Minute of the Endowment Committee Meeting 22 September 2016 Conference Room, Summerfield House

Transcription

1 Minute of the Endowment Committee Meeting 22 September 2016 Conference Room, Summerfield House Present: Mr Raymond Bisset (Chair), Non-Executive Board Member Cllr Stewart Cree, Non-Executive Board Member Ms Sharon Duncan, Employee Director Mrs Laura Gray, Director of Corporate Communications/Board Secretary Prof Mike Greaves, Non-Executive Board Member In Attendance: Dame Anne Begg, Non-Executive Board Member Mr Gair Brisbane, Senior Portfolio Manager, Standard Life Wealth (Item 5.1) Ms Carol Clark, Senior Portfolio Manager, Standard Life Wealth (Item 5.1) Mr Gerry Donald, Head of Property and Asset Development Ms Isabel Hinds, National Finance Trainee, NHS Grampian Mr Garry Kidd, Assistant Director of Finance Mrs Christine Lester, Non-Executive Board Member Prof Stephen Logan, Chair, NHS Grampian Mrs Sheena Lonchay, Operational Manager for NHSG Charities Mr Jonathan Passmore, Non-Executive Board Member Miss Jennifer Scollen, National Finance Trainee, NHS Grampian Mr Malcolm Wright, Chief Executive, NHS Grampian Ms Else Smaaskjaer, Minuting Secretary Item Subject Action 1. Apologies Ms Amy Anderson, Non-Executive Board Member Mrs Rhona Atkinson, Non-Executive Board Member Mr Alan Gray, Director of Finance Mr Eric Sinclair, Non-Executive Board Member Welcome and Introductions Mr Bisset welcomed everyone to the meeting and explained that following on from their discussion at the Annual General Meeting in June all Trustees had been invited to this meeting of the Committee to consider at Item 5.2 on the agenda the issue of ethical investments, in particular whether armaments and defence should be excluded from the NHS Grampian Endowment Fund portfolio. Mr Bisset also noted that to allow Mr Donald to attend a subsequent meeting Items 5.3 and 9.3 will be taken earlier in the agenda following Item 4.1. Page 1 of 11

2 2. Declaration of Interest Professor Greaves declared that he had a non-pecuniary interest with the project at item 9.3 on the agenda. 3. Minute of meeting held on 9 June Mr Bisset highlighted some typographical errors on pages 3 and 5; the minute of the above meeting was then approved as an accurate record. 4. Matters arising from meeting held on 2 nd March Action Log 9 June 2016 The Committee reviewed the action log from the previous meeting and highlighted the following items: Physician Associates Mrs Lonchay reported that enquiries had been made regarding the redistribution of endowment funding for Physician Associate training places between first and second year students. The Committee agreed that rather than students being awarded different levels of funding for first and second year studies, the same amount per student should be awarded for each year of the course. Professor Greaves asked if any clarity had been provided regarding whether those receiving funding for studies can be obliged to remain in the employment of NHS Grampian post qualification. Mr Kidd confirmed that although a pay-back agreement can often act as a deterrent, it cannot be enforced. The Committee agreed to fund students 4,500 per year for Physician Associate training. Foresterhill Mosque Mrs Gray informed the Committee that this project is now moving towards the submission of a planning application. There may still be some issues regarding the temporary nature of the building but the application will seek to satisfy Aberdeen City Council that there are longer term plans for the Mosque and that it will be included in the overall development of the Foresterhill Health Campus. 5. Investments 5.1 Update on Investment Performance - Standard Life Wealth (SLW) (Ms Carol Clark and Mr Gair Brisbane attended for this item.) Page 2 of 11

