plans, documentation as well as observance of the Trust Board and Board Committee meetings and interviews with members of the Trust Board and key staff. A report was provided to the Trust in December 2015, the outcome from this exercise resulted in 25 recommendations which were reflected in an action plan developed by the Trust. By the end of January 2016 all these identified actions had been completed. The Trust received a positive opinion from Ernst and Young in April 2016, with this opinion also being used by Monitor to inform their assessment process regarding FT authorisation

c. Monitor Assessment Process – the Monitor process involves the appointment of an assessment team to review the Trust’s application, which involves observance of Trust Board and Board Committee meetings, interviews with members of the Board and key staff and detailed scrutiny of the Trust’s strategy and financial plans. As part of the process the Trust was required to submit a range of documentation for consideration by Monitor, as well as provide comment on the opinion provided by Ernst and Young. The process also involved a Board to Board meeting between Monitor and Mersey Care which took place on 4 March 2016. At the end of April 2016 Monitor authorised Mersey Care as a FT with effect from 1 May 2016 and the Trust is now subject to FT regulation. In terms of the Trust governance arrangements the Trust is now subject to its FT Constitution, which means it is accountable to its membership through a Council of Governors and a Board of Directors.

31. The results of these reviews have informed the continuing review and development of the Trust’s governance and risk management arrangements, as well as our readiness for Foundation Trust status.

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Individual Reviews

32. In addition, the performance of individual Board members has been assessed through annual appraisal processes as follows:

a. the Trust’s Chairman is subject to an independent appraisal process undertaken by the NHS Trust Development Authority

b. Non-executive directors/Board advisory members are subject to an appraisal process undertaken by the Trust’s Chairman against their agreed objectives

c. Executive directors are subject to the organisational-wide Personal Achievement and Contribution Evaluation (PACE) process which links individual’s objectives to the Trust’s strategy for perfect care objectives.

Corporate Governance Arrangements

33. The Trust commissions regular reviews of its delegation arrangements through the internal audit function and the Audit Committee receives assurances of the effectiveness of the Board Committees through provision of annual Board Committee reports. In addition, the Board undertakes regular reviews of its delegated arrangements through ongoing reviews of its Standing Orders, Standing Financial Instructions and Scheme of Reservation and Delegation.

34. Mersey Care NHS Trust is committed to effective corporate governance. As an aspirant Foundation Trust in 2015/16, an assessment has been undertaken of the Trust’s level of compliance with the NHS Foundation Trust Code of Governance, where this is applicable to the governance of a NHS trust.

Proposed Acquisition of Calderstones Partnership NHS Foundation Trust

35. At the end of March 2016 the Trust Board approved, subject to confirmation of transitional funding and indemnities from commissioners, a Final Business Case proposing the acquisition of Calderstones Partnership NHS Foundation Trust (Calderstones) by Mersey Care. Such an acquisition was subject to Mersey Care obtaining Foundation Trust status and approval by regulators, with a working date for the acquisition of 1 July 2016 (subject to approval/confirmation).

36. In the medium term it is intended to fully integrate Calderstones’ services into the existing governance, committee and leadership arrangements for the Trust, although initially it is intended to create an additional clinical division – the Specialist Learning Disability Division – as part of a planned transition process. The acquisition will also involve the Trust appointing an additional executive director post (for operations) and will require changes to Mersey Care’s Foundation Trust Constitution and Council of Governors so as to ensure the Foundation Trust remains reflective of the enlarged area it would then serve.

37. As part of this process of assessing this application, Monitor (NHS Improvement) has appointed an assessment team to review the application, which will also include a financial due diligence process. This assessment process will involve a further review of the Trust’s proposed governance and assurance arrangements for the acquisition.

38. To oversee the development of the Trust’s plans the Trust has formed a Joint Oversight Group with Calderstones, which is chaired by Mersey Care’s Chairman and includes non-executive directors and members of the Executive Teams from both Trusts. This is supported by an Acquisition Steering Group chaired by Mersey Care’s Chief Executive. As well as reporting to the Boards of both organisations (through their respective Chief Executives) the Joint Oversight Group also provides assurance to the Calderstones Strategic Partnership Board, whose membership is drawn from local authority, NHS commissioners and both Trusts, and is responsible for overseeing the implementation of the Homes not Hospitals national policy as it applies to Calderstones and its Whalley hospital site. The Strategic Partnership Board is chaired by NHS England with its deputy chair from NHS Improvement (Monitor).

Quality Governance

39. In March 2015 the Trust Board approved the Trust’s Framework for the Governance of Quality. This Framework outlined how established arrangements (such as the work of the weekly Quality Surveillance Group, Quality Review Visits, monitoring of complaints, patient experience, serious untoward incidents, and action plans resulting from independent reports in incidents, etc.) had been combined with new developments since January 2015 (such as clinical team self-assessments against CQC Fundamental Standards, weekly Divisional Quality Surveillance Groups and weekly Executive Surveillance) to monitor and escalate concerns/emerging concerns and issues relating to the delivery of services and the CQC’s Fundamental Standards using a wide range of information and intelligence sources. Through the Framework the Trust assesses whether quality concerns are thematic (ie across more than one team) and the appropriate response to mitigate these concerns/emerging concerns by keeping the affected teams under special review.

40. A Programme of Clinical Audit and Improvement was in place for 2015/16 outlining the key quality areas of focus and implementation of this Programme was overseen by the Quality Assurance Committee and Audit Committee in line with their terms of reference. Key areas of focus for audit and improvement in 2015/16 were:

a. Fundamental/Regulatory standards

b. Perfect Care and Quality Account priorities

c. Divisional quality priorities (including NICE guidance)

d. National Clinical Audit Patients Outcomes Programme (NCAPOP)

e. Participation in National Accreditation Schemes

f. Clinical and student led audits.

41. Due to concerns about the delay in delivery of the Clinical Audit Programme for 2015/16, the Quality Assurance Committee referred the matter to the Audit Committee which sought additional assurance that the programme would be achieved for 2015/16. Assurance on the performance against the programme has been provided to both the Audit and Quality Assurance Committees through the year. Following its meeting in February 2016 the Audit Committee was sufficiently assured that the programme would be delivered, that it returned the oversight of the programme to the Quality Assurance Committee.

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42. The Trust has developed a Quality Account for 2015/16 that highlighted the quality improvements made across the Trust during this period and the priorities for quality improvement in 2016/17. The Quality Account has been shared with members of the Perfect Care and Wellbeing Sub-Committee, the Standing Committee of the Service User and Carer Assembly, Trust directors and the Trust Board to ensure all of the information contained within is accurate. Internal audit has also performed a review in year of an element of the data quality contained within the Quality Account and further analysis of the quality of data will be undertaken by external audit as part of their annual plan.

43. To determine the quality improvement priority areas for 2015/16 the Trust engaged in extensive consultation and this included the Perfect Care and Wellbeing Sub-Committee, internal groups and committees, service users and carers, local Healthwatch and commissioners.

44. Table 2 overleaf shows the quality priorities agreed for 2015/16, which are linked to the Trust’s strategy for perfect care, and highlights delivery against these quality priorities.

45. More detailed information about the progress against these priority areas may be found in the Trust’s Quality Account for 2015/16, available on the Trust’s website.

46. As part of the aforementioned consultation exercise, the Trust will be seeking the views of service users, staff and other stakeholders with regard to what our priority improvement areas for 2016/17 will be. These priorities should build on our achievements in 2015/16 and may include three priorities with the following metrics:

a. Priority 1: No Force First

• by July 2016, individualised performance outcomes and targets will be developed for each inpatient area

• by July 2016 a guide of strategies for implementing No Force First will be developed and roll out commenced

• by July 2016 a research project will commence to evaluate the impact of on-ward safety, staff and service user satisfaction and workforce metrics

• by September 2016 a policy on reducing restrictive practice will be developed

• by March 2017 there will be a further 20% reduction in restraint across all wards from the baseline position.

b. Priority 2: Towards Zero Suicide

• by March 2017 safety planning intervention to be embedded at the following high risk points in local service:

• safe inpatient discharge plan pathway

• stepped up care pathway

• by March 2017 all staff in primary service user contact roles will have undertaken level 2, team based, clinical risk management and intervention training

• by December 2016 the Safe from Suicide Team will monitor and measure suicide and near-fatal self-harm data and respond with enhanced support and interventions, including training, supervision, psychologically informed risk formulations and safety planning

• by December 2016 four pilot wards will have implemented a design based solution to reduce self-harm. This will be rolled out across all inpatient wards by March 2017

• by December 2016 a ‘zero suicide app’ will be developed for implementation across the Trust (in conjunction with Stanford University)

c. Priority 3: Improvements in Physical Health Pathways

• by October 2016 the community physical health pathway will be reviewed and implementation of a revised standard will commence in January 2017

• by March 2017 100% of community service users subject to a Care Programme Approach will have a completed physical health pathway

• by December 2016 100% of inpatients will have metabolic screening completed in line with the National Audit of Schizophrenia standards

• by March 2017 100% of all inpatients identified at risk, following cardio-metabolic screening, will have a record of interventions offered

• by March 2017 all inpatients screened as smokers will have prescribed nicotine replacement therapy on admission.

47. The Trust Board receives details of all serious untoward incidents through the Integrated Governance of Quality Report, with more detailed scrutiny undertaken by the Quality Assurance Committee on behalf of the Trust Board. In addition the Trust Board receives, in full, all internal and external independent investigation reports into serious incidents, together with action plans which outline how lessons are learnt and appropriate controls are either refreshed or put in place to prevent/reduce the possibility of reccurrence. Assurance on the delivery of these action plans is overseen by the Quality Assurance Committee on behalf of the Trust Board.

48. Following the publication in December 2015 of the independent review commissioned by NHS England from Mazars into the quality of processes for investigating and reporting patient deaths in mental health and learning disability services at Southern Health NHS Foundation Trust, the Trust has commissioned a report from Mersey Internal Audit Agency into Mersey Care’s structure and systems for investigating the deaths of service users in order to provide the Board with independent assurance. Members of the Executive Team have also met with representatives from Mazars to facilitate greater learning of the issues raised in their report.

49. The Trust is compliant with Care Quality Commission’s fundamental standards and remained registered with the Care Quality Commission throughout 2015/16 without conditions.

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50. In addition, following the Chief Inspector of Hospitals visit in June 2015 the Trust received an overall rating of ‘Good’, with ratings of ‘Good’ for services being effective, caring, responsive and well-led but a rating of ‘Requires Improvement’ for services being safe. The CQC noted that “the Trust has good systems in place which helped them understand what was happening on the front line. These systems helped them to respond quickly and efficiently to areas of concern”. An action plan to address the issues raised by the inspection visit was brought to an extraordinary Trust Board meeting on October 2015 (the month of publication); with the Quality Assurance Committee tasked with seeking assurance on the delivery of this action plan on behalf of the Trust Board.

NHS Trust Development Authority’s Accountability Framework

51. Throughout 2015/16 the Trust regularly monitored itself against the NHS Trust Development Authority’s (TDA) Accountability Framework in the form of a self-assessment which was reported to the Trust Board and the TDA. The Overall Oversight and Escalation Score is agreed with the TDA through regular Integrated Delivery Meetings. The Trust’s self-assessment of its performance against the TDA’s Accountability Framework – which is reflected in the overall escalation score - has been informed by the technical guidance that accompanies the TDA’s Accountability Framework.

No Description Achieved

1 No Force First

• By March 2016 all wards will have introduced the No Force First initiative that will result in Achieved a Trust wide reduction in the use of physical and medication led restraint

2 Zero Suicide

• By September 2015 a Safe from Suicide Team will be established, the team will be led by a new Achieved associate medical director. The Safe from Suicide team will monitor and report to the Board on the progress against the Board approved (May 2015) Zero Suicide strategy. We will work with academic partners and establish a definitive baseline measure for suicide

3 Improvements in Physical Health

• We will commence a staged implementation of a Smoke Free policy in September 2015 Achieved

• We will monitor the impact of the policy on service user experience via our monthly patient Achieved experience survey

• All inpatients will have metabolic screening completed in line with the National Audit of Not Achieved Schizophrenia standards by March 2016

4 Falls

• The Trust will approve a revised Fall strategy by September 2015 Achieved

• The Trust will achieve a 20% reduction in the harm associated with falls by March 2016 Not Achieved

5 Self Harm

• The Trust will approve by September 2015 a Management of Self-Harm strategy Achieved

• The Trust will evaluate the pilot project in A&E to reduce people re-presenting with self harm at Partially A&E by October 2015 and set new ambitious targets approved by the Executive Committee Achieved based on the outcomes of the review of the pilot

• The Trust will achieve a reduction of 20% in harm associated with the use of ligatures in inpatient settings Not Achieved

6 Recovery Focussed Outcome Measures

• There is no national consensus on outcome measures covering the breadth of services provided by the Trust. We will establish outcome measures for the three initiatives below. We will commence collection of this data from April 2016 Achieved

• No Force First

• Zero Suicide

• Physical Health Care

Table 2: Quality Account Priorities and Progress for 2015/16

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52. As at the end of 2016 the Trust was assessed as having an overall escalation score as a Level 4 Trust, with the scores for the different elements shown in Table 3 below.

*The sustainability scoring mechanism has not been defined by the TDA so is currently feeding into the moderation element of the oversight and escalation framework.

53. The amber score recorded for the Finance RAG Assessment occurred as a result of the Trust changing its capital resource limit mid-year. Although the TDA was informed of this change a mechanism does not exist to allow the submission of revised figures in-year. The Trust has achieved all of its statutory financial duties for 2015/16.

54. Mersey Care is now subject to monitoring against waiting times and other access targets from April 2015. These relate to Referral to Treatment (RTT) indicators in relation to its Improving Access to Psychological Therapies (IAPT) service (known locally as Talk Liverpool) and the Early Intervention in Psychosis indicators.

55. In respect of its Talk Liverpool service (which is a new service to the Trust from April 2015 having won a tender) since October 2015 the Trust has been subject to a contract performance notice from NHS Liverpool Clinical Commissioning Group (CCG) in respect of continued underperformance against access and recovery targets. Recognising that some of the operational difficulties being faced are as a result of the waiting list handed over by the previous provider, NHS Liverpool CCG continues to be supportive (including additional financial support) of the Trust’s response. An action plan is in place and reports have been presented to the Trust Board and the Performance, Investment and Finance Committee on the work that is being undertaken. The Trust continues to meet regularly with NHS Liverpool CCG to discuss progress.

56. Although the Trust is not formally accountable for 12-hour waiting breaches that occur at local accident and emergency units (following a decision to admit), under our contract we are required to cooperate with local accident and emergency providers to minimise any delay in admissions for those attendees who require admission to our mental health or learning disability services. The Trust was notified of such issues occurring at Aintree University Hospital NHS Foundation Trust and the Royal Liverpool and Broadgreen University Hospitals NHS Trust and a contract performance notice has been issued by NHS Liverpool CCG in August 2015, which remains in place. The Trust continues to work with local acute providers, local authorities and commissioners to

address this issue. Internally such breaches are now recorded on our Datix incident management system and we have established escalation procedures with local acute trusts, including notification via our on-call mechanisms should this be necessary.

57. In addition, the Trust was subject to a contract performance notice from NHS Liverpool CCG in January 2016 in respect of a problem with the Trust’s month six data submission to the Health and Social Care Information Centre. This has now been closed by commissioners.

58. Assurance on all such performance issues is provided via our monthly Care at a Glance performance report which is scrutinised by the Executive Committee and the Performance, Investment and Finance Committee on behalf of the Trust Board. Where our surveillance processes also identify possible quality issues these may also be scrutinised by the Quality Assurance Committee on behalf of the Trust Board.

Other Regulatory Requirements

59. Control measures are in place to ensure that all the organisation’s obligations under equality, diversity and human rights legislation are complied with.

60. As an employer with staff entitled to membership of the NHS Pension Scheme, control measures are in place to ensure all employer obligations contained within the Scheme regulations are complied with. This includes ensuring that deductions from salary, employer’s contributions and payments into the Scheme are in accordance with the Scheme rules, and that member Pension Scheme records are accurately updated in accordance with the timescales detailed in the Regulations.

61. In line with the Climate Change Act 2008 and relevant NHS guidance, the Trust approved a Sustainability Development Management Plan in July 2015. The Trust is online to deliver the targets set for the NHS in respect of carbon reduction (ie 34% reduction by 2020). Part of this process involves compliance with the Good Corporate Citizen Score; although overall we have achieved a score of 35.83% for 2015/16 the Trust recognises that further work is necessary in respect of the travel and procurement sections of this score. Assurance on progress is provided to the Board through an annual report which is being considered at May 2016’s meeting.

62. As well as meetings with officers through the year, the Board has met with the Trust’s three main clinical commissioning groups (CCGs) over the last year (ie NHS Liverpool, NHS South Sefton and NHS Southport and Formby CCGs) as well as with representatives from the Trust’s three main local Healthwatch organisations (ie Knowsley, Liverpool and Sefton). As well as the Calderstones Strategic Partnership Board, the Trust participates in the Southport and Ormskirk Strategic Partnership Board and the Mersey Care Strategic Partnership Board.

63. In line with the latest planning guidance issued by NHS England about delivering the Five-Year Forward Plan, the Trust is part of the arrangements across the Liverpool city region and Cheshire to develop a local health and care system Sustainability and Transformation Plan.

64. Mersey Care also works in partnership with Liverpool Heart and Chest Hospital NHS Foundation Trust, Liverpool Community

Element Score

Quality Score 4

Finance RAG Assessment Green

Sustainability Score* Not Available

Moderation Issues Yes

Overall Score 4

Table 3: Overall Escalation Score as at March 2016

20

Health NHS Trust, NHS Liverpool Clinical Commissioning Group (CCG), NHS South Sefton CCG and Southport and Formby CCG for the provision of IT and telephony services through Informatics Merseyside, which is held to account by a Partnership Board. Informatics Merseyside is hosted by Mersey Care and has its own audit plan with Mersey Internal Audit Agency, which is approved and subject to scrutiny by both the Partnership Board and Mersey Care’s Audit Committee. Quarterly ‘governance check’ meetings are held with Informatics Merseyside by the Director of Informatics and Performance Improvement to ensure it operates within Mersey Care’s governance framework, policies and processes (eg finance, workforce, risk).

Risk Assessment Updating the Risk Management Process

65. As has been outlined in paragraph 8 above, although it is recognised that the Trust had robust arrangements for the management of risks, the Trust’s risk management processes were revisited in September 2015 with the adoption of a new Risk Management Strategy, taking account of the issues raised in the GGI’s review (see paragraph 27 above). This review has resulted in the Trust:

a. adopting a new format for its Board Assurance Framework which is reviewed and approved every two months by the Trust Board (replacing the Board Assurance and Escalation Framework)

b. establishing a single Trust wide Risk Register on the Covalent risk reporting system (replacing a range of separate division and project-specific risk registers)

c. approving a risk appetite statement (included in the November 2015 update of the Risk Management Strategy approved by the Trust Board)

d. clarifying the role of Board committees in overseeing and considering different categories of risk, making recommendation to the Trust Board as appropriate as to whether strategically significant risks should be added, revised or removed. All strategically significant risks are categorised as shown below, with particular Board committees taking the lead in reviewing these risks:

• compliance/regulatory risks (Executive Committee)

• financial risks (Performance, Investment and Finance Committee)

• innovation/quality/outcomes risks (Quality Assurance Committee)

• reputation risks (Executive Committee).

e. clarifying the escalation process for risks from wards/teams to the Board, including via the Trust’s surveillance processes

f. establishing a new Risk Management Group chaired by the Executive Director of Nursing with senior representatives from every division whose role is to:

• oversee the Trust’s Risk Register (advising on the completeness and standardisation of risks, their controls, mitigation, action plans and assurance through the Trust’s governance systems) and ensures the risks recorded take account of the Trust Board’s risk appetite

• taking account of the Risk Register, to advise the Trust Board (via the Board Committee) on the strategically significant risks for inclusion, update or removal on the Trust’s Board Assurance Framework (taking account of the risk appetite)

• liaise with Divisional Governance Boards on the standardisation of risk descriptions and risk scores and the robustness of the controls to mitigate those risks included in the Trust’s Risk Register (and Board Assurance Framework)

• assist the Executive Director of Nursing on providing assurance to Audit Committee on the robustness of the Trust’s risk management process.

g. ensuring that all risks now include:

• an initial, current and target risk rating score

• the date the risk was added and a date when it will be reviewed

• an action lead, accountable manager and executive owner so as to ensure clear ownership.

h. appointing a new operational lead for risk, the Head of Risk and Resilience, to support the Executive Director of Nursing.

Strategically Significant Risks in 2015/16

66. The above changes mean that the Trust now has a more dynamic approach to risk management, which is reflected in the risks escalated to the Trust Board and Board committees to be considered as strategically significant risks by the Risk Management Group. As part of this refresh, the strategically significant risks facing the Trust were comprehensively reviewed, also taking into account the Trust’s risk appetite statement. A revised and updated Board Assurance Framework, in its new format, was approved by the Board in November 2015.

67. As the approach to risk management is now more dynamic, it is not uncommon for risks to be regarded as strategically significant for a short time, which means that strategically significant risks may be included in the Board Assurance Framework at the request of an Executive Director outside of the normal Trust Board/Board committee reporting cycles. For example during episodes of industrial action over the last year the potential impact would have been included as a strategically significant risk in preparation to/on the day of the industrial action and then removed. When risks have been added and then removed in this manner, the next report to the Trust Board will include details.

68. Table 4 highlights the strategically significant risks the Trust Board considered at its meeting in March 2016, listed against the four main objectives of the Trust’s strategy for perfect care.

69. Five incidents have been reported to the Information Commissioners Office in respect of data loss/data breaches, further information on which can be found in paragraphs 90 to 92.

21

Our Future There is a risk that the Trust will not embrace its appetite for risk in innovation

Risk that we will fail to engage effectively with primary and social care and we will not formally agree a pathway approach to integrated care

(FT status) There is a risk that the Trust will fail to gain Foundation Trust status

Risk that the Trust research and development agenda is not aligned to perfect care

There is a risk that robust planning will not be put in place to manage the transition arrangements with Calderstones (subject to the Board agreeing the acquisition)

Risk that the Trust will not embrace its appetite for risk in the areas of growth

Possible delay in CQC registration for Calderstones

David Fearnley

Neil Smith

Elaine

Darbyshire

David Fearnley

Elaine Darbyshire

Elaine Darbyshire

Ray Walker

4

4

3

3

3

4

4

5 Nov 2015

5 Nov 2015

28 Apr 2014

5 Nov 2015

13 Nov 2015

5 Nov 2015

7 Jan 2016

16

12

6

12

9

15

12

12

12

9

9

9

8

8

4

8

3

3

3

8

8

Objective Title Executive Impact Date Initial Current Target Owner Identified Risk Risk Score Rating Rating

Our People

Our Resources

Our Services

Risk that the People Plan including Workforce Plan, Health and Wellbeing Plan and Engagement Plan will not be implemented effectively

Risk that we fail to deliver sustainable redesign plans

Risk that we do not deliver our enabling plan (digital, financial, people, and estates)

Delays in access to beds

Talk Liverpool (IAPT) performance

Risk is that long term agency medical locums may leave the Trust because of the new capped rate rules from 1 April 2016

Risk that the large scale transformational programmes are not managed effectively

Risk that due to the block contract we experience an increase in demand for services

Risk that the Trust will be unable to provide safe staffing on wards

Risk that the focus on the drivers for financial sustainability and quality improvement become out of balance

Risk that the Trust approaches to perfect care will not be implemented effectively.

Amanda Oates

Neil Smith

Neil Smith

Neil Smith

Neil Smith

Amanda Oates

Neil Smith

Neil Smith

Ray Walker

Joe Rafferty

David Fearnley

4

4

4

4

4

4

4

3

4

4

3

5 Nov 2015

5 Nov 2015

5 Nov 2015

31 Jul 2013

30 Dec 2015

28 Jan 2016

5 Nov 2015

5 Nov 2015

5 Nov 2015

5 Nov 2015

5 Nov 2015

16

12

12

12

16

16

12

15

12

12

12

8

12

12

16

16

16

12

12

12

8

6

6

4

4

4

4

8

8

6

4

8

6

Table 4: Board Assurance Framework (March 2016)

22

THE RISK CONTROL FRAMEWORK70. The development of effective risk management across

the organisation is underpinned by clear processes and procedures which include:

a. overarching strategic aims for risk management

b. the Trust’s Risk Management strategy

c. the Trust’s Risk Management policy

d. organisational risk management objectives

e. the organisational process for risk identification and analysis

f. a definition of significant risk and acceptable risk within the organisation

g. organisational risk management structures

h. the development and application of risk registers within the organisation

i. incident reporting

j. the accountability and responsibility arrangements for risk management

k. the Board Assurance Framework.

71. At the commencement of 2015/16 the Executive Committee and the Audit Committee were the Board’s overarching committees responsible for scrutinising the arrangements in place for managing risk. These committees are supported by the following Board Committees and sub-committees/groups:

• Performance, Investment and Finance Committee

• Quality Assurance Committee

• Remuneration and Terms of Reference Committee

• Foundation Trust Project Board

• Mental Health Act Manager’s Sub-Committee

• Health and Safety Sub-Committee

• Infection Control Sub-Committee

• Drugs and Therapeutics Sub-Committee

• Joint Information Governance, SIRO and Caldicott Sub-Committee

• Safeguarding Group

• Risk Management Group

• Surveillance Group

• Executive Surveillance Group.

72. As has been explained in paragraph 65 above, following the external reviews of governance and risk, the existing arrangement for managing risk with the Trust were reviewed in respect of assurance and escalation systems, risk culture, roles, responsibilities and ownership, risk process and governance structure. This included the transfer of executive responsibility for risk management from the Medical Director to the Executive Director of Nursing.

