Princess Alexandra Hospital NHS Trust (PAHT) | My Assignment Tutor

Annual Report2019 – 20202Contents1. The performance report 2019-20 …………………………………………………………….32. The accountability report 2019-20…………………………………………………………483. The financial statements ………………………………………………………………………883The performance report 2019-20OverviewThe overview section provides a summary of our hospital, how we have performedover the year and the challenges we have faced.Foreword from the chair and the chief executive officerAs we reflect on the last year at The Princess Alexandra Hospital NHS Trust (PAHT);all that our people have achieved and the high quality care they have provided everyday to our patients, we are facing the most unprecedented demand on us all as werespond to the impact of the coronavirus (Covid -19) pandemic.Much will be recorded about the challenges that we have faced and that we can expectto continue to face for many months to come in 2020 – 21. For PAHT, we would like toput on record our thanks to our amazing people who have put in place a huge rangeof changes to how we provide care, to how we utilise our clinical spaces and also tohow we ensure that our people have the resources and equipment they need. It is theirprofessionalism and commitment to high quality care that has continued to make adifference to the people they care for and the people they work alongside. We areproud to know that in the most critical of situations that PAHT people have shown greatresilience and compassion.After many years of developing our case for our patients and our people, in September2019 we learnt the fantastic news of a commitment from Government to fund a newhospital for the communities we serve. Behind the scenes, there is a lot of work beingundertaken in developing the essential business cases to take this amazing changeforward. A new hospital gives us a real opportunity to create a fit for purpose, modernsetting that provides an environment for the 21st century that is designed to maximiseboth the efficiency of how care is delivered and is also a great place to work andreceive care. We look forward to continuing to work together with our people and ourlocal communities to create the best hospital and services for our patients and ourpeople.A new hospital that maximises the use of technology and new ways of delivering carein a purpose built setting aligns with PAHT 2030, our ten year plan for developing andtransforming the way we deliver care. PAHT 2030 will make a real difference to ourpatients and to everyone at PAHT as we continue our focus on our journey to beingan outstanding organisation.Our PAHT 2030 plan also aligns with the NHS Long Term Plan that aims to bring theNHS and social care colleagues more closely together to meet the needs of patientsnow and into the future. Meeting these needs is central to our ongoing qualityimprovement work and in January (2020) we were pleased that PAHT was recognised4for our commitment to improvement when we became the second hospital in thecountry to be formally accredited by the Academy of Fabulous NHS Stuff.Another important step towards preparing for the future and achieving the objectivesdetailed in both the PAHT 2030 plan and the NHS long term plan is enhancingintegrated working across health and social care. In light of this we are pleased thatPAHT 2030 is taking a leading role in the One Health and Car partnership that wasestablished in June 2019. The partnership will give people greater control over theirown health and care, basing services on the health needs of the local population andworking together, create an outstanding health and social care system for local people.In July 2019, we saw a positive improvement in the ratings awarded to us by the CareQuality Commission (CQC) following their inspection of our core services in March andApril (2019). Although our overall rating remains unchanged we are much closer toachieving a Good rating and our focus on continuing to improve remains clear andstrong.We are pleased that these improvements were also reflected in the results of ourannual NHS staff survey, which showed that our people rate the quality of careprovided to their patients as being above average compared with hospitals across thecountry.Responses from our clinicians, corporate and support staff from teams based at ThePrincess Alexandra Hospital in Harlow, St Margaret’s Hospital in Epping and Hertsand Essex Hospital in Bishop’s Stortford also showed an improvement in our peoplebeing happy both with the quality of care they give to patients and being able to providethe care they aspire to.A huge success this year has been a dedicated nurse recruitment campaign thatincluded increasing our recruitment of nurses from overseas. The campaign began inthe summer (2019) when the vacancy rate for registered nurses was 24%. A highvacancy rate has been a longstanding challenge for PAHT and impacts on both ourpatients and our people, as nurses on our wards will have less time to spend with eachpatient.We are delighted that a significant improvement in the registered nurse vacancy ratehas been achieved and at the end of 2019-20 we now have a rate of 8% with a Band5 vacancy rate of 4.3%. It seems fitting, as 2020 is the Year of the Nurse and Midwife,that we have been fortunate to welcome many new nurses to PAHT and furtherstrengthen our nursing workforce.We hope that you will find this annual report interesting and informative and we thankthe individuals and teams who have put this report together during a period ofunprecedented challenge and intense pressure on their time.All that PAHT has achieved in 2019 – 20 has only been made possible by the hardwork, commitment and passion to deliver high quality care to our patients by everyoneat PAHT – we thank them all. They are amazing. Steve ClarkeChairLance McCarthyChief executive officer Celebrating our amazing staff: Staff awards 2019-20The purpose and activities of the organisationPAHT is a 414 bedded hospital with a full range of general acute services, including;a 24/7 Accident and Emergency Department (A&E), plus an Intensive Care Unit(ICU), a Maternity Unit (MU) and a Level II Neonatal Intensive Care Unit (NICU).The trust serves a core population of around 350,000 and is the natural hospital ofchoice for people living in West Essex and East Hertfordshire. In addition to thecommunities of Harlow and Epping, the trust serves the populations of Bishop’sStortford and Saffron Walden in the North, Loughton and Waltham Abbey in theSouth, Great Dunmow in the East, and Hoddesdon and Broxbourne in the West. Itsextended catchment incorporates a population of up to 500,000.The trust owns the main hospital site in Harlow, and also operates outpatient anddiagnostic services out of the Herts and Essex Hospital, Bishops Stortford and StMargaret’s Hospital, Epping. The operation of these facilities forms part of the longerterm strategy of bringing patient services closer to where they live and makingservices, where appropriate, more accessible and easily available to patients.The trust operates over forty different services to meet the needs of its patients (seeservice portfolio below):6 Directory of our servicesAmbulatory CareDiabetic medicineGynaecology: Colposcopy Hysteroscopy Termination ofPregnancyServicesSurgical assessmentunitAudiologyDieteticsHigh DependencyUnitPathologyBreast screeningEarly PregnancyUnitIntensive Care unitPatient appliancesInfection controlservicesPharmacy servicesBreast surgeryEmergencyDepartmentInterventionalradiologyPhysiotherapy andoccupational therapyCardiologyEndoscopyservicesMaternity comprising: Antenatalclinic Ultrasoundscanning Labour Ward AntenatalWard PostnatalWard MaternalFoetalAssessmentUnit Breast feedingsupport Birthing Unit CommunitymidwiferyservicesPre op assessmentsChemotherapyEndocrinologyMaxilla-facial surgeryRadiologyClinical DecisionUnitENTMedical OncologyRespiratory MedicineFrailty serviceNeonatal critical care– special care babyRheumatology unit and neonatalcommunity nursesNew-born HearingScreeningClinicalHaematologyGastroenterologyNeurologyClinicalOncologyGeneral medicineObstetricsSpecialist palliativecareColposcopy andhysteroscopyservicesGeneral surgeryOphthalmologySpeech andlanguage therapyCommunitymidwiferyGenito-urinarymedicineOral surgeryTransfusion servicesOncology servicesTongue tie serviceColorectalservicesGeriatric medicinePaediatrics – onpatients, outpatients, ambulatorycareTrauma andorthopaedicsDay surgeryVascular servicesPaediatric diabeticMedicineUrologyDermatologyGynaecologyambulatoryservicePaediatricEmergencyDepartment Strategic objectivesOver the last 12 months the trust has further defined its vision and courageousgoals:Vision: To deliver outstanding healthcare to the communityCourageous goals:OutstandingWe will deliver healthcare that our patients deserve and makes us proud.IntegratedWe will work as one to provide joined up healthcare that puts patients first.ModernWe will always use up to date treatments, technology and facilities.Underpinning the trust’s ambition to achieve outstanding healthcare is the five Ps.The trust board set five strategic objectives for the 2019-20 year focussed ondelivering the Five Ps.8 Five PsTrust objectivesOur patientsContinue to improve the quality of care andexperiences that we provide our patientsand families, integrating care with ourpartners and improving our CQC rating.Our peopleSupport and develop our people to deliverhigh quality care within a culture thatimproves, engagement, recruitment andretention and results in furtherimprovements in our staff survey results.Our performanceMeet and achieve our performance targets,covering national and local operational,quality and workforce indicators.Our placesMaintain the safety of and improve thequality and look of our places and work withour partners to develop an OBC for a newbuild, aligned with the development of ourlocal Integrated Care Partnership.Our poundsManage our pounds effectively andmodernise our corporate services to achieveour agreed financial control total for 2019-20and our local system control total. The trust also has a clear set of values that are lived by the staff to provide the bestpossible care for patients and working environment for the staff. RespectfulWe treat others as we would want to be treated ourselvesCaringWe always put patients firstResponsibleWe always say what we are going to do CommittedWe strive to be the best The trust has continued to work towards ‘outstanding’ along the existing roadmapand milestones of “Your future, Our hospital”, captured below, which takes us alongthe 5 year journey to outstanding and beyond:During 2019-20, the trust embarked upon the development of a 10 year strategy‘PAHT 2030’, which facilitates the delivery of the trusts vision and courageous goals: Strategic priority oneTechnology and Innovation including electronic -patientrecordStrategic priority twoIntegrated care developmentStrategic priority threeNew hospital programmeStrategic priority fourOrganisational cultureStrategic priority fiveNon-clinical support service modernisation PAHT 2030 has been developed in alignment with the: NHS Long Term Plan Hertfordshire and West Essex ‘A healthier future; delivering improved healthand care in Hertfordshire and West Essex’ West Essex One Health and Care Partnership five year transformation planThe trust recognises the active role we play in ensuring the ambitions of each ofthese strategies are achieved and have developed our strategic priorities in line withthe national, regional and local system priorities, illustrated below:10Clinical strategyOur role in both regional and local integrated care, our new hospital and the changesin technology and innovation requires a change to the way in which we deliver careto adapt to our changing environments. Over 2019-20 the trust has also begun todevelop a 10 year clinical strategy.The PAHT 2030 clinical strategy programme has been led by our clinical teamsand developed at speciality and pathway level, allowing us to build our strategy fromthe ground up. Through the development of our clinical strategy we have begungrowing our suite of integrated patient outcome measures ensuring patient care ismeasured on true quality of life outcomes, proposing how our role in the preventionof ill health can support people to live well and stay well for longer, and implementingbest practice treatment pathways across all areas to ensure care is standardised andcost effective.Integrated care developmentThe trust remains of the view that a sustainable future for the services currentlyprovided by PAHT would be best pursued through forming strategic partnershipswith neighbouring NHS hospitals and primary and community care to facilitate closerworking both regionally and locally.From a local perspective the West Essex One Health and Care Partnership (OHCP)brings together NHS organisations, local hospitals, GP’s, social care and the charityand voluntary sector in West Essex to put local people, and the quality of health andcare services, at the centre of what we do. Our core partners are West Essex CCG,Essex County Council, Essex Partnership University Trust and our Primary CareNetworks.Over 2019-20 we have worked with our OHCP partners to begin formalising ourpartnership arrangements. This will include working collegiately to meet systemcontrol total requirements, creating a shared vision and strategy, a ‘whole system’governance agreement and shared clinical strategies.The OHCP has also published an ambitious transformational plan across thefollowing priority areas for the West Essex system: Delivery of urgent and emergency care, frailty and complex care in a moreefficient, integrated and outcomes based approach. Modernisation of outpatients Investment in mental health services with the aim to achieve the MentalHealth Investment Standard (MHIS) and work towards integration of physicaland mental health conditions. Improvement of outcomes for people who live with one or more long termconditions and that we continuously work on preventing disease, decline andmortality. Improvement of safety in maternity by reducing rates of stillbirth, neonataldeath, maternal death by 50% and brain injury during birth by 20% by 2023. Improvement of health and outcomes for children and young people and theirfamilies including mental health. Enabling functions such as medicines optimisation, estates, finance, digitaland workforce are embedded within all the programmes and support deliveryof the plan by transforming the way we work. Increasing support for people so they have more control over their own healthand more personalised care.From a regional perspective PAHT has continued to work closely with organisationswithin the Hertfordshire and West Essex Sustainability and TransformationPartnership (HWE STP) on programmes where there is greatest opportunity for moreeffective and efficient health and care services, and where working as onepartnership on pathways is more beneficial than local design and delivery.During 2019-20 the trust has worked collaboratively to deliver against the three keypriorities for transformation and service change; frailty, children and maternity, andplanned care. Through a population health management approach we have workedwith HWE STP partnering organisations to segment the population into three groupsbased on their broad level of need, therefore identifying groups of people within ourpopulation who are at risk of deteriorating health and wellbeing. These threepopulation groups are:1. Generally well – our largest segment with a population of over 1 million,2. People who have one or more long term conditions – approximately 300,000people, and3. Severely frail and/or in their last year of life – our analysis has shown that the most12severely frail comprise about 11% of the total population and we spend around 45%of our total budget on this group of people.New hospital programmeIn October 2019 PAHT secured funding to build a new hospital in Harlow through thefirst phase of the Governments Health Infrastructure Plan (HIP1). This new hospitalsite will provide fit for purpose facilities which maintain the quality of clinical servicesfor patients and support financially sustainable service transformation to integratedcare. It is also essential for ensuring that the future needs of the local population aremet.This flagship project represents the largest capital investment in the trusts historyand is therefore recognised for its scale, complexity, profile and strategic importance.The trust has begun to work at pace, within a robust system of governance, toproduce and submit an Outline Business Case (OBC) by December 2020 to includethe strategic fit, option appraisal, achievability, assumptions about costs, benefits,risks and funding. Following submission of the OBC we will move forward to the nextstage of the programme through the development of a Full Business Case (FBC)outlining the procurement of the value for money solution and ensuring successfuldelivery.Key risksThe trust has a Board Assurance Framework (BAF) which provides a mechanism forthe Board to monitor risks to delivery of the trust’s strategic objectives. The highestscoring risks on the BAF throughout 2019-20 were variation in clinical outcomes,nurse recruitment, our estate, delivery of the Emergency Department standard andour finances. The risks are reviewed monthly and progress is monitored by therelevant board committees and trust board every other month. A summary of theserisks is reflected below: Five PsHighest scoring risks on board assuranceframework 2019-20OutcomesVariation in outcomes in clinical quality, safety,patient experience and ‘higher than expected’mortalityNurse recruitmentInability to recruit to critical nursing roles.Estates and infrastructureConcerns about potential failure of the trust’sestate and infrastructure and consequences forservice delivery4 hour Emergency Departmentconstitutional standardFailure to achieve ED standardFinanceConcerns around failure to meet financial planincluding cash shortfall. Going concernIAS1 requires management to assess, as part of the accounts preparation process,the trust’s ability to continue as a going concern. The HM Treasury Financial ReportingManual directs that in the context of non-trading entities in the public sector, theanticipated continuation of the provision of a service in the future is normally sufficientevidence of going concern. The financial statements should be prepared on a goingconcern basis unless there are plans for, or no realistic alternative other than, thedissolution of the trust without transfer to another entity.In approving the trust’s annual accounts the Board of Directors has satisfied itself thatthe trust has prepared the accounts on the basis of going concern recognising thefollowing:14i) The Board considers the trust operates a significant portfolio of clinical services.The Trust has signed a two year allocative contract (expiring 31 March 2021)with its main Commissioner. The trust has not been made aware of any plansfrom any Commissioner to disinvestment. The Trust is expanding and taking onlead responsibility for services e.g. musculoskeletal services.West Essex System partners aim to form an Integrated Care Trust (ICT) by2022. The ICT will be made up of Primary Care, Community Care and Acutecare providers. The development of ‘One Health and Care Partnership’ during2020/21 will be a key transitional point towards the ICT.ii) In October 2019 the trust received notification of financial improvementtrajectories and Financial Recovery Fund (FRF) allocations for each year up to2023/24. These trajectories outline a reduction in deficit with indicative FRF setto meet a breakeven position. Subsequent amendments to reflect policychanges and the debt write off regime were notified in January 2020 with thetrust’s trajectory of £28.6m deficit in 2020-21 to be matched by FRF. It shouldbe noted that due to Covid-19 operational planning guidance was suspendedwith the introduction of an adapted financial regime intended to cover the fullcosts of service delivery. The detail of the block and top-up payments to bereceived by the Trust have been received.iii) The trust has included an estimate of £40.9m of capital requirements in its2020/21 operating plan. This plan includes £9.9m of internally generated funds,£9.5m for the development of a Medical Assessment Unit, £5m emergencycapital and £9.2m to progress a Strategic Outline Business Case (SOC) forHospital redevelopment. Support for the new Hospital development has beenreceived from senior Department of Health officials and the Prime Minister.iv) The Board of Directors has carefully considered the principle of ‘going concern’and recognises that there are material uncertainties related to the financialsustainability (profitability and liquidity) of the Trust which may cast significantdoubt about the ability of the Trust to continue as a going concern. Suchuncertainties include delivery of a cost improvement programme for thefollowing 12 months to levels that secure FRF funding in 2020/21 and beyond.The Board has considered this position and, although there remains uncertaintyregarding the overarching financial regime beyond July 2020, assesses it isreasonable that identified savings will be delivered. This position is supportedby existence of both a Transformational agenda, actions of the Recovery andRestoration cell as part of the response to Covid-19 and a continued trackrecord of the Trust to delivery cost and efficiency improvements.On that basis and for the reasons outlined above the Board of Directorsconsiders it is appropriate to prepare the 2019/20 Accounts on a goingconcern basis and the financial statements do not include the adjustmentsthat would result if the Trust were unable to continue as a going concern.Performance AnalysisFinancial PerformanceThe trusts 2019-20 net control total target deficit i.e. including Provider SustainabilityFund (PSF) and Financial Recovery Fund (FRF) set by NHSI/E was £6.2m (grossdeficit excluding PSF and FRF £29.6m). The trust’s outturn was a £50k surplus beinga £6.2m underspend against the net control target. This compares to a £16.6m deficitin 2018-19 and the trust’s first recorded surplus since 2012/13.Key elements of the trusts financial results: Delivery of our cost improvement target of £10m. Temporary staff costs were £35.1m (agency £10.9m, bank £24.2m). Moved towards block contract arrangements with an allocative contractformally established with West Essex CCG and additional funding flowscovering winter pressures, Covid-19 costs and additional activities. Eligibility to earn additional Financial Recovery Fund and ProviderSustainability funding of £28m from delivery of financial performance targets.NHS Trust Financial DutiesControlTargetActualOutturnUnderspend£000’s £000’s £000’sNet Control Total – 2019/20 (6,168) 50 6,21816The key financial results for 2019-20: The Trust delivered an adjusted retained surplus of £50k. The Trust spent £17.3m on capital (Medical Equipment, IT and Estates). Thiswas an increase in the £11.9m investment in 2018/19. The Trust underspentagainst Capital Resource Limit by £0.5m. The Trust underspent against its 2019-20 external financial limit by £0.1m. Thiswas an improvement on the 2018/19 position.The Trusts external auditors have issued a qualified opinion on its financial statementsin that the accounts