3 Ms Clark provided an update on performance during the reporting quarter ending 30 June During this period there had been high returns from Overseas Bonds, North American markets and Gold. Currency movements have impacted on a range of asset classes providing good returns for sterling based investors. Although the report does not cover the period following the vote at the end of June to leave the European Union, current indications are that the markets have absorbed the event without major fluctuations. The value of the fund at 30 June 2016 was 44.9m, which demonstrates an increase above target from 31 March 2016 when the value was 42.1m. Mr Brisbane reminded members that the composite benchmark had been changed with effect from 1 July 2016 and that is not reflected in this report. He also pointed out that although the amount of cash held at 30 June appears high, this reflected a short period between shares being sold and the income reinvested and the cash position has now reverted to its normal level. Dame Anne asked if there were significant risks associated with investing in overseas equities. Mr Brisbane responded that the portfolio is diverse and covers a broad spectrum of investments but the main responsibility of SLW is to ensure the long term maintenance of its value. Mr Kidd observed that the change to the benchmark agreed by Trustees at the AGM in June would more accurately reflect actual performance. Mr Passmore asked how often the portfolio is reviewed, and whether SLW have enough flexibility to react to market changes. Ms Clark explained that the portfolio is reviewed as part of their daily forecasting and monitoring processes which identifies indicators for any changes required. Mr Kidd also informed members that whilst SLW actively manages the portfolio on behalf of the Trustees, there are regular exchanges with finance staff and Senior Portfolio Managers attend each quarterly meeting of the Committee to provide an update. The Committee noted the report and agreed to: Continue to monitor activity across the portfolio 5.2 Investment Policy Mr Bisset explained that all Trustees had been invited to attend this meeting to consider whether the current restriction on investment in defence and aerospace industries remains appropriate. Page 3 of 11

4 A paper by Mr Brisbane of Standard Life Wealth providing information regarding the ethical considerations for charities had been circulated to Trustees prior to the meeting. Trustees had also been provided with the Opinion of Christopher McCall QC on Ethically Questionable Investments A Summary for Trustees. Mr Brisbane commented that the QC opinion should be considered in the context of the current direction of travel in the charitable sector and whether Trustees want to continue excluding a sector when some elements could be defined as peripheral to armaments and defence. Mr Passmore wished to record that he strongly believed there is no connection between the charity and the sector excluded. He suggested that the relevant obligations of Trustees should only relate to what is best for the charity and its beneficiaries. Mr Passmore added that as this sector has performed well in the marketplace it should not be excluded on investment grounds and to continue with this restriction comprises a moral gesture which, Christopher McCall QC in his paper considers not permissible. He also asked Trustees to consider whether it is reasonable to exclude the sector on the grounds that it is in direct conflict with the objectives of the charity as the NHS Grampian Endowment Fund has no connection to the aerospace industry. Mr Passmore acknowledged that he is sympathetic to the view that some supporters or beneficiaries might be alienated by investment in this sector but noted that contributors represent a wide range of views and opinions resulting in there being no moral mandate for this restriction, as Trustees must act on behalf of everyone and not just those who share one particular viewpoint. Mr Passmore also pointed out that if Trustees wish to be consistent they should then exclude investment in every sector which could be considered as contributing to demonstrable harm in the community, including sections of the food industry. Mr Passmore asked Trustees to question whether the exclusion is based on their views regarding the morality of the armaments industry as case law quoted by Christopher McCall QC states that Trustees must put on one side their personal interests and views in the best interests of their charity. Professor Greaves observed that Mr Passmore had made a very persuasive argument and agreed there are inconsistencies in the restrictions applied. Mrs Duncan asked that, as the charity is still reliant on day to day donations, Trustees give this matter very careful consideration before any changes are agreed. She emphasised the need to balance the damage to the public perception of the charity against any benefits which could be gained from removing the restriction. Councillor Cree noted that he had been persuaded that there are inconsistencies in the Page 4 of 11