73. The Trust’s Risk Management strategy provides a framework for managing risk within the Trust and outlines the objectives of risk management; the structure in place to support the management of risk across the organisations; and the systems and processes to ensure identification, management and control of risk. The revised Risk Management Strategy includes a number of key components and changes, including:

a. a clear objective for the strategy, including a plan to achieve this objective over the next two years

b. a system of risk classification and risk stratification that makes clear who and where risks are to be escalated and reviewed

c. a framework to determine the Trust’s appetite for risk (with the risk appetite being explored with the Board as part of the Board development sessions)

d. a single Trust wide Risk Register

e. a combined risk report and Board Assurance Framework

f. a process to moderate and standardise the approach to assessing risk (coordinated by the Risk Management group)

g. the requirement for all risks to have three risk scores – an initial score, a current score and a target risk score

h. greater alignment between risk identification and quality improvement

i. greater alignment between risks and the assurance in respect of the controls/mitigation that has been put in place.

74. Mersey Care NHS Trust recognises the need for significant and robust focus on the identification and management of risks and therefore places risk within an integral part of our overall approach to quality. Therefore, risk management is an explicit process in every activity the Trust and its employees take part in.

75. The Head of Risk and Resilience is responsible for implementing the effective systems and processes of risk management across the organisation, the identification, management and monitoring of risks; providing reports, information and training as appropriate. As well as executive and non-executive directors, other senior Trust staff (including the divisional associate medical directors and chief operating officers), managers and individual staff members are responsible for ensuring that they engage with risk management objectives in order to ensure that their clinical and managerial responsibilities for risk management are met.

76. All executive directors and managers are responsible for ensuring that within their designated area(s) and scope of responsibility:

a. there are appropriate and effective risk management pro-cesses in place and that all staff are made aware of the risks within their work environment and of their personal responsibilities

b. there are effective systems in place for the identification, control, monitoring and review of risks and that risks are evaluated using the Trust framework for the grading of risks and that the appropriate level of management action is initiated and completed appropriately

c. they, and all their staff, receive the necessary information, instruction and training to enable them to work safely and comply with appropriate Trust procedures, including incident reporting, risk assessments, fire arrangements and all health and safety procedures

d. staff are identified and released to attend mandatory training and other appropriate training, adequate attendance records are kept and non-attendance is monitored and followed up

23

e. staff know and understand their responsibilities and duties under the Trust Health and Safety policy and have appropriate arrangements to ensure that these are met.

77. Each division has governance arrangements in place and a local governance lead is responsible for implementing the corporate risk management processes locally and in addition facilitating the sharing of best practice.

78. Risk management is the responsibility of every individual member of staff. Providing the skills and knowledge to underpin this process is an organisational priority, and is achieved through:

a. effective induction of all Trust staff

b. the effective implementation of any new systems, procedures or equipment

c. critical learning provision

d. the identification of specific needs of staff via the personal achievement and contribution evaluation process

e. the identification of specific needs by service areas following risk assessment

f. by providing information leaflets and bulletins to raise awareness of policies and hazard/risk warnings in induction packs, staff handbook and dissemination across the Trust.

79. Embedding risk management as a core activity within the organisation is achieved through many systems and processes. 2015/16 has seen:

a. a fully revised Board Assurance Framework developed, along with continued development of the systems and processes that support its production

b. development of a Board risk appetite

c. a review of the Risk Management group, as a sub-committee of the Executive Committee, to undertake additional analysis of strategic risk, to develop mitigation plans and ensure in-depth reviews of key risks

d. continued development and scrutiny of risks within clinical division

e. maintenance of compliance with the Care Quality Commission’s Fundamental Standards, supported by Quality Review visits and Board Assurance visits, to further support compliance

f. reviews of and improvements to the complaints, claims and adverse incident functions including detailed policy reviews in each area

g. the annual review and updating of the Trust’s Anti Fraud, Corruption and Bribery policy and Response Plan

h. continued development of organisational policies, including implementation of the new policy template

i. continued registration, without improvement conditions, from the Care Quality Commission.

80. The development of the Board Assurance Framework has enabled the organisation to systematically identify, record and action the key risks faced by the organisation in relation to the achievement of our overarching strategic aims. An opinion on the Assurance Framework has been provided by Mersey Internal Audit Agency. The opinion (review) states that: “The organisation’s Assurance Framework is structured to meet the NHS requirements, is visibly used by the Board and clearly reflects the risks discussed by the Board”.

REVIEW OF THE EFFECTIVENESS OF RISK MANAGEMENT AND INTERNAL CONTROL

81. As Accountable Officer, I have responsibility for reviewing the effectiveness of the system of internal control. My review is informed in a number of ways. The Head of Internal Audit provides me with an opinion on the overall arrangements for gaining assurance through the Board Assurance Framework and on the controls reviewed as part of Internal Audit’s work.

82. The overall opinion for 2015/16 is that there is ‘significant assurance’ in that there is a generally sound system of internal control designed to meet the organisation’s objectives, and that controls are generally being applied consistently.

83. Responsible managers within the organisation who have responsibility for the development and maintenance of the system of internal control provide me with assurance. It is through this process that I am assured that arrangements are in place for the effective discharge of statutory functions. The Board Assurance Framework itself provides me with evidence that the effectiveness of controls that manage the risks to the organisation achieving its principal objectives have been reviewed.

Directors and senior managers of the Trust have specific

responsibilities for reviewing the risks and controls for

which they are responsible and for maintaining internal

control systems.

24

84. My review is also informed by:

a. external audit activities, including an audit of the Quality Account and the information governance arrangements

b. Care Quality Commission inspection and compliance requirements

c. internal audit work including:

• financial systems assurance

• assurance framework

• health and safety

• clinical quality

• policy compliance

• information governance toolkit review

• emergency preparedness

• human resources systems and process

• service performance.

d. the clinical audit process

e. the executive managers and clinical leads within the Trust who have responsibility for the development and maintenance of the internal control framework.

85. During 2015/16 the Trust Board regularly reviewed progress against a series of action plans including the Board Assurance Framework to ensure that identified actions were implemented in a timely manner. This was supported by a fundamental review of risk management process, the Risk Management strategy and the Board Assurance Framework in response to externally led reviews of the existing arrangements.

86. The annual report produced by the Trust’s internal auditors identified that significant assurance could be given and that there is a generally sound system of internal control, designed to meet the organisation’s objectives, and that controls are generally being applied consistently. A separate report provided assurance regarding the work of the internal audit function regarding counter fraud activities.

87. Where weaknesses have been identified through audit reviews, the Trust has been proactive in monitoring progress to ensure that timely remedial action is taken and the Audit Committee actively monitors this progress.

88. Regular reports regarding clinical and non-clinical incidents, complaints, claims and other risks identified were submitted to the Quality Assurance Committee and Executive Committee which monitored progress and suggested action to be taken as appropriate. Directors and senior managers of the Trust have specific responsibilities for reviewing the risks and controls for which they are responsible and for maintaining internal control systems.

89. The Trust will continue to monitor its governance processes, particularly in light of the proposed Calderstones acquisition and make any appropriate changes to strengthen process.

SIGNIFICANT ISSUESINFORMATION GOVERNANCE90. The Trust experienced the following issues in respect of five

information governance incidents which occurred in 2015/16 and met the Information Commissioners Office (ICO) reporting criteria:

a. a media briefing prepared for Clinical Commissioning Group leads, Executive Directors and Divisional leads was emailed in error to the media. A full route cause investigation was undertaken which led to changes to operational processes and provision of further information governance training

b. nine bags of confidential waste were left in a locked, alarmed building on another hospital trust site during team relocation. A full route cause investigation was undertaken and operational processes changed accordingly

c. a group email was created and sent to 170 volunteers instead of being sent using blind carbon copy. In response a Duty of Candour letter was sent to all 170 volunteers by the Senior Information Risk Owner (Executive Director of Finance) advising of the incident. A full Route Cause Investigation was undertaken and as a result operational procedures for department were amended and individual and departmental information governance training provided. Mersey Internal Audit Agency conducted an audit to identify any weak areas and a full action plan was developed to mitigate residual risk

d. a list of twelve patients (containing their initials, date of birth, named nurse, named key worker and detention section) was pinned onto a ward notice board. A Duty of Candour letter was issued to all twelve patients by the Caldicott Guardian advising of this incident. A 72 hour report was conducted and further training provided to staff as a result

e. documents were left in the ward meeting room on Forster ward at Ashworth Hospital following a meeting. The incident was thoroughly investigated, including the interviewing of consultants and staff. CCTV footage was also viewed and a new security operational procedure implemented as a result.

91. The Trust undertook appropriate internal investigations, including root cause analysis, for each of these incidents. All data loss/data breach incidents were reviewed at meetings of the Information Governance and Caldicott Sub-Committee (which reports to the Executive Committee), with further reviews undertaken by the relevant service to provide a full report back to the Senior Information Risk Owner (the Executive Director of Finance). The ICO was satisfied by the action taken by the Trust for each of these incidents and the cases were all subsequently closed by the ICO.

92. The Trust did receive “significant assurance” in respect of the Information Governance Toolkit [version 13] when it was audited by Mersey Internal Audit Agency (the Trust’s internal auditors).

Accountable Officer: Dr Joe Rafferty Chief Executive

Organisation: Mersey Care NHS Trust (RW4)

Signature:

25 May 2016

25

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26

Name Job Title Declaration 2014/15

Beatrice Fraenkel Chairman • Liverpool City Councillor (Labour) • Member, Labour Party • Member, Association of Labour Councillors • Director, Normal Properties Ltd • Chair, Architect’s Registration Board • School Governor, The King David High School, Liverpool • Fellow, Royal Society of Arts • Trustee, St George’s Hall • Member, Local Government Association • Member, The Council of the University of the South Bank, London • Council Member, Edge Hill University • Built Environment Expert, Design Council/CABE

Matt Birch Non-Executive Director • Director, Sainsbury’s Supermarkets Limiited

Gerry O’Keeffe Non-Executivee Director • Nil return

Brenda Roe Non-Executive Director • Professor of Health Research, Edge Hill University • Fellow, Queens Nursing Institute • Fellow, Royal Society of Public Health • Editor, Journal of Advanced Nursing • Co-investigator (Head for Public Involvement) on the National Institute for Health Research’s Dementia Research Programme (HOST-D) – [Note – this has been included as Mersey Care is part of the Observation Study] Nick Williams Non-Executive Director • Director, Lloyds Banking Group plc

Pamela Williams Non-Executive Director • Non-Executive Director of Manchester Mental Health and Social Care Trust (until 30 September 2015) • Stepdaughter - trainee psychiatrist

Chris Dowrick Advisory Board member • Part-time General Practitioner, Aintree Park Group Practice • Professor of Primary Medical Care, University of Liverpool • Honorary President, Compass Counselling Services • Honorary Consultant in Primary Care, Liverpool Clinical Commissioning Group • Ex-officio member, Liverpool Local Medical Committee

Joe Rafferty Chief Executive • Director of Mersey Care Ltd

David Fearnley Medical Director • Medical Director, Calderstones Partnership NHS Foundation Trust (Secondment)

Neil Smith Executive Director of Finance/ • Executive Director of Finance, Calderstones Partnership Deputy Chief Executive NHS Foundation Trust (Secondment)

Ray Walker Executive Director of Nursing • Nil return

Elaine Darbyshire Executive Director of • Nil return Governance and Communications

Amanda Oates Executive Director of Workforce • Director of Mersey Care Ltd

Louise Edwards (*) Director of Strategy • Nil return and Planning

Jim Hughes (*) Director of Informatics • Nil return and Performance Improvement

REGISTER OF INTERESTS

* See notes on previous page

27

STATEMENT OF THE CHIEF EXECUTIVE’S RESPONSIBILITIES AS THE ACCOUNTABLE OFFICER OF THE TRUST

The Chief Executive of the NHS Trust Development Authority has designated that the chief executive should be the accountable officer to the trust. The relevant responsibilities of accountable officers are set out in the accountable officers memorandum issued by the Chief Executive of the NHS Trust Development Authority. These include ensuring that:

• there are effective management systems in place to safeguard public funds and assets and assist in the implementation of corporate governance

• value for money is achieved from the resources available to the trust

• the expenditure and income of the trust has been applied to the purposes intended by Parliament and conform to the authorities which govern them

• effective and sound financial management systems are in place

• annual statutory accounts are prepared in a format directed by the Secretary of State with the approval of the Treasury to give a true and fair view of the state of affairs as at the end of the financial year and the income and expenditure, recognised gains and losses and cash flows for the year.

To the best of my knowledge and belief, I have properly discharged the responsibilities set out in my letter of appointment as an accountable officer.

I confirm that, as far as I am aware, there is no relevant audit information of which the Trust’s auditors are unaware, and I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that the Trust’s auditors are aware of that information.

I confirm that the annual report and accounts as a whole is fair, balanced and understandable and that I take personal responsibility for the annual report and accounts and the judgments required for determining that it is fair, balanced and understandable.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ACCOUNTS

The directors are required under the National Health Service Act 2006 to prepare accounts for each financial year. The Secretary of State, with the approval of the Treasury, directs that these accounts give a true and fair view of the state of affairs of the trust and of the income and expenditure, recognised gains and losses and cash flows for the year. In preparing those accounts, directors are required to:

• apply on a consistent basis, accounting policies laid down by the Secretary of State with the approval of the Treasury

• make judgements and estimates which are reasonable and prudent

• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the accounts.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the trust and to enable them to ensure that the accounts comply with requirements outlined in the above mentioned direction of the Secretary of State. They are also responsible for safeguarding the assets of the trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors confirm to the best of their knowledge and belief they have complied with the above requirements in preparing the accounts.

Signed: Chief Executive

Date: 25.5.2016

Date: 25.5.2016 Chief Executive

Date: 25.5.2016 Finance Director

28

FINANCE DIRECTOR’S REPORT

Summary

Against the backdrop of a continuing challenging financial climate the Trust has delivered a strong financial performance and has delivered its four statutory financial duties.

Supported by this platform of financial delivery, the Trust has developed detailed plans to transform existing services, which will support the delivery of perfect care. Over the next five years efficiencies of £30.3m will be delivered. These efficiencies will support delivery of an annual surplus, that will provide cash to support improvements to our estate and IT services.

Strategic capital investment of £137m into the estate will ensure all our service users have single en-suite accommodation and that the accommodation is of a suitable standard. This will move us from a position of 38% of our accommodation being single ensuite to 100%, and the majority of our estate moving from in need of repair and replacement to a minimum standard of good. This will be delivered by 2020.

Financial Duties

1. To achieve a balanced position on the income statement - the Trust made a surplus after impairment of £5.5m for 2015/16.

2. To operate within the Capital Resource Limit (CRL) - the Trust delivered a capital programme of £12.68m to achieve its CRL.

3. To operate within the External Financing Limit (EFL) - the Trust had a duty to hold a minimum cash balance of £10.068m at the end of the year and achieved this.

4. To achieve a 3.5% return on the net assets owned by the Trust - this target was achieved with a 3.5% return on net assets.

Financial Overview

The Trust had an income budget of £213.4m in 2015/16. A cost improvement programme of £8.4m was delivered across the Trust which supported the delivery of the surplus of £5.5m. The surplus delivered each year provides funds to support capital investment for the benefit of service users and the local population.

Capital investment in 2015/16 includes:

• refurbishment of Newman ward in high secure services £2.4m

• community hubs and spokes £1.3m

• upgrade of perimeter security in high secure services £1.3m

• refurbishment of Walton Library £0.8m

• second Liverpool inpatient facility £0.7m

• preparation of the medium secure site £0.6m.

Income and Expenditure

Income

The Trust received income of £213.4m in 2015/16 which was generated from a number of sources as set out in Chart 1.

Operating Expenditure

The Trust has used the income it received to fund the cost of services provided. The major areas of cost are summarised in Chart 2. The majority of the Trust’s costs relate to staff.

Better Payments Practice Code

The Better Payments Practice Code (BPPC) requires the Trust to pay a minimum of 95% of all NHS and non-NHS invoices within 30 days of receipt of the goods or valid invoice. In 2015/16, the Trust achieved an average of 97%.

Prompt Payments Code

The Prompt Payment Code is a payment initiative developed by Government with the Institute of Credit Management (ICM) to improve liquidity for small businesses.

Mersey Care has signed up to the code and is committed to pay all invoices relating to small and medium businesses and individuals within 10 days.

A guide for suppliers and contractors regarding the code is available on the Trust website, within the financial policies and procedures section.

72%

4%

11% 7% 6%

Chart 2 - Analysis of Expenditure

Pay Costs

Supplies and Services

Establishment & Premises Costs

Depreciation, Amortisation and Impairment

Other Costs

35%

5% 33%

7% 6%

3%

2% 2%

7%

Chart 1 - Analysis of Income

Nhs England

Welsh Secure Commissioners

NHS Liverpool Ccg

NHS South Sefton Ccg

NHS Southport & Formby Ccg

Other Commissioners

Local Authorities

Education & Training

29

Trust auditors

The external auditor for the Trust was Grant Thornton UK LLP, who provides audit services in relation to the statutory audit duties as required by the Department of Health in providing an independent audit opinion. The fee for work carried out during 2015/16 on the financial statements and opinion was £56,858 (2014/15, £75,810) detailed as follows:

Audit services

£

Financial statements and value for money 56,858

Other services (including the Trust’s Quality Accounts) 31,500

88,358

Longer Term Outlook

The financial framework supports the delivery of the Trust’s strategy and ensures the Trust retains a strong financial position. The key elements of the framework are:

1. Maintain Sound Financial Performance

Ensuring that the Trust maintains sound financial performance provides a stable platform, which will support the achievement of the Trust’s strategic aims. Mersey Care aims to be the best mental health provider within the UK by providing the highest quality care for all service users and patients. It has developed a comprehensive strategic framework that sets out clear aims for the forthcoming years. The concept of perfect care is well supported and will ensure that quality of care is improved.

Over the period 2016/17 to 2020/21, the financial framework will deliver the statutory financial duties of the Trust. The Trust will continue to plan on delivering an annual 2% surplus, hold a minimum of £5m in cash and maintain a continuity of service rating of three.

Key to maintaining sound financial performance will be the delivery of a cost improvement programme of £30.3m. Plans have been agreed by multi-disciplinary teams and all budget holders within each division. The multi-disciplinary teams include directors, clinicians, other staff and service users/carers. The plans are risk assessed by divisions for their impact on the quality of care using the six national domains of quality. The plans have been reviewed by the Medical Director and the Executive Director of Nursing. They have been presented to and discussed by the Executive Committee, the Quality Assurance Committee and the Performance and Investment Committee and have been agreed by the Trust Board.

2. Service Transformation and Organisational Growth

Supported by a strong platform of financial delivery, the Trust is well placed to transform its services and deliver perfect care. Key enablers to this transformation are the delivery of the estates framework and new patient information IT system.

The estates framework looks to improve all the Trust’s estate to a minimum of condition B (good) by 2020. This will require strategic capital investment of £137m. New inpatient facilities will be provided within local and secure services. Therefore, by 2020 all staff will be working from new or refurbished upgraded premises. The Trust has agreed an ambitious service transformation plan that seeks to realise savings through the redesign of services. This will enable traditional services to be re-provided through new service models, providing highly effective and efficient services.

The Trust has identified three key work programmes, designed to deliver this change and generate the improvements required. The three areas are:

• Local Services - redesign of inpatient and community services based on pathways of care

• Secure Services - integration and growth of services supported by a move to a secure campus on the Maghull site

• Corporate Services - integration of traditional corporate services to reduce the cost of transactions, increase intelligence provision and become more customer focused.

The Trust has developed a growth strategy that will support service transformation and drive economies of scale.

3. Mental Health Payment System and Contracting

The Trust is currently paid on a block contract basis. In 2016/17, NHS England and NHS Improvement continue to hold responsibility for the National Tariff Payment System (NTPS). Every relevant service user will need to continue to be allocated to a cluster, as the clusters will still be reported as part of the monthly monitoring to Health and Social Care Information Centre (HSCIC). Whilst there is no national tariff for mental health, the Trust is required to submit indicative, non mandatory tariffs for each of the clusters based on cluster days.

The 2016/17 contracting proposal for mental health is to move away from block contracts towards either a capitated payment model or a year/episode of care payment in shadow format so mental health organisations can take this forward for 2017/18. As the Trust has made significant progress towards clustering and care pathways, the year/episode of care model is most favourable. The costing team is using data from the activity costing system to build up a pathway cost for each cluster. This information will be shared with commissioners to understand and explain the pathways which underpin each cluster. The team meet with commissioners on a monthly basis to work collaboratively to review cluster activity and review cluster costs in preparation for using year of care costs as a currency for the 2017/18 contract.

The Trust has previously been recognised as a relatively high cost provider of services when using the Reference Cost Index (RCI) as a measure of efficiency. The Trust has been successful in improving its RCI from 121 in 2005/06 to 93 in 2014/15 (an RCI of 100 is the national average score). It is important that we maintain a RCI below the national average of 100 to ensure income received will exceed costs when a NTPS is introduced.

30

Conclusion

The Trust continues to deliver a strong financial position during a challenging economic climate. I would like to thank all staff who have worked hard to deliver the planned surplus, and who have contributed to our investment in the estate and IT equipment. We have opened a new Liverpool community hub in Norris Green and next financial year will see the opening of the Life Rooms at Walton Library. Plans are being developed for investment in a medium secure campus, a new high secure dependency unit and two new inpatient units in Liverpool and Southport. This would not be possible without the commitment to delivery of the financial plans each year.

REMUNERATION AND STAFF REPORT

1. What this report covers

This report to stakeholders:

• sets out the Trust’s Remuneration policy

• explains the policy under which the chairman, executive directors, and non-executive directors were remunerated for the year ended 31 March 2016

• sets out tables of information showing details of the salary and pension interests of all directors for the year ended 31 March 2016.

2. Role of the Remuneration and Terms of Service Committee

The Remuneration and Terms of Service Committee is a committee of the Trust Board. An effective committee is key to ensuring that executive directors’ remuneration is aligned with stakeholders’ interests and that executive directors are motivated to enhance the performance of the Trust.

3. Membership of the Remuneration and Terms of Service Committee

The membership of the committee is the chairman and all non-executive directors. Committee meetings are considered to be quorate when the chairman and three non-executive directors are present.

The chief executive may also attend in an advisory role except when his or her own remuneration or other terms of service are under discussion.

4. Service contracts

All executive directors have service contracts. Contracts are usually awarded on a permanent basis, unless the post is for a fixed period of time. Executive directors have a three month notice period within their contracts of employment, with the exception of the chief executive who has a six month notice period.

Termination payments are made in accordance with contractual agreements.

5. Remuneration policy for executive directors

Executive directors’ posts are currently evaluated by the Business Services Authority, and signed off by NHS England prior to final ratification by the Department of Health. Any pay awards are agreed by the Remuneration and Terms of Service Committee.

Executive directors participate in an annual appraisal process which identifies and agrees objectives to be met. This is supported by a personal development plan where appropriate.

The Trust does not operate a performance related pay scheme.

6. Remuneration policy for the chairman and non-executive directors

Increases in the remuneration of the chairman and non-executive directors are set by the Secretary of State for Health, notified by the Trust Development Authority and implemented locally by the Trust.

Note:

Please note that elements of the Remuneration Report are subject to audit, namely the salary and pension entitlements of senior managers, compensation paid to former directors, details of amounts payable to third parties for the services of a director (if made) and the median remuneration of the Trust’s staff and the ratio between this and the mid-point of the banded remuneration of the highest paid director.

The Trust continues to deliver a strong financial position during

a challenging economic climate. I would like to thank all staff who

have worked hard to deliver...

31

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36

Cash Equivalent Transfer Values

A cash equivalent transfer value (CETV) is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The CETV figures and the other pension details include the value of any pension benefits in another scheme or arrangement which the individual has transferred to the NHS Pension Scheme. They also include any additional pension benefit accrued to the member as a result of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelines and framework prescribed by the Institute and Faculty of Actuaries.

Real Increase in CETV

This reflects the increase in CETV effectively funded by the employer. It takes account of the increase in accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another scheme or arrangement) and uses common market valuation factors for the start and end of the period.

Superannuation Contributions Adjusted for Past Experience (SCAPE)

On 16 March 2016, the Chancellor of the Exchequer announced a change in the Superannuation Contributions Adjusted for Past Experience (SCAPE) discount rate from 3.0% to 2.8%. This rate affects the calculation CETV figures in this report.

Due to the lead time required to perform calculations and prepare annual reports, the CETV figures quoted in this report for members of the NHS Pension Scheme are based on the previous discount rate and have not been recalculated.

8. Pay Multiples

Reporting bodies are required to disclose the relationship between the remuneration of the highest-paid director in their organisation and the median remuneration of the organisation’s workforce.

The banded remuneration of the highest paid director in Mersey Care NHS Trust in the financial year 2015/16 was £199,746 (2014/15, £239,430). This was 7.0 times (2014/15, 7.8) the median remuneration of the workforce, which was £28,703 (2014/15, £30,620).

In 2015/16, 0 (2014/15, 0) employees received remuneration in excess of the highest-paid director. Remuneration ranged from £15,100 to £199,746 (2014/15 £14,008 to £239,430).

Total remuneration includes salary, non-consolidated performance-related pay and benefits-in-kind. It does not include employer pension contributions, severance payments and the cash equivalent transfer value of pensions.

The number of full time equivalent staff has decreased from 3,855 to 3,839. The pay multiple has decreased from 7.8 to 7.0. This increase is due to the highest paid director undertaking a secondment within year and part of their salary being recharged.

Ensuring that the Trust maintains sound financial performance provides a stable platform which will support the achievement of the Trust’s strategic aims.

37

9. R

epo

rtin

g o

f o

ther

co

mp

ensa

tio

n s

chem

es –

exi

t p

acka

ges

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cy a

nd o

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dep

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re c

osts

hav

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en p

aid

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ccor

danc

e w

ith t

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sion

s of

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NH

S Sc

hem

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ARS

). W

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38

OFF-PAYROLL ENGAGEMENTSAll public sector bodies are required to report arrangements whereby individuals are paid through their own companies (and so are responsible for their own tax and NI arrangements, not being classed as employees).