present a true and fair view of the trust’s financial position for the2019-20 financial year.We continue to work to maintain an anti-fraud, bribery and corruption culture and havea range of policies and procedures to minimise risk in this area. The trust is committed2019/20£000’sExternal financing limit (EFL) 30,083Cashflow financing 29,489Unadjusted EFL 594CT Scanner funding deferred to 20/21 included in 19/20 limit (447)Underspend against EFL 147Adjusted financial performance (management control total basis): 2019/20£000’sGross capital expenditure17,412Less: Donated and granted capital additions(98)Charge against Capital Resource Limit17,314Capital Resource Limit17,721Unadjusted CRL407Adjusted financial performance (management control totalbasis):CT Scanner funding deferred to 20/21 included in 19/20limit(447)COVID CRL Support for 2019/20 to be adjusted in 20/21509Underspend against CRL469 to providing and maintaining an absolute standard of honesty and integrity in dealingwith its assets. We are committed to the elimination of fraud, bribery and illegal actswithin the trust and ensure rigorous investigation and disciplinary or other actions asappropriate if allegations are made. The trust utilises best practice, as recommendedby NHS Counter Fraud Authority.Better payment practice codeThe code sets out the following obligations for NHS organisations in respect of thepayments it makes to its suppliers – principally: Payment terms are to be agreed with suppliers before a contract commences Payment terms are not to be varied without prior agreement with a supplier By default, bills are to be settled within 30 days unless other terms have beenagreedPerformance in 2019-20 has continued to improve compared to 2018-19.Performance is summarised as follows:Financial plan 2020-2021The trust is looking to build upon the significant progress made in the last financialyear. This includes an unqualified Value for Money opinion for the 2018/19 Accountsand securing ‘Good’ for its Use of Resources assessment.The trust has set an interim budget for 2020-21 in light of the adapted financial regimeassociated with Covid-19. The trust will be tracking and managing its resources closelyto ensure full cost recording and recovery for its pandemic response, both in terms ofoperational spend and capital investment. Its focus will remain on cost control andtemporary staffing reductions together with quality and cost improvement. A verysignificant and successful international nurse recruitment programme in 2019-20 hasmuch improved nurse vacancy rates at the Trust, nursing levels across the wardswhilst also providing the potential to reduce its reliance on both bank and agency staffgoing forward.The trust also continues to work actively with its health and care partners within theLocal Integrated Care Partnership and broader Integrated Care System. Key areas ofactivity currently include the response to Covid-19 and the development of recovery2019/20 2019/20 2018/19 2018/19Non-NHS Payables Number £000’s Number £000’sTotal non-NHS trade invoices paid in the year 49,002 76,083 51,665 67,947Total non-NHS trade invoices paid within target 43,722 64,320 36,583 49,942Percentage of non-NHS trade invoices paidwithin target 89.2% 84.5% 70.8% 73.5%NHS PayablesTotal NHS trade invoices paid in the year 2,227 56,446 2,553 42,033Total NHS trade invoices paid within target 1,805 47,379 1,810 36,631Percentage of NHS trade invoices paid withintarget 81.1% 83.9% 70.9% 87.1%18plans, this is in addition to the integration of its services for patients and users and,where appropriate, the development and consolidation of support services.The trust is part of the National Health Improvement Programme (HIP) Phase 1 andis urgently progressing its Outline Business Case for a new hospital development for2025.Having delivered its first operating surplus since 2012-13 and having increased itscapital investment significantly across recent years, the trust has further opportunitiesand potential to take these successes forward.The trust’s indicative capital investment for 2020-21 is planned to increase to £40.9m.This includes £9.2m to progress the development of the new hospital. Other significantplanned investments include emergency backlog maintenance and the developmentof a Medical Assessment Unit, medical equipment and IT infrastructure.Operational performanceThe trust’s operational performance against national and local standards is monitoredand reviewed at: Regular performance review meetings between members of the executive teamand each health care group The Urgent Care Improvement Board Senior Management Team meetings The Performance and Finance Committee Trust board meetingsAn Integrated Performance Report is presented to the Performance and FinanceCommittee and trust board meetings. Externally, the trust is held to account for itsoperational performance by NHS Improvement.Targets and national standardsThe progress in Referral to Treatment (RTT) standards made in 2018/19 wasmaintained during the first half of 2019/20, however this deteriorated to 86.6% in thelatter half of the year. During the last quarter of 2019 there were unexpected medicalstaffing gaps in dermatology, diabetes and endocrinology, gastroenterology andhand surgery in trauma and orthopaedics which resulted in the trust focussing on thecancer workload which impacted on RTT performance. However, the trust’sperformance is still significantly above national performance. The trust was aiming toimprove RTT performance to the national standard in April 2020 howeverperformance in February and March 2020 were impacted by COVID-19 whichresulted in routine elective operating being postponed to enable re-deployment ofclinical staff to support the respiratory emergency demand.Delivery of the national cancer standards was challenging during 2019-20 due toworkforce issues across the medical workforce specifically within dermatology andLower GI specialties. Cancer recovery plans were implemented across all specialtiesand led to a sustained improvement in performance from quarter 1 with continuedachievement of the cancer standard between September and December 2019.COVID-19 impacted on cancer performance in the last two months of the year and thetrust adopted the national guidance to ensure as far as possible that cancer patientscontinued to receive appropriate care. All revised diagnostic and treatment decisionsare made through the clinical multi-disciplinary meetings and with patient agreement.The trust continues to be committed to the delivery of all national cancer standardsand plans are now in place to work towards the proposed 28 day faster diagnosisstandard which will come into effect during 2020/21.20Diagnostic performanceThe trust has achieved the 99% diagnostic wait target consistently over the last yearand only failed the target for one single month in the last 5 years which was due to anadministrative human error. This means that over 99% of all patients waiting for adiagnostic examination have this completed inside 6 weeks of the referral being made.We are proud of consistently maintaining this performance despite a 5% growth indemand, year on year.The trust has consistently performed circa 3% higher than the national performanceeach month throughout the last year.Urgent care and ED performanceThe trust continued to struggle to meet the four hour standard and finished the yearend at 79.7%. Whilst we have continued to have workforce challenges, we have alsoconsistently had a high bed occupancy level meaning admissions from the EmergencyDepartment to inpatient wards has often been slower than required. This is despite afurther reduction in our length of stay and improvement in our internal and externaldelays. We have also continued to see an increase in attendances to the EmergencyDepartment, with an increase of nearly 6% in attendances until the development ofCOVID-19 in February/March 2020 compared to the same period in 18/19, and anincrease of over 10% compared to 17/18. In the last month of the year EmergencyDepartment attendances dropped significantly due to the COVID-19 pandemic and EDperformance improved.Ambulance handover performance has seen a marked improvement over the pastyear due to the re-design of the Rapid Assessment Treatment (RAT) pathway. Withthe assistance of the emergency care intensive support team from NHSE/I the RATpathway is led by an advanced nurse practitioner to ensure swift clinical assessmentand decision making improving patient flow through the Emergency department andimproving patient experience.We have continued to work with our system partners to further develop streamlinedservices that can be delivered in the most effective location and to preventattendances and admissions to hospital. The local delivery group has continued toforge close working relationships across organisations and enabled improved serviceprovision such as increased intermediate care capacity and patient at home support22for patients with existing care packages. Patient experience has been enhanced byincreasing the use of the Clinical Decision Unit and the development of the temporarySurgical Assessment Unit.The operational teams across the health care system, both providers andcommissioners, have worked collaboratively to develop the Urgent Treatment Centrestaffed with enhanced nurse practitioners and general practitioners which worksflexibly with the Emergency Department to respond to changes in demand.The graph below shows the development and range of these services:The trust has consistently exceeded the national delayed transfers of care target of2.5%. We have also exceeded our long length of stay trajectory and reduced ourpatients with a length of stay of over 21 days by more than 40%. We have beenasked by the Getting it Right First Time (GIRFT) programme to share ourmethodology to support other organisations.Further work is planned in 2020-21 to increase our bed capacity and improve ourfrailty service to improve patient experience.The urgent care and Emergency Department has risen to the immense challengecreated by the COVID-19 pandemic and carried out significant redesign of services ina short space of time. We developed two separate pathways and departments,opening a Respiratory Emergency Department (RED) to work in parallel with thegeneral Emergency Department. This ensures that patients attending the hospital withnon COVID-19 emergency conditions are protected from infection as much as possibleand both cohorts of patients are cared for by the most appropriately qualified staff.This separation into two departments required the re-provision of the UrgentTreatment Centre into the out-patient department.Responding in an emergencyThroughout 2019-20 the resilience team have continued to work to ensure that theTrust is in a position to respond to, and recover from a range of emergencies. In thelast year we have focused on our staff and trust preparedness through training andexercising, including scenarios related to cyber security and fuel shortages.During the previous year our largest resilience challenge was preparing for the UnitedKingdom exiting the European Union. As an organisation we recognise the importanceof multi-agency working, and continue to actively engage in the work of the local healthresilience partnership and the Essex resilience forum. As required nationally weundertook the NHS England emergency planning, resilience and response corestandards for which we were able to provide full assurance to NHS England.The coming year will see us working alongside our partners and a range of otherorganisations, as we face the challenges posed by the COVID-19 pandemic. Furtherdetail on how the Trust is managing this virus is included in the infection preventionand control section below.Clinical performanceInfection prevention and controlThe trust has robust infection prevention and control (IP&C) measures in place thatare part of a safety culture that helps control healthcare associated infections (HCAIs).This year PAHT has continued to maintain excellent control of HCAIs and antimicrobialresistance (AMR). Commitment by clinical and management staff to work together andmaintain the ‘board to ward’ model supported by audit and feedback, helped to providea safe environment for our patients.The trust remains in a favourable positon nationally for various alert organisms. For trustapportioned Meticillin sensitive Staphylococcus aureus bacteraemia (MSSA) control weare amongst the best in England. We continue to do well with Clostridium difficile (Cdifficile) management. NHS England requested our control plan for gram negativebacteraemias as we are a Trust that has shown significant improvement compared toprevious years.An unexpected threat in the form of the respiratory virus; COVID-19 brought newchallenges to the trust from the end of January 2020. The virus tested every aspect ofinfection prevention and control. Dealing with the pandemic has given us a newperspective on organisational IP&C, and shown the Trust to be versatile andresponsive.MRSA bacteraemiaDuring 2019-20, there were two cases of trust apportioned cases of MRSAbacteraemia and two cases of non-trust apportioned MRSA bacteraemia. Althoughnumbers are small, these are higher case numbers than in previous years and the24IP&C team worked with colleagues in our local CCGs, to address any learning inrelation to these cases.Clostridium difficileThe trust was set a challenging trajectory of 27 cases for 2019-20 combining for thefirst time hospital associated cases and community cases where the patient hadbeen in hospital during the preceding month. This target reflects our excellent Cdifficile numbers in previous years, as the target is based on previous case numbers.We have coped well with this target, ending the year below the trajectory, with 23cases in total.Meticillin Sensitive Staphylococcus Aureus (MSSA) bacteraemiaThe trust remains in an excellent position as one of the top performing NHSorganisations in the country in terms of low MSSA blood infections (bacteraemia). Thiswas noted by the CQC inspectors on their last visit to the trust. This year there havebeen six trust apportioned cases. This is a reduction from eight trust apportioned caseslast year. Non-trust apportioned cases are the usual source of MSSA bacteraemia andwe had 36 patients who presented to our Emergency Department with this infection.Aggressive treatment of all MSSA bacteraemias is undertaken to reduce mortalityassociated with this infection.Escherichia Coli (E.coli) and Gram Negative Blood Stream Infections (GNBSIs)In April 2017, a new national target to halve healthcare associated GNBSI by 2021was introduced. Initially, the focus was on reducing healthcare associated E. coli BSIsbecause they represent 55% of all gram-negative BSIs. Now attention is also beinggiven to other GNBSIs.Numbers of trust-apportioned E.coli cases remain low this year and the trust is in afavourable position when compared with other hospitals nationally. During 2019-20 wehad a total of 163 cases; of these 150 were found to have an E. coli bacteraemia onadmission and the remaining 13 cases were considered to have been hospitalassociated.Klebsiella sp. blood stream infections (classified as GNBSIs)During 2019-20 we had a total of 41 cases. Of these 38 were found to have abacteraemia on admission and the remaining three cases were hospital associated.We have achieved a significant reduction in our hospital associated cases from eightcases last year to three cases.Pseudomonas aeruginosa blood stream infections (also classified as GNBSIs)During 2019-20 we had a total of 22 cases. Of these, 19 had a bacteraemia onadmission and three cases were hospital associated. Our hospital associated casesremain under control largely due to control of CaUTIs as pseudomonas aeruginosa isan organism often associated with catheters. The team managing the trust catheterpathway have worked hard to control of this infection.Outbreaks and incidentsNorovirusFive norovirus outbreaks occurred in the trust in 2019-20. Isolated incidents occurredin April, October, two outbreaks occurred in December 2019 and the last outbreakoccurred in February 2020. The trust has systems in place for the management ofoutbreaks with daily meetings for the duration of the outbreak, led by the IP&C Teamsupported by the director of infection prevention and control or director of nursing,midwifery and allied health professionals.MRSA transmissionsFour wards had more MRSA transmissions than expected during the year. 54 of the71 MRSA transmissions that occurred in the Trust, occurred on Gibberd, Harold, Listerand Ray wards. There was no increase in MRSA infections. Regular MRSA controlmeetings were held with the IP&C Team, clinical and management staff and thetransmissions were brought under control. Sustained transmission occurred on Haroldand Lister wards, especially affecting the latter ward and this was deemed to be anoutbreak. It was decided to rectify estates issues and refurbish Lister ward as part ofmanaging the outbreak.Vancomycin resistant enterococci (VRE)A VRE outbreak started in critical care in January 2019, and was declared over inJuly 2019. However, due to on-going low grade VRE in the summer, apart fromcarrying on with the usual IPC standards, it was decided to refurbish both HDU andITU to rectify estates issues, put in modern sinks and create more isolation facilities.ITU now has two isolation pods rather than one, HDU has one side room rather thannone.There were no clinical infections due to VRE on ITU or HDU during 2019. A fewcolonised patients were treated as a precaution, such as patients with vascular grafts.COVID-19The Covid-19 pandemic required a change to the way the organisation and the IP&CTeam functioned. Being relatively close to London meant PAHT experienced asignificant COVID-19 case load. Different ways of working to ensure compliance withsocial distancing including home working with remote access helped reduce virustransmission both in primary and secondary care between staff, and between staff andpatients. Efforts focussed on ensuring the hospital had sufficient ward capacity andCritical care capacity to manage case numbers. Most elective surgery was stoppedand the hospital was ‘zoned’ to manage COVID-19 and non COVID-19 patients.26A meeting structure was introduced to manage all aspects of the pandemic in theorganisation. Apart from an IPC cell, there was a clinical cell, an operations cell, apeople cell and strategic Cell. The IPC cell focussed exclusively on IPC matters linkedto COVID-19 including the roll out of personal protective equipment (PPE) and anystaff concerns or queries around the programme. The groups met daily and the IPCcell was chaired by the director of nursing, midwifery and allied health professionals.From 13 March 2020, when PAHT had its first COVID-19 inpatients to 31 March 2020a total of 478 samples were tested for the virus. 182 of those tests were positive and34 deaths were reported in this period. All deaths were, and continue to be reviewedas the pandemic continues to be managed during 2020.Our approach to PPE was fully co-ordinated across the trust. It was consistent andsupportive, with clear messages endorsed by regular education and Fit testing ofFFP3 respirators for staff groups who need FFP3. Training was provided to staffacross the Trust and team work and communication improved as time passed.A fully co-ordinated procurement process for securing PPE supplies was put in placewith NHS approved stocks received from a central procurement pathway. Ten PPEsafety marshals were appointed to work alongside the IP&C team to support andmonitor the PPE programme.PPE was just one of a complete IPC package which included respiratorysegregation, testing of respiratory in-patients for COVID-19 with appropriate isolation,ward cleaning, twice daily cleaning of frequently touched surfaces, hand washing,respiratory etiquette, social distancing of patients from each other and staff from eachother, and staff wearing PPE in ED, critical care and across all COVID-19 wards.Staff were supported by the staff health and well-being service (SHaW) as well as thepeople team. A staff swabbing programme and a process for monitoring sickness wereintroduced.The above changes were introduced over a period of weeks from February 2020 asexperience in dealing with this very complex virus grew.Learning from incidentsPatient safety is a trust priority, we continually strive to ensure incidents are managedeffectively and most importantly that we learn and share the improvements that arisefrom them. A patient safety incident is defined as ‘any unintended or unexpectedincident which could or did lead to harm for one or more patients receiving NHS fundedcare’.During 2019-20 the trust reported a total of 10,204 incidents. Of these incidents98.17% resulted in either no or low harm, the remaining resulting in moderate (1.48%),severe (0.29%) or death (0.06%).The total number of incidents reported has increased by 8.9% when compared with2018-19. Overall incident severity ratings have remained consistent. The increase inincidents reported demonstrates that our staff are conscious of patient safety and ourorganisation can continue to improve through critical review.28All patient safety incidents are reported to the National Reporting and Learning System(NRLS) to enable learning and comparison with other similar organisations to occur.We have embedded robust processes to enable learning to take place across theorganisation to support prevention of the same or similar incidents from occurringagain. Following investigations into patient falls, work commenced to develop effectivefalls risk assessments, safety handovers, and a process to effectively nurse high riskfalls patients. This improvement work continues with the trust currently developing anorganisational wide approach to reduce in-patient falls.Incident reviews within the maternity department have led the department to re-definethe criteria for admission of women with specific health needs to the labour ward ratherthan the birthing unit (low risk births). There has been increased training for staff inmonitoring of both the mother and the baby during labour to ensure that an abnormalityis recognised and acted upon promptly. An additional scan at 38 weeks takes place tomonitor the growth of babies of women who smoke during pregnancy so any slowingof growth can be promptly identified.An investigation within paediatrics saw the introduction of a pre-assessment tool forchildren waiting to be seen by the triage nurse when attending the children’sEmergency Department. This pre-assessment tool enables effective identification ofchildren becoming increasingly unwell whilst waiting to be clinically assessed and thatthey are prioritised for medical attention.Never eventsThere were no never events in 2019-20.Being open and Root Cause Analysis (RCA) investigation skills trainingThe trust continues to invest in RCA investigation training and training in being openand duty of candour conversations with patients and families. In year the trust held: One being open/duty of candour training day Five days of root cause analysis trainingFriends and Family Test (FFT)The national average for a composite friends and family test score in England is 93%.The trust is well above the national average with a composite average score for