5 current restrictions and questioned whether those making donations are particularly concerned with where the funds are invested. He also queried whether it is the role of Trustees to examine every company the charity invests in to ensure they are not involved in inconspicuous restricted activities. Mr Kidd suggested that the majority of those making donations are more interested in how the money is spent rather than in how it is invested. He had made enquiries regarding exclusions agreed by other NHS Boards and reported that whilst one Board had no specific exclusions and most excluded alcohol and tobacco manufacturers there is no consistent approach across Boards. The exclusions made by some of the other Boards also include the gambling industry, pay-day loan companies, pornography which demonstrates a degree of morality is taken into account when making decisions regarding investment restrictions. Dame Anne also noted the inconsistencies but questioned whether the negative impact of lifting existing restrictions would comprise a bigger risk to the charity than leaving things as they are. Mr Wright agreed that the well researched arguments made by both sides in the debate had highlighted a number of issues, not least that the main duty of Trustees is to behave in the best interest of the charity and they should consider how to safeguard it from any reputational damage if they agree to any changes in investment policy. Mr Passmore accepted all the points made but maintained that Trustees have no legal basis for the exclusion. Mrs Duncan suggested that it may be beneficial to conduct a fundamental review of all restrictions contained in the investment policy as this could help to manage the risk of reputational damage. Professor Logan agreed that this could also take a broader ethical view of the policy, taking into consideration the underpinning principles and whether the current restrictions are still relevant. It was agreed that a Short Life Working Group be established to undertake a comprehensive review of the NHS Grampian Endowment Fund Investment Policy and will report back to Trustees at the Annual General Meeting in June GK 5.3 Key Worker Housing (NB: this item was discussed before item 5.1) Mr Donald presented a paper which invited the Committee to reconsider its previous decision to invest in key worker housing in the light of occupancy conditions required by the local authority and changes in the local housing market. Mr Donald reported that NHS Grampian was currently seeking planning consent to develop key worker housing at Burnside Gardens but the funding package did not require local authority subsidy and therefore NHS Grampian could set its own criteria for occupancy. However, the Page 5 of 11

6 Endowment Fund proposal was to purchase properties as the developer s affordable housing contribution and attracted occupancy conditions set by Aberdeen City Council (ACC. In this case, despite considerable and prolonged discussion, Aberdeen City Council was unwilling to be flexible around and upper income threshold for prospective tenants of 40k. Mr Kidd reminded the Committee that their original intention had been to provide low cost housing for key workers as a positive move in attracting employees to the Grampian area. The conditions attached by ACC make this an unlikely outcome if the investment goes ahead. The previous understanding was that the salary condition for occupancy would be that the leaseholder could earn up to 40K per annum. ACC has now clarified that the total household income should not exceed 40K. On that basis, two employees starting on Band 5 salaries would exceed that level and the health service employees the Committee wished to attract to NHS Grampian would not be considered as eligible tenants. There are also a number of other anticipated difficulties with regard to reselling properties and the monitoring of tenancy arrangements. Mr Bisset was particularly disappointed to note the restrictions regarding household income and agreed with Professor Greaves that if this had been made clear, it was unlikely that the original decision for this investment would have been made. Dame Anne added that although it is unfortunate that this particular intention cannot be met, there are now many other housing developments across the City which would be available to key NHS staff.. Mr Donald also notified the Committee that since approving this investment strategy, the property market in Aberdeen has undergone a significant change. Average private sector rents have seen a decrease in the region of 20% and the resale value of properties has also fallen. Mr Kidd confirmed that it is unlikely that investment in key worker housing would now achieve the anticipated return in yield or capital growth. The Committee agreed that investment in key worker housing will not be pursued at this time Operational Manager s Report The Operational Manager s Report had been circulated for information. Mrs Lonchay reported that the main activities since the last meeting in June had related to the restructuring of funds and development of the website. The launch of the website is scheduled for later in the year and the main focus will be to ensure that the procedure for making donations is user friendly and there is a strong message that donations are used locally. Page 6 of 11