For all off-payroll engagements as of 31 March 2016, for more than £220 per day and that last longer than six months:

Number of Senior Managers by Band

Number

Number of existing engagements as of 31 March 2016 2

Of which, the number of staff that have existed:

for less than one year at the time of reporting 0

for between one and two years at the time of reporting 0

for between 2 and 3 years at the time of reporting 0

for between 3 and 4 years at the time of reporting 0

for 4 or more years at the time of reporting 2

Number

Number of new engagements, or those that reached six months in duration, between 1 April 2015 and 31 March 2016

0

Number of new engagements which include contractual clauses giving Mersey Care the right to request assurance in relation to income tax and National Insurance obligations

0

Number for whom assurance has been requested 0

Of which:

assurance has been received 0

assurance has not been received 0

engagements terminated as a result of assurance not being received 0

Number

Number of off-payroll engagements of Board members, and/or senior officers with significant financial responsibility, during the year

0

Number of individuals that have been deemed “Board members, and/or senior officers with significant financial responsibility” during the financial year. This figure includes both off-payroll and on-payroll engagements

6

Board Member

Chairman/non-executive directors 1

Medical consultant 1

Executive director 6

Non review body band 9 2

Total 10

39

Staff Numbers and Composition

FTE Headcount

Corporate services division 487.3 851

Board 10 34

Capital estates 11 11

Clinical governance, quality and innovation 27.7 30

Corporate governance, business development and communications 42.52 50

Estates and facilities 138.5 205

Executive nurse 36.91 41

Extra staffing 0 244

Finance, contracts, procurement and FT 48.68 50

Informatics and performance improvement 46.34 50

Medical services 43.8 47

Workforce 81.85 89

Informatics Merseyside revenue 210.48 220

Informatics Merseyside 210.48 220

Local services division 1634.77 1744

Adult mental health 737.81 781

Assessment services 135.64 143

Complex care 239.57 258

Local management 145.72 157

Local support 63.95 66

Specialist services 312.08 339

Secure services division 1182.92 1224

Capital high secure services 27 27

High secure services directorate 843.3 873

Low secure 72.18 75

Medium secure 221.04 230

Offender health 19.4 19

Local and secure 64.1 65

*Medics hosted by St Helens and Knowsley Teaching Hospitals NHS Trust 64.1 65

Total 3579.57 4104

Excluded from the figures above are recharges out which include trainee clinical psychologists, Resettle Team, AQuA hosted and others - see overleaf.

*Medics who work at Mersey Care but are hosted by St Helens and Knowsley Teaching Hospitals NHS Trust based on month 12 Staff in Post Ledger File included. Bank staff and capital expenditure staff who are part of the workforce are included.

40

SICKNESS ABSENCE DATAThe cumulative staff sickness rate in 2015/16 was 6.21% compared with 5.64% in 2014/15. The Trust has investigated the increased levels of absence and a detailed action plan, in response to the findings, is being implemented. Source: ESR.

Staff Policies Applied during the Year

Giving full and fair consideration to applications for employment by the company made by disabled persons, having regard to their particular aptitudes and abilities.

Mersey Care is recognised as a ‘Two Ticks’ organisation. This means that the Trust actively encourages applications from disabled individuals in accordance with the Equality Act 2010 and will make necessary adjustments during the recruitment process. As an organisation we are committed to employ, keep and develop the abilities of disabled staff and this is reflected in our Recruitment and Selection policy. Candidates who have declared a disability need only meet the essential criteria within the person specification to be guaranteed an interview.

The Trust is also signed up to the charter on being a Mindful Employer which aims to put good practice into place to ensure employees and job applicants who declare a mental health issue receive the right level of support.

Managers ensure that all adverts, job descriptions and person specifications provided to the Resourcing Team do not include statements which could be deemed discriminatory. The Resourcing

Team ensures that any direct or indirect reference to discrimination is removed from all application forms and that equality and diversity information (part A of the application form) is removed from the shortlisting process.

Continuing the employment of, and arranging appropriate training for employees of the company who have become disabled persons during the period when they were employed by the company.

The Trust is committed to supporting staff to remain in work and have a Supporting Staff with Disabilities policy, which is used for both newly recruited employees with a disability who make their needs known at the recruitment stage, and those staff who are currently employed by the Trust and become disabled whilst in employment.

The policy ensures that NHS guidance, advice and necessary training is provided to managers.

The Management of Attendance policy is used in conjunction with the Supporting Staff with Disabilities policy and provides flexibility for employees where their disability may increase their levels of sickness absence. Time off for treatment or rehabilitation, which may be categorised as disability leave, may be given as a reasonable adjustment. Also where an employee’s disability will increase the levels of disability related sickness absence, the Trust may, as a reasonable adjustment, allow a greater level of sickness absence before progressing through the stages of the policy.

Training, career development and promotion of disabled persons employed by the company.

The Trust’s Learning and Development policy acknowledges that “no one size fits all” with regards to training, and supports access to a range of learning and development opportunities that meet individuals’ learning styles and are appropriate to the individuals’ circumstances. Access to education, training and development is as open and flexible as possible. There is no discrimination in terms of protected characteristics and it is available to part-time/full time staff irrespective of working pattern and geographical location. Courses are advertised in the Learning and Development prospectus which is available to all staff.

FTE Headcount

Recharged hosted students 73 73

AQuA recharge 1 1

Resettle recharge 8.8 10

Other recharges 12.8 13

Total 94 97

Data Warehouse

Source - Finance Month 12 Transactional file, Electonic Staff Record Data via Data Warehouse.

41

STAKEHOLDER ENGAGEMENTOur vision is to strive for perfect care for the people we serve. We can only deliver this vision by being clear with colleagues, service users, carers and partner organisations about what we stand for as an organisation. Our strategy is a description of ‘what we are about’, and from Board to ward it will ensure that we stay focused on what matters most to those who work for Mersey Care and to those we serve.

The strategy has been introduced gradually since 2012 as our operations have become more aligned with it through our annual planning cycle and through our Board reporting processes. It has been designed to be flexible in order to adapt to our changing environment and was never intended to be an endpoint. We have used our strategy to create dialogue with colleagues, service users, carers and partner organisations about how best we can all contribute to strive for perfect care.

Throughout the year we have engaged with colleagues at all levels about the strategy and from September to November each year we have engaged a wider range of stakeholders in reviewing the strategy for the following year, testing emerging priorities with different groups, and getting ideas on how the strategy could be embedded more fully in everything that Mersey Care does.

Examples of stakeholder engagement that have taken place on the strategy include:

• People Participation Group (service users and carers) monthly meetings

• Leaders forums, managers forums and staff roadshows

• Regular meetings with Liverpool, South Sefton and Southport and Formby Clinical Commissioning Groups (CCGs)

• Participation in the Liverpool CCG Healthy Liverpool programme

• Testing our draft Strategic Framework proposals via the Trust intranet

• Participation in the Sefton CCG Mental Health Task Force and Shaping Sefton events

• Participation in the Calderstones Strategic Partnership Board

• Hosting the Mersey Care Strategic Partnership Board, involving local commissioners, providers and Merseyside Police.

Each member of staff is supported through the PACE process to understand how they contribute to the strategy and to decide personal objectives that link with our strategic objectives. We have accelerated delivery of our strategy in 2015/16 through greater involvement of divisional teams and individuals in contributing to delivery of our objectives. Focused and aligned objectives cascading through our PACE appraisal system is the key mechanism to achieve greater colleague involvement. This cascade of objectives through our PACE system takes place in the first quarter of every financial year (April to June).

Mersey Care has an active role in the local health economies of Liverpool, Sefton and Knowsley and in the North West/Wales health economy for secure services. Our key system relationships are illustrated in the diagram below.

Our key relationships

Regulatory bodies

Wider economy

Commissioners

South Sefton/S’port & Formby

CCGs

Liverpool CCG

Knowsley CCG

NHS England(Spec Comm)

Healthy Liverpool

Sefton MH Board

CalderstonesPartnership NHS FT

Merseyside Police

Housing

Social Care

Criminal Justice Service

Primary Care

Liverpool City Council

Mayoral Summit

NHS TDA Monitor

NHS England

Liverpool CommunityHealth NHS Trust

Service users,carers and communities

42

Immediate sustainability issues on a small scale are addressed through ongoing commissioner contracting and performance dialogue. Over the long term, the key local initiatives addressing sustainability of the health economy are Healthy Liverpool (run by Liverpool CCG) and Shaping Sefton (run by South Sefton CCG and Southport and Formby CCG).

The Healthy Liverpool programme is a collaborative approach involving health and social care organisations, Liverpool City Council, and all individual trusts are involved in the process. Mersey Care is an active partner in the process and leading the development of the new model for community services, working closely with primary care providers and social care to develop community care teams. The sustainability of local acute trusts is being addressed through the ‘re-aligning hospital services’ programme workstream.

Transforming health and social care in Sefton will be challenging, with a 45 per cent reduction of £170m for Sefton Council alongside the minimal allocation of 1.94 per cent for the Sefton CCGs. In order to deliver the required changes at pace, the CCGs and local authority have recognised the need to work together more closely. Shaping Sefton brings together organisations from across health and social care to create services that work more closely together, so each person’s care is better co-ordinated and tailored to their individual needs. Shaping Sefton will also help the CCG and Sefton Council deliver the vision for improved health and wellbeing that both organisations have set out in their respective long term strategies and in the CCG blueprint for transforming services. Mersey Care has been an active partner in the Shaping Sefton programme so far and awaits recommendations and implementation plans in order to understand the consequences for our organisation.

The report ‘A Time for Change’ was published in November 2014 and called for a closure programme of inappropriate institutional inpatient facilities and Calderstones Partnership NHS Foundation Trust was identified.

Calderstones went through a rigorous process of identifying the best partner to work with and Mersey Care was chosen for its range of services and similarities in the two organisations.

Mersey Care has a Joint Oversight Group with Calderstones staff which is supported by an Acquisition Steering Group. The Joint Oversight Group provides assurance to the Strategic Partnership Board, whose membership is drawn from local authority, NHS commissioners and both Trusts, and is responsible for overseeing the implementation of the Homes not Hospitals national policy. The Strategic Partnership Board is chaired by NHS England with its deputy chairman from NHS Improvement (Monitor).

INCLUSION AND PARTICIPATIONMersey Care’s people participation policy on involving service users, carers and members of the public has continued to grow not only to the benefit of the organisation but to that of the individual participant. Those who give of their insights, talents and experiences receive specialist support and now have access to a range of opportunities aimed at supporting their learning journey as well as their own personal recovery and social inclusion goals.

The programme now involves over 600 participants contributing in a wide range of activities including:

• Co-facilitation and co-production activities (including recovery groups)

• Complaints and incident reviews

• Governance groups and networks

• Inspections (including Patient Led Assessment of the Care Environment (PLACE)) and quality review visits

• Leadership and management teams

• Pastoral support and befriending

• Policy development and review

• Recruitment and selection of staff

• Research

• Service development and design

• Training and induction of staff

• Trust Board and Board sub-committees.

We are particularly proud of the fact that approximately half of that overall total are service user and carer ‘experts by experience’ working side by side with Mersey Care towards our vision of perfect care. It is also important to note that this scheme extends to service users within our secure and forensic services, where an average of 1,250 hours of volunteer activity is contributed every month by service users/patients.

We now seek to extend this programme to our Trust membership so as to further enhance our engagement with, and accountability to, the communities we serve.

The Healthy Liverpool programme is a collaborative approach involving health and social care organisations, Liverpool City Council, and all individual trusts are involved in the process.

43

Accounts

44

INDEPENDENT AUDITOR’S REPORT TO THE DIRECTORS OF MERSEY CARE NHS TRUST

We have audited the financial statements of Mersey Care NHS Trust for the year ended 31 March 2016 under the Local Audit and Accountability Act 2014 (the “Act”). The financial statements comprise the Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Changes in Taxpayers’ Equity, the Statement of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union, and as interpreted and adapted by the 2015/16 Government Financial Reporting Manual (the 2015/16 FReM) as contained in the Department of Health Group Manual for Accounts 2015/16 (the 2015/16 MfA) and the Accounts Direction issued by the Secretary of State with the approval of HM Treasury as relevant to the National Health Service in England (the Accounts Direction).

We have also audited the information in the Remuneration and Staff Report that is subject to audit, being:

• the table of salaries and allowances of senior managers and related narrative notes

• the table of pension benefits of senior managers and related narrative notes

• the table of exit packages and related narrative notes

• the analysis of staff numbers and related narrative notes

• the table of pay multiples and related narrative notes.

This report is made solely to the Directors of Mersey Care NHS Trust, as a body, in accordance with Part 5 of the Act and as set out in paragraph 43 of the Statement of Responsibilities of Auditors and Audited Bodies published by Public Sector Audit Appointments Limited. Our audit work has been undertaken so that we might state to the Directors of the Trust those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Directors of the Trust, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors, the Accountable Officer and auditor

As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

As explained in the statement of the Chief Executive’s responsibilities, as the Accountable Officer of the Trust, the Accountable Officer is responsible for the arrangements to secure economy, efficiency and effectiveness in the use of the Trust’s resources. We are required under Section 21(3)(c) and Schedule 13 paragraph 10(a) of the Act to be satisfied that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources and to report our opinion as required by Section 21(4)(b) of the Act.

We are not required to consider, nor have we considered, whether all aspects of the Trust’s arrangements for securing economy, efficiency and effectiveness in its use of resources are operating effectively.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of whether the accounting policies are appropriate to the Trust’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Scope of the review of arrangements for securing economy, efficiency and effectiveness in the use of resources

We have undertaken our review in accordance with the Code of Audit Practice, having regard to the guidance on the specified criteria issued by the Comptroller and Auditor General in November 2015, as to whether the Trust had proper arrangements to ensure it took properly informed decisions and deployed resources to achieve planned and sustainable outcomes for taxpayers and local people. The Comptroller and Auditor General determined the criteria as that necessary for us to consider under the Code of Audit Practice in satisfying ourselves whether the Trust put in place proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016.

We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, we undertook such work as we considered necessary to form a view on whether, in all significant respects, the Trust had put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources.

Opinion on financial statements

In our opinion the financial statements:

• give a true and fair view of the financial position of Mersey Care NHS Trust as at 31 March 2016 and of its expenditure and income for the year then ended; and

• have been prepared properly in accordance with IFRSs as adopted by the European Union, as interpreted and adapted by the 2015/16 FReM as contained in the 2015/16 MfA and the Accounts Direction.

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Opinion on other matters

In our opinion:

• the parts of the Remuneration and Staff Report to be audited have been properly prepared in accordance with IFRSs as adopted by the European Union, as interpreted and adapted by the 2015/16 FReM as contained in the 2015/16 MfA and the Accounts Direction; and

• the other information published together with the audited financial statements in the annual report and accounts is consistent with the audited financial statements.

Matters on which we are required to report by exception

We are required to report to you if:

• in our opinion the governance statement does not comply with guidance issued by the NHS Trust Development Authority; or

• we refer a matter to the Secretary of State under section 30 of the Act because we have reason to believe that the Trust, or an officer of the Trust, is about to make, or has made, a decision which involves or would involve the body incurring unlawful expenditure, or is about to take, or has begun to take a course of action which, if followed to its conclusion, would be unlawful and likely to cause a loss or deficiency; or

• we issue a report in the public interest under section 24 of the Act; or

• we make a written recommendation to the Trust under section 24 of the Act; or

• we are not satisfied that the Trust has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources for the year ended 31 March 2016. We have nothing to report in these respects.

Certificate

We certify that we have completed the audit of the accounts of Mersey Care NHS Trust in accordance with the requirements of the Act and the Code of Audit Practice.

Michael Thomas for and on behalf of Grant Thornton UK LLP, Appointed Auditor Royal Liver Building Liverpool L3 1PS 26 May 2016

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NOTE March2015/16£000s

RestatedMarch

2014/15£000s

PPA*

March2014/15£000s

ReportedMarch

2014/15£000s

Gross employee benefits 8.1 (151,228) (150,463) 0 (150,463)

Operating expenses 6 (59,934) (54,000) (8,294) (45,706)

Revenue from patient care activities 4 193,825 186,942 0 186,942

Other operating revenue 5 19,618 19,961 0 19,961

Operating surplus/(deficit) 2,281 2,440 (8,294) 10,734

Investment revenue 10 109 118 0 118

Other (losses) 11 (160) (123) 0 (123)

Finance costs 12 (2,756) (1,380) 0 (1,380)

Surplus/(deficit) for the financial year (526) 1,055 (8,294) 9,349

Public dividend capital dividends payable (3,946) (3,855) 0 (3,855)

Retained surplus/(deficit) for the year (4,472) (2,800) (8,294) 5,494

Other comprehensive income

2015/16

£000s

2014/15

£000s

2014/15

£000s

2014/15

£000s

Impairments and reversals taken to the revaluation reserve

0 (1,259) (939) (320)

Net gain on revaluation of property, plant and equipment 2,489 10,012 0 10,012

Total other comprehensive income 2,489 8,753 (939) 9,692

Total comprehensive income for the year (1,983) 5,953 (9,233) 15,186

Financial performance for the yearRetained surplus/(deficit) for the year (4,472) (2,800) (8,294) 5,494

IFRIC 12 adjustment (including IFRIC 12 impairments)** 841 335 0 335

Impairments (excluding IFRIC 12 impairments) 15 9,124 8,800 8,294 506

Adjusted retained surplus 5,493 6,335 0 6,335

*The Prior Period Adjustment (PPA) refers to impairments and a full explanation of this is provided in note 39.

**Due to the introduction of International Financial Reporting Standards (IFRS) accounting in 2009/10, NHS trust’s financial performance measurement needs to be aligned with the guidance issued by HM Treasury measuring Departmental expenditure. Therefore, the incremental revenue expenditure resulting from the application of IFRS to IFRIC 12 schemes (which would include LIFT schemes), which has no cash impact and is not chargeable for overall budgeting purposes, is

excluded when measuring breakeven performance.

The notes on pages 50 to 84 form part of this account.

STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 MARCH 2016

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*The Prior Period Adjustment (PPA) refers to impairments and a full explanation of this is provided in note 39.

The notes on pages 50 to 84 form part of this account.

The financial statements on pages 46 to 49 were approved by the Board on 25 May 2016 and signed on its behalf by

STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2016

Restated PPA* Reported 31 March 2016 31 March 2016 31 March 2015 31 March 2015

NOTE £000s £000s £000s £000s

Non-current assets:

Property, plant and equipment 13 179,877 181,129 (9,233) 190,362

Intangible assets 14 336 478 0 478

Trade and other receivables 19.1 80 64 0 64

Total non-current assets 180,293 181,671 (9,233) 190,904

Current assets:

Inventories 18 333 382 0 382

Trade and other receivables 19.1 8,475 7,825 0 7,825

Cash and cash equivalents 22 10,665 24,306 0 24,306

Sub-total current assets 19,473 32,513 0 32,513

Non-current assets held for sale 0 0 0 0

Total current assets 19,473 32,513 0 32,513

Total assets 199,766 214,184 (9,233) 223,417

Current liabilities

Trade and other payables 23 (9,355) (16,662) 0 (16,662)

Provisions 29 (2,182) (1,705) 0 (1,705)

Borrowings 25 (509) (465) 0 (465)

Total current liabilities (12,046) (18,832) 0 (18,832)

Net current assets 7,427 13,681 0 13,681

Total assets less current liabilities 187,720 195,352 (9,233) 204,585

Non-current liabilities

Provisions 29 (20,982) (21,830) 0 (21,830)

Borrowings 25 (30,233) (30,834) 0 (30,834)

Total non-current liabilities (51,215) (52,664) 0 (52,664)

Total assets employed 136,505 142,688 (9,233) 151,921

Financed by:

Public dividend capital 54,149 58,349 0 58,349

Retained earnings (26,808) (25,615) (4,256) (21,359)

Revaluation reserve 49,257 50,047 (4,977) 55,024

Other reserves 59,907 59,907 0 59,907

Total taxpayers’ equity: 136,505 142,688 (9,233) 151,921

Chief Executive

Date: 25.5.2016

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STATEMENT OF CHANGES IN TAXPAYERS’ EQUITY

FOR THE YEAR ENDING 31 MARCH 2016

Public Retained Revaluation Other Total dividend earnings reserve reserves reserves capital

£000s £000s £000s £000s £000s

Balance at 1 April 2015 58,349 (25,615) 50,047 59,907 142,688

Changes in taxpayers’ equity for 2015/16

Retained (deficit) for the year 0 (4,472) 0 0 (4,472)

Net gain on revaluation of property, plant, equipment 0 0 2,489 0 2,489

Transfers between reserves 0 3,279 (3,279) 0 0

Reclassification Adjustments

Permanent PDC received - cash 1,800 0 0 0 1,800

Permanent PDC repaid in year (6,000) 0 0 0 (6,000)

Net recognised (expense) for the year (4,200) (1,193) (790) 0 (6,183)

Balance at 31 March 2016 54,149 (26,808) 49,257 59,907 136,505

Balance at 1 April 2014 restated 58,099 (28,433) 46,912 59,907 136,485

Changes in taxpayers’ equity for the year ended 31 March 2015

Retained surplus for the year 0 (2,800) 0 0 (2,800)

Net gain on revaluation of property, plant, equipment 0 0 9,073 0 9,073

Impairments and reversals 0 0 (320) 0 (320)

Transfers between reserves 0 5,618 (5,618) 0 0

Reclassification Adjustments

New temporary and permanent PDC received - cash 250 0 0 0 250

Net recognised revenue for the year 250 2,818 3,135 0 6,203

Balance at 31 March 2015 58,349 (25,615) 50,047 59,907 142,688

Balance at 1 April 2014 58,099 (28,433) 46,912 59,907 136,485

Changes in taxpayers’ equity for the year ended 31 March 2015

Retained surplus for the year 0 5,494 0 0 5,494

Net gain on revaluation of property, plant, equipment 0 0 10,012 0 10,012

Impairments and reversals 0 0 (320) 0 (320)

Transfers between reserves 0 1,580 (1,580) 0 0

Reclasification Adjustments

New temporary and permanent PDC received - cash 250 0 0 0 250

Net recognised revenue for the year 250 7,074 8,112 0 15,436

Balance at 31 March 2015 reported 58,349 (21,359) 55,024 59,907 151,921

Balance at 1 April 2014 PPA* 0 0 0 0 0

Changes in taxpayers’ equity for the year ended 31 March 2015

Retained surplus for the year 0 (8,294) 0 0 (8,294)

Net gain on revaluation of property, plant, equipment 0 0 (939) 0 (939)

Transfers between reserves 0 4,038 (4,038) 0 0

Net recognised revenue/(expense) for the year 0 (4,256) (4,977) 0 (9,233)

Balance at 31 March 2015 restated 58,349 (25,615) 50,047 59,907 142,688

*The Prior Period Adjustment (PPA) refers to impairments and a full explanation of this is provided in note 39.

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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH 2016

Restated PPA* Reported 2015/16 2014/15 2014/15 2014/15

NOTE £000s £000s £000s £000s

Cash flows from operating activities

Operating surplus/(deficit) 2,281 2,440 (8,294) 10,734

Depreciation and amortisation 6 6,348 5,495 0 5,495

Impairments and reversals 15 9,124 8,800 8,294 506

Interest (paid) (2,476) (1,446) 0 (1,446)

PDC dividend (paid) (4,300) (3,769) 0 (3,769)

(Increase)/decrease in inventories 49 (16) 0 (16)

(Increase)/decrease in trade and other receivables (397) 195 0 195

Increase/(decrease) in trade and other payables (6,760) 6,898 0 6,898

Provisions utilised (1,622) (1,572) 0 (1,572)

Increase in movement in non cash provisions 977 2,249 0 2,249

Net cash inflow from operating activities 3,224 19,274 0 19,274

Cash flows from investing activities

Interest received 109 118 0 118

(Payments) for property, plant and equipment (12,033) (12,571) 0 (12,571)

(Payments) for intangible assets (160) (561) 0 (561)

Net cash (outflow) from investing activities (12,084) (13,014) 0 (13,014)

Net cash inflow / (outflow) before financing (8,860) 6,260 0 6,260

Cash flows from financing activities

Gross temporary (2014/15 only) and permanent PDC received 1,800 250 0 250

Gross temporary (2014/15 only) and permanent PDC repaid (6,000) 0 0 0

Capital element of payments in respect of finance leases and on-SoFP PFI and LIFT (581) (302) 0 (302)

Net cash (outflow) from financing activities (4,781) (52) 0 (52)

Net increase/(decrease) in cash and cash equivalents (13,641) 6,208 0 6,208

Cash and cash equivalents at beginning of the period 24,306 18,098 0 18,098

Cash and cash equivalents at year end 22 10,665 24,306 0 24,306

* The Prior Period Adjustment (PPA) refers to impairments and a full explanation of this is provided in note 39.

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NOTES TO THE ACCOUNTS

1. Accounting policies

The Secretary of State for Health has directed that the financial statements of NHS trusts shall meet the accounting requirements of the Department of Health Group Manual for Accounts, which shall be agreed with HM Treasury. Consequently, the following financial statements have been prepared in accordance with the Department of Health Group Manual for Accounts 2015/16 issued by the Department of Health. The accounting policies contained in that manual follow International Financial Reporting Standards to the extent that they are meaningful and appropriate to the NHS, as determined by HM Treasury, which is advised by the Financial Reporting Advisory Board. Where the Department of Health Group Manual for Accounts permits a choice of accounting policy, the accounting policy which is judged to be most appropriate to the particular circumstances of the Trust for the purpose of giving a true and fair view has been selected. The particular policies adopted by the Trust are described below. They have been applied consistently in dealing with items considered material in relation to the accounts.

1.1 Accounting convention

These accounts have been prepared under the historical cost convention modified to account for the revaluation of property, plant and equipment, intangible assets, inventories and certain financial assets and financial liabilities.

1.2 Acquisitions and discontinued operations

Activities are considered to be ‘acquired’ only if they are taken on from outside the public sector. Activities are considered to be ‘discontinued’ only if they cease entirely. They are not considered to be ‘discontinued’ if they transfer from one public sector body to another.

1.3 Movement of assets within the DH Group

The Trust has not had any transfer of assets in 2015/16.

1.4 Critical accounting judgments and key sources of estimation uncertainty

In the application of the Trust’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from those estimates and the estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

1.4.1 Critical judgments in applying accounting policies

The following are the critical judgments, apart from those involving estimations (see 1.4.2 below) that management has made in the

process of applying the Trust’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Valuation of non current assets, their useful lives and the depreciation policy

The Trust uses appropriately qualified valuers to determine the value of assets and their useful lives. The depreciation policy follows HM Treasury and Department of Health guidance.