theyear to date (excluding March data due to COVID-19) of 97.1%.The evidence in the graph below shows some variation in sampling as well as asignificant drop at the end of the year as measurement was suspended due to thepandemic, giving the trust data from the first few days of March 2020.Cross checking this data with evidence from wider measures of activity in patientadvice and liaison services, the trust responded to 6103 contacts either in the form ofcompliments, questions or concerns and saw a decrease in complaints from 205 to172 consistent with the improvements in scoring for the friends and family test.A number of key projects took place this year including: The development of voluntary services projects such as butterfly volunteers and a£25k of funding from NHSE/I to support Emergency Department volunteering. The establishment of a carers working group as part of work to address thecommunication issues raised often raised by carers in complaints. Effective patient stories at board meetings including a story that led to changes inhow we implement reasonable adjustments for patients with a mental health issueand at the end of life. The implementation of fifteen steps, a schedule of visits by senior members of staffand board members to clinics, wards and teams to support our people.30MortalitySome of the statistical markers for mortality have been higher than expected for 2019-20.Hospital Standardised Mortality Ratio (HSMR) and Standardised Mortality Ratios(SMR)HSMRThe Hospital Standardised Mortality Ratio is the ratio of observed deaths to expecteddeaths for a basket of 56 diagnosis groups, which represent approximately 80% of inhospital deaths.The trust’s rolling HSMR and SMR reported for the last 12 months have been higherthan expected. For the period December 2018 to November 2019 (including a time lagof one month) the trust’s HSMR was 122 (higher than expected).PAHT is 1 of 6 trusts within the peer group of 15 that sit within the ‘higher expected’range.Summary Hospital-Level Mortality Indicator (SHMI)SHMI for the period November 2018 to October 2019 is 111.15 (as expected).Progress over the past year:Mortality governance is a key priority for the trust board. The chief medical officer hasexecutive responsibility for the learning from deaths agenda and a non-executivedirector has responsibility for oversight of progress.A trust wide improvement programme and Mortality Improvement Board wasestablished in 2019-20 utilising quality improvement methodology to deliverimprovements in patient outcomes and mortality rates.Over the past year the national medical examiners system has been fully implementedand 100% of all inpatient deaths were, and continue to be, reviewed and scrutinised.The national system of structured judgement reviews has also been rolled out acrossthe trust. Themes identified from these reviews inform the quality improvementprojects to be undertaken and learning from mortality reviews is shared across theorganisation.A lead nurse for mortality and quality was also appointed to facilitate the mortalityreview process.The COVID-19 pandemic has increased and will continue to increase the actual andthe expected number of deaths both nationally and at PAHT. The first COVID-19 deathat PAHT was reported on 18th March 2020. All deaths related to COVID-19 areincluded in the structured judgement review process.32Quality improvementEach year we assess our performance against previous quality priorities and patientoutcomes; taking account of national reports, feedback from regulators and emergingthemes from incidents as well as patient and staff feedback.The trust was inspected by CQC during March and April 2019 and the outcome ofthose inspections reported in July 2019 showed further improvements, with five of thetrust’s core services rated as Good. The trust received an outstanding rating forcaring for children and young people. The overall quality rating for the trust remainedthe same; requires Improvement. However, the trust received an overall rating ofGood for both the well-led assessment and also for the use of resources assessment.The trust’s current CQC ratings (based on the inspection report published on 31 July2019) are reflected below:In 2017 the trust developed a whole system approach to quality improvement. Thequality first team works alongside the patient safety and quality department which isaligned to quality governance and patient safety. We define quality improvement as‘working together in partnership to make the sustainable changes that will lead toexcellence for our patients, people, places, performance and pounds.’Quality first teamThe quality first team defines their purpose as:‘Inspiring our people to put quality first for the benefit of our patients, staff andwider community by building confidence and capability in quality improvement’The team is led by a senior doctor, nurse and manager and work alongside staff,patients and wider partners in health and social care.This multidisciplinary team’s key functions are: to centrally coordinate the delivery of quality improvement initiatives that delivergreater efficiency and productivity as well as reducing unwarranted variation. to support the delivery and realisation of our long term plan (Your future, ourhospital (five P’s), clinical strategy and quality improvement strategy) to lead quality improvement and organisational development to prepare thetrust for our future health and social care campus to support the strategic realisation of the clinical strategy.Our patients are our most important partners. ‘Co-production means that we are thereat the beginning, we are sitting at the table as an equal, and we will contribute to thedecision about whether something is needed or not’ (Ann Nutt, Chair of Patient Panel).For co-production to become part of the way we work, we have created a culture wherethe following values and behaviours are the norm: ownership, understanding and support of co-production by all a culture of openness and honesty a commitment to sharing power and decision making with patients, families andcommunity clear communication in plain English a culture in which people are valued and respectedThe improvement partnershipThe ‘Improvement Partnership’ is our programme for enrolling, engaging, involvingand developing our staff in quality improvement. The quality first team runs leadingchange and leading projects learning and development sessions with the objective ofenabling them to deliver successful quality improvement projects. When the staffmember completes a quality improvement project (capturing project outcomes inposter), they become PAHT improvement partners:34The improvement partnership is an enabler addresses the leadership, culture andorganisational development required to embed quality improvement at PAHT.Our highest quality improvement priorityA key focus has been on improving the trust’s mortality rate. Programmes of workhave been developed and the quality improvement methodology is embedded intopractice and approach.Celebrating successFor two consecutive years PAHT have won champion organisation at the annualacademy of fabulous stuff national awards. In January 2020 the trust became thesecond hospital in the country to be formally accredited by the Academy of FabulousNHS Stuff. It is a testament to the energy and effort of teams across the hospital thatour work to continually improve the quality of our services has been recognisednationally.A number of notable highlights of the year include:Event in a Tent quality improvement day – 25 September 2019On Wednesday 25 September the quality first team joined forces with colleagues fromacross the organisation to facilitate a quality improvement day during Event in a Tent.The day was an opportunity to share and celebrate the fantastic quality improvementwork taking place at PAHT. The day started with a poster celebration eventshowcasing all of the quality improvement projects at PAHT. Following this, there wasa celebratory event to congratulate all of our new Improvement Partners at PAHT. Theafternoon kicked off with a quality improvement café, a fun and interactive speeddating style session with 9 teams from across PAHT demonstrating how they can helpsupport staff in their roles across the organisation. The final part of the day was ideasworth sharing, 8 inspirational short talks from various speakers such as Chris Pointon(#Hellomynameis), Roy Lilley and Terri Porrett (Academy of fabulous stuff), as well asLance McCarthy, PAHT chief executive officer. The day was a huge success.Fri-QI-Day – 6 September 2019Fri-QI-day was established on 6 September 2019 as an opportunity to get togetherevery two weeks and discuss all things quality improvement. The sessions are workingwell and offer a peer support network to strengthen junior doctors’ involvement andleadership in the delivery of quality improvement with assistance and support from thequality first team.36World Sepsis Day – 13 September 2019On the 13 September, the trust recognised and celebrated World Sepsis Day. The daywas a great opportunity to raise the awareness of Sepsis across the organisation toboth patients and staff highlighting what sepsis is, the symptoms and treatment ofSepsis.World Patient Safety Day – 17 September 2019On Tuesday 17 September it was World Patient Safety Day organised by the WorldHealth Organisation (WHO). The Princess Alexandra Hospital NHS Trust (PAHT) waskeen to support the event to highlight its efforts and achievements in improving patientsafety.Clinicians and NHS hospital teams are committed to keeping patients safe, day in, dayout and the aim of the national day is to urge them to demonstrate their commitmentto making healthcare even safer. Through education, improved hygiene andawareness raising, the campaign aims to make patient care safer. The day was a greatday to celebrate and share the achievements of patient safety at PAHT.Fab Change Day – 16 October 2019On the 16 October (fab change day) the quality first team manned the stands outsideof the canteen showcasing the quality improvement project posters that staff hadsubmitted for Event in a Tent in September, the posters showcased all of theoutstanding quality improvement projects in place at PAHT.Another focus of the day was to encourage staff to recognise a member of their teamor wider staff at the trust who deserves a high 5 and recognition for all of their hardwork.It was a fabulous day seeing staff take time out of their busy roles to recognise,share and celebrate all of the outstanding work our teams are achieving here atPAHT.Transformation programmeThe trust has embarked on a number of transformation programmes with the goal ofdeveloping and delivering the change required to deliver outstanding healthcare to thecommunity using the trust’s quality improvement methodology. There are seventransformation programmes aligned with the trust’s strategic objectives and the costimprovement programme (CIP) for 2020-21.38All projects operate within a defined framework of roles and responsibilities, havingexecutive directors as accountable officers as well as clinical sponsors workingalongside work stream and project leaders who are responsible for the day-to-dayproject activity.The quality first team are working with the healthcare groups, executive team,corporate teams, and senior management and system partners to ensure delivery ofthis programme aligns to PAHT’s quality improvement strategy (2019-2022).The following four measures have been identified as key determining factors for‘success criteria’ against the quality improvement strategy i.e. if the goals areachieved, the strategy will have been a success. It is recognised and understood thatthe delivery of healthcare can be complex and multifactorial, and the work associatedwith delivering the quality improvement strategy will not be the only factors that dictatesuccess. IDDescriptionSourceGoal1Mortalityrates(HSMR)Dr Foster HSMRAchieve ’as expected’ across allspecialities, with no more than twooutlier alerts over a 12 month rollingperiod by March 2021 and to besustained.2Length ofStayDr Foster averagenon-elective length ofstay for each specialtyAchieve national average (or better)across each of the specialities byMarch 2021 and to be sustained.3AnnualPatientexperiencesurveySurvey results, Q68 –overall experience(inpatient, outpatientand A&E )Achieve top quartile by March 2022.4HarmInformation teamAchieve top quartile against NationalReporting Learning System (NRLS)March 2022. Dr Foster, Model Hospital and GIRFT tools and analysis will be used to benchmarkthroughout life time of quality improvement strategy.40People performanceIn 2019-20 overall vacancy rates continued to reduce with notable improvements inrecruitment and retention processes as well as time to hire. We have also seen anincrease in our “grow our own” initiatives with the start of the new four year nursingdegree apprenticeship programme as well as exceeding our required 25%+ clinicalplacement capacity expansion target for new student nurses (adult and child) andmidwives. We have now welcomed over 60%+ additional first year students into thetrust to complete their training. People KPI2019-20 targetYear to dateperformanceVacancy rate8%8.6%Sickness absence3.7%4.3%Voluntary turnover12%10.7%Statutory and mandatory training90%92%Appraisal90%89%Flu80%80.1%Time to hire31 daysAverage 42days The diagram below summarises the outputs that form our people framework andclarifies the five key pillars of the people strategy which are as follows: Culture, health and well being Workforce resourcing and planning Learning, leadership and team development New service and workforce models Optimising technologyEmbed newvalues andbehaviours• National Staff Survey results• GMC survey results• Staff FFT : Place to work• Staff FFT : Place to be treated• Sickness rates/themes• Flu vaccination take up• Vacancies• New roles within the Trust• Bank and agency usage• Exception reports• Time to hire & join• National & local staff awards• Statutory/mandatarytraining compliance• Appraisal & 360• Stability and turnover• Internal promotions• New roles across the ACS• Joint roles with partnerorganisations• ESR self service take up• E learning take up• Self service rostering• Active agreed e Job plansInvestappropriately inleadership & teamdevelopment toattract and retaintalentCo design andimplement newservice &workforce modelsacross the STP &ACSMaximise the useof technology tosupportprofessionals,productivity &efficiencyAlign and embed ahealth & wellbeingculture which isconsistent with ourvision, values andcorporate goalsDevelop and implementa workforce &resourcing plan whichcelebrates ouremployer brand anddiversityPatients People Performance Places PoundsOrganisational Development Strategy1. Physical & psychologicalsafety (no harm)2. Meaning & purpose (makinga difference)3. Choice & autonomy (rights& responsibilities)4. Camaraderie & teamwork(belonging & supported)5. Fairness and equity forimproving enjoyment6. Wellness, resilience,participative management,recognition, reward andfeedback mechanisms7. Health promotion eventsPeople Strategy: A Joy to work at The Princess Alexandra Hospital NHS Trust1.Workforcetransformation plan (newroles & ways of working)2.Conversion of studentand trainee pipeline3.Employer brand &compelling proposition4.Entrepreneurialresourcing plan5.Recognition & rewardschemes (‘choices’)6.Simplified & streamlinedrecruitment processesand systems1.Shared purpose andgoals with STP partners(Hertfordshire andEssex)2.Shared support servicesacross the STP ( Carter)3. Shared clinical servicemodels (Dalton)4.Shared research,academic, training anddevelopment goals1.Shared career & skillsframework2.Distributed leadershipcommitment framework3.Flexible learning delivery(including e-learning)4. Talent management5. Succession planning6. Appraisal supplemented by3601.ESR self service2.E learning3.Self e rosteringInvestappropriately inlearning,leadership & teamdevelopment toattract and retaintalentThroughout 2019-20 the people directorate have aligned work streams to the fivepillars and have delivered the following: We undertook an ambitious medical and nursing recruitment programme, bothdomestic and international which saw our overall nursing vacancy rate reducefrom 40% to 10% in 2019-20 bringing the overall trust vacancy rate down to9.8% Our talent management programme cohort 1 commenced in November 2019. Our equality and diversity steering group is fully established with a focus on aspecific protected characteristic each month We established an integrated musculoskeletal service with partnerorganisations Exceeded our flu target for 2019-20 with 80% of our front line staff having theflu vaccine Achieved core statutory and mandatory training compliance of 93% 80 apprentices work across the organisation “Event in a Tent” held for the third year to celebrate our amazing people Increased our mental health first aiders to 26, with plans to build on this in 202042 Maximised efficiencies within our roster systems and now rolling out to nonclinical areas of the trust Our first group of 10 ‘home grown’ registered nurses commenced work inMarch 2020 3 new graduate management trainees joined the trust in March 2020 Increased our provision of leadership and management developmentprogrammes, including the introduction of an induction programme for newmanagers, covering HR and operational requirements Coordinated over 200 work experience placements for local studentsinterested in NHS careers Organised and hosted the 2019 health careers expo, with almost 600attendees from local schools and collegesCulture health and wellbeingThe objective is for The Princess Alexandra Hospital NHS Trust to lead on joy at workand have a positive impact on the health and wellbeing of our staff team.During 2019-20 we continued to embed a culture of health and wellbeing consistentwith our values and ran a number of events supported by the equality and diversitysteering group, this included International Men’s day and World Religion Day. Anumber of mental health events also took place throughout the yearWe continued to recognise and celebrate the great work of our staff with awardsceremonies both locally and trust wide, long service awards for staff who have workedfor the trust for 20 years or more and Our Amazing People programme which highlightsthe achievements of our staff through various communications channels throughoutthe hospital. All of which were celebrated at the trusts annual Event in a Tent.We developed our culture and leadership programmes over the last year with our “in myshoes” programme which included unconscious bias training and was delivered to bothmanagers and staff across the organisation. 250 supervisors, /managers and leadershave attended this training so far with a further 100 booked to attend by end of March2020.Staff engagementWe continued to drive improvement in staff experience using our staff survey results;this is an ongoing programme of work and will continue throughout 2020/21 via localstaff experience groups, the staff engagement group and staff council.Research, development and innovationEvery year we participate in a wide range of research studies. The studies vary in theirpurpose and may be academic or commercial in nature. A commercial study is onethat is developed by the pharmaceutical/device company, whereas an academic studyis developed in a university teaching hospital environment. The aim of participating isto support the development or evaluation of treatments and interventions provided topatients.There was a significant drop in commercial activity in 2019-20 for several reasonsincluding: The availability of commercial trials that were feasible for the trust toparticipate in. Several studies closed in year, as expected and replacement studies werepaused due to the Covid-19 outbreak.Recruitment targetThe North Thames Clinical Research Network did not set a target for recruitment ofparticipants into National Institute for Health Research (NIHR) portfolio adopted trialsin 2019-20. This was as a result of budget cuts. As of 11 March 2020, the number ofparticipants recruited into research at PAHT was 501.0102030405060708027 19 78 74Commercial Commercial Academic Academic2018/19 2019/20 2018/19 2019/20ACTIVE STUDIES (18/19 – 19/20)44Recruitment by speciality RecruitmentSpecialityDirectorateCommercial/non commercialPortfolio activity48CancerCCCSNon-commercial126GastroenterologyMedicalNon-commercial17RespiratoryMedicalNon-commercial43CardiologyCCCSNon-commercial3DermatologyMedicalNon-commercial13RheumatologyMedicalNon-commercial11OphthalmologySurgeryNon-commercial110MaternityFaWsNon-commercial17SurgicalSurgeryNon-commercial41AnaestheticsSurgeryNon-commercial1Infection, Prevention andControlCCCSNon-commercial28EmergencyMedicalCommercial36UrologySurgeryCommercial3CancerCCCSCommercial2RheumatologyMedicalCommercial2DermatologyMedicalCommercial Good news storiesOPTIMA trialWe were recognised by the sponsors of this non-commercial breast cancer trial dueto our significant increase in recruitment. By the end of 2019, PAHT were ranked the16th highest recruiting site internationally, out of 100 sites in total.Penthrox PASS TrialThis commercial emergency study, evaluating the risks from administration ofMethoxyflurane (Penthrox) for pain relief, closed to recruitment in 2019. PAHT arepleased to have recruited a total of 333 participants – over 100% of its target.Study 15PAHT were the highest recruiting smaller site for this non-commercial cancer study.REACH: pregnancy circles studyPAHT was recognised as one of the fastest sites to open to recruitment by thesponsors of this non-commercial maternity study. The trust was recognised as havingrecruited the 1000th patient study-wide.QIST studyPAHT are now top of the study leader board for data entry as a result of entering 100%of follow-up data required.Improving our estateWhilst work on developing plans for our new hospital is well underway we still haveto ensure we improve the existing hospital site and buildings.The approved capital programme for 2019-20 included schemes to the value of over£11m. The programme is made up of three key elements: Capital investment schemes – £3.5m Backlog maintenance – £2.1m Emergency backlog maintenance – £5.4mThe trust has a number of capital investment schemes under development includingone for an urgently needed medical assessment unit.The trust secured office accommodation at Kao Park, enabling the relocation of somenon-clinical staff to modern off-site accommodation.This project is an opportunity to address the wider accommodation issues the trust isfacing whilst allowing modernisation and co-location of our workforce.46During 2019-20 works commenced to build a new fracture clinic (repatriation ofservices from the Herts and Essex hospital) with a build programme from April 2019with planned completion in July 2020.In 2019-20 the trust addressed the following areas of backlog maintenance: Theatres air handling units – critical function chiller replacement worksThis scheme was part of an ongoing project that commenced in 2018-19 withfinal commissioning of the plant in late November 2019. This project hasresolved concerns with theatre temperature controls which need to beconstantly monitored and managed manually. Generator – North side installationA generator has been installed with final testing completed in July 