7 There had also been some work in relation to promotion and publicity. Corporate Graphics has investigated wrapping for the taxi based on the ARI site, incorporating the Endowment Fund logo and website details, at cost of around 2.5k. Work continues on promotional materials which highlight projects funded by the Endowment Fund and how to make donations. Mrs Duncan noted the importance of publicity not just as a method of encouraging donations but also to convey thanks for donations made. The Committee agreed that the Operational Manager should continue with plans to promote the work of NHS Grampian Endowment Funds. 6.2 Rationalisation of Funds Mrs Lonchay reported that she continues to progress work to reduce the number of funds which comprise the NHS Grampian Endowment Fund. The aim is to merge funds of a similar purpose, respecting the original purpose of the donation. Many funds have similar purpose but individually, are too small to be useful. The Office of the Scottish Charity Regulator (OSCR) and the Central Legal Office (CLO) have reviewed a framework by which to rationalise funds, and both organisations are broadly in agreement with the aims and method of such a rationalisation. Mrs Lonchay provided details of a proposed phased approach to merging funds into speciality areas. She reported that this had already been discussed with some fund stewards who generally welcomed the proposal. Fund stewards had been supportive of the suggestion that specialities form endowment panels where bids for funding could be evaluated, within agreed criteria by their peers. There was some concern regarding the formation of panels but the Committee agreed that this will allow fund stewards to exercise their responsibilities within clear guidelines approved by Trustees. The Committee agreed to delegate responsibility to the Operational Manager to, seek guidance from OSCR and legal advice as required in taking forward the rationalisation of the number of funds and report back on progress made. 7. Donations A paper was tabled on all donations and legacies greater than 1,000 that were received from 1 June 2016 to 31 August During this period 71, had been received in donations and 1,095, in the form of legacies. The Committee noted the report. Page 7 of 11

8 8. Financial Report Mr Kidd presented a Summary Financial Report to the Committee. He noted that the increase in investment value had been mainly due to favourable exchange rates which may not be maintained in the longer term. Mr Kidd asked members to note the disparity in values between restricted and unrestricted funds. The agreement at the AGM regarding how investment income should be allocated across funds will go some way to improving this but he recommended that members continue to monitor the position to ensure that the overall growth of the general fund is protected. The Committee noted the report. 9. Funding Requests 9.1 Expenditure requests over 2,000 approved from 1 June 2016 to 31 August 2016 A paper was tabled regarding authorisation of items approved for over 2,000. During this period applications amounting to 549, were approved. The Committee noted the report. General Endowment Funds 9.2 Speech Recognition System An application had been received to consider funding of 194,336 for the introduction of a speech recognition system within Aberdeen Royal Infirmary. Professor Greaves asked for clarity regarding whether this refers to a system where the spoken word becomes text as he has been aware of some problems, particularly in relation to treatment recommendations and drug names and doses. He cautioned that the introduction of this type of system could result in the necessity for very close proof reading which could outweigh any advantages gained in saving administration time. Dame Anne observed that the significant improvements made to this type of software in recent years should ensure that it will enhance the current process of creating letters. Mr Kidd noted that he had met with a renal consultant who had been confident that this system will reduce the administrative burden on clinicians. It was noted that Radiology had used a speech recognition system successfully for several years. Page 8 of 11

9 The Committee requested further evidence of the accuracy of the speech recognition software, including the attendance of a clinician who is familiar with the system at the next meeting, when the application would be considered again. 9.3 Green Infrastructure Project (NB: this item was discussed before item 5.1) Mr Donald presented a supporting paper giving details of the Green Infrastructure Project for the Foresterhill Health Campus, working in partnership with the University of Aberdeen. This initial phase would focus on Phase One, around the car park and the new Foresterhill Health Centre site. An opportunity has arisen to make an application for an EU Green Infrastructure Fund (GIF) Grant and the Endowment Committee are being asked to underwrite the project by 600K to enable the application for EU funding for 40% of the total cost of the initial phase of the project. Mr Donald explained that there are recognised benefits to having a green space strategy in place. A number of major developments are planned for the Foresterhill site during the next few years and an agreed strategy will provide a framework during discussions with local authority planning staff. He informed members that there is currently limited green space on the site, much of it inaccessible, and the Green Infrastructure Project aims to provide a varied range of accessible areas for patients and staff. The anticipated cost of introducing the green space strategy to the whole site will be around 16m. Mrs Duncan expressed concern that to designate areas of the site as green space would worsen the current difficulties in relation to car parking and asked the Committee to note that there are already two large public parks nearby. She also felt that the proposed green space sites in Phase One were too far from the main hospital buildings to be accessible for staff during breaks. The Committee agreed that they would not wish to make a negative impact on the amount of car parking available but it is understood that more car parking space will be developed through time and this proposal should be looked at in the context of the development of the Foresterhill site as a whole. It gives an opportunity to create a positive and pleasant environment for patients, visitors and staff. Professor Greaves observed that during public consultations regarding the Anchor Centre, the provision of green space had been raised as an important issue. The Committee agreed to fund up to 600k from General Endowment Funds in support of the proposal. This funding to be made available as match funding should the application for EU funding be successful. The potential source of funding would be NEUR3001 Endowment Page 9 of 11