LIFT Assets

The Trust’s LIFT scheme is deemed under International Financial Reporting Standards to be classed as ‘on Statements of Financial Position’ on the basis that the asset is under the control of the Trust and all risks and rewards sit with the Trust. This is deemed to be a critical judgment that impacts on the financial statements.

1.4.2 Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Accounting for impairments

The Trust accounts for impairments using an adaption of IFRS as per the FREM and Department of Health Group Manual for Accounts. Details of impairments are included in note 15.

Financial value of provisions for liabilities and charges

The Trust makes financial provision for obligations of uncertain timing or amount at the Statement of Financial Position date. These are based on estimates using as much relevant information as is available at the time the account is prepared. They are reviewed to confirm that the values included in the financial statements best reflect the current relevant information. Where this is not the case, the value of the provision is amended. Details of provisions are included in note 29.

Actuarial assumptions for costs relating to the NHS Pension Scheme

The Trust reports as operating expenditure, employer contributions to staff pensions. This employer contribution is based on an annual actuarial estimate of the required contribution to meet the scheme’s liabilities. It is an expense that is subject to change.

1.5 Revenue

Revenue in respect of services provided is recognised when, and to the extent that, performance occurs, and is measured at the fair value of the consideration receivable. The main source of revenue for the Trust is from commissioners for healthcare services.

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Where income is received for a specific activity that is to be delivered in the following year, that income is deferred.

The Trust is registered to receive income under the NHS Injury Cost Recovery Scheme, designed to reclaim the cost of treating injured individuals to whom personal injury compensation has subsequently been paid eg by an insurer. The Trust recognises the income when it receives notification from the Department of Work and Pension’s Compensation Recovery Unit that the individual has lodged a compensation claim. The income is measured at the agreed tariff for the treatments provided to the injured individual, less a provision for unsuccessful compensation claims and doubtful debts.

1.6 Employee benefits

Short-term employee benefits

Salaries, wages and employment-related payments are recognised in the period in which the service is received from employees, except for bonuses earned but not yet taken which, like leave earned but not yet taken is not accrued for at the year end, on the grounds of immateriality.

Retirement benefit costs

Past and present employees are covered by the provisions of the NHS Pensions Scheme. The scheme is an unfunded, defined benefit scheme that covers NHS employers, general practices and other bodies, allowed under the direction of the Secretary of State, in England and Wales. The scheme is not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in the scheme is taken as equal to the contributions payable to the scheme for the accounting period.

For early retirements other than those due to ill health the additional pension liabilities are not funded by the scheme. The full amount of the liability for the additional costs is charged to expenditure at the time the Trust commits itself to the retirement, regardless of the method of payment.

1.7 Other expenses

Other operating expenses are recognised when, and to the extent that, the goods or services have been received. They are measured at the fair value of the consideration payable.

1.8 Property, plant and equipment

Recognition

Property, plant and equipment is capitalised if:

• it is held for use in delivering services or for administrative purposes

• it is probable that future economic benefits will flow to, or service potential will be supplied to the Trust

• it is expected to be used for more than one financial year

• the cost of the item can be measured reliably

• the item has a cost of at least £5,000

• collectively, a number of items have a cost of at least £5,000 and individually have a cost of more than £250, where the assets are functionally interdependent, they had broadly simultaneous purchase dates, are anticipated to have simultaneous disposal dates and are under single managerial control

• items form part of the initial equipping and setting-up cost of a new building, ward or unit, irrespective of their individual or collective cost.

Where a large asset, for example a building, includes a number of components with significantly different asset lives, the components are treated as separate assets and depreciated over their own useful economic lives.

Valuation

All property, plant and equipment are measured initially at cost, representing the cost directly attributable to acquiring or constructing the asset and bringing it to the location and condition necessary for it to be capable of operating in the manner intended by management.

All assets are measured subsequently at fair value.

Land and buildings used for the Trust’s services or for administrative purposes are stated in the statement of financial position at their revalued amounts, being the fair value at the date of revaluation less any impairment.

Revaluations are performed with sufficient regularity to ensure that carrying amounts are not materially different from those that would be determined at the end of the reporting period. Fair values are determined as follows:

• Land and non-specialised buildings – market value for existing use

• Specialised buildings – depreciated replacement cost.

HM Treasury has adopted a standard approach to depreciated replacement cost valuations based on modern equivalent assets and, where it would meet the location requirements of the service being provided, an alternative site can be valued.

Properties in the course of construction for service or administration purposes are carried at cost, less any impairment loss. Cost includes professional fees but not borrowing costs, which are recognised as expenses immediately, as allowed by IAS 23 for assets held at fair value. Assets are revalued and depreciation commences when they are brought into use.

Fixtures and equipment are carried at depreciated historic cost as this is not considered to be materially different from fair value.

An increase arising on revaluation is taken to the revaluation reserve except when it reverses impairment for the same asset previously recognised in expenditure, in which case it is credited to expenditure to the extent of the decrease previously charged there. A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Gains and losses recognised in the revaluation reserve are reported as other comprehensive income in the Statement of Comprehensive Income.

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Subsequent expenditure

Where subsequent expenditure enhances an asset beyond its original specification, the directly attributable cost is capitalised. Where subsequent expenditure restores the asset to its original specification, the expenditure is capitalised and any existing carrying value of the item replaced is written-out and charged to operating expenses.

1.9 Intangible assets

Recognition

Intangible assets are non-monetary assets without physical substance, which are capable of sale separately from the rest of the Trust’s business or which arise from contractual or other legal rights. They are recognised only when it is probable that future economic benefits will flow to, or service potential be provided to, the Trust; where the cost of the asset can be measured reliably, and where the cost is at least £5,000.

Intangible assets acquired separately are initially recognised at fair value. Software that is integral to the operating of hardware, for example an operating system is capitalised as part of the relevant item of property, plant and equipment. Software that is not integral to the operation of hardware, for example application software, is capitalised as an intangible asset. Expenditure on research is not capitalised except insofar as development expenditure relates to a clearly defined project and the benefits of it can reasonably be regarded as assured: it is recognised as an operating expense in the period in which it is incurred. Internally-generated assets are recognised if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use

• the intention to complete the intangible asset and use it

• the ability to sell or use the intangible asset

• how the intangible asset will generate probable future economic benefits or service potential

• the availability of adequate technical, financial and other resources to complete the intangible asset and sell or use it

• the ability to measure reliably the expenditure attributable to the intangible asset during its development.

Measurement

The amount initially recognised for internally-generated intangible assets is the sum of the expenditure incurred from the date when the criteria above are initially met. Where no internally- generated intangible asset can be recognised, the expenditure is recognised in the period in which it is incurred.

Following initial recognition, intangible assets are carried at fair value by reference to an active market, or, where no active market exists, at amortised replacement cost (modern equivalent assets basis), indexed for relevant price increases, as a proxy for fair value. Internally-developed software is held at historic cost to reflect the opposing effects of increases in development costs and technological advances.

1.10 Depreciation, amortisation and impairments

Freehold land, properties under construction, and assets held for sale are not depreciated.

Otherwise, depreciation and amortisation are charged to write off the costs or valuation of property, plant and equipment and intangible non-current assets, less any residual value, over their estimated useful lives, in a manner that reflects the consumption of economic benefits or service potential of the assets. The estimated useful life of an asset is the period over which the trust expects to obtain economic benefits or service potential from the asset. This is specific to the trust and may be shorter than the physical life of the asset itself. Estimated useful lives and residual values are reviewed each year end, with the effect of any changes recognised on a prospective basis. Assets held under finance leases are depreciated over their estimated useful lives.

At each reporting period end, the Trust checks whether there is any indication that any of its tangible or intangible non-current assets have suffered an impairment loss. If there is indication of an impairment loss, the recoverable amount of the asset is estimated to determine whether there has been a loss and, if so, its amount. Intangible assets not yet available for use are tested for impairment annually.

A revaluation decrease that does not result from a loss of economic value or service potential is recognised as an impairment charged to the revaluation reserve to the extent that there is a balance on the reserve for the asset and, thereafter, to expenditure. Impairment losses that arise from a clear consumption of economic benefit should be taken to expenditure. Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of the recoverable amount but capped at the amount that would have been determined had there been no initial impairment loss. The reversal of the impairment loss is credited to expenditure to the extent of the decrease previously charged there and thereafter to the revaluation reserve.

Impairments are analysed between Departmental Expenditure Limits (DEL) and Annually Managed Expenditure (AME). This is necessary to comply with HM Treasury’s budgeting guidance. DEL limits are set in the Spending Review and Departments may not exceed the limits that they have been set.

AME budgets are set by HM Treasury and may be reviewed with the departments in the run-up to the Budget. Departments need to monitor AME closely and inform HM Treasury if they expect AME spending to rise above forecast. Whilst HM Treasury accepts that in some areas of AME inherent volatility may mean departments do not have the ability to manage the spending within budgets in that financial year, any expected increases in AME require HM Treasury approval.

1.11 Leases

Leases are classified as finance leases when substantially all the risks and rewards of ownership are transferred to the lessee. All other leases are classified as operating leases.

The Trust as lessee

Property, plant and equipment held under finance leases are initially recognised, at the inception of the lease, at fair value or, if lower, at the present value of the minimum lease payments, with a matching liability for the lease obligation to the lessor. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate on interest on the remaining balance of the liability. Finance charges are recognised in calculating the Trust’s surplus/deficit.

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Operating lease payments are recognised as an expense on a straight-line basis over the lease term. Lease incentives are recognised initially as a liability and subsequently as a reduction of rentals on a straight-line basis over the lease term.

Contingent rentals are recognised as an expense in the period in which they are incurred.

Where a lease is for land and buildings, the land and building components are separated and individually assessed as to whether they are operating or finance leases.

1.12 Inventories

Inventories are valued at the lower of cost and net realisable value using the first-in first-out cost formula. This is considered to be a reasonable approximation to fair value due to the high turnover of stocks.

1.13 Cash and cash equivalents

Cash is cash in hand and deposits with any financial institution repayable without penalty on notice of not more than 24 hours. Cash equivalents are investments that mature in three months or less from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.

In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and that form an integral part of the Trust’s cash management.

1.14 Provisions

Provisions are recognised when the Trust has a present legal or constructive obligation as a result of a past event, it is probable that the Trust will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the expenditure required to settle the obligation at the end of the reporting period, taking into account the risks and uncertainties. Where a provision is measured using the cash flows estimated to settle the obligation, its carrying amount is the present value of those cash flows using HM Treasury’s discount rate for either short, medium or long term provisions. The rates applied are 0 to 5 years (-1.55%), 6 to 10 years (-1.00%) and over 10 years (-0.80%). The majority of the Trust’s provisions are long term and therefore the discount rate is -0.80% in real terms (1.37% for employee early departure obligations).

When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the receivable is recognised as an asset if it is virtually certain that reimbursements will be received and the amount of the receivable can be measured reliably.

A restructuring provision is recognised when the Trust has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with ongoing activities of the entity.

1.15 Clinical negligence costs

The NHS Litigation Authority (NHSLA) operates a risk pooling scheme under which the Trust pays an annual contribution to the NHSLA which in return settles all clinical negligence claims. The contribution is charged to expenditure. Although the NHSLA is administratively responsible for all clinical negligence cases the legal liability remains with the Trust. The total value of clinical negligence provisions carried by the NHSLA on behalf of the Trust is disclosed at note 29.

1.16 Non-clinical risk pooling

The Trust participates in the Property Expenses Scheme and the Liabilities to Third Parties Scheme. Both are risk pooling schemes under which the Trust pays an annual contribution to the NHS Litigation Authority and, in return, receives assistance with the costs of claims arising. The annual membership contributions, and any excesses payable in respect of particular claims are charged to operating expenses as and when they become due.

1.17 Carbon Reduction Commitment Scheme (CRC)

CRC and similar allowances are accounted for as government grant funded intangible assets if they are not expected to be realised within 12 months, and otherwise as other current assets. They are valued at open market value. As the NHS body makes emissions, a provision is recognised with an offsetting transfer from deferred income. The provision is settled on surrender of the allowances. The asset, provision and deferred income amounts are valued at fair value at the end of the reporting period.

1.18 Contingencies

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Trust, or a present obligation that is not recognised because it is not probable that a payment will be required to settle the obligation or the amount of the obligation cannot be measured sufficiently reliably. A contingent liability is disclosed unless the possibility of a payment is remote.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Trust. A contingent asset is disclosed where an inflow of economic benefits is probable.

Where the time value of money is material, contingencies are disclosed at their present value.

1.19 Financial assets

Financial assets are recognised when the Trust becomes party to the financial instrument contract or, in the case of trade receivables, when the goods or services have been delivered. Financial assets are de-recognised when the contractual rights have expired or the asset has been transferred.

Financial assets are classified into the following categories: financial assets at fair value through profit and loss; held to maturity investments; available for sale financial assets, and loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

54

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments which are not quoted in an active market. After initial recognition, they are measured at amortised cost using the effective interest method, less any impairment. Interest is recognised using the effective interest method.

The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset, to the initial fair value of the financial asset.

At the end of the reporting period, the Trust assesses whether any financial assets, other than those held at ‘fair value through profit and loss’ are impaired. Financial assets are impaired and impairment losses recognised if there is objective evidence of impairment as a result of one or more events which occurred after the initial recognition of the asset and which has an impact on the estimated future cash flows of the asset.

For financial assets carried at amortised cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the revised future cash flows discounted at the asset’s original effective interest rate. The loss is recognised in expenditure and the carrying amount of the asset is reduced directly/through a provision for impairment of receivables.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through expenditure to the extent that the carrying amount of the receivable at the date of the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

1.20 Financial liabilities

Financial liabilities are recognised on the Statement of Financial Position when the Trust becomes party to the contractual provisions of the financial instrument or, in the case of trade payables, when the goods or services have been received. Financial liabilities are de-recognised when the liability has been discharged, that is, the liability has been paid or has expired.

Loans from the Department of Health are recognised at historical cost. Otherwise, financial liabilities are initially recognised at fair value.

Financial liabilities at fair value through profit and loss

Embedded derivatives that have different risks and characteristics to their host contracts, and contracts with embedded derivatives whose separate value cannot be ascertained, are treated as financial liabilities at fair value through profit and loss. They are held at fair value, with any resultant gain or loss recognised in the Trust’s deficit. The net loss incorporates any interest payable on the financial liability.

The Trust has reviewed all contracts to identify any embedded derivatives that are not closely related to the host contracts. Following this review the Trust has deemed its embedded derivatives to be immaterial and as such no adjustment has been made to the accounts.

Other financial liabilities

After initial recognition, all other financial liabilities are measured at amortised cost using the effective interest method, except for loans from Department of Health, which are carried at historic cost. The effective interest rate is the rate that exactly discounts estimated future cash payments through the life of the asset, to the net carrying amount of the financial liability. Interest is recognised using the effective interest method.

1.21 Value added tax (VAT)

Most of the activities of the Trust 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.

1.22 Third party assets

Assets belonging to third parties (such as money held on behalf of patients) are not recognised in the accounts since the Trust has no beneficial interest in them. Details of third party assets are given in note 37 to the accounts.

1.23 Public dividend capital (PDC) and PDC dividend

Public dividend capital represents taxpayers’ equity in the Trust. At any time the Secretary of State can issue new PDC to, and require repayments of PDC from, the Trust. PDC is recorded at the value received. As PDC is issued under legislation rather than under contract, it is not treated as an equity financial instrument.

An annual charge, reflecting the cost of capital utilised by the Trust, is payable to the Department of Health as public dividend capital dividend. The charge is calculated at the real rate set by HM Treasury (currently 3.5%) on the average carrying amount of all assets less liabilities (except for donated assets and cash balances with the Government Banking Service). The average carrying amount of assets is calculated as a simple average of opening and closing relevant net assets.

In accordance with the requirements laid down by the Department of Health (as the issuer of PDC), the dividend for the year is calculated on the actual average relevant net assets as set out in the “pre-audit” version of the annual accounts. The dividend thus calculated is not revised should any adjustment to net assets occur as a result of the audit of the annual accounts.

1.24 Losses and special payments

Losses and special payments are items that Parliament would not have contemplated when it agreed funds for the health service or passed legislation. By their nature they are items that ideally should not arise. They are therefore subject to special control procedures compared with the generality of payments. They are divided into different categories, which govern the way that individual cases are handled.

Losses and special payments are charged to the relevant functional headings in expenditure on an accruals basis, including losses which would have been made good through insurance cover had Trusts not been bearing their own risks (with insurance premiums then being included as normal revenue expenditure).

55

1.25 Subsidiaries

Material entities over which the Trust has the power to exercise control are classified as subsidiaries and are consolidated. The Trust has control when it is exposed to or has rights to variable returns through its power over another entity. The income and expenses; gains and losses; assets, liabilities and reserves; and cash flows of the subsidiary are consolidated in full into the appropriate financial statement lines.

1.26 Research and development

Research and development expenditure is charged against income in the year in which it is incurred, except insofar as development expenditure relates to a clearly defined project and the benefits of it can reasonably be regarded as assured. Expenditure so deferred is limited to the value of future benefits expected and is amortised through the Statement of Comprehensive Income on a systematic basis over the period expected to benefit from the project. It should be revalued on the basis of current cost. The amortisation is calculated on the same basis as depreciation, on a quarterly basis.

1.27 Other reserves

Other reserves represent the increase of the net assets of the Trust as a result of the integration of Ashworth Hospital into the Trust on 1 April 2002. The reserve will remain in perpetuity until such time as the Trust is dissolved.

2. Operating segments

The Trust has only one operating segment, that of healthcare.

3. Income generation activities

The Trust has no income generating activities.

4. Revenue from patient care activities

2015/16 2014/15 £000s £000s

NHS trusts 0 63

NHS England 73,612 73,039

Clinical commissioning groups 103,834 96,621

Foundation trusts 1,228 1,420

Non-NHS:

Local authorities 3,651 3,570

Other* 11,500 12,229

Total revenue from patient care activities 193,825 186,942

*Includes patient care income for high secure services from Welsh health bodies of £10.6m

(£11.6m 2014/15)

5. Other operating revenue

2015/16 2014/15 £000s £000s

Education, training and research 4,681 3,973

Non-patient care services to other bodies* 9,831 10,639

Rental revenue from operating leases 3,028 3,028

Other revenue 2,078 2,321

Total other operating revenue 19,618 19,961

Total operating revenue 213,443 206,903

*Includes income for Informatics Merseyside

of £9.5m (£10.1m 2014/15)

Most of the activities of the Trust are outside the scope of

VAT and, in general, output tax does not apply and input tax on

purchases is not recoverable.

56

6. Operating expenses

Restated PPA* Actual

2015/16 2014/15 2015/15 2014/15

£000s £000s £000s £000s

Purchase of healthcare from non-NHS bodies 3,433 1,425 0 1,425

Trust Chairman and non-executive directors 55 53 0 53

Supplies and services - clinical 4,576 4,523 0 4,523

Supplies and services - general 3,838 3,823 0 3,823

Consultancy services 1,043 2,078 0 2,078

Establishment 8,155 7,546 0 7,546

Transport 412 388 0 388

Service charges - On-SoFP LIFT contracts 463 127 0 127

Business rates paid to local authorities 908 731 0 731

Premises 14,831 13,468 0 13,468

Hospitality 98 122 0 122

Insurance 294 333 0 333

Legal fees 563 266 0 266

Impairments and reversals of receivables 75 (17) 0 (17)

Depreciation 6,256 5,442 0 5,442

Amortisation 92 53 0 53

Impairments and reversals of property, plant and equipment 9,124 8,800 8,294 506

Internal audit fees 105 104 0 104

Audit fees 57 76 0 76

Other auditor’s remuneration** 32 51 0 51

Clinical negligence 190 195 0 195

Research and development (excluding staff costs) 124 264 0 264

Education and training 2,436 1,262 0 1,262

Change in discount rate (158) 1,177 0 1,177

Other*** 2,932 1,710 0 1,710

Total operating expenses (excluding employee benefits) 59,934 54,000 8,294 45,706

*The Prior Period Adjustment refers to impairments and a full explanation of this is provided in note 39.

**Other auditor’s remuneration comprises £0.014m for Board skills review, £0.010m for review of the Trust’s Quality Accounts and £0.007m for a costing and activity review.

***Other includes £2.280m professional fees, £0.127m Mental Health Act appeals and £0.117m development monies.

2015/16 2014/15 £000s £000s

Employee benefits

Employee benefits excluding Board members 150,186 149,486

Board members 1,042 977

Total employee benefits 151,228 150,463

Total operating expenses 211,162 196,169

57

7. Operating leases

The Trust has operating leases in respect of: photocopiers, buildings and lease cars. None of these are significant. The Trust entered into an operating lease for the new Trust offices in December 2012.

7.1. Mersey Care NHS Trust as lessee

2015/16 Land Buildings Other Total 2014/15

£000s £000s £000s £000s £000s

Payments recognised as an expense

Minimum lease payments 848 698

Total Payable: 848 698

No later than one year 0 526 92 618 732

Between one and five years 0 2,390 198 2,588 2,618 After five years 0 1,564 0 1,564 2,157

Total 0 4,480 290 4,770 5,507

Total future sublease payments expected to be received 0 0

7.2. Mersey Care NHS Trust as lessor

The Trust is leasing 8.5 hectares of land. No buildings form part of the lease.

2015/16 2014/15Recognised as revenue £000 £000s

Rental revenue 3,028 3,028

Total Receivable: 3,028 3,028

No later than one year 3,028 3,028

Between one and five years 883 3,911

After five years 0 0

Total 3,911 6,939

8. Employee benefits and staff numbers

8.1 Employee benefits

Total 2015/16 Permanently employed Other

£000s £000s £000s

Employee benefits - gross expenditure

Salaries and wages 127,433 115,830 11,603

Social security costs 8,985 8,985 0

Employer contributions to NHS BSA - pensions division 14,551 14,551 0

Other pension costs 2 2 0

Termination benefits 1,427 1,427 0 Total employee benefits 152,398 140,795 11,603 Employee costs capitalised 1,170 1,170 0 Gross employee benefits excluding capitalised costs 151,228 139,625 11,603

58

Total 2014/15 Permanently employed Other

£000s £000s £000s

Employee benefits - gross expenditure

Salaries and wages 126,284 115,111 11,173

Social security costs 8,756 8,756 0

Employer contributions to NHS BSA - pensions division 13,616 13,616 0

Other pension costs 1 1 0

Termination benefits 2,816 2,816 0

Total employee benefits 151,473 140,300 11,173

Employee costs capitalised 1,010 1,010 0

Gross employee benefits excluding capitalised costs 150,463 139,290 11,173

8.2 Staff numbers

Permanently Total employed Other Total number number number number

Average staff numbers

Medical and dental 165 86 79 156

Administration and estates 1,014 964 50 992

Healthcare assistants and other support staff 1,329 1,306 23 1,267

Nursing, midwifery and health visiting staff 982 979 3 1,076

Scientific, therapeutic and technical staff 360 353 7 303

Social care staff 29 29 0 23 TOTAL 3,879 3,717 162 3,817 Of the above - staff engaged on capital projects 40 40 0 32

8.3 Staff sickness absence and ill health retirements

2015/16 2014/15 number number

Total days lost 47,240 44,578

Total staff years 3,489 3,450

Average working days lost 13.54 12.92

The staff sickness figures are based on a calendar year (January to December) not the financial year.

2015/16 2014/15 number number

Number of persons retired early on ill health grounds 16 16

£000s £000s

Total additional pensions liabilities accrued in the year 663 1,333

2014/152015/16

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60

8.6 Pension costs

Past and present employees are covered by the provisions of the two NHS Pension Schemes. Details of the benefits payable and rules of the schemes can be found on the NHS Pensions website at www.nhsbsa.nhs.uk/pensions. Both are unfunded defined benefit schemes that cover NHS employers, GP practices and other bodies allowed under the direction of the Secretary of State in England and Wales. They are not designed to be run in a way that would enable NHS bodies to identify their share of the underlying scheme assets and liabilities. Therefore, each scheme is accounted for as if it were a defined contribution scheme: the cost to the NHS body of participating in each scheme is taken as equal to the contributions payable to that scheme for the accounting period.

In order that the defined benefit obligations recognised in the financial statements do not differ materially from those that would be determined at the reporting date by a formal actuarial valuation, the FReM requires that “the period between formal valuations shall be four years, with approximate assessments in intervening years”. An outline of these follows:

a) Accounting valuation

A valuation of scheme liability is carried out annually by the scheme actuary (currently the Government Actuary’s Department) as at the end of the reporting period. This utilises an actuarial assessment for the previous accounting period in conjunction with updated membership and financial data for the current reporting period, and are accepted as providing suitably robust figures for financial reporting purposes. The valuation of scheme

liability as at 31 March 2016 is based on valuation data as at 31 March 2015, updated to 31 March 2016 with summary global member and accounting data. In undertaking this actuarial assessment, the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rate prescribed by HM Treasury have also been used.

The latest assessment of the liabilities of the scheme is contained in the scheme actuary report, which forms part of the annual NHS Pension Scheme (England and Wales) Pension Accounts. These accounts can be viewed on the NHS Pensions website and are published annually. Copies can also be obtained from The Stationery Office.

b) Full actuarial (funding) valuation

The purpose of this valuation is to assess the level of liability in respect of the benefits due under the schemes (taking into account their recent demographic experience), and to recommend contribution rates payable by employees and employers.

The last published actuarial valuation undertaken for the NHS Pension Scheme was completed for the year ending 31 March 2012.

The Scheme regulations allow for the level of contribution rates to be changed by the Secretary of State for Health, with the consent of HM Treasury, and consideration of the advice of the Scheme actuary and appropriate employee and employer representatives as deemed appropriate.

The Trust has one employee who is a member of the Teacher’s Pension Scheme.

2015/16 2014/15 Total Total Agreements value of Agreements value of agreements agreements Number £000s Number £000s Mutually Agreed Resignations (MARS) contractual costs 53 1,057 114 2,567Contractual payments in lieu of notice 18 92 22 113Exit payments following employment tribunals or court orders 1 17 0 0Total 72 1,166 136 2,680

Non-contractual payments made to individuals where the payment value was more than 12 months of their annual salary. 0 0 0 0

8.5 Exit packages - other departures analysis

The Trust’s (MARS) scheme was agreed with HM Treasury. Of the ‘Other’ departures, 53 staff (£1.1m) left as a result of MARS.