2019. Theinstallation provides site resilience and a backup facility for the existinggenerator set. ITU refurbishment and HTM ventilation systemThis project was initially to be a relatively simple upgrade of the ward spacehowever, on starting the work it was established that the entire air handlingsystem needed replacing. The scheme was delayed as a result, however,despite a challenging programme, the facility was opened before the officialcommencement of ‘winter pressures’.SustainabilityTo ensure NHS trusts are delivering high quality health care service with minimalnegative impact on the environment, the Sustainable Development Unit (SDU) inassociation with NHSI instituted the Sustainable Development Management Plan(SDMP) outline to guide and to enable trusts evidence their commitments tosustainability. In compliance with the SDMP guidance and to fulfil our moralresponsibilities the trust board approved its SDMP (2018-2020) which set out the keymeasures and actions that enable the trust to contribute to global sustainability goalsand the NHS target to reduce carbon emission by 28% by 2020 (from 2013 baseline).Our sustainability achievements 2019-20The trust is able to report significant progress on its SDMP for the 2019-20 financialyear. We achieved the key success measure (28% energy carbon footprint reductionby 2020) in 2019 and continue to undertake measures to further reduce ourenvironmental impact and contribute towards achieving the UK Government’s new netzero carbon emissions target and or carbon neutrality by 2050.The trust placed emphasis on the following areas of its SDMP in 2019-20: energy,waste, water and purchasing.Energy: The trust achieved its goal for energy related carbon emission in 2019-20;reduced building energy carbon emissions and complied with Environmental Agency’s(EA) Carbon Reduction Commitment (CRC) regulation. To achieve this, the trustreduced its gas and electricity consumption by 24% and 3% respectively from 2018/19usage levels. The total carbon emission from our energy consumption for this yearwas also reduced significantly to 5,364 (tCO2) equivalent to 29.3% reduction from2013 baseline of 7,588 (tCO2). The set national target was achieved with circa £35kcost savings on our energy costs. To further reduce our energy consumption andcarbon footprint, the NHSI funded Light-Emitting Diode (LED) lighting project workscommenced as planned on the 29 January 2020 with a revised completion date of 30April 2020 due to the COVID-19 pandemic.Waste: The trust now has an approved waste management plan in place to enablecompliance with HTM 07-01 recommendations and to ensure 100% of our waste isreused, recycled or reprocessed. This is in line with the trust’s Sustainable Strategy toreduce waste and negative environmental impacts. The trust’s waste carbon emissionfor 2019 is 16.4 tonnes.Waste recycling efforts and process changes put in place have yielded positive resultsthis year; we have sent ‘zero waste’ to landfill and recycled over 22% of our waste.This was achieved through segregating our waste into the below waste streams andsending the non-recycled waste for Energy from waste (EfW) incineration: Cardboard: baling of cardboard boxes Metal: using a separate receptacle for all metal waste Food waste: removing food waste separately for Anaerobic Digestion (AD)Water: The trust’s water portfolio use is approximately 150,000 m3 per annum (water,sewerage and trade effluent) equating to 60 tonnes of CO2 per annum. Waterconsumption has reduced by 5.63% since baseline.The ongoing repairs and maintenance to plumbing and heating services across thesite will help to further reduce water usage and the related carbon emissions.Purchasing: The aim in the SDMP is to work collaboratively with our supply chainpartners to fully integrate sustainable and ethical procurement practices into oursupplies and procurement strategy, policy and processes for all goods and services.We have recently formalised our energy contract and the source of our electricity asspecified the source of our electricity as ‘renewable’ (not fossil) sources; we willcontinue to specify environmentally friendly practises to our supply chain partners.482020-2021 look aheadIn 2020-21 the trust will continue to explore all opportunities to deliver high standardhealthcare services to our local communities with minimal negative impact to theenvironment. We will progress the successes made in our energy, waste, water andpurchasing activities and ensure completion of the LED lighting project to actualise theprojected carbon and cost savings from the project.In addition, the trust will look into implementing its approved ‘Green Travel Plan’,Electric Vehicle (EV) infrastructure and carpooling projects to reduce the Trusts’ travelcarbon footprint.The trust will further explore opportunities to replace single use plastic with suitablealternatives in compliance to the NHS plastic pledge.There will be a concerted effort to ensure sustainability actions and trajectories aremade visible to the staff through the intranet and other communication platforms.The Trust will review its SDMP activities and timelines to align them to the new ‘GreenPlan’ (formerly known as Sustainable Development Management Plan – SDMP)guideline introduced by the SDU, NHS England and NHSI in January 2020. The‘Green Plan’ template is published to further guide NHS Trusts’ endeavours in thefulfilment of NHS environmental targets and UK government’s regulations; as well asensuring services remain fit for purpose today and for the future.Lance McCarthyChief executive officer49The Accountability Report 2019-20Corporate governance reportOur boardThe trust board meets bi-monthly in public. The times and venues are advertisedon the hospital’s website ( and board papers are publishedahead of each meeting.The role of the trust board is to determine strategy and policy for the trust, tomonitor in-year performance against its plans and ensure the trust is well governed.The trust board formally operates in accordance with its governance manualcomprising the standing orders, standing financial instructions and scheme ofdelegation.Members of the trust board 2019-20 NamePositionVotingFromToExecutive directors:Lance McCarthyChief executive officerY03.05.17CurrentTrevor SmithChief financial officerY15.07.13CurrentDr Andy MorrisChief Medical OfficerY01.03.1527.03.20StephanieLawtonChief operating officerY02.03.16CurrentJames McLeishDirector of quality improvementN01.04.16CurrentSharon McNallyDirector of nursing and midwiferyY01.10.18CurrentOgechi EmeadiDirector of people, OD andcommunicationsN01.08.18CurrentMichael MeredithDirector of strategyN04.06.18CurrentMarcelle MichailActing chief medical officerY30.03.20CurrentNon-Executive Directors:Steve ClarkeChairmanY03.12.18CurrentAndrew HoldenNon-executive director(Chair of PAF until 01.01.20)Y01.01.1531.03.20George WoodSenior independent director(Chair of Audit Committee)Y01.07.1930.06.21Pam CourtNon-executive director(Chair of CFC until 01.01.20 andChair of PAF from 01.01.20)Y28.09.1527.09.21John HoganNon-executive director(Chair of QSC until 01.01.20 andY01.08.1731.07.20 50 Chair of Strategy Committee from01.01.20)Helen GlenisterNon-executive director(Chair of CFC until 01.01.20 andChair of Quality and SafetyCommittee from 01.01.20)Y01.04.1831.03.20Helen HoweAssociate non-executive director(Chair of Workforce Committeefrom 01.04.20)N11.06.1810.06.20John KeddieAssociate non-executive director(Chair of Charitable FundsCommittee from 01.01.20)N01.07.1930.06.21 51Attendance at board meetingsNumber of board members present at board meetings in 2019-20: 27.04.1902.05.1923.05.1906.06.1904.07.1901.08.1905.09.1903.10.1907.11.1905.12.1909.01.2006.02.2005.03.20Public&PrivatePrivateBoardExtraOrdinaryTrustBoardPublic&PrivatePrivateBoardPublic&PrivatePrivateBoardPublic&PrivatePrivateBoardPublic&PrivateNomeetingheldPublic&PrivatePrivateBoardPublic12/1410/1411/1414/1415/1613/1614/1615/1616/1615/1615/1614/16Private12/1414/1414/1615/1615/1615/16 52CommitteesThe trust board has established the following committees to discharge itsresponsibilities on Board assurance:Audit CommitteeThe Audit Committee provides the board of directors with an independent andobjective review of financial and corporate governance, assurance processes andrisk management across the whole of the trust’s activities (clinical and non-clinical)both generally and in support of the annual governance statement. In addition itoversees the work programmes for external and internal audit and receivesassurance of their independence, monitoring the trust’s arrangements for corporategovernance.Remuneration and nominations committeeThe remuneration and nominations committee determines the remuneration and termsof service of the trust’s directors and senior managers; it also considers the overallskill mix and balance of the board of directors.Performance and Finance CommitteeThe purpose of the Performance and Finance Committee is: Consider, challenge and recommend the trust’s operating plan to the board Scrutinise operational and financial performance and monitor achievement ofnational and local targets and recommend any re-basing or re-forecasting ofoperational and financial performance trajectories to the board Assure the board of directors that the trust has robust processes in place toprioritise its finance and resources and make decisions about their deploymentto ensure that they best meet patients’ needs, deliver best value for money andare efficient, economical, effective and affordable Recommend the trust’s cost improvement programme to the board and monitorits delivery including investigating reasons for variance from plan andrecommend any re-basing or re-forecasting of the plan to the board Monitor the management of the trust’s asset base and the implementation ofthe trust’s enabling strategies in support of the trust’s clinical strategy andclinical priorities Review and monitor the management of finance, performance and contractingrisks53Quality and Safety CommitteeThe Quality and Safety Committee (QSC) functions as the trust’s umbrella clinicalgovernance committee. It enables the trust board to obtain assurance that highstandards of care are provided by the trust and that adequate and appropriategovernance structures, processes and controls are in place throughout the trust toenable it to deliver a quality service according to each of the dimensions of quality setout in High Quality Care for All and enshrined through the Health and Social Care Act2012.Workforce CommitteeThe purpose of the Workforce Committee is: Maintain oversight of the development and design of the workforce and ensureit is aligned with the strategic context within which the trust is required to operate Assure the trust board on all aspects of workforce and organisationaldevelopment and provide leadership and oversight for the trust on workforceissues that support delivery of the trust’s annual objectives Assure the trust board that the trust has adequate staff with the necessary skillsand competencies to meet both the current and future needs of the trust andensure delivery of efficient services to patients and service users Assure the trust board that legal and regulatory requirements relating toworkforce are metStrategy CommitteeThe Strategy Committee is responsible for overseeing the development of the strategyto deliver the trust board’s vision of PAH being an excellent provider of integratedacute care services. The purpose of the Committee is to establish a sustainablevehicle and model for acute care services in West Essex and East Hertfordshire andmaintain oversight of its delivery and the trust’s contribution to the system widestrategy as well as the trusts strategic ambition of delivery of a new hospital.Charitable Funds CommitteeThe Charitable Funds Committee was established by the trust board to make andmonitor arrangements for the control and management of the trust’s charitable funds.54Statement of board members’ interests 2019-20 NameTitleInterests/MembershipsdeclaredSteve ClarkeChairman Trustee and honorarytreasurer of Dementia UK Independent director,University of SuffolkAndrew HoldenNon-executive director Board director, liaison financialservicesPam CourtNon-executive director Chief executive officer of SaintFrancis HospiceHelen GlenisterNon-executive director Chair of Accelerate CICLimited Vice Chair of Isabel HospiceHelen HoweAssociate nonexecutive director Trustee of Addenbrooke’sCharitable Trust Honorary professorpharmacy/chairman ofpharmacy pre-registrationtraining advisory group (HEEfunded) for East of England Member UEA undergraduatePharmacy advisory group Associate/accreditation panelmember for undergraduatepharmacy degrees andindependent prescribingcoursesJohn HoganNon-executive director Self-employed at privatemedical practice. Consultant cardiologist atBarts Health NHS Trust Director Whitfield AcademyTrustGeorge WoodNon-executive director Chairman of the King George’sHospital CharityJohn KeddieAssociate nonexecutive director Governor, Anglia RuskinUniversity Trustee, Anglia Trust Chair, West Essex EnterpriseZone Board Chair, Discover Harlow Board 55  Deputy Chair, LondonStansted CambridgeConsortiumLance McCarthyChief executive officer Trustee, NHS ProvidersTrevor SmithChief financial officer No Interests declaredOgechi EmeadiDirector of people,organisationaldevelopment andcommunications Sister employed by Newhamand Waltham Forest CCG Brother-in-law employed byHighgate SurgeryMichael MeredithDirector of strategy andestates No interests declaredSharon McNallyDirector of nursing andmidwifery No interests declaredStephanie LawtonChief operating officer No interests declaredJames McLeishDirector of qualityimprovement Spouse is a paramedic for Eastof England Ambulance Service Daughter is student nurse,Anglia Ruskin UniversityAndy MorrisChief medical officer Member of East of EnglandNHS Clinical SenateMarcelle MichailActing chief medicalofficer No interests declared Each director knows of no information which would be relevant to the auditors for thepurposes of their audit report, and of which the auditors are not aware, and; has taken“all the steps that he or she ought to have taken” to make himself/herself aware of anysuch information and to establish that the auditors are aware of it.Statement of director’s responsibilitiesThe full statement of director’s responsibilities is included in the financial statements.The statement of accounting officer’s responsibilitiesThe chief executive of NHS Improvement, in exercise of powers conferred on the NHStrust development authority, has designated that the chief executive should be the56accountable officer of the trust. The relevant responsibilities of accountable officers areset out in the NHS trust accountable officer memorandum. These include ensuring that: There are effective management systems in place to safeguard public fundsand 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 purposesintended 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 ofState to give a true and fair view of the state of affairs as at the end of thefinancial year and the income and expenditure, recognised gains and lossesand cash flows for the yearTo the best of my knowledge and belief, I have properly discharged the responsibilitiesset out in my letter of appointment as an accountable officer.SignedLance McCarthyChief executive officerDate: 31 May 202057The Princess Alexandra Hospital Annual Governance Statement 2019-20My Annual Governance Statement (AGS) has been written describing the governancearrangements in place at the trust during 2019-20. During the year, we continued toreview and strengthen our governance arrangements and took into account thefindings of our last CQC inspection together with continuing feedback and support fromNHS England and NHS Improvement.At the same time, we have taken a full and active role within the Hertfordshire andWest Essex Sustainability and Transformation Programme (STP) and the West EssexIntegrated Care Partnership system (ICP). Delivering high quality, timely and costeffective care to our local community are core components of our strategic objectives,and the STP and ICP both give clear clinically led focus on improving standards,financial stability and adapting services to a growing and changing community acrossWest Essex and Hertfordshire.The trust has received from the external auditors a qualified opinion on its financialstatements in that the accounts present a true and fair view on the trust’s financialposition for the 2019-20 financial year.The Trusts revenue outturn was £0.1m surplus after accounting for Financial RecoveryFunds (FRF) and Provider Sustainability Fund (PSF). This compares to a £16.5mdeficit in 2018-19.Scope of responsibilityAs accountable officer, I have responsibility for maintaining a sound system of internalcontrol that supports the achievement of the NHS trust’s policies, aims and objectives,whilst safeguarding the public funds and departmental assets for which I am personallyresponsible, in accordance with the responsibilities assigned to me. I am alsoresponsible for ensuring that the NHS trust is administered prudently and economicallyand that resources are applied efficiently and effectively. I also acknowledge myresponsibilities as set out in the NHS trust accountable officer memorandum.The purpose of the system of internal controlThe system of internal control is designed to manage risk to a reasonable level ratherthan to eliminate all risk of failure to achieve policies, aims and objectives; it cantherefore only provide reasonable and not absolute assurance of effectiveness.The system of internal control is based on an ongoing process designed to identifyand prioritise the risks to the achievement of the policies, aims and objectives of ThePrincess Alexandra Hospital NHS Trust, to evaluate the likelihood of those risks beingrealised and the impact should they be realised, and to manage them efficiently,effectively and economically. The system of internal control has been in place in The58Princess Alexandra Hospital NHS Trust for the year ended 31 March 2020 and up tothe date of approval of the annual report and accounts.The governance framework of the organisationThe governance framework describes the structure and systems that are in place forthe direction and control of the Trust to fulfil the functions as set out in the StatutoryInstrument 1994 No. 3179. These mechanisms include the board, its committees,management arrangements, governance manual and risk management strategy.The trust board is responsible for making sure we provide safe, effective andcompassionate care to our patients at the same time as supporting their families,relatives and carers. It does this by making the key decisions that affect our hospitaland setting the values, aims and strategic direction for the trust.It also reviews performance against our objectives, as well as against nationalstandards and targets. It has overall responsibility for the effective control of the Trustand is accountable, through its chairman, to NHS Improvement and the Secretary ofState for Health and Social Care. The trust board consists of:• a chairman• five voting non-executive directors and two non-voting associatenon-executive directors• five voting executive directors (chief executive officer, chief financial officer,chief medical officer, chief operating officer and director of nursing,Midwifery and AHPs) and three further executive directors without votingrights; the director of people, OD and communications, the director ofstrategy and the director of quality improvement.In July 2019, the trust appointed one non-executive director and one associatenon-executive director.There was one change to the executive team in 2019/20; the chief medical officer wasseconded to NHSE/I to support COVID-19 planning and the deputy chief medicalofficer (strategy) was appointed as the acting chief medical officer with effect from 30March 2020.Attendance at board and committee meetings throughout 2019/20 has been monitoredand is recorded in the Annual Report.The trust board has established the following committees to discharge itsresponsibilities in relation to Board assurance:• Audit Committee• Quality and Safety Committee• Performance and Finance Committee• Workforce Committee59• Strategy Committee• Remuneration and Nominations Committee• Charitable Funds CommitteeAn annual effectiveness review of each committee is undertaken to ensure theycontinue to meet their terms of reference. The outcomes of the reviews are reportedto the trust board.Following each meeting of the committees the committee chairs present written andverbal reports to the next board meeting. These reports provide a summary of thematters discussed at the meetings, areas of risk or concern as well as areas of goodnews or positive performance. Progress against the committees’ work plans is alsoincluded in each committee report to board.Capacity to handle riskAs chief executive officer, I am accountable for the overall risk management activitywithin the trust. Committed leadership in the area of risk management is essential tomaintaining sound systems of internal control required to manage risks associatedwith the achievement of the corporate goals of the trust. The trust’s risk managementstrategy details my overall accountability to the trust board for risk management andmakes it clear that managing risk is a key responsibility for the trust and all staffemployed by it. The trust board receives regular reports that detail quality, financialand operational performance risk, and, where required, the action being taken toreduce identified high-level risks.I am responsible for ensuring that the trust is in a position to provide overall assurancethat the organisation has in place the necessary controls to manage its risk exposure.In discharging these responsibilities I was assisted by the following directors during2019/20: The chief financial officer has delegated responsibility for co-ordinating themanagement of financial and business related risk and assisted me in ensuringthat the trust’s resources were managed efficiently, economically and effectively.The chief financial officer also has delegated responsibility for ensuring thatinformation governance arrangements at the trust are suitable and is the trust’sSenior Information Risk Owner (SIRO). The director of nursing, midwifery and AHPs has delegated authority andresponsibility for the professional leadership of the nursing and allied healthprofessions. The role is also the executive lead for infection prevention and controlwith the director of infection prevention and control reporting to them. The role hasdelegated responsibility for reporting to the trust board on the achievement ofquality and patient experience standards and complaints and claims managementand is the trust’s safeguarding lead.60 The chief medical officer has overall accountability for operational and clinical riskand incident management. This includes the establishment and monitoring ofassurance mechanisms and provision of associated risk reports to the trust board.The chief medical officer also has delegated responsibility forco-ordinating and monitoring the trust’s revalidation programme for medical staff inline with the ‘maintaining high professional standards’ system for the NHS. Thechief medical officer is also the