A CASH-strapped NHS trust spent £4.2m on extra staff when the service was already plunging into the red, despite a damning Audit Commission report which should have been a "major wake up call," leaked documents have revealed.

Scarborough NHS Trust should have confronted senior managers and consultants with the auditor's findings to find a way forward, a review has suggested.

But instead, the trust chose to place the audit report on its Website – where hardly any of its own senior staff noticed it – possibly in an attempt to avoid damaging the morale of front-line workers, NHS trouble-shooters found.

The trust's chief executive Alison Guy and finance director Bernard Flynn – who earn around £200,000 between them – were suspended in July pending a review of how the organisation was dealing with a forecast deficit of between £5.4m to £13.9m, and historical debt of £11.8m.

Decisions over their futures will not be taken until after the review of governance arrangements, led by Keith Wright, a former regional finance director for the NHS Executive, is published.

But some of the findings have leaked – painting a picture of a trust lulled into complacency by the fact it was delivering to patients. Although the organisation felt well led because of its front-line success the leadership were failing to tackle the root causes of the financial crisis, it is suggested.

According to the review, there were 141 more staff working there in 2005/06 than there were in April 2004 – at a cost of £4.2m – reflecting the management's determination to deliver services whatever the damage to its over-all running.
"In our opinion, the over-riding reason for the trust continuing to find itself being criticised is that the trust's management agenda has been skewed towards operational delivery at the expense of its governance challenges," the review states.
The Audit Commission issued a public interest report in November 2005 over the state of the trust's finances. But the review team found that "the majority of senior managers and representatives of the consultant body we have spoken to were unaware of the report's existence."

That suggested that making the Audit Commission's findings available on the web site did nothing really to get the message across – and was seen by the review team as a "passive response".

The report continued: "It may have been perceived this was a technical financial issue or perhaps it was part of a deliberate communications strategy to minimise the damage to the morale of those delivering front-line services in the trust.

"Either way, we do not agree with this approach as it suggests a lack of ownership and understanding of the seriousness of the agenda." The report also noted the trust had a tendency to blame problems on things outside of its control.

The auditor's report was "a major wake up call in terms of the trust addressing core strategic, financial and governance issues." However, against this the review team found "a perception that the trust has been under-funded for years, is very efficient, and has delivered against key targets".

A trust spokesman said: "It is clear from the findings that governance arrangements within the trust are not sufficiently robust. However, the report recognise's much progress has been made in relation to the operational management and performance of the trust in recent years.

"The action plan outlines the actions necessary; the time scale for taking action; the lead officer accountable and a completion/review date."