Scots NHS fiasco points at ministers

SIR ROBIN BUTLER, the Cabinet Secretary, has ordered an investigation into a Scottish Office fiasco over the sacking of a senior health service official.

Sir Robin, the top civil servant, is said to be furious about the row that has beset the Scottish Office. He has ordered a private inquiry, which could direct blame towards Government ministers, into the controversy surrounding the sacking of Laurence Peterken, the former general manager of the Greater Glasgow Health Board.

Sir Robin is also particularly concerned about the treatment of two senior Civil Service colleagues, the Scottish Office permanent secretary Sir Russell Hillhouse and the acting head of the NHS management executive, Gavin Anderson, who appear to have been made scapegoats.

Sir Robin's investigation will be the third inquiry into the health service affair, a saga involving a multi-million-pound hospital, illegal redundancy pay, sackings, and claims of witch-hunts. The controversy centres on the running of the GGHB, Britain's largest health authority and a quango with 32,000 employees and an annual budget of around pounds 700m.

The shadow Scottish Secretary, George Robertson, and the Ayrshire MP Brian Wilson have voiced serious misgivings about the Glasgow affair, saying it illustrates the accountability problems of non-elected quangos.

Laurence Peterken, who headed the GGHB until November 1993, was at first thought ideal by his NHS employers to take charge of services within the new-style NHS, because of his experience in the tough commercial world outside. Yet despite his early devotion to the Government's health service reforms, concern later grew that he had 'gone native'and was not pushing trust status. By September 1992, Don Cruickshank, head of the management executive, described progress as 'glacial'.

The following month, Ian Lang, the Scottish Secretary, decided to bring in Bill Fyfe, chairman of the Ayrshire and Arran Health Board, to speed up moves to trust status.

Then a month later Mr Peterken told a Glasgow newspaper that he would only accept a government plan to reduce 1,200 beds in Glasgow's hospitals if the Scottish Office financed a new pounds 326m hospital. This was regarded as the final catalyst, and senior NHS officials in Scotland decided not to renew Mr Peterken's contract.

Sir Robin's inquiry will have to study the complex, and sometimes conflicting accounts of what happened next.

Mr Peterken's departure was first discussed in February 1993, when Mr Fyfe arrived early in Glasgow to take up his chairmanship of the health board.

But after his talks with Mr Cruickshank in Edinburgh, the first proposal of redundancy for Mr Peterken was postponed.

Mr Cruickshank then left the NHS and Gavin Anderson, his deputy, temporarily took over. Mr Anderson's role, as the most senior NHS official at the time of Mr Peterken's departure, led to his eventual demotion. A crucial role of the internal Butler inquiry will be to determine what orders, if any, Mr Anderson followed.

The Scottish Office's legal department, the health board and Mr Peterken's advisers then negotiated a redundancy sum of pounds 185,444. But by July of last year the Treasury had ruled such payments illegal, and alternative posts for Mr Peterken were being discussed.

Regardless of further rulings from the Treasury, Mr Fyfe claims that his subsequent actions were approved at the highest level.

On 2 November, Laurence Peterken was sacked. Mr Fyfe later told a select committee investigating the case: 'My actions were approved at the highest levels at all times . . .'

Lord Fraser, the Scottish Office Health minister, said he first knew of the sacking only after it had taken place.

Lord Fraser also said that neither he nor Ian Lang knew anything of a letter which allegedly stated it would be irresponsible to offer alternative employment 'to someone in whom the Secretary of State had lost confidence'.

The Scottish Office now estimates an unfair dismissal case and damages could have cost pounds 250,000. Instead, Laurence Peterken was given a specially created and unadvertised post within the management executive of the NHS in Edinburgh and kept his pounds 86,000 salary.

Lord Fraser has since said that Mr Peterken was given the job to avoid compensation costs. However, his civil servants are still pushing the message that Mr Peterken was being considered for the job anyway.

By 17 November, a fortnight after Peterken's departure as general manager, it was Bill Fyfe who was coming under pressure. The NHS's chief executive in Scotland, Geoff Scaife, began an inquiry and wrote to him: 'The confidence of ministers in the running of GGHB under your chairmanship has been severely shaken.' After two requests for his resignation, Mr Fyfe quit, and he later told the select committee: 'I now see quite clearly that I was meant to be cast as Fyfe the fall guy.'

The complex affair is not only the subject of the impending Butler inquiry and the Scaife investigation. Another inquiry is underway to discover whether Mr Fyfe acted with the full knowledge of his board on the day of Mr Peterken's departure, or whether he made a 'maverick' decision.

The Labour MP Brian Wilson says it has had 'the welcome side-effect of focusing attention on the phenomenon of Tory Quangoland; that state- within-a-state where a party card is as important as it ever was in the darkest Eastern European autocracy.'

Health boards are responsible for pounds 4bn of annual spending. With a further 167 quangos having combined budgets of pounds 1.6bn, non-elected bodies now distribute nearly 40 per cent of the Scottish Office's annual budget. And with regional councils soon to be abolished, non-elected quango appointments made directly by the Secretary of State, including health, local enterprise, housing, environment and numerous other boards, will total over 5,000.

Although ministerial resignations over the affair are not expected, those whose duty it is to carry out the policy of ministers, the civil servants, appear to have already begun taking the blame.

Gavin Anderson, once acting chief executive, has been moved to a lower grade job in Edinburgh as head of community care. The Peterken inquiry is being conducted by Geoff Scaife, who is junior to Scottish Office permanent secretary Sir Russell Hillhouse. One source in St Andrew's House told the Independent on Sunday: 'That will put question marks over Sir Russell, and (as with) all civil servants there is no way to complain.'

George Robertson, the shadow Scottish Secretary, said he was appalled at the 'witch- hunt' he said was now being brought against some civil servants in Edinburgh. 'First Bill Fyfe was blamed for his own downfall. Now other scapegoats are being found to cover up ministers' own culpability.'

According to Mr Robertson, both Ian Lang and Lord Fraser should resign because they knew of the affair - or else they were ignorant of their department's activities.

(Photographs omitted)