This disclosure reports the number and value of exit packages agreed in the year. Note: the expense associated with these departures may have been recognised in part or in full in a previous period.

As a single exit package can be made up of several components each of which will be counted separately in this note, the total number above will not necessarily match the total numbers in note 8.4 which will be the number of individuals.

The Remuneration Report includes disclosure of exit payments payable to individuals named in that report.

61

9. Better Payment Practice Code

9.1. Measure of compliance

2015/16 2015/16 2014/15 2014/15

Non-NHS payables Number £000s Number* £000s*

Total non-NHS trade invoices paid in the year 38,919 68,693 35,709 58,716

Total non-NHS trade invoices paid within target 37,745 66,113 34,879 58,067

Percentage of NHS trade invoices paid within target 96.98% 96.24% 97.68% 98.89%

NHS payables

Total NHS trade invoices paid in the year 1,382 13,789 834 13,143

Total NHS trade invoices paid within target 1,381 13,789 828 13,128

Percentage of NHS trade invoices paid within target 99.93% 100.00% 99.28% 99.89%

The Better Payment Practice Code requires the Trust to aim to pay all valid invoices by the due date or within 30 days of receipt of a valid invoice, whichever is later.

* The table has been restated to reflect all trade creditors paid in 2014/15.

9.2. The Late Payment of Commercial Debts (Interest) Act 1998

The Trust made no payments under the Late Payment of Commercials Debts (Interest) Act 1998.

10. Investment revenue

2015/16 2014/15 £000s £000s

Bank interest 109 118

Total 109 118

11. Other gains and losses

2015/16 2014/15 £000s £000s

(Loss) on disposal of assets other than by sale (intangibles) (160) (123)

Total (160) (123)

12. Finance costs

Interest 2015/16 2014/15 £000s £000s

Interest on obligations under finance leases 540 473

Interest on obligations under LIFT contracts:

- main finance cost 1,845 523

- contingent finance cost 97 26

Total interest expense 2,482 1,022

Other finance costs 0 0

Provisions - unwinding of discount 274 358

Total 2,756 1,380

62

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66

13.4 Property, plant and equipment

The Trust’s land and buildings were revalued on 31 March 2015 by Myles Riordan (MRICS), a professionally qualified valuer of DVS - property services arm of the Valuation Office Agency. These values were updated on 31 March 2016 in line with work undertaken by the valuer.

The valuation, and subsequent update, was undertaken in accordance with the terms of the Royal Institution of Chartered Surveyors’ Valuation Standards - Global and UK, 7th Edition, insofar as these terms are consistent with the requirements of HM Treasury, the NHS and the Department of Health.

The valuation of each property is on the basis of market value on the assumption that the property is sold as part of a continuing enterprise on occupation.

The estimated useful lives of the Trust’s assets are as follows:

• Buildings (excluding dwellings) between 3 and 90 years

• Plant and machinery between 10 and 15 years

• Transport equipment 7 years

• Information technology between 5 and 8 years

• Furniture and fittings 5 years.

The Trust believes that there is not a material difference between its current asset values and market value.

The Trust has £7.8m fully depreciated assets in use.

67

£000's £000’s £000’s £000’s £000’s £000’s

At 1 April 2015 0 1,496 0 0 0 1,496

Additions purchased 0 (50) 160 0 0 110

Additions internally generated 0 0 0 0 0 0

Additions - non cash donations 0 0 0 0 0 0

Additions - purchases from cash donations and Government grants 0 0 0 0 0 0

Additions leased (including PFI/LIFT) 0 0 0 0 0 0

Reclassifications 0 0 0 0 0 0

Reclassified as held for sale and reversals 0 0 0 0 0 0

Disposals other than by sale 0 0 (160) 0 0 (160)

Upward revaluation/positive indexation 0 0 0 0 0 0Impairments/reversals charged to operating expenses 0 0 0 0 0 0

Impairments/reversals charged to reserves 0 0 0 0 0 0Transfers to NHS Foundation Trust on authorisation as FT 0 0 0 0 0 0

Transfer (to)/from other public sector bodies under absorption accounting 0 0 0 0 0 0

At 31 March 2016 0 1,446 0 0 0 1,446

Amortisation

At 1 April 2015 0 1,018 0 0 0 1,018

Reclassifications 0 0 0 0 0 0

Reclassified as held for sale and reversals 0 0 0 0 0 0

Disposals other than by sale 0 0 0 0 0 0

Upward revaluation/positive indexation 0 0 0 0 0 0

Impairment/reversals charged to reserves 0 0 0 0 0 0

Impairments/reversals charged to operating expenses 0 0 0 0 0 0 Charged during the year 0 0 92 0 0 92

Transfers to NHS Foundation Trust on authorisation as FT 0 0 0 0 0 0

Transfer (to)/from other public sector bodies under absorption accounting 0 0 0 0 0 0

At 31 March 2016 0 1,110 0 0 0 1,110

Net book value at 31 March 2016 0 336 0 0 0 336

Asset financing: Net book value at 31 March 2016 comprises:

Purchased 0 336 0 0 0 336

Donated 0 0 0 0 0 0

Government granted 0 0 0 0 0 0

Finance leased 0 0 0 0 0 0

On-balance sheet PFIs 0 0 0 0 0 0

Total at 31 March 2016 0 336 0 0 0 336

Revaluation reserve balance for

intangible non-current assets

At 1 April 2015 0 0 0 0 0 0

Movements (specify) 0 0 0 0 0 0

At 31 March 2016 0 0 0 0 0 0

14. Intangible non-current assets

14.1. Intangible non-current assets

2015/16 IT - in-house Computer Licenses and Patents Development Total and third party licenses trademarks expenditure - software internally generated

68

14.3. Intangible non-current assets

All the Trust’s intangible assets relate to computer software and have a useful life of between 3 to 5 years.

Revaluation reserve balance for tangible assets

The Trust has no revaluation reserve for intangible assets.

The Trust still uses the MAPS Health Roster software that was purchased in 2007/08 at a cost of £0.792m and is now fully amortised.

Cost or valuation: £000's £000’s £000’s £000’s £000’s £000’s

At 1 April 2014 0 1,058 0 0 0 1,058

Additions - purchased 0 438 123 0 0 561

Additions - internally generated 0 0 0 0 0 0

Additions - donated 0 0 0 0 0 0

Additions - Government granted 0 0 0 0 0 0

Additions leased (including PFI/LIFT) 0 0 0 0 0 0

Reclassifications 0 0 0 0 0 0

Reclassified as held for sale 0 0 0 0 0 0

Disposals other than by sale 0 0 (123) 0 0 (123)

Upward revaluation/positive indexation 0 0 0 0 0 0

Impairments 0 0 0 0 0 0

Reversal of impairments 0 0 0 0 0 0

Transfer (to)/from other public sector bodies under absorption accounting 0 0 0 0 0 0

At 31 March 2015 0 1,496 0 0 0 1,496

Amortisation

At 1 April 2014 0 965 0 0 0 965

Reclassifications 0 0 0 0 0 0

Reclassified as held for sale 0 0 0 0 0 0

Disposals other than by sale 0 0 0 0 0 0

Upward revaluation/positive indexation 0 0 0 0 0 0

Impairments charged to operating expenses 0 0 0 0 0 0

Reversal of impairments charged to operating 0 0 0 0 0 0

Charged during the year 0 53 0 0 0 53

Transfer (to)/from other public sector

bodies under absorption accounting 0 0 0 0 0 0

At 31 March 2015 0 1,018 0 0 0 1,018

Net book value at 31 March 2015 0 478 0 0 0 478

Net book value at 31 March 2015 comprises:

Purchased 0 478 0 0 0 478

Donated 0 0 0 0 0 0

Government granted 0 0 0 0 0 0

Finance leased 0 0 0 0 0 0

On-balance sheet PFIs 0 0 0 0 0 0

Total at 31 March 2015 0 478 0 0 0 478

14.2. Intangible non-current assets prior year

2014/15

IT - in-house Computer Licenses and Patents Development Total and third party licenses trademarks expenditure - software internally generated

69

IT - in-house Computer Licenses and Patents Development Total and third party licenses trademarks expenditure - software internally generated

15. Impairments ImpairmentsI and reversals recognised in 2015/16

2015/16 2014/15 2014/15 2014/15 Total Restated PPA* Accounts £000s £000s £000s £000sProperty, plant and equipment impairments and reversals taken to SoCI

Loss or damage resulting from normal operations 0 0 0 0

Over-specification of assets 0 0 0 0

Abandonment of assets in the course of construction 0 0 0 0

Total charged to departmental expenditure limit 0 0 0 0

Unforeseen obsolescence 0 0 0 0

Loss as a result of catastrophe 0 0 0 0

Other 7,452 7,603 8,294 (691)

Changes in market price 1,672 1,197 0 1,197

Total charged to annually managed expenditure 9,124 8,800 8,294 506

Total impairments of property, plant and equipment changed to SoCI 9,124 8,800 8,294 506

Intangible assets impairments and reversals charged to SoCI

Loss or damage resulting from normal operations 0 0 0 0

Over-specification of assets 0 0 0 0

Abandonment of assets in the course of construction 0 0 0 0

Total charged to departmental expenditure limit 0 0 0 0

Unforeseen obsolescence 0 0 0 0

Loss as a result of catastrophe 0 0 0 0

Other 0 0 0 0

Changes in market price 0 0 0 0

Total charged to annually managed expenditure 0 0 0 0

Total impairments of intangibles charged to SoCI 0 0 0 0

Financial assets charged to SoCI

Loss or damage resulting from normal operations 0 0 0 0

Total charged to departmental expenditure limit 0 0 0 0

Loss as a result of catastrophe 0 0 0 0

Other 0 0 0 0

Total charged to annually managed expenditure 0 0 0 0

Total impairments of financial assets charged to SoCI 0 0 0 0

Non-current assets held for sale - impairments and reversals charged to SoCI

Loss or damage resulting from normal operations 0 0 0 0

Abandonment of assets in the course of construction 0 0 0 0

Total charged to departmental expenditure limit 0 0 0 0

Unforeseen obsolescence 0 0 0 0

Loss as a result of catastrophe 0 0 0 0

Other 0 0 0 0

Changes in market price 0 0 0 0

Total charged to annually managed expenditure 0 0 0 0

Total impairments of non-current assets held for sale charged to SoCI 0 0 0 0

Total impairments charged to SoCI - DEL 0 0 0 0

Total impairments charged to SoCI - AME 9,124 8,800 8,294 506

Overall total impairments 9,124 8,800 8,294 506

*The Prior Period Adjustment (PPA) refers to impairments and a full explanation of this is provided in note 39.

70

Donated and Government granted assets, included overleaf

There are no donated and Government granted asset impairments.

The Trust has total impairments of £9.1m in 2015/16. £7.4m are economic impairments and £1.7m are impairments due to movements in market value.

Economic impairments of £2.0m, £0.6m, £0.5m, £0.4m and £0.1m respectively arose when Newman ward at Ashworth Hospital, Haigh Road, Walton Library, Norris Green Community Hub and Wavertree Bungalow were valued by the District Valuer following major refurbishment.

The closure of Arundel House, Mossley Mansion and Olive Mount gave economic impairments of £1.0m, £0.1m and £0.1m respectively.

There were also economic impairments of £1.5m and £1.6m respectively when expenditure was incurred developing the secure health park and second Liverpool inpatient facility were written off.

Following the revaluation of the Trust estate by the District Valuer on 31 March 2016 the values of the previously impaired buildings increased and the Trust has reversed economic impairments of £0.5m and recognised market price impairments of £1.7m.

15.1 Analysis of impairments and reversals recognised in 2015/16

Property Intangible Financial Non-current Total plant and equipment assets assets assets held for sale

£000s £000s £000s £000s £000s

Impairments and reversals taken to SoCI 0 0 0 0

Loss or damage resulting from normal operations 0 0 0 0 0

Over-specification of assets 0 0 0 0 0

Abandonment of assets in the course of construction 0 0 0 0 0

Total charged to departmental expenditure limit 0 0 0 0 0

0 0 0 0

Unforeseen obsolescence 0 0 0 0 0

Loss as a result of catastrophe 0 0 0 0 0

Other 7,452 0 0 0 7,452

Changes in market price 1,672 0 0 0 1,672

Total charged to annually managed expenditure 9,124 0 0 0 9,124

Total impairments of property, plant and equipment charged to SoCI 9,124 0 0 0 9,124

Donated and Government granted assets, included above £000s

PPE - donated and Government granted asset impairments: amount charged to SoCI - DEL 0

Intangibles - donated and Government granted asset impairments: amount charged to SoCI - DEL 0

16. Commitments

16.1 Capital commitments

Contracted capital commitments at 31 March not otherwise included in these financial statements:

31 March 2016 31 March 2015

£000s £000s

Property, plant and equipment 1,801 3,277

Intangible assets 0 0

Total 1,801 3,277

71

18. Inventories

Drugs Consumables Work Energy Loan Other Total Of which in Equip held at progress NRV £000s £000s £000s £000s £000s £000s £000s £000s Balance at 1 April 2015 266 58 0 32 0 26 382 0

Additions 2,441 1,526 0 41 0 113 4,121 0

Inventories recognised as an expense

in the period (2,501) (1,528) 0 (42) 0 (99) (4,170) 0

Balance at 31 March 2016 206 56 0 31 0 40 333 0

17. Intra-Government and other balances

Current Non-current Current Non-current receivables receivables payables payables

£000s £000s £000s £000s

Balances with other central Government bodies 1,237 0 1,081 0

Balances with local authorities 996 0 203 0

Balances with NHS bodies outside the departmental group 0 0 0 0

Balances with NHS bodies inside the departmental group 3,117 0 944 0

Balances with public corporations and trading funds 0 0 0 0

Balances with bodies external to Government 3,125 80 7,636 30,233

At 31 March 2016 8,475 80 9,864 30,233

prior period:

Balances with other central Government bodies 1,298 0 3,642 0

Balances with local authorities 224 0 172 0

Balances with NHS bodies outside the departmental group 0 0 0 0

Balances with NHS bodies inside the departmental group 2,849 0 1,122 0

Balances with public corporations and trading funds 0 0 0 0

Balances with bodies external to Government 3,454 64 12,191 30,834

At 31 March 2015 7,825 64 17,127 30,834

19.1 Trade and other receivables

Current Non-current

31 March 2016 31 March 2015 31 March 2016 31 March 2015

£000s £000s £000s £000s

NHS receivables - revenue 2,838 2,844 0 0

NHS receivables - capital 15 0 0 0

NHS prepayments and accrued income 0 7 0 0

Non-NHS receivables - revenue 1,368 734 0 0

Non-NHS prepayments and accrued income 3,380 3,319 80 64

PDC dividend prepaid to DH 260 0 0 0

Provision for the impairment of receivables (180) (117) 0 0

VAT 782 1,003 0 0

Other receivables 12 35 0 0

Total 8,475 7,825 80 64

Total current and non current 8,555 7,889

Included in NHS receivables are prepaid pension contributions: 2

72

19.2 Receivables past their due date but not impaired

31 March 2016 31 March 2015

£000s £000s

By up to three months 3,364 2,514

By three to six months 9 25

By more than six months 0 212

Total 3,373 2,751

19.3 Provision for impairment of receivables

2015/16 2014/15 £000s £000s

Balance at 1 April 2015 (117) (143)

Amount written off during the year 12 9

Amount recovered during the year 232 544

(Increase) in receivables impaired (307) (527)

Transfers (to)/from other public sector bodies under absorption accounting 0 0

Balance at 31 March 2016 (180) (117)

20. Other financial assets

20.1 Other financial assets - current

The Trust had no other current financial assets in 2015/16 and 2014/15.

20.2 Other financial assets - non current

The Trust had no other non current financial assets in 2015/16 and 2014/15.

21. Other current assets

The Trust had no other current financial assets in 2015/16 and 2014/15.

22. Cash and cash equivalents

31 March 2016 31 March 2015

£000s £000s

Opening balance 24,306 18,098

Net change in year (13,641) 6,208

Closing balance 10,665 24,306

Made up of

Cash with Government banking service 4,628 5,273

Commercial banks 6 6

Cash in hand 31 27

Liquid deposits with NLF 6,000 19,000

Current investments 0 0

Cash and cash equivalents as in statement of financial position 10,665 24,306

Cash and cash equivalents as in statement of cash flows 10,665 24,306

Patients’ money held by the Trust, not included above 1,111 972

Third party assets - monies on deposit 0 0

73

23. Trade and other payables

Current Non-current

31 March 2016 31 March 2015 31 March 2016 31 March 2015

£000s £000s £000s £000s

NHS payables - revenue 939 860 0 0

NHS payables - capital 0 15 0 0

NHS accruals and deferred income 5 528 0 0

Non-NHS payables - revenue 1,523 3,440 0 0

Non-NHS payables - capital 542 957 0 0

Non-NHS accruals and deferred income 5,329 7,489 0 0

Social security costs 148 1,555 0 0

PDC dividend payable to DH 0 94 0 0

Tax 578 1,342 0 0

Other 291 382 0 0

Total 9,355 16,662 0 0

Total payables (current and non-current) 9,355 16,662

Included above:

to buy out the liability for early retirements over five years 0 0

number of cases involved (number) 0 0

outstanding pension contributions at the year end 0 2

24. Other liabilities

The Trust had no other liabilities in 2015/16 and 2014/15.

25. Borrowings

Current Non-current

31 March 2016 31 March 2015 31 March 2016 31 March 2015

£000s £000s £000s £000s

LIFT liabilities:

Main liability 274 250 22,834 23,200

Finance lease liabilities 235 215 7,399 7,634

Total 509 465 30,233 30,834

Total other liabilities (current and non-current) 30,742 31,299

The Trust has two finance leases: one with Contour Housing for the Rathbone Rehabilitation Centre which is a 25 year lease running to 2032 and the other with The Walton Centre NHS Foundation Trust for the Brain Injury Rehabilitation Centre which is a 25 year lease running to 2039.

74

Borrowings/loans - repayment of principal falling due in:

31 March 2016 DH Other Total £000s £000s £000s

Zero to one years 0 509 509

One to two years 0 735 735

Two to five years 0 2,011 2,011

Over 5 years 0 27,487 27,487

Total 0 30,742 30,742

26. Other financial liabilities

The Trust has no other liabilities in 2015/16 and 2014/15.

27. Deferred income Current Non-current

31 March 2016 31 March 2015 31 March 2016 31 March 2015 £000s £000s £000s £000s

Opening balance at 1 April 2015 144 145 0 0

Deferred revenue addition 116 144 0 0

Transfer of deferred revenue (144) (145) 0 0

Current deferred income at 31 March 2016 116 144 0 0

Total deferred income (current and non-current) 116 144

28. Finance lease obligations as lessee

The Trust has two finance leases.

One is with Contour Housing for the Rathbone Rehabilitation Centre which is a 25 year lease running to 2032. At the end of the lease in 2032 the property will revert to the Trust’s ownership. The rental amount is based upon paying the loan Contour Housing took out to build the property, plus a management charge.

The other is with The Walton Centre NHS Foundation Trust for the Brain Injuries Rehabilitation Centre which is a 25 year lease running to 2039. At the end of this lease in 2039 the property will revert to the ownership of The Walton Centre NHS Foundation Trust.

Amounts payable under finance leases (buildings)

Minimum lease payments Present value of minimum 31 March 2016 31 March 2015 31 March 2016 31 March 2015 £000s £000s £000s £000s

Within one year 769 764 235 215

Between one and five years 3,222 3,200 1,156 1,070

After five years 11,849 12,818 6,243 6,564

Less future finance charges (8,206) (8,933) 0 0 Minimum lease payments/present value of minimum lease payments 7,634 7,849 7,634 7,849

Included in:

Current borrowings 235 215

Non-current borrowings 7,399 7,634

7,634 7,849

31 March 2016 31 March 2015

Finance leases as lessee £000s £000s

Future sublease payments expected to be received 0 0

Contingent rents recognised as an expense 0 0

75

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76

30. Contingencies

31 March 2016 31 March 2015

Contingent liabilities £000s £000s

NHS Litigation Authority legal claims (108) (71)

Net value of contingent liabilities (108) (71)

Contingent assets

Contingent assets 0 0

Net value of contingent assets 0 0

The future contingent liabilities of £0.108m relate to potential legal claims (2014/15 £0.07m). These figures have been provided by the NHS Litigation Authority.

31. LIFT - additional information

The information below is required by the Department of Heath for inclusion in national statutory accounts.

Charges to operating expenditure and future commitments in respect of on and off SOFP LIFT

2015/16 2014/15 £000s £000s

Total charge to operating expenses in year - OFF SoFP LIFT 0 0

Service element of on SoFP LIFT charged to operating expenses in year 463 127

Total 463 127

Payments committed to in respect of off SoFP LIFT and the service element of on SoFP LIFT

LIFT scheme expiry date: 2015/16 2014/15 £000s £000s

No later than one year 467 464

Later than one year, no later than five years 2,150 2,054

Later than five years 22,754 23,557

Total 25,371 26,075

The above tables disclose the total payments the Trust is committed to paying in respect of the service element of on SoFP LIFT on the basis of an RPI increase of 2.5% each year. At the current inflation rate the payments that the Trust would be committed to in respect of the service element until the end of the contract life would be £25.37m. The impact of future RPI is £7.756m.

The estimated annual payments in future years are expected to be materially different from those which the Trust is committed to make during the next year. The likely financial effect of this is:

2015/16 2014/15

£000s £000s

Estimated capital value of project - off SoFP LIFT 0 0

Value of deferred assets - off SoFP LIFT 0 0

Value of residual interest - off SoFP LIFT 0 0

77

Imputed “finance lease” obligations for on SoFP 2015/16 2014/15LIFT contracts due £000s £000s

No later than one year 2,184 2,095

Later than one year, no later than five years 8,565 8,632

Later than five years 47,385 49,501

Subtotal 58,134 60,228

Less: interest element (35,026) (36,778)

Total 23,108 23,450

IFRS7 requires the Trust to disclose the fair value of financial liabilities. The PFI scheme is a non-current financial liability where the fair value is likely to differ from the carrying value. The Trust has reviewed the current interest rates available on the market and if these were to be used as the implicit interest rate for the scheme the fair value of the liability would range from £23.108m to £38.368m.

Present value imputed “finance lease” obligations 2015/16 2014/15 for on SoFP LIFT contracts due £000s £000s analysed by when LIFT payments are due

No later than one year 274 250

Later than one year, no later than five years 1,590 1,537

Later than five years 21,244 21,663

Total 23,108 23,450

Number of on SoFP LIFT contracts

Total number of LIFT contracts 1

Number of LIFT contracts which individually have a total commitments value in excess of £500m 0

Number of off SoFP LIFT contracts

Total number of LIFT contracts 0

Number of LIFT contracts which individually have a total commitments value in excess of £500m 0

Following a filming visit to Clock View Hospital by the BBC, they said:

“It was a pleasure to deal with so many enthusiastic staff who did everything

with a smile on their face despite some challenging circumstances.”

78

32. Impact of IFRS treatment - current year

The information below is required by the Department of Heath for budget reconciliation purposes.

2015/16 2014/15

Income Expenditure Income Expenditure £000s £000s £000s £000s

Revenue costs of IFRS: arrangements reported on SoFP under IFRIC12 (eg PFI/LIFT)

Depreciation charges 0 542 0 127

Interest expense 0 1,845 0 549

Impairment charge - AME 0 0 0 0

Impairment charge - DEL 0 0 0 0

Other expenditure 0 560 0 127

Revenue receivable from subleasing 0 0 0 0

Impact on PDC dividend payable 0 163 0 188

Total IFRS expenditure (IFRIC12) 0 3,110 0 991

Revenue consequences of PFI/LIFT schemes under UK GAAP/ESA95 0 (2,269) 0 (656)

Net IFRS change (IFRIC12) 0 841 0 335

Capital consequences of IFRS : LIFT/PFI and other items under IFRIC12 £000’s £000’s

Capital expenditure 2015/16 691 24,155

UK GAAP capital expenditure 2015/16 (reversionary interest) 478 117

2015/16 2015/16

Income/ Income/ expenditure IFRIC 12 YTD expenditure ESA 10 YTD

Revenue costs of IFRS12 compared with ESA10 £000s £000s

Depreciation charges 542 0

Interest expense 1,845 0

Impairment charge - AME 0 0

Impairment charge - DEL 0 0

Other expenditure

Service charge 447 2269

Contingent rent 97 0

Lifecycle 16 0

Impact on PDC dividend payable 163 0

Total revenue cost under IFRIC12 vs ESA10 3,110 2,269

Revenue receivable from subleasing 0 0

Net revenue cost/(income) under IDRIC12 vs ESA10 3,110 2,269

The LIFT Scheme relates to Clock View, situated in Walton, Liverpool that treats local people for a range of mental health issues including depression, anxiety and dementia, providing 80 individual bedrooms all with ensuite bathrooms. It also provides the city’s new psychiatric intensive care unit for those most in distress and in need of urgent inpatient care.

The LIFT contract ends in December 2044. A monthly unitary payment will be made up to that point. The unitary payment is subject to annual increases in line with RPI. The arrangement requires the operator to deliver services to the Trust in accordance with the service delivery specification. Non delivery of quality or performance can lead to a reduction in the service charge being paid by the Trust. The Trust retains step in rights should the contractor fail to meet minimum standards as set out within the contract. Under IFRIC12 the asset is treated as an asset of the Trust. The substance of the contract is that the Trust has a finance lease and payments comprise two elements; imputed finance lease charges and service charges.

79

33. Financial instruments

33.1 Financial risk management

Financial reporting standard IFRS7 requires disclosure of the role that financial instruments have had during the period in creating or changing the risks a body faces in undertaking its activities. Because of the continuing service provider relationship that the Trust has with commissioners and the way those commissioners are financed, the Trust is not exposed to the degree of financial risk faced by business entities. Also financial instruments play a much more limited role in creating or changing risk than would be typical of listed companies, to which the financial reporting standards mainly apply. The Trust has limited powers to borrow or invest surplus funds and financial assets and liabilities are generated by day-to-day operational activities rather than being held to change the risks facing the Trust in undertaking its activities.