caldicott guardian for the trust. The chief operating officer (COO) has delegated authority for managing the Trust’sperformance delivery both against national operating standards and keyperformance indicators together with local contractual standards set by the ClinicalCommissioning Groups (CCGs). The director of people, organisational development and communications hasdelegated responsibility for overseeing all HR functions across the trust includingrecruitment, staff training and managing absence as well as developing theworkforce and people strategy. The director of quality Improvement has delegated responsibility for managing thetrust’s transformation and modernisation programme as well as the quality firstteam and implementing the quality improvement strategy. The director of strategy has delegated responsibility for managing the developmentof the new hospital, the estates strategy and the capital programme for the trust.As chief executive I also hold responsibility for managing the strategic developmentand leadership of the trust’s quality improvement agenda; ensuring the implementationof the quality management improvement agenda; and ensuring the safety and qualityof the care provided to our patients.All our people receive risk management and related training at induction and furtherupdates as required. The training covers topics such as risk assessments, health andsafety at work, moving and handling, fire safety, incident reporting, informationgovernance as well as infection prevention and control.In addition to providing staff with skills and knowledge to carry out their work safely,staff are actively encouraged to report incidents and escalate any identified risks in atimely manner. In addition, thematic learning from incidents is shared throughnewsletters, internal safety alerts, simulation sessions and/or case scenarios throughthe trust’s sharing the Learning sessions. We also support a programme of counterfraud training and awareness provided by the local counter fraud specialist team.The risk and control frameworkThe role of the risk and control framework is to identify, evaluate and prioritise clinicaland non-clinical risks and gain assurance that these are properly controlled to ensuresafe and effective care.61Within the Trust, there are systems and processes in place for identifying, managingand monitoring risks. These include: A risk management strategy (for the effective management of clinical and nonclinical risk) A board committee structure with clear reporting lines to the trust board A risk management group reporting to the trust board via senior management teammeetings A significant risk register and board assurance framework, both of which arereviewed by the risk management group and trust board Monitoring systems for incidents and complaintsRisk is managed at different levels of the organisation. Each healthcare group andcorporate department has a risk register that is regularly reviewed, ensuring that riskscores are accurate and that risks are appropriately mitigated, managed andescalated. Each risk on the register has a risk owner accountable for that risk.The risk management group meets on a monthly basis to review risks across allhealthcare groups as well as corporate departments. The group’s objectives are: To champion and promote the identification, proactive management of risks andsound risk management practices across the trust, facilitating and embedding astrong risk management process and culture To ensure the identification of the burden of risks across the trust by providing acritical review of risks on all risk registers To offer constructive challenge, serving as risk moderators in the trusts riskescalation process and ensuring that significant risks are appropriately escalated. To support the delivery of the trust’s objectives by obtaining assurance on theeffectiveness of controls and actions identified to minimise risks To improve the standard of decision making on risk managementThe trust has a Board Assurance Framework (BAF) which provides a mechanism forthe board to monitor the risks to delivery of the trust’s strategic objectives as well asthe effectiveness of the controls and assurance processes. The risks reflect the trust’sin-year and future risks.Each risk on the BAF has an executive lead and a designated responsible committee.The risks are reviewed monthly with executive leads and are reviewed by the relevantCommittees and the trust board bi-monthly. The risk management group reviews theBAF by exception.The highest scoring BAF risks (scoring 20) throughout 2019/20 were the risks relatingto our estate/infrastructure, delivery of the ED standard and our financial position.Further detail on these risks and their management is outlined in the annual report.62Following the annual review of the BAF by the trust’s Internal Auditors an overallassessment of substantial assurance was provided.Quality governance arrangementsThere is clear accountability at board level for patient safety and clinical qualityoutcomes along with structured reporting of performance against these objectives.Executive oversight of quality improvement is through the director of nursing,midwifery and allied healthcare professionals who, with the chief medical officer,ensures an organisation-wide approach to the integrated delivery of the qualitygovernance agenda. For any transformational change required, they are supported bythe trust’s quality first team.Each of the trust’s four healthcare groups has a patient safety and quality group wherethemes and trends from reviews of incidents and complaints and learning are reported.Performance is reviewed at monthly performance review meetings and at the Qualityand Safety Committee each healthcare group presents a quarterly overview of itsperformance on a rolling programme, in line with the CQC key lines of enquiry.Throughout 2019-20, the Quality and Safety Committee continued to receive updateson progress against the quality improvement plan developed to address concernsraised by CQC during their inspection.Regular sharing the learning reports providing an overview of themes, trends andlearning arising from incidents, serious incidents and on-going quality improvementinitiatives for topics such as falls, dementia and pressure ulcers are also received.A review of the quality governance framework was undertaken in quarter 4 and a newstructure for the meeting groups reporting to the Quality and Safety Committee wasagreed and will be implemented during 2020-21.Mortality is monitored by the Quality and Safety Committee as well as the trust Board.The statistical markers for mortality have been higher than expected for 2019-20.The rolling Hospital Standardised Mortality Ratio (HSMR) for the last 12 months hasbeen “higher than expected”. However, there has been an improvement throughoutthe second half of the year for the in-month HSMR. To address this problem a trustwide Mortality improvement programme was established which utilised qualityimprovement methodology to deliver improvements in patient outcomes across anumber of identified work streams. Medical examiners have been appointed andstructured judgement reviews are undertaken. Quality and Safety Committee receivesmonthly reports on mortality and learning from deaths whilst the trust board receivesan update at every public board meeting (held bi-monthly).63The Quality and Safety Committee and trust board receive monthly reports on nurseand midwifery staffing levels in line with guidance received from NHS England and theCare Quality Commission on the delivery of the ‘hard truths’ commitments associatedwith publishing staffing data regarding nursing, midwifery and care staff levels. Thevacancy rate for band five nurses has been a long standing challenge for the trust witha vacancy rate as high as 41% during 2018/19 however following an internationalnurse recruitment programme the overall vacancy rate reduced to 12.7% in February2020 and to 8% in March 2020 with the band 5 vacancy rate at 4.3%. The objective ofachieving a vacancy rate for qualified nurses of less than 10% by the end of 2019/20has therefore been achieved.CEO assurance panels have been convened to provide enhanced oversight andassurance where high risk areas have been identified in relation to quality.There have been no ‘never events’ in 2019-20.Well-Led reviewsThe board conducted a self-assessment against the CQC’s well-led framework at aBoard Development session in January 2020. An overall rating of ‘Good’ wasassigned. The CQC rated the trust as ‘good’ for well-led.Compliance with NHS provider licenceThe trust completed self-assessments against the following NHS provider licenceconditions: The provider has taken all precautions necessary to comply with the licence,NHS acts and NHS constitution (Condition G6 (3)). The provider has complied with required governance arrangements (conditionFT4 (8)).In relation to general condition 4 (fit and proper persons) of the provider licence thetrust has a robust process for monitoring the trust’s compliance with the regulations.Annual compliance checks, by way of annual self-declarations are undertaken andfollowing the review undertaken in January 2020 full compliance was achieved andreported to the Workforce Committee in March 2020.Developing workforce safeguardsThe trust ensures that short, medium and long-term workforce strategies and staffingsystems are in place which provide assurance to the trust board that staffingprocesses are safe, sustainable and effective. Compliance with the ‘developingworkforce safeguards’ recommendations is demonstrated through the followingsystems:64 The integrated performance report (IPR) is received at each public trust boardmeeting and details a range of staffing metrics including vacancy rates,sickness absence, turnover, appraisal rates, friends and family test results,statutory and mandatory training compliance A workforce report is presented to the Workforce Committee bi-monthly wherethe metrics listed above are scrutinised The safer nurse staffing report is presented to the Quality and SafetyCommittee monthly and bi-monthly to the Workforce Committee and trustboard; this details the actions taken to provide safe, sustainable and productivestaffing levels for nursing, midwifery and care staff as well as providing anupdate on nursing vacancy rates, and in 2019-20, the plans to further reducethe vacancy rate to achieve the target vacancy rate. Trust board reporting is underpinned by monthly performance review reportswhich detail a range of performance indicators including vacancy rates,sickness absence, turnover, maternity leave, training and average absence Freedom to speak up guardians and guardian of safe working reports arepresented to the trust board and Workforce Committee Electronic job planning processes are in place for medical staff Bi-annual nursing and midwifery establishment reviews are undertaken andreported to the Workforce Committee, Quality and Safety Committee and thetrust board. The reviews utilise the Safer Nursing Care Tool (SNCT) for adultward areas, the Baseline Emergency Staffing Tool (BEST) for the Emergencydepartment and Birth rate plus for the maternity department The trust’s workforce plan underpins the trust’s annual operating plan which isreviewed by the Performance and Finance Committee and approved by thetrust board The trust remains focussed on increasing and retaining its core nursingworkforce, utilising new roles such as nursing associates, paramedics andphysician associates whilst continuing to further develop and embed newworkforce models. Working with our STP partners we will continue to exploreopportunities for joint roles as we identify workforce models that supportintegrated working.Managing conflicts of interestThe trust has published an up-to-date register of interests, including gifts andhospitality for decision-making staff within the past twelve months, as required by themanaging conflicts of interest in the NHS guidance. The trust’s Audit Committeemonitors and approves the registers of interest.65Care Quality CommissionThe trust is fully compliant with the registration requirements of the Care QualityCommission (CQC).During March 2019, the CQC inspected six core services provided by the trust namelyurgent and emergency care, medical care (including older people’s services) surgery,maternity, children and young people’s services and end of life care. The well-ledinspection took place in April 2019. The overall rating assigned to the trust remained‘requires improvement’.The use of resources assessment took place in March 2019 and the trust received arating of ‘good’ for this assessment.Following the CQC Winter Assurance visit on 3 February 2020, the CQC issued aSection 29a warning notice in relation to the following issues: The trust has still not taken enough action to ensure that records of care andtreatment are clear, up to date and easily accessible GI bleed out of hour’s rota – the trust has not taken actions to mitigate the risksassociated with the lack of endoscopy services out of hoursIn response to the warning notice the trust developed an action plan, delivery of whichis being monitored by the Quality and Safety Committee on a monthly basis.Key actions in relation to documentation include establishing an overarchingdocumentation transformation task and finish group, reporting to Quality ImprovementBoard and the Emergency Department has established a documentation improvementworking group. In relation to the GI bleed out of hour’s rota, the trust continues to worktowards gaining support for an agreed an out-of-hours service level agreementthrough: immediate agreement in principle regarding out-of-hours emergency transfer toa tertiary centre discussion to formalise this through an SLA, with meetings scheduled toprogressNHS pension schemeAs an employer with staff entitled to membership of the NHS Pension Scheme,control measures are in place to ensure all employer obligations contained withinthe scheme regulations are complied with. This includes ensuring that deductionsfrom salary, employer’s contributions and payments into the scheme are inaccordance with the scheme rules, and that member pension scheme records areaccurately updated in accordance with the timescales detailed in the regulations.66Equality, diversity and human rightsControl measures are in place to ensure that all the organisation’s obligations underequality, diversity and human rights legislation are complied with.Carbon reductionThe trust has undertaken risk assessments and has a sustainable developmentmanagement plan in place which takes account of UK Climate Projections 2018(UKCP18). The trust ensures that its obligations under the Climate Change Act andthe adaptation reporting requirements are complied with.Review of economy, efficiency and effectiveness of the use of resourcesThe trust has a governance manual comprising standing orders and standing financialinstructions, which provide the framework for ensuring appropriate authorisation ofexpenditure commitments in the trust.The board’s processes for managing its resources include approval of annual budgetsfor both revenue and capital, reviewing financial performance against these budgets,and assessing the results of the trust’s cost improvement programme on a monthlybasis.The trust has a process for the development of business cases for both capital andrevenue expenditure and, depending on the level of investment, these are reviewedby the senior management team, performance and finance committee and/or trustboard. The performance and finance committee reviews productivity, operational andfinancial performance and use of resources both at trust and healthcare group level.The trust was rated ‘good’ following the use of resources assessment in March 2019.More details of the trust’s performance and some specific trust projects aimed atincreasing efficiency are included in the annual report. The trust’s external auditorsare required to consider whether the trust has made proper arrangements for securingeconomy, efficiency and effectiveness in its use of resources. They report the resultsof their work to the Audit Committee.Information governance/data security risksThe trust has reported two Information Governance (IG) data security breaches to theInformation Commissioners Office (ICO) during 2019/20 and both have been closed.The first breach occurred due to human error; eleven patient letters were sent out witheach of the eleven patients receiving all eleven letters. The ICO has investigated andclosed this incident with no further action taken.67The second breach related to accessing patient records in breach of trust policy.Elements of this incident are still being investigated but the ICO has closed the IGincident with no further action taken.Elective waiting time dataPatients who have been referred to the trust on a cancer waiting time or Referral toTreatment (RTT) pathway are managed daily by the clinical and operational teams, inline with the hospital’s access policy.These pathways are reviewed at weekly Patient Tracker List (PTL) meetings, chairedby the head of performance and planning where pathway trigger points are reviewedand remedial actions taken, if required. The PTL meetings report to the weekly accessboard meetings which are chaired by the head of performance and planning or thechief operating officer. The access board also reviews RTT data quality reports anddetermines required actions to ensure that processes maintain accurate datarecording.In addition, a number of data quality reports are produced to enable the servicemanagement teams to monitor patients on non-RTT pathways. These are reviewedthrough the data quality steering group. Both the access board and data qualitysteering group report to the senior management team, performance and financecommittee and the trust board.Review of effectivenessAs accountable officer, I have responsibility for reviewing the effectiveness of thesystem of internal control. My review of the effectiveness of the system of internalcontrol is informed by the work of the internal auditors, clinical audit, the executiveteam, managers and clinical leads within the trust who have responsibility for thedevelopment and maintenance of the internal control framework. I have drawn on theinformation provided in this annual report and other performance information availableto me. My review is also informed by comments made by the external auditors in theirmanagement letter and other reports. I have been advised on the implications of theresult of my review of the effectiveness of the system of internal control by the trustboard and audit committee and a plan to address weaknesses and ensure continuousimprovement of the system is in place.The trust has an annual clinical audit programme in place including mandated auditsaddressing national and local issues, targets and performance.The trust’s internal auditors provide an opinion on the overall arrangements for gainingassurance as part of the risk-based annual internal audit plan. During the year, the68following internal audit reports received limited assurance ratings: Patient transport Estates compliance (planned preventative maintenance)The trust’s internal auditors undertook a detailed follow up exercise of therecommendations in relation to the limited assurance reports and concluded that allhigh priority recommendations had either been implemented by the trust or were notyet due for implementation.Action plans are in place to address internal audit’s recommendations for all auditsundertaken. The internal auditor’s provide a progress report to the executivemanagement team, senior management team and audit committee. The executiveteam as well as the audit committee continues to focus on the implementation ofrecommendations to ensure the audit committee is receiving adequate assurance thatcontrol weaknesses are being addressed.Head of internal audit (HoIA) opinion on the effectiveness of the system ofinternal control for the year ended 31 March 2020:The purpose of my annual HoIA opinion is to contribute to the assurances available tothe accounting officer and the board which underpin the board’s own assessment ofthe effectiveness of the organisation’s system of internal control. This opinion will inturn assist the board in the completion of its annual governance statement.My opinion is set out as follows:1. Overall opinion2. Basis for the opinion3. Commentary1. My overall opinion is that reasonable assurance can be given that there is agenerally sound system of internal control, designed to meet the organisation’sobjectives, and that controls are generally being applied consistently. However,some weakness in the design and/or inconsistent application of controls, putthe achievement of particular objectives at risk2. The basis for forming my opinion is as follows: i.An assessment of the design and operation of the underpinning assuranceframework and supporting processes; andAn assessment of the range of individual opinions arising from risk-basedii. audit assignments contained within internal audit risk-based plans that havebeen reported throughout the year. This assessment has taken account ofthe relative materiality of these areas and management’s progress inrespect of addressing control weaknesses.69Additional areas of work that may support the opinion will be determined locally butare not required for Department of Health purposes e.g. any reliance that is beingplaced upon third party assurances.Significant issuesThe following is a summary of significant issues which were and will continue to be thefocus of the Trust Board’s attention and direct the Trust’s management efforts during2020 (and beyond); these issues are also reflected on the Board AssuranceFramework:Operational performance – A&E standardThe trust has struggled to deliver against this standard throughout the year. Year todate the trust achieved 79.7%. We have also continued to see an increase inattendances to the Emergency Department, with an increase of nearly 6% inattendances compared to the same period in 18/19, and an increase of over 10%compared to 17/18.The urgent care improvement board meets on a weekly basis to review actions beingtaken to improve performance against the standard. Recovery plans remain in placeto address performance issues both internally and across the health and social caresystem. There is also a system wide local delivery board supporting the managementof urgent care patients across all parts of the health and care sectors.Financial SustainabilityThe Trusts revenue outturn was £0.1m surplus after accounting for Financial RecoveryFunds (FRF) and Provider Sustainability Fund (PSF). This compares to a £16.5mdeficit in 2018-19. Key elements of the financial results included: Delivery of the cost improvement target of £10m. Temporary staffing costs of £35.1m (agency £10.9m, bank £24.2m). Move towards block contract arrangements with an allocative contract formallyestablished with West Essex CCG. Additional funding flows covering winterpressures, Covid-19 costs and additional activities. Eligibility to earn additional Financial Recovery Fund and ProviderSustainability funding of £28m from delivery of financial performance targets.The Trust invested £17.3m in its estates, facilities, equipment and technologyimprovements a 50% increase from the £11.9m investment in the