10 Committee Fund. 9.4 Phase II Backlog Maintenance Project Mr Kidd presented an application asking for a total of 1,594k from Endowment funds to cover the agreed commitment to complete the improvement of clinical accommodation at Aberdeen Royal Infirmary. He confirmed that all stakeholders had been involved in plans for the final design. The overall improvement project was agreed for completion over four stages. Three of those stages are now complete and funding is now required to progress the fourth stage of the programme. The Committee agreed that the additional amounts from the Endowment Fund to the improvement programme at ARI have had a positive impact on the finished aesthetic standard of clinical accommodation. The Committee approved the application for 1,594k to support the project to improve the quality of patient accommodation at ARI from NEUR3001 Endowment Committee Fund. 9.5 Kessock Clinic Relocation An application had been received to provide funding in the region of 200k from General Endowment Funds to allow the relocation of the Kessock Clinic to Fraserburgh Hospital. Members agreed that the need to relocate the Kessock Clinic had been considered a matter of urgency for some time. The current accommodation is unsuitable in terms of appropriate service delivery and this application will provide an opportunity to make available fit for purpose accommodation which will comply with agreed health and safety standards. The Committee agreed to meet the cost of relocating Kessock Clinic to Fraserburgh Hospital from General Endowment Funds, subject to appropriate consultation with staff, hospital users and the local community. Costs are anticipated to be in the region of 200k and would come from NEUR3001 Endowment Committee Fund. Specific Endowment Funds 9.6 Aboyne Hospital Members were asked to consider an application to redesign internal accommodation at Aboyne Hospital to create outpatient, diagnostic and treatment services locally. The space vacated by the redesign of maternity services across NHS Grampian will allow for additional outpatient consulting rooms. Members Page 10 of 11

11 agreed that this application fits in with the aims to strengthen health care in rural areas and improve local access to diagnostic and treatment services. The Committee agreed that the costs, anticipated to be in the region of 130k, should be made available from the funds suggested in the report. Funding from NER11620 Annie Tweedie Executry (50%) and NER11617 Aboyne Hospital Patients Fund (50%). 10. Review of Risk Control Plan The Endowments Committee Risk Control Plan was tabled. There are currently 12 items on the register. Mrs Lonchay informed members that with regard to item 10 Individual Funds Become Overdrawn, financial reports are distributed to fund stewards each month. The Committee agreed that the risk level for item 1 Stock Market Reduction should be reduced from red to amber. The Committee agreed that all other items on the Endowments Risk Control Plan should remain at their current level and it will be reviewed again in November. 11. Update to NHSG Board It was agreed that the following information should go the next Board Meeting. Review of Investment Policy. An update on Key Worker Housing. Endowment Funds Rationalisation. Proposals for publicity and promotion. Details of applications which were approved. 13 AOCB 13.1 Mr Bisset suggested that, as the meeting in March 2017 will be his last meeting as Chair of the Endowment Committee, members may wish to consider the appointment of a Vice Chair. Professor Logan advised that he is considering the issue of Vice Chairs for all NHSG Committees. 14 Date of next meeting Thursday 17 November at am in Meeting Room 6, Summerfield House. Page 11 of 11