The Trust’s treasury management operations are carried out by the finance department, within parameters defined formally within the Trust’s standing financial instructions and policies agreed by the Board of directors. The Trust’s treasury activity is subject to review by the Trust’s auditors.

Currency risk

The Trust is principally a domestic organisation with the great majority of transactions, assets and liabilities being in the UK and sterling based. The Trust has no overseas operations. The Trust therefore has low exposure to currency rate fluctuations.

Interest rate risk

The Trust borrows from Government for capital expenditure, subject to affordability as confirmed by the Department of Health. The borrowings are for 1 to 25 years, in line with the life of the associated assets, and interest is charged at the National Loans Fund rate, fixed for the life of the loan. The Trust therefore has low exposure to interest rate fluctuations.

Credit risk

Because the majority of the Trust’s revenue comes from contracts with other public sector bodies, the Trust has low exposure to credit risk. The maximum exposures as at 31 March 2016 are in receivables from customers, as disclosed in the trade and other receivables note.

Liquidity risk

The Trust’s operating costs are incurred under contracts with clinical commissioning groups (CCG) and NHS England, which are financed from resources voted annually by Parliament. The Trust funds its capital expenditure from funds obtained within its prudential borrowing limit. The Trust is not, therefore, exposed to significant liquidity risks.

Fair value

IFRS7 requires the Trust to disclose the fair value of financial liabilities. The LIFT scheme is a non-current financial liability where the fair value is likely to differ from the carrying value. The Trust has reviewed the current interest rates available on the market and if these were used as the implicit interest rate for the scheme the fair value of the liability would range from £23.108m to £38.368m.

80

33.2 Financial assets

At ‘fair value Loans and Available for Total through profit and loss’ receivables sale £000s £000s £000s £000s

Embedded derivatives 0 0 0 0

Receivables - NHS 0 2,856 0 2,856

Receivables - non-NHS 0 3,646 0 3,646

Cash at bank and in hand 0 10,665 0 10,665

Other financial assets 0 0 0 0

Total at 31 March 2016 0 17,167 0 17,167

Embedded derivatives 0 0 0 0

Receivables - NHS 0 2,408 0 2,408

Receivables - non-NHS 0 1,825 0 1,825

Cash at bank and in hand 0 24,306 0 24,306

Other financial assets 0 0 0 0

Total at 31 March 2015 0 28,539 0 28,539

33.3 Financial liabilities

At ‘fair value Other Total through profit and loss’ £000s

Embedded derivatives 0 0 0

NHS payables 0 939 939

Non-NHS payables 0 1,863 1,863

Other borrowings 0 0 0

PFI and finance lease obligations 0 30,742 30,742

Other financial liabilities 0 0 0

Total at 31 March 2016 0 33,544 33,544

Embedded derivatives 0 0 0

NHS payables 0 1,041 1,041

Non-NHS payables 0 4,686 4,686

Other borrowings 0 0 0

PFI and finance lease obligations 0 31,299 31,299

Other financial liabilities 0 0 0

Total at 31 March 2015 0 37,026 37,026

81

34. Related party transactions

Details of related party transactions with individuals are as follows:

Payments to Receipts from Amounts owed to Amounts due related party related party related party from related party £ £ £ £

Beatrice Fraenkel (Chairman) Liverpool City Councillor 565,037 1,494,765 18,193 154,559

Beatrice Fraenkel (Chairman) Council Member, Edge Hill University 21,980 2,325 1,000 0

Professor Brenda Roe (Non-Executive Director) Professor of Health Research, Edge Hill University 21,980 2,325 1,000 0

Pamela Williams (Non-Executive Director) Non-Executive Director, Manchester Mental Health and Social Care Trust 0 175,440 0 43,860

Professor Christopher Dowrick (Trust Board Advisor) Professor of Primary Medical Care, Liverpool University 559,745 185,208 86,306 21,908

Professor Christopher Dowrick (Trust Board Advisor) Honorary Consultant in Primary Care, Liverpool Clinical Commissioning Group 0 74,216,613 0 0

David Fearnley (Medical Director) Medical Director, Calderstones Partnership NHS Foundation Trust (secondment) 477,030 279,776 0 72,211

Neil Smith (Executive Director of Finance - Deputy Chief Executive) Executive Director of Finance, Calderstones Partnership NHS Foundation Trust (secondment) 477,030 279,776 0 72,211

The Department of Health is regarded as a related party. During the year the Trust has had a significant number of material transactions with the department, and with other entities for which the department is regarded as the parent department. For example:

Abertawe Bro Morgannwg University Local Health Board

Aintree University Hospital NHS Foundation Trust

Calderstones Partnership NHS Foundation Trust

Care Quality Commission

Cheshire and Wirral Partnership NHS Foundation Trust

Community Health Partnerships

Department of Health

Health Education England

Lancashire Care Trust

Liverpool Community Health NHS Trust

Liverpool Heart and Chest Hospital NHS Foundation Trust

Liverpool Women’s Hospital NHS Foundation Trust

NHS Business Services Authority

NHS Cheshire and Merseyside Commissioning Support Unit

NHS England

NHS Halton Clinical Commissioning Group

NHS Knowsley Clinical Commissioning Group

NHS Lancashire North Clinical Commissioning Group

NHS Litigation Authority

NHS Pension Scheme

NHS St Helens Clinical Commissioning Group

NHS Warrington Clinical Commissioning Group

NHS West Lancashire Clinical Commissioning Group

Northumbria Healthcare NHS Foundation Trust

Royal Liverpool and Broadgreen University Hospitals NHS Trust

Salford Royal NHS Foundation Trust

South Eastern Health and Social Trust

Southport and Ormskirk Hospital NHS Trust

The Walton Centre NHS Foundation Trust

Welsh Health Specialised Services Committee

In addition, the Trust has had a number of material transactions with other Government departments and other central and local Government bodies. Most of these transactions have been with Liverpool City Council, Sefton Metropolitan Borough Council and Knowsley Borough Council.

82

35. Losses and special payments

The total number of losses cases in 2015/16 and their total value was as follows:

Total value Total value of cases of cases £ £

Losses 12,157 19

Special payments 3,564 38

Total losses and special payments 15,721 57

The total number of losses cases in 2014/15 and their total value was as follows:

Total value Total value of cases of cases

£ £

Losses 8,134 12

Special payments 6,383 35

Total losses and special payments 14,517 47

83

36. F

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84

36.2 Capital cost absorption rate

The dividend payable on public dividend capital is based on the actual (rather than forecast) average relevant net assets based on the pre audited accounts and therefore the actual capital cost absorption rate is automatically 3.5%.

36.3 External financing

The Trust is given an external financing limit which it is permitted to undershoot.

2015/16 2014/15 £000s £000s

External financing limit (EFL) 10,068 (3,196)

Cash flow financing 8,860 (6,260)

Finance leases taken out in the year 0 3,040

External financing requirement 8,860 (3,220)

Underspend against EFL 1,208 24

36.4 Capital resource limit

The Trust is given a capital resource limit which it is not permitted to exceed.

2015/16 2014/15 £000s £000s

Gross capital expenditure 12,749 40,321

Less: book value of assets disposed of (1,160) (123)

Charge against the capital resource limit 11,589 40,198

Capital resource limit 12,684 40,291

Underspend against the capital resource limit 1,095 93

37. Third party assets

The Trust held cash and cash equivalents which relate to monies held by the Trust on behalf of patients or other parties. This has been excluded from the cash and cash equivalents figure reported in the accounts.

31 March 2016 31 March 2015 £000s £000s

Third party assets held by the Trust 1,111 972

38. Investment in subsidiary

Mersey Care NHS Trust has established a subsidiary company, Mersey Care Limited to allow for growth and expansion of service provision. The company was established in May 2012. The company has no transactions and is still in development. Mersey Care NHS Trust owns 100% of Mersey Care Limited.

Shares at 31 March 2016 Trust

£

100 shares 100

39. Prior Period Adjustment (PPA)

The Trust transferred buildings to Aintree University Hospitals NHS Foundation Trust during 2015/16. The Trust planned to impair these buildings in 2015/16 but following a review, it has been recognised that the impairment should have been realised at the point when the Trust became aware that the assets were due to transfer ie during 2014/15. On this basis, a prior period adjustment has been posted to restate the primary statements as at 31 March 2015.

The following notes to the accounts have been adjusted for this PPA:

Note 6 Operating Expenses

Note 13 Property, Plant and Equipment Note 15 Impairments.

40. Going concern

The Trust’s accounts are prepared on a “going concern” basis.

41. Non-adjusting post balance sheet events

At the end of March 2016 the Trust Board approved, subject to confirmation of transitional funding and indemnities from commissioners, a final business case proposing the acquisition of Calderstones Partnership NHS Foundation Trust (Calderstones) by Mersey Care. This transaction could only proceed if the Trust was successful in its application for Foundation Trust status. On 1 May 2016, Mersey Care NHS Trust was granted Foundation Trust status and subject to approval by regulators, has a working date for the acquisition of 1 July 2016.

85

NOTES

86

NOTES

87

NOTES

Mersey Care welcomes ideas and feedback regarding the annual report. If you have any ideas or comments that you would like to share with us, please contact us at

Mersey Care NHS Foundation Trust, Communications Department, V7 Building, Kings Business Park, Prescot, L34 1PJ.

This report is available in other formats and languages on request.

Agenda Item No: C1

Page 1 of 10

Council of Governors

Report provided (check necessary boxes): Paper No: COG16/17/021

To Note: ☐ For Decision ☒ Meeting Date: 28 September 2016

Proposed Process for the Appraisal of the Chairman and Non Executive Directors

Report Author(s): Sarah Jennings, Deputy Trust Secretary

Summary of Key Issues:

• The NHS Foundation Trust Code of Governance states that the Board of Directors should undertake a formal, rigorous annual evaluation of its own performance and of its committees and of its individual Directors.

• In line with Your statutory Duties: a Reference Guidance for NHS Foundation Trust Governors’, conducting performance appraisals and then reviewing the results will significantly assist the Council of Governors in performing its statutory duties, specifically when considering the potential re-appointment or removal of the chair.

• The Council of Governors, which is responsible for the appointment and re-appointment of Non-Executive Directors, should take the lead on agreeing a process for the evaluation and appraisal of the Chair and the Non-Executives.

• The Nomination and Remuneration Committee considered the appraisal process for the Chairman and Non Executive Directors at their meeting on 16 September 2016 and recommended these to the Council of Governors for approval.

Recommendation:

The Council of Governors is asked to: 1. Approve the proposed process for the appraisal of the

Chairman including the proposed timescales for 2016/17 appraisals;

2. Approve the proposed process for the appraisal of the Non Executive Directors including the proposed timescales for 2016/17 appraisals;

3. Note the arrangements for the appraisal of Executive Directors; 4. Note that future appraisals of the Chairman and Non Executive

Directors will take place annually between April and June. PURPOSE & INTRODUCTION

1. The purpose of this report is to: a) Outline and seek approval of the proposed process for the appraisal of the

Chairman; b) Outline and seek approval of the proposed process for the appraisal of the

Chairman; c) To confirm the arrangements in place for the appraisal of Executive Directors;

Agenda Item No: C1

Page 2 of 10

2. The objective of an appraisal is to enable the Chair or Non-Executive Director to evaluate their performance, to build upon strengths and address any areas for development.

3. The NHS Foundation Trust Code of Governance states that the Board of Directors should undertake a formal, rigorous annual evaluation of its own performance and of its committees and of its individual Directors.

4. In line with Your statutory Duties: a Reference Guidance for NHS Foundation Trust

Governors’, conducting performance appraisals and then reviewing the results will significantly assist the Council of Governors in performing its statutory duties, specifically when considering the potential re-appointment or removal of the chair.

5. The Council of Governors, which is responsible for the appointment and re-

appointment of Non-Executive Directors, should take the lead on agreeing a process for the evaluation and appraisal of the Chair and the Non-Executives. The outcomes of the evaluation of the Chairman and the Non-Executive Directors should be agreed by the Governors. The Governors should bear in mind the desirability of using the Senior Independent Director to lead the Non-Executive Directors in the evaluation of the Chairman.

6. The appraisal process for Chair’s and Non-Executive Directors should achieve the

following: a) Hold all Chairs and Non-Executive Directors to account for their performance b) Set appropriate objectives, consistent with the role c) Identify learning and development needs. d) Clarify expectations and capacity to meet the time requirements to effectively

deliver the role of the Chairman/Non Executive Director.

7. The appraisal processes for the Chairman and Non Executive Directors outlined below were subject to the consideration of the Nomination and Remuneration Committee on 16 September 2016. The Nomination and Remuneration Committee recommend approval of these processes to the Council of Governors.

PROCESS FOR APPRAISAL OF THE TRUST CHAIRMAN

A) PROCESS

8. In line with the NHS Foundation Trust Code of Governance, the focus of the Chairman’s appraisal should be their performance as leader of the Board of Directors and the Council of Governors.

9. The Senior Independent Director will undertake the appraisal of the Chair with the involvement of the Lead Governor, taking soundings from the Chief Executive, Executive Directors and members of the Council of Governors collated through the Lead Governor by way of 360 degree review.

10. It is proposed that the appraisal of the Chairman will consist of the following key steps:

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Step 1 A self assessment form to be completed by the Chairman (Form A)

Step 2 The Senior Independent Director (SID) will request that all members of the Board of Directors complete, on an anonymous basis, a peer assessment form (Form B) to be returned to the Trust Secretary.

Step 3 The Lead Governor will request that interested Governors complete, on an anonymous basis, a peer assessment form (Form C) to be returned to the Trust Secretary

Step 4 The results will be aggregated and a summary prepared for the SID and Lead Governor

Step 5 A joint discussion will take place between the SID, Lead Governor and Chairman regarding performance, professional and personal development based on the summary provided by the Trust Secretary, to include:

• A joint review of the achievements / objectives of the previous year

• Discussion on the outcomes of the self-assessment / peer assessment

• Agreement of objectives and a personal development plan for the forthcoming year

• Completion of appraisal pro-forma (Form D)

Step 6 The SID will summarise the appraisal pro-forma and share this with the Nomination and Remuneration Committee, in the absence of the Chairman, and a brief report, including any recommendation will be produced and agreed, for consideration by the Council of Governors.

11. It is proposed that the appraisal will cover the following criteria:

a) Chairing meetings of the Board of Directors and the Council of Governors; b) Leadership; c) Corporate Understanding and strategic awareness d) Commitment; e) Holding to account; f) Personal style; g) Independence and objectivity; h) Self-development; i) Impact;

12. Objective setting should be framed each year around the Trust’s Strategy in line with the existing Personal Achievement and Contribution Evaluation for staff, as follows: a) Improving the quality of our services b) Enhancing the skills and productivity of our people c) Making better use of recourses d) Preparing for our future now

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B) RESPONSIBILITIES

13. The following key responsibilities in respect of the Chairman’s appraisal are proposed.

14. The Chair will be responsible for effectively contributing to the appraisal process, by identifying key objectives for delivery and managing performance against agreed outcomes. Feedback from the Board of Directors and Council of Governors will be discussed and reviewed openly in the appraisal discussion with the SID.

15. The Monitor Your Statutory Duties – A Reference guide for NHS Foundation Trust Governors sets out: “the Senior Independent Director would be expected to lead the actual appraisal (although one of more Governors may also play a significant role) and confirm to the Governors whether, following formal performance evaluation, the performance of the Chairman continues to be effective and demonstrates commitment to the role. Therefore Senior Independent Director will be responsible for leading the Non-Executive Directors in a meeting without the Chair at least annually to evaluate the Chair’s performance and will lead the annual appraisal process.

16. The Lead Governor shall collate all governor input through individual completion of

peer assessment forms regarding the performance of the Chair and provide such information to the (via the Trust Secretary) Senior Independent Director to support the appraisal of the Chair.

17. Note – Due to the infancy of the Council of Governors, not all individual Governors

may feel able to respond through completing the assessment form. This is both acknowledged and accepted.

18. The Nomination and Recommendation Committee, chaired by the Senior

Independent Director (or a Governor), will review the process for evaluation of the Chair's performance on an annual basis and make recommendation for its report back to the Council of Governors. The Nomination and Remuneration Committee will receive a summary of the outcomes of the appraisal and agree a brief report and any recommendation, for consideration by the Council of Governors.

19. The Council of Governors are responsible for assuring that that the appraisal

process is conducted appropriately for the Chair and to develop a mechanism to feedback to the Senior Independent Director on performance and contribution. The Council of Governors will receive a summary of the outcomes Appraisals will be taken into account by the Council of Governors when considering the removal and/or reappointment of the Chair.

20. In addition, in line with the FT Code of Governance, the Non-Executive Directors will

meet at least annually without the chairman present, to appraise the Chairman’s performance.

C) REPORTING

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21. It is proposed that a report of the headline outcomes from the Chair's appraisal will be prepared by the Senior Independent Director and discussed by the Nominations and Remunerations Committee (in the absence of the Chair). This will be then presented to the Council of Governors at the next available meeting following the appraisal process for information.

D) PROPOSED TIMESCALES

Activity Due Date Chairman appraisal process to be considered/ agreed by Nomination and Remuneration Committee

16 September 2016

Chairman appraisal process to be formally approved by Council of Governors

28 September 2016

Peer assessment questionnaires to be issued to Board of Directors and Governors

January 2017

Chairman to undertake self-assessment

January 2017

Non-Executive Directors to meet without the chairman present, to appraise the Chairman’s performance

February 2016

Peer assessment questionnaires to be returned to Trust Secretary [note: for Governors, this will be via the Lead Governor]

February 2017

Summary of peer assessment produced by Trust Secretary and discussed by SID, Lead Governor and Chairman

March 2017

Summary report to Nomination and Remuneration Committee April 2017

Summary report to Board of Directors.

27 April 2017

PROCESS AND CRITERIA FOR APPRAISAL OF NON-EXECUTIVE DIRECTORS

A) PROCESS

22. The Chair, with the support of the Trust Secretary, will undertake the appraisal of the Non-Executive Directors, taking soundings from the Chief Executive and appropriate members of the Board of Directors.

23. It is proposed that the appraisal of Non Executive Directors will consist of the following

key steps:

Step 1 Each Non Executive Director will prepare a self-assessment

Step 2 A joint discussion will take place between each Non Executive Director and the Chairman regarding performance, professional and personal development based on completion of the self assessment, to include:

• A joint review of the achievements / objectives of the previous year;

• Discussion on the outcomes of the self-assessment / peer assessment.

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• Agreement of objectives and a personal development plan for the forthcoming year

• Completion of appraisal pro-forma

Step 6 A summary of the appraisal pro-forma will be shared with the Nomination and Remuneration Committee, by the Chairman and a brief report will be produced and agreed, for consideration by the Council of Governors.

24. The appraisal will include an assessment of the following: a) Performance against individual objectives b) Strategic direction c) Holding to account d) Influencing and communication e) Team working f) Intellectual Flexibility g) Patient and community focus h) Demonstration of values

25. It is proposed that the Senior Independent Director, in addition to the criteria for

appraisal as a Non-Executive Director, will be assessed against their special role, specifically demonstrating that they: a) have a good understanding of the Trust’s constitution b) are able to commit the time necessary to carry out the role c) are fully committed to best practice set out in the NHS Foundation Trust code of

Governance to “comply” or “explain” d) are able to intervene to resolve issues of concern to work with the chair other

directors and/or governors, to resolve significant issues.

B) RESPONSIBILITIES

26. The following key responsibilities in respect of Non Executive Directors appraisals are proposed.

27. The Chair of the Trust will be responsible for the annual appraisal process and regular, open and transparent review of the performance of the Non-Executive Directors, including the Senior Independent Director.

28. The Chair will also support Non-Executive Directors in achievement of their objectives by ensuring the following: a) They receive the necessary information and feel able to raise appropriate

challenge of recommendations or decisions of the Board, in particular making full use of their skills and experience gained both as a director of the Trust and also in other leadership roles.

b) Board development sessions are scheduled into the annual cycle of business for the Board

c) Training appropriate to a special role allocated to a Non-Executive Director will be made available as required

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d) Mandatory training will be incorporated into the Board Development Plan for the Board of Directors and a record of attendance retained by the Corporate Governance Team.

29. Each Non-Executive Director will be responsible for agreeing annually with the Chair a set of measurable, individual objectives based upon the Trust strategic aims, training and development, and their designated lead roles.

30. Non-Executive Directors will be responsible for ensuring that they contribute effectively to development sessions, undertake training as appropriate including mandatory training in a timely manner. Contribute to the overall effective leadership of the Trust by maintaining appropriate visibility and engagement in Trust activities such as Council of Governors meetings and Annual Awards.

31. The Nominations and Remuneration Committee, chaired by the Chair, will review

the process for evaluation of the Non-Executive Directors performance and make recommendation for its report back to the Council of Governors.

32. The Council of Governors are responsible for assuring that that the appraisal

process is conducted for the Non-executive Directors and to develop a mechanism to feedback to the Chair on performance and contribution. Appraisals will be taken into account by the Council of Governors when considering the re- appointment of the Non-Executive Directors.

C) REPORTING

33. Is it proposed that a report of the headline outcomes from the Non-Executive Directors

appraisal will be prepared by the Chair and considered by the Nomination and Remuneration Committee. This will be presented to the Council of Governors at the next available meeting following the appraisal process.

D) PROPOSED TIMESCALES

34. It is proposed that the appraisal of each Non Executive Director is aligned to their terms of office review to ensure that the Council of Governors can utilise the outcomes of appraisals in considering, where required, the re-appointment of Non Executive Directors.

35. It is suggested that going forward, the Chairman and non Executive Director appraisal’s will be undertaken April – June annually in line with the Executive Director (and staff) appraisals.

36. Subject to this appraisal process being approved by the Council of Governors at its

meeting on 28th September, the below table outlines the proposed timescales for the appraisal of each Non Executive Director for 2016/17.

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NED to undertake self-assessment

Self-assessment to be discussed by Chairman and NED

Summary report of NED appraisal to Nomination and Remuneration Committee

Summary report of NED appraisal to Council of Governors

Gerry O’Keeffe

October 2016 November 2016 December 2016 12 January 2017

Pam Williams October 2016 November 2016 December 2016 12 January 2017 Brenda Roe February 2017 March 2017 April 2017 27 April 2017 Matt Birch February 2017 March 2017 April 2017 27 April 2017 Rob Beardall February 2017 March 2017 April 2017 27 April 2017 Nick Williams February 2017 March 2017 April 2017 27 April 2017

FIT AND PROPER PERSONS TEST

37. In direct response to failing at the Winterbourne View Hospital and the Francis Inquiry into Mid Staffordshire NHS Hospital Trust Regulation 5 of The Health and Social Care Act 2008 (Regulated Activities) Regulations 2014 (referred to as the 2014 Regulations) was been introduced.

38. In January 2015 that Board of Directors agreed a process which has been adopted by the Trust to ensure that ‘directors’ are subject to the fit and proper persons test. This included a robust process to be undertaken on the appointment of a director (including non-executive directors) and annual review process.

39. The regulations state that ‘the fitness of directors is regularly reviewed by the provider to ensure that they remain fit for the role they are in; the provider should determine how often fitness must be reviewed based on the assessed risk to business delivery and/or the service users posed by the individual and/or role.’

40. The process for the on-going (annual) review of directors in respect of the Fit and

Proper Persons Test of Directors includes a completion of a self-declaration form.

41. The role of the Nominations and Remuneration Committee is to provide the Council of Governors with assurance that the relevant checks have been carried out for Non-Executive Directors. The Council of Governors will want to satisfy themselves that the Board has adequate assurances on the robustness of procedures.

42. A report on the full process in respect of application of the fit and proper person test and the outcome of this test will be provided to the Nominations and Remunerations Committee who will, in turn, provide assurance to the Council of Governors. In addition, the Senior Independent Director will receive the outcomes of the fit and proper persons test as part of the Chairmans appraisal and the Chairman will receive the outcomes for Non-Executive Directors appraisals.

43. It is proposed that the Council of Governors are asked to consider and endorse the fit

and proper persons process in due course in preparation for its application in 2017/18.

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EXECUTIVE DIRECTOR APPRAISALS 44. In line with the requirements of the Foundation Trust Code of Governance the Chief

Executive takes lead responsibility on the evaluation of the Executive Directors. Executive Directors are appraised through the Trust’s robust Personal Achievement and Contribution Evaluation which is applicable to all employees of Mersey Care NHS Foundation Trust.

REVIEW & SUBSEQUENT APRAISALS

45. This framework for appraisals will be reviewed annually, to ensure its effectiveness and to take account of any emerging guidance or legislation.

46. In line with the annual planning cycle, appraisals of all employees (including Executive Directors) take place annually between April and June. In future, it is proposed that the appraisal of the Chairman and Non-Executive Directors will also be brought into line with this timetable.

RECOMMENDATION

47. The Nomination and Remuneration Committee is asked to: a) Consider and recommend to the Council of Governors the proposed process for

the appraisal of the Chairman including the proposed timescales for 2016/17 appraisals;

b) Consider and recommend to the Council of Governors the proposed process for the appraisal of the Non Executive Directors including the proposed timescales for 2016/17 appraisals;

c) Note the arrangements for the appraisal of Executive Directors; d) Note that future appraisals of the Chairman and Non Executive Directors will take

place annually between April and June.