prior year.70The Trust is looking to build upon the significant progress made in the last financialyear. This includes an unqualified Value for Money opinion for the 2018/19 Accountsand securing ‘Good’ for its Use of Resources assessment.The Trust has set an Interim Budget for 2020/21 in light of the adapted financial regimeassociated with Covid-19. The Trust will be tracking and managing its resourcesclosely to ensure full cost recording and recovery for its pandemic response, both interms of operational spend and capital investment. Its focus will remain on cost controland temporary staffing reductions together with quality and cost improvement. A verysignificant and successful international nurse recruitment programme in 2019/20 hasmuch improved nurse vacancy rates at the Trust, nursing levels across the wardswhilst also providing the potential to reduce its reliance on both bank and agency staffgoing forward.The Trust also continues to work actively with its health and care partners within theLocal Integrated Care Partnership and broader Integrated Care System. Key areas ofactivity currently include the response to Covid-19 and the development of recoveryplans, this is in addition to the integration of its services for patients and users and,where appropriate, the development and consolidation of support services.The Trust is part of the National Health Improvement Programme (HIP) Phase 1 andis urgently progressing its Outline Business Case for a New Hospital Development for2025. It is also seeking to progress the consideration of its major Clinical InformationSystem, its Electronic Patient Record.Having delivered its first operating surplus since 2012/13 and having increased itscapital investment significant across recent years, the Trust clearly has significantfurther opportunities and potential to take these successes forward and significantlybuild upon.EstateThe quality and safety of the estate remain significant challenges for us at a time offinancial constraint. It has been well communicated that the current hospital estate hasreached its limit in terms of capacity and development.A significant portion of the hospital site is 50 years old and falls short of modern daylegislation with areas of key infrastructure in need of replacement. Our ability to keepup with the changing clinical landscape, technological advances and delivery of newmodels of care is limited by our current estate.These key risks and concerns drive our longer term estate strategy which includesbuilding a new hospital to address these challenges and enable the trust to besuccessful in delivering integrated care as part of an integrated care partnership. On29 September 2019, the Prime Minister announced that The Princess AlexandraHospital NHS Trust would receive the capital funding required to build a new hospital,71with the expectation that this is completed by 2025. However we still need to deliverhigh quality, efficient services from the current estate for at least the next 5 to 10 years.ConclusionAs accountable officer, I receive information and assurance from a wide range ofsources about the trust’s internal control systems and structures in place to ensure theeffective operation of the trust. These facilitate the identification of strengths and areasin need of attention enabling appropriate action plans to be established and acted on.Although some significant issues have been identified, my review confirms that thetrust has a generally sound system of internal control that supports the achievementof its policies, aims and objectives and statutory duties. I and the trust board remaincommitted to achieving continuous improvement and enhancement of the systems ofinternal control.Lance McCarthyChief executive officer(31 May 2020)72Remuneration and staff reportBackgroundThis report includes details regarding “senior managers” remuneration in accordancewith paragraphs 3.33 to 3.57 of the DHSC (Department of Health and Social Care)Group Accounting Manual 2018-19. The Remuneration Report set out below issubject to audit by our external auditors.The trust has established a Remuneration and Nominations Committee to advise andassist the Board in meeting its responsibilities to ensure appropriate remuneration,allowances and terms of service for the Chief executive officer, executive directorsand very senior managers. The Remuneration Committee is chaired by the trustchairman and meets at least annually. Membership of the committee consists of trustchairman and all non-executive directors with the director of people and others inattendance. The chief executive officer and directors remuneration is determined onthe basis of reports to the Remuneration and Nominations Committee taking accountof any independent evaluation of the post, national guidance on pay rates and marketrates. Pay rates for the chair and non-Executive directors of the trust are determinedin accordance with national guidance.The trust does not operate any system of performance related pay and no proportionof remuneration is dependent on performance conditions. The performance of nonexecutive directors is appraised by the chair. The performance of the chief executiveofficer is appraised by the chair. The performance of trust executive directors isappraised by the chief executive officer. Annual pay increases are implemented inaccordance with national pay awards for all other NHS staff.Staff reportPay multiplesReporting bodies are required to disclose the relationship between the remunerationof the highest-paid director in their organisation and the median remuneration of theorganisation’s workforce. The banded remuneration of the highest paid director in PAHT in the financialyear 2019-20 was £235k-£240k (2018-19, £235k-£240k). This was 10.5 times(2018-19, 10.9 times) the median remuneration of the workforce, which was£23k (2018-19, £22k) In 2019-20, no employees received remuneration in excess of the highest paiddirector (this was the same in 2018-19). Remuneration ranged from the bands£0k-£5k to £235k-£240k (2018-19 £0k-£5k to £235k-£240k) Total remuneration includes salary, benefits-in-kind, golden hellos andcompensation for loss of office. It does not include employer pensioncontributions, termination payments and the cash equivalent transfer value ofpensions73Consultancy and professional services spend2019-20 total expenditure on consultancy and professional services was £3,532k(2018-19 £1,912k).Employee benefits and staff numbers (subject to audit)Employee benefits Gross expenditurePermanentlyemployedOther2019-20Total2018-19Total£000’s£000’s£000’s£000’sSalaries and wages124,549407124,956114,601Social security costs12,319012,31912,045Apprenticeship levy6050605566Employer’s contributions toNHS pensions21,144021,14413,467Pension costs – other3503521Temporary staff035,86535,86529,182Total employee benefits158,65236,272194,924169,882Less: Employee costscapitalised1,0687261,7941,250Gross employee benefitsexcluding capitalised costs157,58435,546193,130168,632 74Average staff numbers PermanentNumberOtherNumber2019-20Total2018-19TotalMedical and dental47489563501Ambulance staff0004Administration and estates58037617528Healthcare assistants andother support staff37052422787Nursing, midwifery and healthvisiting staff8601691,029910Nursing, midwifery and healthvisiting learners405105510461Scientific, therapeutic andtechnical staff240024080Healthcare science staff00014Social care staff800800Other1381139108Total3,1474533,6003,394Staff engaged on capitalprojects (included in above)21133422 Note: In 2019/20 an additional category of social care staff was identified.Staff sickness and ill health retirementsYear references for staff sickness absence are to calendar years. For ill healthretirements, year references are to financial years.Staff sickness absence data can be accessed via NHS Digital using the following link:NHS Digital Staff Sickness Data75 Ill Health Retirements2019-202018-19NumberNumberNumber of persons retired early due to ill healthgrounds30£000s£000sTotal additional pensions liabilities accrued inthe year1510 Reporting of compensation schemes – exit packages 2019-20 (subject to audit)Redundancy and other departure costs have been paid for in accordance with theprovisions of the NHS Pensions Scheme. Exit costs in this note are accounted for infull in the year of departure. Where the trust has agreed early retirements, theadditional costs are met by the trust and not by the NHS Pensions Scheme.Ill–health retirement costs are met by the NHS Pensions Scheme and are not includedin the table. Exit package cost band(including any specialpayment element)Number ofcompulsoryredundanciesNumber of otherdeparturesagreedTotalnumber ofexitpackagesLess than £10,000000£10,000 – £25,000000£25,001 – £50,000101£50,001 – £100,000000£100,001- £150,000000£150,001 – £200,000000> £200,000000Total101Total resource cost (£)£44,000£0£44,000 76Reporting of compensation schemes – exit packages 2018-19 (subject to audit)Exit packages: other (non-compulsory) departure payments (subject to audit) 2019-202018-19AgreementsTotal valueofagreementsAgreementsTotal valueofagreementsNumber£000’sNumber£000’sContractual payments inlieu of notice––––Exit payments followingEmployment Tribunalsor court orders––––Total–––– Off payroll arrangementsNo individual holding a Board position was paid directly through an associated limitedcompany. During 2019-20 there were no executive posts covered by off-payrollarrangements. The trust had no off-payroll engagements as of 31 March 2020, andthere were no new engagements during the period 1 April 2019 to 31 March 2020. Exit package cost band(including any specialpayment element)Number ofcompulsoryredundanciesNumber of otherdeparturesagreedTotalnumber ofexitpackagesLess than £10,000000£10,000 – £25,000000£25,001 – £50,000101£50,001 – £100,000101£100,001- £150,000000£150,001 – £200,000000> £200,000000Total202Total resource cost (£)£119,000£0£119,000 77Table of salaries – non-executive directors (subject to audit)1. Associate NED and NED roles held prior to being appointed as Chairman. Appointed as Associate NED on 1.08.18 and then NED on3.10.18.78Table of salaries – executive directors (subject to audit)791. £130k of the salary within the total £235k-240k salary banding disclosed for Dr Andrew Morris, Chief Medical Officer, is for their clinicalrole. (2018-19 £128k of the total £235k-£240k salary of Dr Andrew Morris was for their clinical role).2. Salary disclosed relates to secondment into CMO role, full salary for 19/20 falls into banding £165k – £170k.Name Title PeriodSalary(bands of£5,000)All pensionrelatedbenefits(bands of£2,500)Total(bands of£5,000)PeriodSalary(bands of£5,000)All pensionrelatedbenefits(bands of£2,500)Total(bands of£5,000)£000’s £000’s £000’s £000’s £000’s £000’sOgechi Emeadi Director of People,Comms & OD All Year 115 – 120 42.5 – 45 160 – 165 01.08.18 – 31.03.19 75 – 80 50 – 52.5 130 – 135Raj Bhamber Director of People – – – – 01.04.18 –31.07.18 40 – 45 10 – 12.5 50 – 552019/20 2018/1980Salary pension entitlement of senior managers (subject to audit)1. Member entered into lease car salary sacrifice arrangement during the year which reduced pensionable pay for benefit calculation2. Real increase to lump sum may be low/zero or negative as now a member of 2008/2015 scheme which does not provide automaticlump sum.81There are no entries in respect of pensions for Non-Executive members as they do not receive pensionable remuneration.CETV is the actuarially assessed capital value of the pension scheme benefits accrued by a member at a particular point in time. The benefitsvalued are the member’s accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made bya pension scheme, or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a schemeand chooses to transfer the benefits accrued in their former scheme. The pension figures shown relate to the benefits that the individual hasaccrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which the disclosureapplies. The CETV figures and the other pension details include the value of any pension benefits in another scheme or arrangement whichthe individual has transferred to the NHS pension scheme. They also include any additional pension benefit accrued to the member as aresult of their purchasing additional years of pension service in the scheme at their own cost. CETVs are calculated within the guidelinesand framework prescribed by the Institute and Faculty of Actuaries.Real Increase / (Decrease) in CETV – This reflects the increase in CETV effectively funded by the employer. It does not include the increasein accrued pension due to inflation, contributions paid by the employee (including the value of any benefits transferred from another schemeor arrangement) and uses common market valuation factors for the start and end of the period.82The National NHS staff surveyThe annual NHS national staff survey (NSS) is recognised as an important tool forensuring that the views of people working in the NHS are used to help inform localimprovements. The feedback is useful in helping highlight strengths, andimprovements that will make the hospital a better place to both work and be treated.A full census was held in the trust between October and November 2019 with all ourpeople employed on 1 September 2019 having the opportunity to take part. In total1520 (45%) completed and returned their survey questionnaire, which was 5%higher than 2018, and 2% lower than the average acute trust response rate (thereare 85 acute trusts within the benchmark group).The table below summarises the survey results by the key national themes,benchmarked against the 85 acute trusts.TableThe full findings report of the 2019 NSS were presented to the workforce committeein March 2020 and to full trust board in April 2020. A series of action plans are beingdeveloped by each of the health care groups to address those areas most requiringimprovement, which will align to three priority actions identified by the trust:Priority one: Improving the physical and mental health and wellbeing of our peoplePriority two: Improving our learning and safety culture, encouraging people toopenly raise concerns and ensure they are acted upon (improving psychologicalsafety)Priority three: Improving the quality and effectiveness of line management skills83These are particularly important as we continue to deliver our quality improvementplan, which focuses on enabling outstanding care for all of our patients, all of thetime.Staff friends and family test resultsSince April 2014, the quarterly Staff Friends and Family Test (SFFT) has beencarried out in all NHS trusts, and are seen as a crucial barometer of how our peopleview their workplaces. The SFFT is helping to promote a significant cultural shiftacross the NHS, encouraging our people to have both the opportunity andconfidence to speak up, and ensuring their views are increasingly heard and thenaddressed.Research has shown a clear relationship between staff engagement and bothindividual and organisational measures, such as staff absenteeism and turnover,patient satisfaction and mortality; and safety measures, including infection controlrates. The more engaged our people are, the better the outcomes for our patientsand the organisation generally. It is, therefore, important that the trust strengthensour people’s voice, as well as our patients’ voice.On a quarterly basis (quarter 3 is included within the NSS and the questions areslightly different) our people are asked to respond to a short survey. The 2019results to the two key national questions are shown below: National SFFT QuestionsNationalTarget%Q42019Q12019Q22019Q42020How likely are you to recommend thisorganisation to friends and family if theyneeded care or treatment?67%75%75%78%75%How likely are you to recommend thisorganisation to friends and family as aplace to work?61%62%65%65%61% Actions taken from the SFFT results are fed into the health care group NSS actionplans.84Our staff breakdown 2019-20 staff compositionMaleFemaleExecutive directors53Other employees8232884Total8282887 Turnover rate Turnover rate2018-192019-20Overall staff turnover16.82%12.96%Voluntary turnover13.61%10.74% 85Our workforce – gender profileOur workforce – ethnic profileEquality and diversity: significant achievements during 2019-20The equality, diversity and inclusion steering group meets monthly to reviewactivities and initiatives to promote and support awareness and education of equality,diversity and inclusion within the trust. The group has widened its membership toensure there is greater representation across healthcare groups and job roles.Diversity champions have been identified to be advocates of the nine protectedcharacteristics identified in the Equality Act.78%22%Workforce Profile by GenderFemaleMale64%2%17%7%0% 2%8%Workforce Profile by EthnicityWhiteMixedAsianBlackChineseFilipinoAny Other86The group agreed a calendar of events for 2019-20, covering the 9 protectedcharacteristics throughout the year. Some activities focussed on celebrations, otherson awareness and education. These events have included: Highlighting disability issues with staff in a series of well attended interactivesessions held during the September staff event, Event in a Tent. Black History Month was celebrated in October 2019, involving a diversity eventfor each week of October. Celebration of International Men’s Day in November 2019 and InternationalWomen’s Day in March 2020, including social media campaigns. During January 2020, World Religion Day was celebrated with an awarenessevent for staff. The trust also facilitated an awareness event and memorialservice on International Holocaust Memorial Day, in conjunction with Rabbi Iritfrom Harlow Synagogue.Looking forwardAs we reflect on our plans and ambitions for 2020-21 it is in the certain knowledgethat our future will be significantly different. We anticipate that many of the changesthat have been put in place to the way we deliver care as we face the currentchallenges of the COVID-19 pandemic will become our future standard.It is evident that we will need to review and maximise the opportunities available to usto continue to transform the way that we organise and provide care. Together withour health, social care and community partners we can build on the improvementsmade and continue to enhance the difference we make to patients and the people wecare for.RecoveryHowever, we must, at the same time, provide health and wellbeing support and careto our people. As individuals and teams they are facing the toughest test of theirclinical and professional careers and we will ensure that we have strong, tailoredrecovery plans to support both the care we provide and, importantly, the peopleproviding the care.Currently (April 2020) there is much that we do not yet have a clear sight of nor dowe know fully what we have yet to face and in what additional ways COVID-19 willimpact us all. What we do know is that our people are our strength and it is theirongoing commitment that will support the recovery plans and the successfulimplementation of our plans for PAHT2030.PAHT 2030Our vision to deliver outstanding healthcare to the community underpins ourPAHT2030 improvement journey to achieve our three goals to be: Outstanding87 Integrated ModernWe have five key strategic priorities on which our PAHT2030 plans are based:1. Technology and innovation2. Integrated care development3. New hospital4. Organisational culture5. Support services modernisationNaturally, a significant focus for each of the next five years is the business casedevelopment, design and build of a new hospital for local people.It is important that we balance this intense focus on planning and developing ahospital fit for the future with our core business priorities, which are enabled by oursix supporting strategies and plans:1. ICT strategy2. Clinical strategy3. Estates strategy4. People strategy5. Medium-term financial plan6. Sustainability strategyOur focus on our journey to outstanding delivered through the detailed plans in placefor PAHT2030 remains clear. Our amazing people are our greatest asset and withtheir passion and energy we will continue to work together with our health and socialcare partners to make a difference to our patients and the people living and workingin the communities we serve.Lance McCarthyChief executive The Princess Alexandra Hospital NHS TrustAnnual Accounts for year ended31 March 2020 Page 88The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Statement of the Chief Executive’s responsibilities as the accountable officer of the TrustThe Chief Executive of NHS Improvement, in exercise of powers conferred on the NHS TrustDevelopment Authority, has designated that the Chief Executive should be the Accountable Officer ofthe Trust. The relevant responsibilities of Accountable Officers are set out in the NHS TrustAccountable Officer Memorandum. These include ensuring that:– there are effective management systems in place to safeguard public funds and assets and assistin 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 Parliamentand conform to the authorities which govern them;– effective and sound financial management systems are in place; and,– annual statutory accounts are prepared in a format directed by the Secretary of State to give a trueand fair view of the state of affairs as at the end of the financial year and the income andexpenditure, other items of comprehensive income and cash flows for the year.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 auditinformation and to establish that the entity’s auditors are aware of that information.To the best of my knowledge and belief, I have properly discharged the responsibilities set out in myletter of appointment as an Accountable Officer.25 June 2020Chief Executive ______________________________________ Date _____________ Page 89The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Statement of Directors’ responsibilities in respect of the AccountsThe Directors are required under the National Health Service Act 2006 to prepare accounts for eachfinancial year. The Secretary of State, with the approval of HM Treasury, directs that these accountsgive a true and fair view of the state of affairs of the Trust and of the income and expenditure, otheritems of comprehensive income and cash flows for the year. In preparing those accounts, thedirectors are required to:– apply on a consistent basis accounting policies laid down by the Secretary of State with theapproval of the Treasury;– make judgements and estimates which are reasonable and prudent;– state whether applicable accounting standards have been followed, subject to any materialdepartures disclosed and explained in the Accounts; and– prepare the financial statements on a going concern basis and disclose any material uncertaintiesover going concern.The Directors are responsible for keeping proper accounting records which disclose with reasonableaccuracy at any time the financial position of the Trust and to enable them to ensure that the Accountscomply with requirements outlined in the above mentioned direction of the Secretary of State. Theyare also responsible for safeguarding the assets of the Trust and hence for taking reasonable steps forthe prevention and detection of fraud and other irregularities.The Directors confirm to the best of their knowledge and belief they have complied with the aboverequirements in preparing the Accounts.The Directors confirm that the Annual Report and Accounts, taken as a whole, is fair, balanced andunderstandable and provides the information necessary for patients, regulators and stakeholders toassess the NHS Trust’s performance, business model and strategy.By order of the Board25 June 2020Chief Executive ________________________________ Date _______________25 June 2020Chief Financial Officer ________________________________ Date _______________ Page 90The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Independent Auditor’s Report To The Directors Of The Princess Alexandra Hospital NHS TrustQualified opinionWe have audited the financial statements of The Princess Alexandra Hospital NHS Trust for the yearended 31 March 2020 under the Local Audit and Accountability Act 2014. The financial statementscomprise the Trust ’s Statement of Comprehensive Income, the Trust Statement of Financial Position,the Trust Statement of Changes in Taxpayers’ Equity, the Trust Statement of Cash Flows and therelated notes 1 to 35. The financial reporting framework that has been applied in their preparation isapplicable law and International Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion, and as interpreted and adapted by the 2019/20 HM Treasury’s Financial Reporting Manual (the2019/20 FReM) as contained in the Department of Health and Social Care Group Accounting Manual2019/20 and the Accounts Direction issued by the Secretary of State with the approval of HM Treasuryas relevant to the National Health Service in England (the Accounts Direction).In our opinion, except for the possible effects of the matter described in the basis for qualified opinionsection of our report, the financial statements: give a true and fair view of the financial position of The Princess Alexandra Hospital NHS Trust as at31 March 2020 and of its expenditure and income for the year then ended; and have been prepared properly in accordance with the National Health Service Act 2006 and theAccounts Directions issued thereunder.Basis for qualified opinionAs a result of the COVID 19 pandemic, the Trust was only able to count certain locations where theirstock is held and we were only able to attend one of those counts, where stock totalled £1 million. Wewere unable to satisfy ourselves by alternative means concerning the inventory quantities held at 31March 2020, which are included in the balance sheet at £4.565 million, by using other audit procedures.Consequently, we were unable to determine whether any adjustment to this amount was necessary.We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) andapplicable law. Our responsibilities under those standards are further described in the Auditor’sresponsibilities for the audit of the financial statements section of our report below. We are independentof the trust in accordance with the ethical requirements that are relevant to our audit of the financialstatements in the UK, including the FRC’s Ethical Standard and the Comptroller and Auditor General’s(C&AG) AGN01 and we have fulfilled our other ethical responsibilities in accordance with theserequirements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour qualified opinion.Material uncertainty related to going concernWe draw attention to Note 1.1.2 in the financial statements, which describes the Trust’s trajectory in2020/21 of £28.6 million deficit to be matched by FRF. This is dependent on meeting cost improvementplans to secure this funding in the next financial year and beyond. As stated in Note 1.1.2, these eventsor conditions, indicate that a material uncertainty exist that may cast significant doubt on the Trust’sability to continue as a going concern. Our opinion is not modified in respect of this matter. Page 91The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Independent Auditor’s Report To The Directors Of The Princess Alexandra Hospital NHS Trust(continued)Emphasis of matter – Property, plant and equipment valuationWe draw attention to Note 1.7.2 Property, Plant and Equipment – Valuation – Impact of COVID-19 onvaluation of the financial statements, which describes the valuation uncertainty the Trust is facing as aresult of COVID-19 in relation to property valuations. Our opinion is not modified in respect of thismatter.Other informationThe other information comprises the information included in the Annual Report, other than the financialstatements and our auditor’s report thereon. The directors are responsible for the other information.Our opinion on the financial statements does not cover the other information and, except to the extentotherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.In connection with our audit of the financial statements, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialstatements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If weidentify such material inconsistencies or apparent material misstatements, we are required to determinewhether there is a material misstatement in the financial statements or a material misstatement of theother information. If, based on the work we have performed, we conclude that there is a materialmisstatement of the other information, we are required to report that fact.As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselvesconcerning the inventory quantities of £4.565 million held at 31 March 2020. We have concluded thatwhere the other information refers to the Inventory balance or related balances such as operatingexpenses, it may be materially misstated for the same reason.Opinion on other matters prescribed by the Health Services Act 2006In our opinion the part of the Remuneration and Staff Report to be audited has been properly preparedin accordance with the Health Services Act 2006 and the Accounts Directions issued thereunder.Matters on which we are required to report by exceptionWe are required to report to you if: in our opinion the governance statement does not comply with the NHS Improvement’s guidance; or we issue a report in the public interest under section 24 of the Local Audit and Accountability Act2014; or we make a written recommendation to the Trust under section 24 of the Local Audit and AccountabilityAct 2014; or we are not satisfied that the Trust has made proper arrangements for securing economy, efficiencyand effectiveness in its use of resources for the year ended 31 March 2020.We have nothing to report in these respects. Page 92The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Independent Auditor’s Report To The Directors Of The Princess Alexandra Hospital NHS Trust(continued)In respect of the following we have matters to report by exception: Referral to the Secretary of StateWe refer a matter to the Secretary of State under section 30 of the Local Audit and Accountability Act2014 because we have reason to believe that the Trust, or an officer of the Trust, is about to make, orhas made, a decision which involves or would involve the body incurring unlawful expenditure, or isabout to take, or has begun to take a course of action which, if followed to its conclusion, would beunlawful and likely to cause a loss or deficiency.On 8 June 2020, we referred a matter to the Secretary of State under section 30(1)(b) of the Local Auditand Accountability Act 2014. At 31 March 2020, Princess Alexandra Hospital NHS Trust has achieved asurplus against its incoming resources for the financial year of £0.05 million but has failed to meet thebreak-even duty over a rolling 3 year period, with a cumulative deficit at 31 March 2020 of £144.344million.Under Paragraph 2 (1) of Schedule 5 of the 2006 Act, an NHS trust shall ensure that its revenue is notless than sufficient, taking one financial year with another, to meet outgoings properly chargeable torevenue account.Responsibilities of the Directors and Accountable OfficerAs explained more fully in the Statement of Directors’ Responsibilities in respect of the Accounts, set outon page 82, the Directors are responsible for the preparation of the financial statements and for beingsatisfied that they give a true and fair view. In preparing the financial statements, the Accountable Officeris responsible for assessing the Trust’s ability to continue as a going concern, disclosing, as applicable,matters related to going concern and using the going concern basis of accounting unless theAccountable Officer either intends to cease operations, or have no realistic alternative but to do so.As explained in the statement of the Chief Executive’s responsibilities, as the Accountable Officer of theTrust, the Accountable Officer is responsible for the arrangements to secure economy, efficiency andeffectiveness in the use of the Trust’s resources.Auditor’s responsibility for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a wholeare free from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that anaudit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements.A further description of our responsibilities for the audit of the financial statements is located on theFinancial Reporting Council’s website at This descriptionforms part of our auditor’s report. Page 93The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Independent Auditor’s Report To The Directors Of The Princess Alexandra Hospital NHS Trust(continued)Scope of the review of arrangements for securing economy, efficiency and effectiveness in theuse of resourcesWe have undertaken our review in accordance with the Code of Audit Practice, having regard to theguidance on the specified criterion issued by the Comptroller and Auditor General in April 2020, as towhether the Trust had proper arrangements to ensure it took properly informed decisions and deployedresources to achieve planned and sustainable outcomes for taxpayers and local people. TheComptroller and Auditor General determined this criterion as that necessary for us to consider under theCode of Audit Practice in satisfying ourselves whether the Trust put in place proper arrangements forsecuring economy, efficiency and effectiveness in its use of resources for the year ended 31 March2020.We planned our work in accordance with the Code of Audit Practice. Based on our risk assessment, weundertook 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 itsuse of resources.We are required under section 21(3)(c), as amended by schedule 13 paragraph 10(a), of the Local Auditand Accountability Act 2014 to be satisfied that the Trust has made proper arrangements for securingeconomy, efficiency and effectiveness in its use of resources. Section 21(5)(b) of the Local Audit andAccountability Act 2014 requires that our report must not contain our opinion if we are satisfied thatproper arrangements are in place.We are not required to consider, nor have we considered, whether all aspects of the Trust’sarrangements for securing economy, efficiency and effectiveness in its use of resources are operatingeffectively.CertificateWe certify that we have completed the audit of the accounts of The Princess Alexandra Hospital NHSTrust in accordance with the requirements of the Local Audit and Accountability Act 2014 and the Codeof Audit Practice.Use of our reportThis report is made solely to the Board of Directors of The Princess Alexandra Hospital NHS Trust , as abody, in accordance with Part 5 of the Local Audit and Accountability Act 2014 and for no other purpose.Our audit work has been undertaken so that we might state to the Directors of the Trust those matterswe are required to state to them in an auditor’s report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other than the Directors, for ouraudit work, for this report, or for the opinions we have formed.Debbie Hanson (Key Audit Partner)Ernst & Young LLP (Local Auditor)Luton25 June 2020 Page 94The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Statement of Comprehensive Income2019/202018/19Note£000’s£000’sOperating income from patient care activities3246,747211,910Other operating income441,74424,790Operating expenses6(286,048)(251,680)Operating surplus / (deficit) from continuing operations2,443(14,980)Finance income128575Finance expenses13.1(2,032)(1,654)Net finance costs(1,947)(1,579)Surplus / (deficit) for the year from continuing operations496(16,559)Other comprehensive incomeRevaluations16613(284)Other recognised gains and losses117(37)Total comprehensive income / (expense) for the period730(321)Adjusted financial performance (control total basis):Surplus / (deficit) for the period496(16,559)Adjustment in respect of capital grants and donations(78)17Adjust for 2018/19 post audit PSF reallocation(368)0Adjusted financial performance surplus / (deficit)50(16,542) Page 95The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Statement of Financial Position31 March202031 March2019Note£000’s£000’sNon-current assetsIntangible assets157,6339,021Property, plant and equipment16117,405107,377Receivables18.1692912Total non-current assets125,730117,310Current assetsInventories174,5654,515Receivables18.149,83718,871Cash and cash equivalents191,1441,197Total current assets55,54624,583Current liabilitiesTrade and other payables20.1(27,068)(20,038)Borrowings22.1(150,958)(57,952)Provisions24(1,186)(151)Other liabilities21(1,158)(656)Total current liabilities(180,370)(78,797)Total assets less current liabilities90663,096Non-current liabilitiesBorrowings22.1(40)(66,383)Provisions24(767)(785)Total non-current liabilities(807)(67,168)Total assets employed99(4,072)Financed byPublic dividend capital133,863130,918Revaluation reserve19,34318,626Income and expenditure reserve(153,107)(153,616)Total taxpayers’ equity99(4,072)The notes on pages 99 to 135 form part of these accounts.Chief ExecutiveDateThe financial statements on pages 95 to 98 were approved by the Board on 19 June 2020 andsigned on its behalf by :25 June 2020 Page 96The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Statement of Changes in Equity for the year ended 31 March 2020PublicdividendcapitalRevaluationreserveIncome andexpenditurereserveTotal£000’s£000’s£000’s£000’sTaxpayers’ equity at 1 April 2019130,91818,626(153,616)(4,072)Surplus for the year00496496Other transfers between reserves0(13)130Revaluations06130613Other recognised gains and losses01170117Public dividend capital received2,945002,945Taxpayers’ equity at 31 March 2020133,86319,343(153,107)99Taxpayers’ equity at 1 April 2018128,15119,015(137,125)10,041Deficit for the year0016,559(16,559)Other transfers between reserves0(68)680Revaluations0(284)0(284)Other recognised gains and losses0(37)0(37)Public dividend capital received2,767002,767Taxpayers’ equity at 31 March 2019130,91818,626(153,616)(4,072)Revaluation ReserveIncreases in asset values arising from revaluations are recognised in the revaluation reserve,except where, and to the extent that, they reverse impairments previously recognised inoperating expenses, in which case they are recognised in operating income. Subsequentdownward movements in asset valuations are charged to the revaluation reserve to the extentthat a previous gain was recognised unless the downward movement represents a clearconsumption of economic benefit or a reduction in service potential.Public Dividend CapitalPublic Dividend Capital (PDC) is a type of public sector equity finance based on the excess ofassets over liabilities at the time of establishment of the predecessor NHS organisation.Additional PDC may also be issued to trusts by the Department of Health and Social Care. Acharge, reflecting the cost of capital utilised by the Trust, is payable to the Department ofHealth and Social Care as the Public Dividend Capital.Income and Expenditure ReserveThe balance of this reserve is the accumulated surpluses and deficits of the Trust. Page 97The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Statement of Cash Flows2019/202018/19Note£000’s£000’sCash flows from operating activitiesOperating surplus / (deficit)2,443(14,980)Non-cash income and expense:Depreciation and amortisation69,3859,082Income recognised in respect of capital donations4(98)(17)Increase in receivables and other assets(30,746)(6,189)Increase in inventories(50)(354)Increase / (decrease) in payables and other liabilities3,989(4,495)Increase / (decrease) in provisions1,015(759)Net cash flows used in operating activities(14,062)(17,712)Cash flows from investing activitiesInterest received8575Purchase of intangible assets(522)(365)Purchase of PPE and investment property(13,042)(13,407)Net cash flows used in investing activities(13,479)(13,697)Cash flows from financing activitiesPublic dividend capital received2,9452,767Movement on loans from DHSC26,51129,274Capital element of finance lease rental payments(20)(18)Interest on loans(1,937)(1,532)PDC dividend paid0863Cash flows used in other financing activities(11)(10)Net cash flows from financing activities27,48831,344Decrease in cash and cash equivalents(53)(65)Cash and cash equivalents at 1 April1,1971,262Cash and cash equivalents at 31 March191,1441,197 Page 98The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other informationNote 1.1 Basis of preparationThe Department of Health and Social Care has directed that the financial statements of the Trustshall meet the accounting requirements of the Department of Health and Social Care GroupAccounting Manual (GAM), which shall be agreed with HM Treasury. Consequently, the followingfinancial statements have been prepared in accordance with the GAM 2019/20 issued by theDepartment of Health and Social Care. The accounting policies contained in the GAM followInternational Financial Reporting Standards to the extent that they are meaningful and appropriateto the NHS, as determined by HM Treasury, which is advised by the Financial Reporting AdvisoryBoard. Where the GAM permits a choice of accounting policy, the accounting policy that is judgedto be most appropriate to the particular circumstances of the Trust for the purpose of giving a trueand fair view has been selected. The particular policies adopted are described below. These havebeen applied consistently in dealing with items considered material in relation to the Accounts.Note 1.1.1 Accounting conventionThese Accounts have been prepared under the historical cost convention modified to account forthe revaluation of property, plant and equipment, intangible assets, inventories and certainfinancial assets and financial liabilities.Note 1.1.2 Going concernThese Accounts have been prepared on a going concern basis.IAS1 requires management to assess, as part of the Accounts preparation process, the Trust’sability to continue as a going concern. The HM Treasury Financial Reporting Manual directs thatin the context of non-trading entities in the public sector, the anticipated continuation of theprovision of a service in the future is normally sufficient evidence of going concern. The financialstatements should be prepared on a going concern basis unless there are plans for, or no realisticalternative other than, the dissolution of the Trust without transfer to another entity.On 2 April 2020, the Department of Health and Social Care (DHSC) and NHS England andNHS Improvement announced reforms to the NHS cash regime for the 2020/21 financial year.During 2020/21 existing DHSC interim revenue and capital loans as at 31 March 2020 will beextinguished and replaced with the issue of Public Dividend Capital (PDC) to allow the repayment.The Trust will therefore no longer be required to generate surpluses to eliminate its historic debt,and that total net assets will increase, thereby strengthening the Trust’s balance sheet. Theaffected loans totalling £150,928k (including interest accrual of £461k) are classified as currentliabilities within these financial statements. As the repayment of these loans will be fundedthrough the issue of PDC, this does not present a going concern risk for the Trust.In approving the Trust’s Annual Accounts the Board of Directors has satisfied itself that the Trusthas prepared the Accounts on the basis of going concern recognising the following:-i) The Board considers the Trust operates a significant portfolio of clinical services. The Trust hassigned a two year Allocative contract (expiring 31 March 2021) with its main Commissioner preCovid-19. The contracting arrangements which were previously agreed for April to July have beenreplaced by the NHSE/I block contracts. The Trust has not been made aware of any plans fromany Commissioner to disinvestment. The Trust is expanding and taking on lead responsibility forservices e.g. MSK.West Essex System partners aim to be an Integrated Care Trust (ICT) by 2022. The ICT will bemade up of Primary Care, Community Care and Acute care providers. The development of ‘OneHealth and Care Partnership’ during 2020/21 will be a key transitional point towards the ICT. Page 99The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)ii) In October 2019 the Trust received notification of financial improvement trajectories and Financial RecoveryFund (FRF) allocations for each year up to 2023/24. These trajectories outline a reduction in deficit with indicativeFRF set to meet a breakeven position. Subsequent amendments to reflect policy changes and the debt write offregime were notified in January 2020 with the Trust’s trajectory in 2020/21 of £28.6m deficit to be matched byFRF. It should be noted that due to Covid-19 operational planning guidance is currently suspended with theintroduction of an adapted financial regime intended to cover the full costs of service delivery.In March 2020 that NHSE&I announced revised arrangements for NHS contracting and payment to apply for thefirst four months of the 2020/21 year due to the Covid-19 pandemic. The contracting arrangements for the rest of2020/21 and beyond have not yet been definitively announcedAs part of the managing the Covid-19 emergency in March 20/21 details were released on the block contract and‘Top Up’ arrangement for payments from April to July. This guidance establishes the principle that Providers willbe funded at full cost recovery at least until July 2020. The contracting arrangements for the remainder of 20/21have yet to be announced.iii) The Trust has included an estimate of £40.9m of capital requirements in its 2020/21 operating plan. This planincludes £9.9m of internally generated funds, £9.5m for the development of a Medical Assessment Unit, £5memergency capital and £9.2m to progress a Strategic Outline Business Case (SOC) for Hospital redevelopment.Support for the new Hospital Development has been received from senior Department of Health officials and thePrime Minister.iv) The adapted financial regime provides certainty of financial flows associated with block and top-up paymentshas negated these concerns. While mechanisms for contracting and payment are not definitively in place beyondJuly 2020, it is clear that NHS services will continue to be funded, and government funding is in place for this, andcashflows have been revised to reflect the current information available. The Board of Directors concludes theTrust has a reasonable expectation that the Trust will continue to have access to adequate cash financing to meetits liabilities and continue to provide the planned range of clinical services in the foreseeable future. This positionhas been confirmed by NHSI/E whereby Providers can expect NHS funding to flow at similar levels to thatpreviously provided where services are reasonably