ANDY MEADOWS

TRUST SECRETARY

August 2016

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Appendix A

Form A – Chairman’s Appraisal Self-Assessment MERSEY CARE NHS FOUNDATION TRUST

APPRAISAL OF THE TRUST CHAIRMAN

Self-Assessment Form

Name: When completed, please return, marked ‘confidential – addressee only’, or by e-mail, to Andy Meadows, Trust Secretary, by TBC. This will be reviewed along with a summary of peer assessments by the Chairman and the Senior Independent Director as part of the appraisal process. ______________________________________________________________ Instructions On the following pages, please rate yourself against the attributes/skills/behaviours listed. Circle or shade if completing electronically, one rating for each statement. Circle/Shade the appropriate number as follows: 1 strongly disagree; 2 disagree; 3 agree; 4 strongly agree; 5 cannot say). 1. CHAIRING MEETINGS OF THE BOARD I agree an annual cycle of Board business with the Board and set the Board agenda in accordance with the cycle and other priorities identified by Board members

1 2 3 4 5

I ensure that the Board’s agenda prioritises items on quality, strategy, corporate risks and feedback from stakeholders

1 2 3 4 5

I manage the agenda within the time allocated

1 2 3 4 5

I encourage open debate and contributions from all

1 2 3 4 5

Agenda Item No: C1

2

I summarise Board discussions well, capture the main points that have been made and clarify how the Board will progress the item under discussion

1 2 3 4 5

2. LEADERSHIP STYLE I am visible within the Trust and I am regarded as approachable by staff and service users

1 2 3 4 5

I work well with the Chief Executive

1 2 3 4 5

I promote effective teamwork between Board members

1 2 3 4 5

My behaviour is consistent with the values of the Trust

1 2 3 4 5

I am well respected by our local health and social care partners and commissioners

1 2 3 4 5

I promote positive relationships between the Trust Board and the Council of Govenors

1 2 3 4 5

3. CORPORATE UNDERSTANDING AND STRATEGIC AWARENESS I demonstrate a breadth of contribution

1 2 3 4 5

Agenda Item No: C1

3

I rise above the immediate problem or situation and see the wider implications of what is being presented or discussed

1 2 3 4 5

I make connections and draw out relationships between different aspects of the Board’s agenda

1 2 3 4 5

I am able to articulate the key risks to achieving the Trust’s vision and strategy.

1 2 3 4 5

I am able to articulate the services that are performing excellently and poorly

1 2 3 4 5

I help the Board to operate at a strategic level

1 2 3 4 5

4. COMMITMENT I commit the time to understand the Trust and get to know the environment in which it operates

1 2 3 4 5

I attend all the meetings I am required to attend

1 2 3 4 5

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4

I fulfil my commitments, delivering on what I says I will deliver

1 2 3 4 5

5. HOLDING TO ACCOUNT I am able to stand back and seek assurance from management rather than get overly involved in operational details

1 2 3 4 5

I challenge in such a way that progresses Board discussion and enables higher quality decisions to be made

1 2 3 4 5

I am persistent in my challenge and do not move on from an issue until I have taken the necessary steps, outside formal meetings when appropriate, to ensure that my questions or concerns have been addressed satisfactorily

1 2 3 4 5

6. PERSONAL STYLE I listen dispassionately, attentively and carefully to what is being said

1 2 3 4 5

I am concise, avoid jargon and tailor content to the audience’s needs

1 2 3 4 5

I am courteous to and supportive of other Board members

1 2 3 4 5

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5

I have authority and credibility

1 2 3 4 5

I am attentive to the needs and experiences of service users

1 2 3 4 5

I operate within the best interests of the Board and ultimately the Trust in mind

1 2 3 4 5

I do not dominate meetings of the Board

1 2 3 4 5

7. INDEPENDENCE AND OBJECTIVITY

I ensure that decisions are taken objectively in the interests of the Trust

1 2 3 4 5

I act impartially

1 2 3 4 5

I support Board decisions that are based on reasonable assumptions and factual information

1 2 3 4 5

8. SELF-DEVELOPMENT

I actively seek out constructive feedback about my performance

1 2 3 4 5

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6

I act on feedback from others and change my behaviour as a result

1 2 3 4 5

I set high goals or standards of performance for myself

1 2 3 4 5

I am willing to admit mistakes/errors that I have made and my personal shortcomings

1 2 3 4 5

9. IMPACT

I have a significant, positive impact on the performance of the Board and ultimately the performance of the Trust

1 2 3 4 5

I add value to the work of the Board

1 2 3 4 5

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Appendix B

Form B – Chairman’s Appraisal Peer-Assessment Form - Directors

MERSEY CARE NHS FOUNDATION TRUST

APPRAISAL OF THE TRUST CHAIRMAN

Peer-Assessment Form (Directors/ Non Executive Directors) Name: When completed, please return, marked ‘confidential – addressee only’, or by e-mail, to Andy Meadows, Trust Secretary, by TBC. All peer-assessments will be summarised by the Trust Secretary and provided to the Chairman and the Senior Independent Director for consideration as part of the appraisal process. ______________________________________________________________ Instructions On the following pages, please rate the Chairman against the attributes/skills/behaviours listed. Circle or shade if completing electronically, one rating for each statement. Circle/Shade the appropriate number as follows: 1 strongly disagree; 2 disagree; 3 agree; 4 strongly agree; 5 cannot say 1. CHAIRING MEETINGS OF THE BOARD Agrees an annual cycle of Board business with the Board and sets the Board agenda in accordance with the cycle and other priorities identified by Board members

1 2 3 4 5

Ensures that the Board’s agenda prioritises items on quality, strategy, corporate risks and feedback from stakeholders

1 2 3 4 5

Manages the agenda within the time allocated

1 2 3 4 5

Encourages open debate and contributions from all

1 2 3 4 5

Agenda Item No: C1

8

Summarises Board discussions well, captures the main points that have been made and clarifies how the Board will progress the item under discussion

1 2 3 4 5

2. LEADERSHIP STYLE Is visible within the Trust and is regarded as approachable by staff and service users

1 2 3 4 5

Works well with the Chief Executive

1 2 3 4 5

Promotes effective teamwork between Board members

1 2 3 4 5

Behaviour is consistent with the values of the Trust

1 2 3 4 5

Is well respected by our local health and social care partners and commissioners

1 2 3 4 5

Promotes positive relationships between the Trust Board and the Council of Govenors

1 2 3 4 5

3. CORPORATE UNDERSTANDING AND STRATEGIC AWARENESS Demonstrates a breadth of contribution

1 2 3 4 5

Agenda Item No: C1

9

Rises above the immediate problem or situation and sees the wider implications of what is being presented or discussed

1 2 3 4 5

Makes connections and draw out relationships between different aspects of the Board’s agenda

1 2 3 4 5

Is able to articulate the key risks to achieving the Trust’s vision and strategy.

1 2 3 4 5

Is able to articulate the services that are performing excellently and poorly

1 2 3 4 5

Helps the Board to operate at a strategic level

1 2 3 4 5

4. COMMITMENT Commits the time to understand the Trust and get to know the environment in which it operates

1 2 3 4 5

Attends all the meetings she is required to attend

1 2 3 4 5

Fulfils her commitments, delivering on what she says she will deliver

1 2 3 4 5

Agenda Item No: C1

10

5. HOLDING TO ACCOUNT Is able to stand back and seek assurance from management rather than get overly involved in operational details

1 2 3 4 5

Challenges in such a way that progresses Board discussion and enables higher quality decisions to be made

1 2 3 4 5

Is persistent in her challenge and does not move on from an issue until she has taken the necessary steps, outside formal meetings when appropriate, to ensure that questions or concerns have been addressed satisfactorily

1 2 3 4 5

6. PERSONAL STYLE Listens dispassionately, attentively and carefully to what is being said

1 2 3 4 5

Is concise, avoids jargon and tailors content to the audience’s needs

1 2 3 4 5

Is courteous to and supportive of other Board members

1 2 3 4 5

Has authority and credibility

1 2 3 4 5

Is attentive to the needs and experiences of service users

1 2 3 4 5

Agenda Item No: C1

11

Operates with the best interests of the Board and ultimately the Trust in mind

1 2 3 4 5

Does not dominate meetings of the Board

1 2 3 4 5

7. INDEPENDENCE AND OBJECTIVITY

Ensures that decisions are taken objectively in the interests of the Trust

1 2 3 4 5

Acts impartially

1 2 3 4 5

Supports Board decisions that are based on reasonable assumptions and factual information

1 2 3 4 5

8. SELF-DEVELOPMENT

Actively seeks out constructive feedback about her performance

1 2 3 4 5

Acts on feedback from others and changes her behaviour as a result

1 2 3 4 5

Sets high goals or standards of performance for herself

1 2 3 4 5

Is willing to admit mistakes/errors that she has made and her personal shortcomings

Agenda Item No: C1

12

1 2 3 4 5

9. IMPACT

Has a significant, positive impact on the performance of the Board and ultimately the performance of the Trust

1 2 3 4 5

Adds value to the work of the Board

1 2 3 4 5

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Appendix C

Form C – Chairman’s Appraisal Peer-Assessment Form - Governors

MERSEY CARE NHS FOUNDATION TRUST

APPRAISAL OF THE TRUST CHAIRMAN

Peer-Assessment Form (Governors) When completed, please return, marked ‘confidential – addressee only’, or by e-mail, to the Lead Governor, by TBC. All peer-assessments will be summarised by the Trust Secretary and provided to the Chairman and the Senior Independent Director for consideration as part of the appraisal process. ______________________________________________________________ Instructions It is acknowledged that the Council of Governors is in its infancy and therefore Governors may feel unable to contribute to the appraisal of the Chairman at this stage. Contribution of Governors in this appraisal is not mandatory. On the following pages, please rate the Chairman against the attributes/skills/behaviours listed. Circle or shade if completing electronically, one rating for each statement. Circle/Shade the appropriate number as follows: 1 strongly disagree; 2 disagree; 3 agree; 4 strongly agree; 5 cannot say 1. CHAIRING MEETINGS OF THE COUNCIL OF GOVERNORS Ensures that the Council of Governors prioritises item on strategy, corporate risks and feedback from stakeholders

1 2 3 4 5

Ensures that items on the Council of Governors’ agenda that are simply for information/ noting, are kept to a minimum

1 2 3 4 5

Manages the agenda within the time allocated

1 2 3 4 5

Agenda Item No: C1

14

Encourages open debate and contributions from all

1 2 3 4 5

Advocates constructive challenge

1 2 3 4 5

Handles conflict and sensitivities between Governors well

1 2 3 4 5

Summarises Council of Governor’ discussion well, captures the main points that have been made and clarified how the Council will progress the items under discussion.

1 2 3 4 5

2. LEADERSHIP STYLE Is Visible within the Trust and is regarded as approachable

1 2 3 4 5

Promotes effective teamwork between Governors

1 2 3 4 5

Works continuously to improve the performance of the Council of Governors

1 2 3 4 5

3. CORPORATE UNDERSTANDING AND STRATEGIC AWARENESS Demonstrates a breadth of contribution

1 2 3 4 5

Agenda Item No: C1

15

Rises above the immediate problem or situation and sees the wider implications of what is being presented or discussed

1 2 3 4 5

Makes connections and draw out relationships between different aspects of the Council of Governors agenda

1 2 3 4 5

Demonstrated well-rounded knowledge of the Trust

1 2 3 4 5

Is able to articulate the services that are performing excellently and poorly

1 2 3 4 5

Can describe who the Trust’s key stakeholders are

1 2 3 4 5

Is able to articulate the main opportunities and threats within our market place

1 2 3 4 5

Helps the Council of Governors to operate at a strategic level.

1 2 3 4 5

4. COMMITMENT Read papers in advance of the meeting.

1 2 3 4 5

Agenda Item No: C1

16

Attends all the meetings she is required to attend

1 2 3 4 5

Fulfils her commitments, delivering on what she says she will deliver

1 2 3 4 5

5. HOLDING TO ACCOUNT Challenges predominantly in relation to strategic matters and the management of corporate risks. Does not tend to challenge around areas which are largely immaterial to the performance of the Trust.

1 2 3 4 5

Challenges in such a way that progresses Council of Governrs discussion and enables higher quality decisions to be made

1 2 3 4 5

Routinely probes the facts, challenges assumptions and identified the advantages and disadvantages of proposals

1 2 3 4 5

Is persistent in her challenge and does not move on from an issue until she has taken the necessary steps, outside formal meetings when appropriate, to ensure that questions or concerns have been addressed satisfactorily

1 2 3 4 5

6. PERSONAL STYLE Listens dispassionately, attentively and carefully to what is being said

1 2 3 4 5

Speaks articulately and audibly

Agenda Item No: C1

17

1 2 3 4 5 Is concise, avoids jargon and tailors content to the audience’s needs

1 2 3 4 5

Is courteous to and supportive of Governors

1 2 3 4 5

Make a strong, positive impression on first meeting and establishes rapport quickly.

1 2 3 4 5

Has authority and credibility

1 2 3 4 5

Actively supports the Council of Governors’ decisions that have been thoroughly debated, to others outside the Council, even though she may have disagreed with the final outcome

1 2 3 4 5

Shows an understanding of the feelings and needs of others and a willingness to provide personal supported when needed.

1 2 3 4 5

Is attentive to the needs and experiences of service users

1 2 3 4 5

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Shows conspicuous levels of energy, vitality and enthusiasm for what the Trust is trying to achieve.

1 2 3 4 5

Retains composure when under pressure or opposition and odes not become defensive or aggressive.

1 2 3 4 5

Operates with the best interests of the Council of Governors and ultimately the Trust in mind

1 2 3 4 5

Does not dominate meetings of the Council of Governors

1 2 3 4 5

7. INDEPENDENCE AND OBJECTIVITY

Ensures that decisions are taken objectively in the interests of the Trust

1 2 3 4 5

Acts impartially

1 2 3 4 5

Supports Council of Governors decisions that are based on reasonable assumptions and factual information

1 2 3 4 5

Agenda Item No: C1

19

8. SELF-DEVELOPMENT

Actively seeks out constructive feedback about her performance

1 2 3 4 5

Acts on feedback from others and changes her behaviour as a result

1 2 3 4 5

9. IMPACT

Has a significant, positive impact on the performance of the Council of Governors and ultimately the performance of the Trust

1 2 3 4 5

Adds value to the work of the Council of Governors

1 2 3 4 5

COMMENTS:

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Appendix Form D

Form D – Chairs Appraisal Pro-Forma

MERSEY CARE NHS FOUNDATION TRUST

APPRAISAL OF THE TRUST CHAIRMAN Name: Appraisal Year: REVIEW OF THE PREVIOUS YEARS ACHIEVEMENTS / OBJECTIVES Please summarise the key points of the summarised feedback from your peer-assessment against your objectives for 2015/16, emphasising the key areas for development.

1. CHAIRING OF MEETINGS OF THE BOARD OF DIRECTORS & COUNCIL OF GOVERNORS :

2. LEADERSHIP STYLE

3. CORPORATE UNDERSTANDING AND STRATEGIC AWARENESS

Agenda Item No: C1

21

4. COMMITMENT

5. HOLDING TO ACCOUNT

6. PERSONAL STYLE

7. INDEPENDENCE AND OBJECTIVITY

Agenda Item No: C1

22

8. SELF- DEVELOPMENT

9. IMPACT OBJECTIVES FOR THE COMING YEAR

1. ROLE OBJECTIVES

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2. PERSONAL DEVELOPMENT OBJECTIVES

3. ADDITIONAL COMMENTS

Signed………………………… Date……………………………… Trust Chairman

Signed………………………… Date……………………………… Senior Independent Director

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Appendix Form E

Form E – Non- Executive Director Appraisal Form

MERSEY CARE NHS FOUNDATION TRUST

APPRAISAL OF THE NON EXECUTIVE DIRECTOR

Self-Assessment Form Name: Appraisal Year: Specific Roles: ______________________________________________________________ PART 1 Instructions The headings below outline the main dimensions of the Non-Executive Director role. Using the headings below as a guide, outline your plans for your personal contribution to the work of the board in the year ahead. It is not necessary to have objectives set under each of the headings. These objectives can then be discussed at your forthcoming review meeting. A) REVIEW OF THE PREVIOUS YEARS ACHEVEMENTS / OBECTIVES

1. ROLE OBJECTIVES

2. SPECIFIC / PERSONAL OBJECTIVES

Agenda Item No: C1

25

3. OTHER CONTRIBUTIONS (E.G., COMMITTEE WORK, VISITS AND OVERALL TIME COMMITMENT)

4. PERSONAL DEVELOPMENT

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PART 2 Instructions The headings below outline the main dimensions of the Non-Executive Director role. Using the headings below as a guide, please provide example/s of how you have demonstrated this competency and highlight any your plans for your personal development/ improvement and your contribution to the work of the Board of Directors in the year ahead. These objectives can then be discussed at your forthcoming review meeting. B) COMPETENCY BASISED SELF-ASSESSMENT STRATEGIC DIRECTION - ability bring astuteness and understanding to shape a strategic vision and encourage full commitment to it. Contributes creatively and realistically to planning

Able to see the bigger picture

Debates cogently

HOLDING TO ACCOUNT -The strength of resolve to hold others to account for agreed targets and the readiness to be held accountable, as a Board, for the delivery of a high level service. Accepts personal accountability

Challenges constructively and effectively

Contributes to effective governance

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INFLUENCING AND COMMUNICATION - Being able and prepared to adopt a number of ways to gain support and influence people with the aim of securing required change. Able to identify costs and benefits of a particular course of action

Persuades with well chosen arguments

Effective communication skills

Uses subtle and informal tactics to persuade

TEAM WORKING - Being committed to working as a team with other Board member whilst respecting the different role of Executive and Non-Executive Directors and accepting collective responsibility for leading the Trust and achieving real change. Involves others in decision making process

Respects other team members

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Understands the Non-Executive Director role

Shares expertise and knowledge freely

INTELLECTUAL FLEXIBILITY - The ability to handle uncertainty and complexity and to be open to creativity in leading and developing services. Ability to digest and analyse information

Willing to modify own thinking

Thinks creatively and constructively

Sees the detail as well as the big picture

PATIENT AND COMMUNITY FOCUS – Demonstrating a high level of commitment to patient, carers and the wider community. Understands local health issues

Understands diversity of the community

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and its differing viewpoints Promotes inclusion and community Involvement

C) FULFILLMENT OF THE ROLE OF SENIOR INDEPENDENT DIRECTOR

VALUES - commitment to demonstrating and championing the Trusts values and behaviours. Continuous Improvement

Accountability

Respect

Enthusiasm

I have a good understanding of the Trust’s constitution

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D) PROPOSED OBJECTIVES FOR 2016/17

1. ROLE OBJECTIVES

2. SPECIFIC / PERSONAL OBJECTIVES

I am able to commit the time necessary to carry out the role

I am fully committed to best practice set out in the NHS Foundation Trust code of Governance to ‘comply’ or ‘explain’

I am able to intervene to resolve issues of concern to work with the chair other directors and/or governors, to resolve significant issues.

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3. OTHER CONTRIBUTIONS (E.G., COMMITTEE WORK, VISITS AND OVERALL TIME COMMITMENT)

4. PERSONAL DEVELOPMENT

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PART 3 – To be completed with Chairman E) CHAIRMANS ASSESSMENTS AND COMMENTS

Signed………………………… Date……………………………… Non Executive Director

Signed………………………… Date……………………………… Chairman

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COUNCIL OF GOVERNORS

Report provided (check necessary boxes): Paper No: COG16/17/022

To Note: ☐ For Decision ☒ Meeting Date: 28 September 2016

Process for the Appointment of an External Auditor

Report Author(s): Sarah Jennings Deputy Trust Secretary 0151 473 2778

Summary of Key Issues:

• The appointment of External Auditors is set out in the Trust’s Constitution and is a statutory responsibility of the Council of Governors

• It is proposed that to support the Council of Governors in making this appointment, a working group is to be established (Audit Appointment Work Group) to lead the process and to make recommendations to the Council of Governors to inform their decision regarding appointment.

• The trust’s Audit Committee, chaired by Pam Williams, Non Executive Director, has considered the process outlined in this report and recommended this to the Council of Governors for approval.

Recommendation:

The Council of Governors is asked to: 1) Consider and approve the proposed process for the

appointment of the External Auditor from 1 April 2016 including the establishment of an Audit Appointment Working Group and associated timescales.

PURPOSE

1. The purpose of this report is to:

a) outline the proposed process for the appointment of an External Auditor from 1 April 2017 to be lead by the Council of Governors, including the establishment of an Audit Appointment Working Group;

b) outline the proposed timescales for this process;

c) seek the Council of Governors approval of the process.

BACKGROUND

2. The appointment of External Auditors is set out in the Trust’s Constitution and is a statutory responsibility of the Council of Governors (Appendix A).

3. When Mersey Care NHS Trust became a Foundation Trust on 1 May 2016, the

Council of Governors appointed the incumbent auditors, Grant Thornton, to continue in role until March 2017, with the expectation that this service would be tendered in the intervening period.

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4. The Foundation Trust Code of Governance published by Monitor (appendix B) states

that the Council of Governors should take the lead in agreeing with the Audit Committee the criteria for appointing, reappointing or removing the auditors. The Code also states that the Audit Committee should make recommendations to the Governors on the appointment of the auditor, and if these are not accepted, then the Board should include in the annual report a statement from the Audit Committee explaining the recommendation and the reasons why the Governors took an alternative approach.

ROLE AND SCOPE OF THE EXTERNAL AUDITOR

5. The role of a foundation trust external auditor is outlined in Monitor’s Audit Code for NHS foundation trusts (the Audit Code). Essentially the external auditor: a) gives the governors an independent opinion on the truth and fairness of the

accounts;

b) reports to governors if they have not been able to satisfy themselves that the foundation trust is using its resources economically, efficiently and effectively; and

c) provides the governors with independent assurance on the foundation trust’s annual quality report.

6. External auditors must undertake their work following a set of common standards

known as International Standards on Auditing or ISAs. These standards include a requirement for the senior member of the team (referred to as the engagement partner or engagement lead) to limit the number of years that they spend auditing an individual foundation trust.

PROCESS

7. The Governwell guide for Governors in appointing the external auditor (Appendix C) describes several key stages of the appointment process. In line with this guidance and that available from regulatory bodies, the following process is proposed: a) Agreement of Process & Establishment of Working Group

8. Whilst the Council of Governors is responsible for making the appointment decision, in

accordance with the FT Code of Governance, a Trust’s Audit Committee has a central role in this process and a partnership approach is therefore required.

9. The Foundation Trust Code of Governance enables the council of governors to delegate authority to the Audit Committee for undertaking the appointment process. In line with best practice however, the Council of Governors should take a lead in the process and typically will request the involvement of a number of governors to represent the council on an audit working group.

10. It is proposed that to support the Council of Governors in making this appointment, a working group is to be established (Audit Appointment Work Group) to lead the process and to make recommendations to the Council of Governors to inform their decision regarding appointment.

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11. It is proposed that this Working Group will include a number of Governors and will be supported by the Audit Committee Chair, the Executive Director of Finance.

12. Subject to the agreement of this process (including the establishment of an Audit Appointment Working Group), the Council of Governors will be asked to nominate governors who have an interest in making the appointment. b) Determination & Agreement of Procurement Process

13. The Executive Director of Finance should be asked to prepare for the Audit

Appointment Working Group, a service specification and an outline of the options for procurement including timescales.

14. The Audit Appointment Working Group will meet to consider the different procurement options available to the Trust, acknowledging the associated benefits and time constraints of each and will be asked to consider and agree the criteria that they consider to be important for an External Auditor. As with all appointments and reappointments, the process must be formal, rigorous and transparent.

15. The preferred procurement process, timescales, service specification and evaluation criteria will be presented by the Audit Committee to the Audit Appointment Working Group via the Executive Director of Finance. c) Execution of the Procurement Process

16. The Executive Director of Finance and Head of Procurement will commence the

procurement process based upon the agreed procurement process as per paragraph 11 & 12 above.

17. The Audit Appointment Working Group will evaluate tender submissions (based on agreed criteria and weightings) and interview potential Auditors (if required) in order to draw up a shortlist of at least two appointable candidates.

d) Approval of Appointment of External Auditor

18. The Audit Appointment Working Group, will advise the Council of Governors of the procurement process undertaken, the results of this process and the preferred candidate. Full details of the shortlisted candidates should be provided including an assessment of their relative strengths and weaknesses.

19. The Council of Governors will be asked make a decision in line with its statutory obligations as follows:

• Approve appointment of preferred External Auditor including length of appointment (typically between 3 – 5 years).

• Reject the recommended appointment of the preferred External Auditor

20. Note - should the council of governors feel unable to make an appointment, then the Audit Committee and the Audit Appointment Working Group must re-commence the procurement process noting the significantly limited time available to ensure an External Auditor is in place by 1 April 2017.

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e) Awarding of Contract and Commencement of Auditor

21. Subject to the Council of Governors approval of the appointment, the successful Auditor will be notified and the contract awarded with effect 1 April 2017.

22. At its meeting in April 2017 the Audit Committee will agree the new External Auditors Terms of Engagement and Audit Planning Report.

23. The full process undertaken to appoint the External Auditor will be disclosed in the Trust’s Annual Report 2016/17.

TIMESCALES 24. A suggested timetable for the appointment of an external auditors in line with the

proposed process is outlined below:

Action Lead/ Responsible Group Timescale Approval of process for appointment of External Auditor

Council of Governors 28 September 2016

Establishment of a Audit Appointment Working Group (AAWG)

Council of Governor October 2016

Agree the external audit specification, criteria, procurement process and timescales

Audit Appointment Working Group

October 2016

Procurement Process Head of Procurement & Associate Director of Finance

November – December 2016

Evaluate/ interview tenders received [if required]

Audit Appointment Working Group

December 2016

Recommend to Audit Committee the proposed appointment

Audit Appointment Working Group

January 2017*

Audit Committee to recommend to Council of Governors the proposed appointment

To be determined by Council of Governors

January 2017

Council of Governors to approve appointment

Council of Governors January 2017

Commencement of Contract

1 April 2016

External Auditor Terms of Engagement & Plan

Audit Committee February 2016

Disclosure of procurement process and outcome in 2016/17 Annual Report

Executive Director of Communications and Corporate Governance

July 2017

*The Audit Committee will need to hold an extra-ordinary meeting in order to consider the proposed appointment.

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CONSEQUENCES OF NOT TAKING ACTION

25. The law requires the NHS foundation trust to have an auditor at all times. Failure to approve a process to appoint an External Auditor to commence from 1 April 2017 may result delays in appointment and thus a breach of the Trust’s Provider License.

NEXT STEPS

26. Subject to the agreement of the process outlined in this report, including the establishment of an Audit Appointment Working Group, nominations will be sought from Governors interesting in sitting on this Group.

RECOMMENDATION

27. The Council of Governors is asked to:

a) Consider and approve the proposed process for the appointment of the External Auditor from 1 April 2016 including the establishment of an Audit Appointment Working Group and associated timescales.

ANDY MEADOWS

TRUST SECRETARY

August 2016

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Appendix A

Excerpt from ‘Your Statutory Duties: A Reference Guide for NHS Foundation Trust Governors’

APPOINTING THE AUDITOR Figure 6: Key stages for appointing the auditor

1. Trigger for Action The impending end of the existing auditor’s contract term will trigger a new appointment process, whether or not the existing auditor is seeking reappointment.

Governors also have the power to remove an existing auditor and, in certain situations, an auditor can or should resign. In either event, governors will need to make a new appointment.

2. Agree process and establish criteria

The council of governors should take the lead in agreeing with the audit committee the criteria for appointing, reappointing or removing auditors. As with all appointments or reappointments, the procedure must be formal, rigorous and transparent. The audit committee will run the process but the final decision on any appointment rests with the council of governors. Having established objective criteria, the audit committee should:

• agree with the council of governors a clear process for nominating a new auditor or reappointing the existing one, including a timetable showing the deadline by which a new appointment should be made; and

• prepare a specification defining the role and capabilities required, including the necessary qualifications, skills and experience, and agree the specification with any governors’ audit working group or similar.

3. Procurement process

The audit committee should run a formal procurement process to obtain the best candidate as fairly and transparently as possible. The process may vary depending on the NHS foundation trust’s particular procurement rules but it must be within procurement law. This is complex and the audit committee and the governors’ audit

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working group are likely to need legal advice before embarking on a procurement process.

Re-appointment If the audit committee and the governors’ audit working group have followed a correct process and the existing auditor meets the appropriate criteria, then the existing auditor may appear on the shortlist of final candidates. The same criteria should be applied to all those that express an interest in becoming the auditor of the NHS foundation trust. Shortlist The audit committee should draw up a shortlist of at least two appointable candidates in conjunction with the governors’ audit working group.

4. Presentation by the audit committee The audit committee and any governors’ audit working group should present to the council of governors:

• the procurement process they have followed; • the results of the procurement process; and • recommendations.

The recommendations should describe in full the shortlisted candidates and assess their relative strengths and weaknesses. The appointment must be based on merit and objective criteria. The committee should also recommend the preferred candidate and set terms of engagement for the external auditor.

5. How will the council of governors make a final decision? The council of governors should then make a final decision in line with its statutory obligations. If the council of governors chooses to make an appointment, the audit committee will need to approve the auditor’s terms of engagement. The council of governors and the audit committee should consider in particular how long the appointment should last. Best practice is to appoint an auditor for a period which allows it to develop a strong understanding of the NHS foundation trust, normally three to five years. Should the council of governors feel unable to make an appointment, for example, because it is unwilling to accept the audit committee’s recommendations or believes the procurement process was flawed, then the audit committee and the governors’ audit working group must set to work again at speed. The law requires the NHS foundation trust to have an auditor at all times, so they should adhere to the appointment timetable they will have drawn up at the start of the process. However, they may need to consider extending the incumbent auditor’s contract to ensure that the trust is never without an auditor.

6. Next steps

In any event, the full process must be set out in the NHS foundation trust’s annual report. In particular, if the council of governors does not accept the audit committee’s

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recommendation, the board of directors should include in the annual report a statement from the audit committee explaining its recommendation and the reasons the council of governors took a different position.

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Appendix B

Excerpt from Foundation Trust Code of Governance ‘APPOINTMENT PROCESS’ The NHS foundation trust Council of Governors is responsible for appointing auditors. The NHS foundation trust is required to ensure that, as part of the appointment process, their appointed auditors meet criteria included by Monitor as set out in appendix C. The auditors must agree the terms of engagement with the NHS foundation trust in the form of a letter (letter of engagement). If the auditors fail to meet, or have cause to believe that they will not be able to comply with, the criteria set out in the terms of authorisation at any point during their appointment, they must resign as auditors. On establishment as an NHS foundation trust, the auditors appointed by the Audit Commission to the predecessor NHS trust (the incumbent auditors) will continue to be appointed until the Council of Governors has had an opportunity to discuss the matter. An engagement letter must therefore, be agreed between the NHS foundation trust and the incumbent auditors for that interim period so that there is not a period during which the NHS foundation trust has no auditor in place. The Council of Governors must discuss at their first meeting after establishment whether they wish to extend the appointment of the incumbent auditors or whether they wish to undertake a competitive tender exercise to appoint their auditors. Both auditors and NHS foundation trusts should consider the impact of the APB ethical standard 3 “Long association with the audit engagement” when determining how long the incumbent auditors’ appointment can be extended for. This consideration must include the time that the auditor was appointed under the Audit Commission appointment arrangements as well as the length of the appointment by the Council of Governors of the NHS foundation trust. References to “the auditor” in this paragraph refer to the individual engagement members rather than their employer. The change of status of the NHS foundation trust and the different mechanism for appointing auditors does not override the ethical standards in relation to rotation of individuals. Further guidance on rotation of auditors and assessment of their work and fees is contained in appendix C. NHS foundation trusts must provide Monitor with details of their auditors on authorisation and whenever a change to the auditors is made. This information should include the name and address of the organisation. When the auditor’s appointment ends, the auditor has the right to write to Monitor to explain the reasons behind the ending of the appointment.’

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Appendix C

GovernWell - Appointing the External Audit: A Guide for Governors See separate attachment

Appointing the external auditor:a guide for governors

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BACKGROUND

An external audit is an examination of the annual financial statements of the foundation trust in accordance with specific rules by someone who is independent of the foundation trust. The external auditor performs the audit by examining and testing the information prepared by the foundation trust to support the figures and information it includes in its financial statements. In contrast, an internal audit provides the foundation trust with independent assurance that internal financial (and non-financial) processes and systems are working properly.

Foundation trusts will have contracts in place for the delivery of both external and internal audit. Both external and internal auditors report their work to the foundation trust’s audit committee which is made up of nominated non-executive directors and is attended by the finance director. The audit committee is a committee of the board and therefore governors cannot be members. The audit committee uses the work of auditors to provide the board of directors with an independent and objective review of how the foundation trust manages its finances (financial governance), how it is structured to deliver its strategy (corporate governance) and how it manages its risks.

The audit committee is responsible for evaluating the performance of the foundation trust’s external and internal auditors each year. It supports the council of governors to determine and deliver the process for appointing the external auditor every three to five years (depending on the length of contract used by the foundation trust). It is the council of governors who must meet and make the final decision on the appointment of the external auditor.

The external auditor addresses all its work to the council of governors. While there is no formal requirement for the external auditor to meet with or engage with governors typically external auditors present a report on their work to the council of governors often at the annual general meeting.

This guide provides governors and company secretaries with information about the governor role in appointing an external auditor. It brings together the relevant statutory requirements and procurement regulations, uses case studies from five foundation trusts to illustrate the different approaches that can be taken and provides a helpful glossary of common terms used when appointing the external auditor.

CONTENTS

Background 1

Glossary and acronyms 2

Why is the appointment of the external auditor important for governors? 4

When do governors appoint an external auditor? 6

What are the rules and procedures governors need to be aware of? 8

What do governors need to know about external auditors? 10

What are the key stages of the appointment process and what should governors expect? 12

Process for appointment 17

NHS foundation trust case studies – appointing the external auditor 18

Case studies 20

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We would like to thank Suresh Patel at Mazars for putting this guidance together, and the five trusts which participated in providing case study information.

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GLOSSARY AND ACRONYMS

Accountable

Foundation trusts are responsible to its membership and wider public for delivering its services in line with its licence from Monitor.

Audit Code for NHS foundation trusts (Audit Code)

Sets out the responsibilities of the external auditor as included in the NHS 2006 Act in relating to the external audit of a foundation trust.

External audit

Examination of a foundation trust’s annual financial statements by someone independent of the foundation trust.

Financial statements

The foundation trust’s annual accounts showing for a period of 12 months how much money it spent (and on what) and received (and from whom) and what it owns (including land, buildings and equipment) and what it owes to others.

Internal audit

Independent assurance on a foundation trust’s internal financial (and some non-financial) processes and systems.

International Standards on Auditing (ISAs)

Common set of professional standards that all auditors must follow in delivering external audit to foundation trusts.

Invitation to tender (ITT)

The document that the foundation trusts issue to interested suppliers, outlining the foundation trust’s detailed requirements for the external audit service.

Office of the Journal for the European Union (OJEU)

A daily publication advertising tender notices of the EU member states including invitations to tender and contract award notices.

Pre-qualification questions (PQQ)

A set of questions used by the foundation trust to establish minimum criteria that interested suppliers need to meet to progress to the next stage of the contracting process.

Procurement

The process by which foundation trusts buy goods and services.

Public Contracts Regulations

A legal framework that helps ensure that the process that public bodies follow to buy goods and services is conducted fairly and openly.

Standing Financial Instructions (SFIs)

Detail the financial responsibilities, policies and procedures adopted by the foundation trust.

Standing orders (SOs)

Internal rules that regulate the proceedings and business of the foundation trust and form part of its corporate governance arrangements.

Standstill period

A compulsory waiting period (10-15 days) between the decision to award a contract and the date on which the contract is signed in order to give unsuccessful bidders a chance to seek remedies if they were dissatisfied with the procurement process.

Statutory

Foundation trusts must adhere to requirements as laid out in the law, including the need to have an external auditor appointment at all times.

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WHY IS THE APPOINTMENT OF THE EXTERNAL AUDITOR IMPORTANT FOR GOVERNORS?

The council of governors appoints the external auditor.

NHS foundation trusts are independent from central government and have greater control over decisions on the services they deliver. However they remain part of the NHS and are accountable to their members and the public through the council of governors. The external auditor plays an important role in this accountability structure, reporting to governors their independent opinion on the foundation trust’s accounts and quality report. This is why the council of governors has the responsibility for appointment.

Typically, a small group representing the council of governors works with members of the audit committee to undertake the appointment process, but the final decision must be made by the council of governors.

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WHEN DO GOVERNORS APPOINT AN EXTERNAL AUDITOR?

Foundation trusts must have an external auditor in place at all times. This is a legal requirement under the 2006 NHS Act. There are four instances that will trigger the need for the appointment. In all four instances, trusts and governors need to be aware of timescales to ensure that they meet the requirement to have an external auditor in place at all times.

Depending on the procedure the foundation trust follows the appointment process can take between three and six months. In practice the audit committee of the foundation trust will be aware of the triggers and engage with governors appropriately.

Table 1: Triggers for the external audit appointment

Trigger for external audit appointment

When and how should governorsbe notified

1. When Monitor authorises a new foundation trust.[see case study 2]

Shadow governors should be made aware of the need to appoint an external auditor by the trust board secretary (or equivalent).

2. When a FT’s existing audit contract expires.[see case study 5]

The audit committee should inform the council of governors prior to the commencement of the final year of the contract.

3. If the audit committee recommends that the governors remove the existing auditor.

The audit committee will report annually on the performance of the auditor to the council of governors and can make recommendations for the removal of the auditor, where appropriate.

4. When the existing auditor resigns.[see case studies 1-4]

The audit committee or finance director should notify the council of governors immediately they become aware of the potential for the auditor to resign.

Monitor recommends that foundation trusts go through a competitive process for the appointment of the external auditor every 3-5 years. Typically this competitive process involves seeking quotes from interested audit firms on the quality of the work that they will perform and the price they will charge for delivering the services required by the foundation trust.

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WHAT ARE THE RULES AND PROCEDURES GOVERNORS NEED TO BE AWARE OF?

Foundation trusts must follow the Public Contracts Regulations, a legal framework that helps ensure that public procurement (the process for buying goods and services) is conducted fairly and openly. The appointment of the external auditor involves the award of a contract for services between a foundation trust and an external audit provider, typically a firm of accountants. Foundation trusts follow internal rules and regulations known as Standing Orders (SOs) aimed at ensuring competition, transparency and consistency in all forms of procurement. SOs are often published on the foundation trust’s website.

SOs will outline a foundation trust’s approach to contracts of different values. Generally the higher the contract value the lengthier and more involved the process will be. Table 2 shows a typical contract, but you should check the rules set by your own trust.

Table 2: An example of the procurement required for a contract by value

The SOs will also include reference to European Union procurement rules which require foundation trusts to advertise in the Office of the Journal for the European Union (OJEU) where the estimated total contract value (over the duration of the contract) exceeds �173,934. Contracts for external audit services tend to exceed the OJEU threshold.

Contract value Procurement required

Less than �10,000Written quote from nominated supplier

�10,000 – �50,000Obtain at least two competitive quotes

More than �50,000 Advertise as a formal tendering process

There are four procurement procedures for public sector tenders. These are outlined below.

Table 3: Procurement procedures explained

Type of procurement Explanation

Open This is where all interested suppliers are asked to return tenders by a set date. These are then evaluated and the contract is awarded

Restricted This is a two-stage process. In the first stage, interested suppliers are asked to fill out a questionnaire and a short-list is drawn up. In the second stage, the shortlisted suppliers are invited to respond to an Invitation to Tender (ITT). The tenders are then evaluated and the contract awarded.

Competitive dialogue This procedure is used for more complex procurements. After a selection process, the buyer negotiates with suppliers and invites chosen companies to put in a bid. Suppliers put in their tenders and the contract is awarded

Negotiated In this procedure, the buyer enters into contract negotiations with one or more suppliers.

Typically, an external audit tender follows the restricted procedure to enable foundation trusts to remove ineligible suppliers from the evaluation stage of the process. The open and restricted procedures do not allow the foundation trust to negotiate with suppliers.

Foundation trusts can also use Framework Agreements for procuring external audit. These agreements involve a list of suppliers which have been pre-approved by the organisation who operates the Framework Agreement (typically a specialist service for buying professional services) as meeting a prescribed set of eligibility criteria (including those outlined in the Monitor’s Audit Code for NHS foundation trusts).

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WHAT DO GOVERNORS NEED TO KNOW ABOUT EXTERNAL AUDITORS?

The role of a foundation trust external auditor is outlined in Monitor’s Audit Code for NHS foundation trust (the Audit Code). Essentially the external auditor:

gives the governors an independent opinion on the truth and fairness of the accounts;

reports to governors if they have not been able to satisfy themselves that the foundation trust is using its resources economically, efficiently and effectively; and

provides the governors with independent assurance on the foundation trust’s annual quality report.

There is recognition that the external audit of a foundation trust is a specialist activity. As such, to be eligible for appointment a firm must:

1. be established in the United Kingdom and be approved by Monitor;

2. have an established and demonstrable standing within the healthcare sector and be able to show a high level of experience and expertise; and

3. have robust internal quality control procedures to monitor the compliance of the audit work with the Audit Code and the standards that govern external audit in the UK.

In practice there are a large number of firms which can meet criteria 1 and 3 but a smaller group who can also demonstrate that they meet criteria 2. The ability of a firm to demonstrate that they meet these criteria will often form part of the initial appointment process.

External auditors must undertake their work following a set of common standards known as International Standards on Auditing or ISAs. These standards include a requirement for the senior member of the team (referred to as the engagement partner or engagement lead) to limit the number of years that they spend auditing an individual foundation trust. Most firms adopt a policy of 5-7 years although ethical standards for auditors allow up to 10 years after which the firm is required to consider taking action to ensure it can continue to be objective and independent.

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WHAT ARE THE KEY STAGES OF THE APPOINTMENT PROCESS AND WHAT SHOULD GOVERNORS EXPECT?

Key stage of appointment process

Governors should expect to…

Decide on the appointment process

1. Be briefed by the foundation trust, typically by a combination of the chair of the audit committee, finance director, trust board secretary and procurement staff on the:

role of the external auditor;

scope of the external audit;

procurement rules and regulations;

timetable required to ensure that there is always an external auditor in place; and

procurement options which include:

– the foundation trust’s internal procurement team (see case studies 2 and 5);

– use of an external procurement service (see case study 3); or

– use of a procurement framework containing external audit firms who have already been confirmed as meeting the eligibility criteria (see case study 4).

2. Be asked by the foundation trust to nominate governors who have an interest in making the appointment. The code of governance enables the council of governors to delegate authority to the audit committee for undertaking the appointment process. However, the council of governors should take a lead in the process and typically will request the involvement of two governors to represent the council on an audit working group or panel. Other members of the working group typically include the chair of the audit committee, the finance director and procurement. However, the case studies illustrate that there is no mandated approach to the membership of the audit working group.

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Key stage of appointment process

Governors should expect to…

Determine what the governors consider to be important considerations in appointing the external auditor

1. Be made aware that the work of an external auditor is determined by auditing standards that firms must comply with and the scope is prescribed by the Audit Code. The governors on the working group should expect to consider other criteria that they consider to be important for an external auditor.

They should also expect to consider the relative weightings associated to each criterion to enable each returning tender to be evaluated on a consistent basis.

This may be different for each trust, an example may be:

2. The working group may be involved or consulted on the drafting of the invitation to tender document which includes the tender criteria and weightings.

Criteria % Weighting

Experience of the audit team 25

Quality of service delivery 15

Quality of communications 10

Added value offered 15

Fee competitiveness 20

Quality of engagement with council of governors

15

100%

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Key stage of appointment process

What governors should expect

Final evaluation of tenders

The working group should receive an analysis of their individually scored tenders and agree on a successful firm.

A report will be drafted proposing the successful external auditor to the council of governors. It is the council of governors that makes the final decision.

Key stage of appointment process

What governors should expect

Evaluate tenders received

1. Procurement and/or finance staff should provide an evaluation sheet to enable governors to score each of the tenders against the agreed tender criteria.

2. Finance directors and audit committee chairs will support governors if required.

3. Foundation trusts have the option of using the tender evaluation to determine a short list of firms who are then invited to make a presentation to the evaluation panel. Alternatively the foundation trust may elect to invite all firms responding to the ITT to make a presentation.

Key stage of appointment process

What governors should expect

Recommendation

to the council of

governors

The council of governors should receive a report from the chair of the audit committee on the appointment process and the recommendation. The case studies show that the governors on the working group often jointly present the report to the council of governors.

Once the council of governors makes the decision on the appointment of the external auditor, the rules relating to awarding contracts requires the foundation trust contact all of the firms involved in the process, including the successful firm, informing them of the decision and starting a ten day period (referred to as the standstill period) where unsuccessful firms can appeal against the decision. Following the ten days if no appeals have been received the foundation trust awards a contract to the successful firm.

If the council of governors does not accept the recommendation the foundation trust must undertake the appointment process again, quickly, to ensure that the foundation trust has an external auditor in place at all times.

There is no requirement for the foundation trust to publish details about the process it followed in appointing the external auditor. However, to promote transparency, foundation trusts can do so as part of reporting the work of the council of governors or the audit committee in its annual report.

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Agenda Item No: C2

PROCESS FOR APPOINTMENT

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Trigger

Audit committee, finance or procurement engagement with council of governors to determine process to be followed

Governors agree the appointment process

Publish contract notice

Receive requests from firms to participate

Issue and then evaluate pre-qualification questionnaire (PQQ) (optional)

Publish the invitation to tender (ITT)

Supplier day – invite all interested suppliers to attend a meeting at the foundation trust for further information about the trust and its requirements (optional)

Receipt of tenders

Evaluate tenders and short list for presentation

Presentation by tenderers

Final evaluation

Audit committee recommendation to council of governors

Council of governors decision

Winner notified

Contract award

Contract award notice

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Agenda Item No: C2

NHS FOUNDATION TRUST CASE STUDIES – APPOINTING THE EXTERNAL AUDITOR

Foundation trust Trigger Process supported by Timescale Governor involvementSpecific support provided to governors

1 North East Ambulance NHS Foundation Trust

Resignation of auditor*

Framework agreement 5 months Two governors on an audit task and finish group.

Lead governor made the recommendation to the council.

Monthly programme of updates included a session from the incumbent auditors.

2 Royal Free London NHS Foundation Trust

Resignation of auditor* and gaining foundation trust status

In-house 3 months Two governors on audit sub-group of council of governors.

Audit committee chair presented the recommendation to council with the two governors.

Nothing specific.

3 East London NHS Foundation Trust

Resignation of auditor*

External procurement service

7 months Two governors involved in the process. Chair of audit committee made the recommendation to the council.

Informal and 1-2-1 support from foundation trust managers.

4 The Walton Centre NHS Foundation Trust

Resignation of auditor*

Framework agreement 6 months Three governors formed a working group.

Lead governors made recommendation to the council.

Presentation to council of governors on the role of external audit and briefings from the finance director and head of procurement.

5 Birmingham and Solihull Mental Health NHS Foundation Trust

Expiry of existing contract

In-house 6 months Four governors established a working group.

Working group presented the recommendation to the council.

Several sources of guidance provided to governors including a number of face to face sessions over a two week period and a meeting with the chair of audit of another foundation trust initiating the same process.

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* The resignation of the external auditor is very rare. However, in 2010 the government announced the abolishment of the audit commission who at the time provided external audit services to almost fifty per cent of all foundation trusts. As a result, the audit commission was required to resign its foundation trust appointments thereby triggering the need for the affected foundation trusts to seek new external auditors.

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Agenda Item No: C2

CASE STUDIES

For all five case studies the chair of the foundation trust audit committee made a recommendation to the council of governors on the firm to appoint as external auditor and in all case studies the council of governors accepted the recommendation.

Case studies 1-4

The resignation of the external auditor is very rare. However, in 2010 the government announced the abolishment of the audit commission who at the time provided external audit services to almost fifty per cent of all foundation trusts. As a result, the audit commission was required to resign its foundation trust appointments thereby triggering the need for the affected foundation trusts to seek new external auditors.

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1. North East Ambulance NHS Foundation Trust (September 2012 appointment)

The foundation trust used an existing skills audit of their governors to enable the council of governors to quickly identify two governors to represent them on an audit task and finish group which managed the process. The audit task and finish group reported to the audit committee and its membership also included the audit committee chair, another NED, the finance director and head of procurement. The council of governors’ monthly programme included a session on the role and duties of the external auditor.

The audit task and finish group considered the different procurement options available to the foundation trust and due to the time constraints it faced, agreed to use a framework agreement for external audit. This meant that the foundation trust had access to a list of audit firms which had already met the eligibility requirements outlined in the Audit Code.

The foundation trust still required interested firms to make a presentation to support their tender response.

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Agenda Item No: C2

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3. East London NHS Foundation Trust (April 2012 appointment)

The foundation trust was undertaking its second external audit appointment process in 2012. The audit committee chair and director of finance presented a report to the council of governors on their involvement in the process to appoint a new provider. The council of governors identified two governors to join a group to lead the process, which also included the chair of the audit committee, the deputy director of finance, the head of procurement and the director of governance. The two governors received informal and one-to-one support from foundation trust staff to help them to understand the role of external audit.

The foundation trust decided to use an external procurement service to facilitate the management of the tender process. Although the governors on the group had limited involvement in the pre-qualification questionnaire they did bring a focus on the quality agenda in the discussions on the tender specification. The governors were part of the evaluation panel receiving tenders and presentations from invited firms and again focused their questions on the quality agenda.

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East LondonNHS Foundation Trust

2. Royal Free London NHS Foundation Trust (September 2012 appointment)

The Royal Free London achieved foundation trust status on 1 April 2012 and owing to the inability of the incumbent to continue as external auditor the foundation trust was required to start the appointment process. The council of governors identified one governor with relevant experience and another governor volunteered to form a task and finish sub-group. The sub-group also included the chair of the audit committee, another NED, the finance director and deputy director of finance. The process which comprised a pre-qualification questionnaire, evaluation of responses to the ITT and a presentation from shortlisted firms was largely led by the finance director and deputy director of finance with regular engagement with the council of governors.

The governors represented on the task and finish sub-group were not directly involved in the pre-qualification evaluation but did evaluate the tenders and were part of the panel that received the presentations from invited firms. The governors were unable to use the accepted commercial practice of requesting ‘best and final offers’ after firms had submitted their proposals because of the restricted procedure used by the foundation trust.

Royal Free LondonNHS Foundation Trust

Agenda Item No: C2

5. Birmingham and Solihull Mental Health NHS Foundation Trust (November 2013 appointment)

The foundation trust began undertaking its second external audit appointment process in June 2013 as the existing three year contract was extended one year to include the financial year 2013/14. As such it had more time to plan and prepare for the role of the council of governors in the appointment process. It also had learning from the first appointment process. As a result the foundation trust invested significant time and resource into ensuring governors were supported and made sufficiently aware of the role and duties of the external auditor to enable them to discharge their responsibilities in making the appointment. The council of governors formed a working group comprising four governors with a variety of experience but none directly related to external audit.

The group received training and guidance throughout the process including access to guidance documents such as the HFMA audit committee handbook, discussions with the chair of the audit committee and presentations from the foundation trust’s internal auditors on the role of external audit and from the chair of audit committee from another foundation trust going through the same process. The governors were instrumental in drafting the invitation to tender document including challenging the weightings and scoring of the evaluation criteria. The working group also decided on an evaluation panel which comprised the working group, the chair of the audit committee and the chief financial officer.

The governors focused on the non-technical aspects of the external audit function, particularly around the importance of effective working relationships between the auditor, foundation trust staff and the council of governors.

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Birmingham and SolihullMental Health NHS Foundation Trust

4. The Walton Centre NHS Foundation Trust (September 2012 appointment)

The foundation trust was required to start the appointment process following the inability of the incumbent to continue as external auditor. The director of corporate and research governance talked to the council of governors and outlined the role of external audit, the appointment process and the council agreed that the process be kept as simple as possible.

Three governors volunteered to join a working group to lead the process, including one governor with a financial background.

The working group was supported by briefings and information from the chair of the audit committee, the director of finance and procurement. The foundation trust used an existing procurement framework used by other public bodies for external audit so the working group had no involvement in the pre-qualification stage of the process.

The governors also requested that the foundation trust staff set the tender specification and evaluation criteria however the three governors did form the evaluation panel along with the chair of the audit committee. The director of finance and the director of corporate and research governance advised the panel but did not evaluate the tenders.

The governors felt that their involvement helped ensure the appointment of an external auditor who understood the foundation trust and had the requisite skills and experience to deliver a quality service.

The Walton CentreNHS Foundation Trust

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Agenda Item No: C2

Produced in partnership with Mazars – an international audit, accounting and advisory firm, working with foundation trusts and other UK public bodies.

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Agenda Item No: C2