still expected to be commissioned. NHSI/E have furtherconfirmed that temporary revenue support arrangements will continue, in order to support Providers withdemonstrable needs and thon to theAccounts.The Board of Directors has carefully considered the principle of ‘going concern’ and recognises that there arematerial uncertainties related to the financial sustainability (profitability and liquidity) of the Trust which may castsignificant doubt about the ability of the Trust to continue as a going concern. Such uncertainties include deliveryof a cost improvement programme for the following 12 months to levels that secure FRF funding in 2020/21 andbeyond. The Board has considered this position and, although there remains uncertainty regarding theoverarching financial regime beyond July 2020, assesses it is reasonable that identified savings will be delivered.This position is supported by existence of both a Transformational agenda, actions of the Recovery andRestoration cell as part of the response to Covid-19 and a continued track record of the Trust to delivery cost andefficiency improvements.On that basis and for the reasons outlined above the Board of Directors considers it is appropriate to prepare the2019/20 Accounts on a going concern basis and the financial statements do not include the adjustments thatwould result if the Trust were unable to continue as a going concern. Page 100The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.2 Critical judgements in applying accounting policiesIn the application of the Trust’s accounting policies, management is required to make judgements, estimates andassumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Theestimates and associated assumptions are based on historical experience and other factors considered 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 both the estimate is revised if the revisionsaffects only that period or in the period of the revision and future periods if the revision affects both current and futureperiods.The following are the judgements, apart from those involving estimations (see below) that management has made inthe process of applying the Trust accounting policies and that have the most significant effect on the amountsrecognised in the financial statements:– Adoption of the going concern basis (see note 1.1.2)– Classification of leases as finance or operating leases. Leases have been reviewed to determine if they are classifiedas operating or finance leases in line with IAS17. Critical judgements include whether the ownership transfers at theend of the term, the level of risk transfer, whether the lease term is for a major part of the economic life of the assetand whether the present value of the minimum lease payment is substantially all of the fair value of the asset.Department of Health and Social Care guidance specifies that the Trust’s land and buildings should be valued on thebasis of depreciated replacement cost, applying the Modern Equivalent Asset (MEA) concept. The MEA is defined as“the cost of a modern replacement asset that has the same productive capacity as the property being valued.”Therefore the MEA is not a valuation of the existing land and buildings that the Trust holds, but a theoretical valuationfor accounting purposes of what the Trust could need to spend in order to replace the current assets. The MEAvaluation approach continues to be adopted by the Trust. As a result of COVID-19 the District Valuer has identified amaterial valuation uncertainty. The valuer has continued to exercise professional judgement in providing the valuationand this remains the best information available to the Trust.Note 1.2.1 Sources of estimation uncertaintyThe following are assumptions about the future and other major sources of estimation uncertainty that have asignificant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the nextfinancial year:Provisions (Note 24)Provisions have been made for legal and constructive obligations of uncertain timing or amount as at the reportingdate where the liability meets the recognition criteria of IAS 37. These are based on judgements and estimates offuture cash flows and are dependent on future events. Any differences between expectations and the actual futureliability will be accounted for in the period when such determination is made.Public liability claims are based on information received from the NHS Resolution (NHSR, previously NHS LitigationAuthority) which handles claims on behalf of the Trust. For cases not yet concluded, provision, or contingent liability, ismade according to NHSR assessment of expected outcomes.Pensions provisions are based on information received from NHS Pension Agency (part of NHS Business ServicesAuthority).Other provisions for legal and constructive obligations (including employment) are made by management, andinformed by professional opinion. Provisions are made where past events are known and settlement by the Trust isprobable and a reliable estimate can be made. As actual settlement is not known at the reporting date provisions arecalculated on the best information available on likely settlement at the date the Accounts are approved.AccrualsAt the end of each accounting period management review expenditure items that are outstanding and estimate theamount to be accrued in financial statements. Accruals are generally based on estimates and judgements of historicaltrends and outcomes. Any variation in prior periods has not been material to the Accounts.InventoriesAs a result of COVID-19 it was not possible to access all clinical areas and complete a full stocktake. The key areaswhere a count could not be completed were Theatres and Pathology, and in 2018/19 these locations accounted for£1.5m of stock. As the areas that were counted showed a minimal stock movement from prior year, the Trust has usedthe 2018/19 value as an estimate of the current level of stock held in Theatres and Pathology. Overall stock value in2018/19 and 2020/21 total around £4.5m. Page 101The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.3 Charitable fundsUnder the provisions of IAS 27 Consolidated and Separate Financial Statements, those CharitableFunds that fall under common control with NHS bodies are consolidated within the entity’s financialstatements. IAS 1 states that specific disclosure requirements as set out in individual standards orinterpretations need not be satisfied if the information is not material, and on that basis the Trust has notconsolidated its Charitable Funds.Note 1.4 RevenueNote 1.4.1 Revenue from contracts with customersWhere income is derived from contracts with customers, it is accounted for under IFRS 15. The GAMexpands the definition of a contract to include legislation and regulations which enables an entity toreceive cash or another financial asset that is not classified as a tax by the Office of National Statistics(ONS).Revenue in respect of goods/services provided is recognised when (or as) performance obligations aresatisfied by transferring promised goods/services to the customer and is measured at the amount of thetransaction price allocated to those performance obligations. At the year end, the Trust accrues incomerelating to performance obligations satisfied in that year. Where the Trust’s entitlement to considerationfor those goods or services is unconditional a contract receivable will be recognised. Where entitlementto consideration is conditional on a further factor other than the passage of time, a contract asset will berecognised. Where consideration received or receivable relates to a performance obligation that is to besatisfied in a future period, the income is deferred and recognised as a contract liability.Revenue from NHS contractsThe main source of income for the Trust is contracts with commissioners for healthcare services. Aperformance obligation relating to delivery of a spell of healthcare is generally satisfied over time ashealthcare is received and consumed simultaneously by the customer as the Trust performs it. Thecustomer in such a contract is the commissioner, but the customer benefits as services are provided totheir patient. Even where a contract could be broken down into separate performance obligations,healthcare generally aligns with paragraph 22(b) of the Standard entailing a delivery of a series of goodsor services that are substantially the same and have a similar pattern of transfer. At the year end, theTrust accrues income relating to activity delivered in that year, where a patient care spell is incomplete.This accrual is disclosed as a contract receivable as entitlement to payment for work completed isusually only dependent on the passage of time.Revenue is recognised to the extent that collection of consideration is probable. Where contractchallenges from commissioners are expected to be upheld, the Trust reflects this in the transaction priceand derecognises the relevant portion of income.Where the Trust is aware of a penalty based on contractual performance, the Trust reflects this in thetransaction price for its recognition of revenue. Revenue is reduced by the value of the penalty. Page102The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Commissioners are entitled not to pay for patient care where it is deemed the patient represented to theTrust within 30 days of the initial admission and such a readmission is judged to have been avoidable ifthis was within control of the Trust. At the start of the financial year the Trust agreed a percentagededuction to be applied to the total cohort of patients who were readmitted. This agreement representedthe basis of a performance obligation which was satisfied by reduction in transaction price. During theyear the Commissioners and the Trust agreed an audit to inform future levels of contractual deductions.This audit concluded that readmissions deductions being applied to the Trust should be negligible.The Trust receives income from commissioners under Commissioning for Quality and Innovation(CQUIN) schemes. The Trust agrees schemes with its commissioner but they affect how care isprovided to patients. That is, the CQUIN payments are not considered distinct performance obligationsin their own right; instead they form part of the transaction price for performance obligations under thecontract.Revenue from research contractsWhere research contracts fall under IFRS 15, revenue is recognised as and when performanceobligations are satisfied. For some contracts, it is assessed that the revenue project constitutes oneperformance obligation over the course of the multi-year contract. In these cases it is assessed that theTrust’s interim performance does not create an asset with alternative use for the Trust, and the Trust hasan enforceable right to payment for the performance completed to date. It is therefore considered thatthe performance obligation is satisfied over time, and the Trust recognises revenue each year over thecourse of the contract.NHS injury cost recovery schemeThe Trust receives income under the NHS injury cost recovery scheme, designed to reclaim the cost oftreating injured individuals to whom personal injury compensation has subsequently been paid, forinstance by an insurer. The Trust recognises the income when performance obligations are satisfied. Inpractical terms this means that treatment has been given, it receives notification from the Department ofWork and Pension’s Compensation Recovery Unit, has completed the NHS2 form and confirmed thereare no discrepancies with the treatment. The income is measured at the agreed tariff for the treatmentsprovided to the injured individual, less an allowance for unsuccessful compensation claims and doubtfuldebts in line with IFRS 9 requirements of measuring expected credit losses over the lifetime of the asset.Provider Sustainability Fund (PSF) and Financial Recovery Fund (FRF)The PSF and FRF enable providers to earn income linked to the achievement of financial controls andperformance targets. Income earned from the funds is accounted for as variable consideration.Note 1.4.2 Revenue grants and other contributions to expenditureGovernment grants are grants from government bodies other than income from commissioners or trustsfor the provision of services. Where a grant is used to fund revenue expenditure it is taken to theStatement of Comprehensive Income to match that expenditure. Page 103The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.4.3 Other incomeGrants and donationsWhere the grant is used to fund capital expenditure, it is credited to the consolidated statement ofcomprehensive income once conditions attached to the grant have been met. Donations aretreated in the same way as government grants.Apprenticeship service incomeThe value of the benefit received when accessing funds from the Government’s apprenticeshipservice is recognised as income at the point of receipt of the training service. Where these fundsare paid directly to an accredited training provider from the Trust’s Digital Apprenticeship Service(DAS) account held by the Department for Education, the corresponding notional expense is alsorecognised at the point of recognition for the benefit.Note 1.5 Expenditure on employee benefitsSalaries, wages and employment-related payments such as social security costs and theapprenticeship levy are recognised in the period in which the service is received from employees.The cost of annual leave entitlement earned but not taken by employees at the end of the period isrecognised in the financial statements to the extent that employees are permitted to carry-forwardleave into the following period.Past and present employees are covered by the provisions of the two NHS Pension Schemes.Both schemes are unfunded, defined benefit schemes that cover NHS employer, general practicesand other bodies, allowed under the direction of Secretary of State for Health and Social Care inEngland and Wales. The scheme is not designed in a way that would enable employers to identifytheir share of the underlying scheme assets and liabilities. Therefore, the scheme is accounted foras though it is a defined contribution scheme: the cost to the Trust is taken as equal to theemployer’s pension contributions payable to the scheme for the accounting period. Thecontributions are charged to operating expenses as they become due.Additional pension liabilities arising from early retirements are not funded by the scheme exceptwhere the retirement is due to ill-health. The full amount of the liability for the additional costs ischarged to the operating expenses at the time the Trust commits itself to the retirement,regardless of the method of payment.Note 1.6 Expenditure on other goods and servicesExpenditure on goods and services is recognised when, and to the extent that they have beenreceived, and is measured at the fair value of those goods and services. Expenditure isrecognised in operating expenses except where it results in the creation of a non-current assetsuch as property, plant and equipment.Note 1.7 Property, plant and equipmentNote 1.7.1 RecognitionProperty, plant and equipment is capitalised where:• 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 be provided to, theTrust• it is expected to be used for more than one financial year Page 104The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)• the cost of the item can be measured reliably• the item costs at least £5,000, or• collectively, a number of items have a cost of at least £5,000 and individually cost more than£250, where the assets are functionally interdependent, had broadly simultaneous purchasedates, are anticipated to have similar disposal dates and are under single managerial control.Where a large asset, for example a building, includes a number of components with significantlydifferent asset lives, e.g. plant and equipment, then these components are treated as separateassets and depreciated over their own useful economic lives.Note 1.7.2 MeasurementValuationAll property, plant and equipment assets are measured initially at cost, representing the costsdirectly attributable to acquiring or constructing the asset and bringing it to the location andcondition necessary for it to be capable of operating in the manner intended by management.All assets are measured subsequently at valuation. Assets which are held for their servicepotential and are in use (i.e. operational assets used to deliver either front line services or backoffice functions) are measured at their current value in existing use. Assets that were mostrecently held for their service potential but are surplus with no plan to bring them back into use aremeasured at fair value where there are no restrictions on sale at the reporting date and where theydo not meet the definitions of investment properties or assets held for sale.Revaluations of property, plant and equipment are performed with sufficient regularity to ensurethat carrying values are not materially different from those that would be determined at the end ofthe reporting period. Current values in existing use are determined as follows:• Land and non-specialised buildings – market value for existing use• Specialised buildings – depreciated replacement cost on a modern equivalent asset basis.For specialised assets, current value in existing use is interpreted as the present value of theasset’s remaining service potential, which is assumed to be at least equal to the cost of replacingthat service potential. Specialised assets are therefore valued at their depreciated replacementcost (DRC) on a modern equivalent asset (MEA) basis. An MEA basis assumes that the asset willbe replaced with a modern asset of equivalent capacity and location requirements of the servicesbeing provided. Assets held at depreciated replacement cost have been valued on an alternativesite basis where this would meet the location requirements.Properties in the course of construction for service or administration purposes are carried at cost,less any impairment loss. Cost includes professional fees and, where capitalised in accordancewith IAS 23, borrowings costs. Assets are revalued and depreciation commences when the assetsare brought into use.IT equipment, transport equipment, furniture and fittings, and plant and machinery that are held foroperational use are valued at depreciated historic cost where these assets have short useful livesor low values or both, as this is not considered to be materially different from current value inexisting use. Page 105The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Impact of COVID-19 on valuationThe valuation exercise was carried out through January 2020 to March 2020 with a valuation dateof 31 March 2020. In applying the Royal Institute of Chartered Surveyors (RICS) Valuation GlobalStandards 2017 (‘Red Book’), the valuer has declared a ‘material valuation uncertainty’ in thevaluation report. This is on the basis of uncertainties in markets caused by COVID-19. The valuesin the report have been used to inform the measurement of property assets at valuation in thesefinancial statements. With the valuer having declared this material valuation uncertainty, the valuerhas continued to exercise professional judgement in providing the valuation and this remains thebest information available to the Trust.Notwithstanding the above, of the £79.6m of Building assets, £79m relates to the main Hospitalsite. This is classified as a Specialist Asset and valued on a Modern Equivalent Asset (MEA)basis. As per note 1.2, MEA is defined as “the cost of a modern replacement asset that has thesame productive capacity as the property being valued.” The valuation as at 31 March 2020 usedfor the majority of the Trust’s Building assets is on an MEA basis and the impact of COVID-19 hasnot changed the overall occupancy/services requirement. On this basis, and for the reasonsoutlined above, the Board of Directors are content that the valuation used is reasonable andmaterially valid.Subsequent expenditureSubsequent expenditure relating to an item of property, plant and equipment is recognised as anincrease in the carrying amount of the asset when it is probable that additional future economicbenefits or service potential deriving from the cost incurred to replace a component of such itemwill flow to the enterprise and the cost of the item can be determined reliably. Where a componentof an asset is replaced, the cost of the replacement is capitalised if it meets the criteria forrecognition above. The carrying amount of the part replaced is de-recognised. Other expenditurethat does not generate additional future economic benefits or service potential, such as repairsand maintenance is charged to the Statement of Comprehensive Income in the period in which itis incurred.DepreciationItems of property, plant and equipment are depreciated over their remaining useful lives in amanner consistent with the consumption of economic or service delivery benefits. Freehold land isconsidered to have an infinite life and is not depreciated.Property, plant and equipment which has been reclassified as ‘held for sale’ cease to bedepreciated upon the reclassification.Revaluation gains and lossesRevaluation gains are recognised in the revaluation reserve, except where, and to the extent that,they reverse a revaluation decrease that has previously been recognised in operating expenses,in which case they are recognised in operating income.Revaluation losses are charged to the revaluation reserve to the extent that there is an availablebalance for the asset concerned, and thereafter are charged to operating expenses.Gains and losses recognised in the revaluation reserve are reported in the Statement ofComprehensive Income as an item of ‘other comprehensive income’. Page 106The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsImpairmentsNote 1.7.3 De-recognitionNote 1.7.4 Donated and grant funded assetsIn accordance with the GAM, impairments that arise from a clear consumption of economicbenefits or of service potential in the asset are charged to operating expenses. A compensatingtransfer is made from the revaluation reserve to the income and expenditure reserve of anamount equal to the lower of (i) the impairment charged to operating expenses; and (ii) thebalance in the revaluation reserve attributable to that asset before the impairment.Note 1. Accounting policies and other information (continued)Property, plant and equipment which is to be scrapped or demolished does not qualify forrecognition as ‘held for sale’ and instead is retained as an operational asset and the asset’suseful life is adjusted. The asset is de-recognised when scrapping or demolition occurs.Donated and grant funded property, plant and equipment assets are capitalised at their fair valueon receipt. The donation/grant is credited to income at the same time, unless the donor hasimposed a condition that the future economic benefits embodied in the grant are to be consumedin a manner specified by the donor, in which case, the donation/grant is deferred within liabilitiesand is carried forward to future financial years to the extent that the condition has not yet beenmet.The donated and grant funded assets are subsequently accounted for in the same manner asother items of property, plant and equipment.An impairment that arises from a clear consumption of economic benefit or of service potential isreversed when, and to the extent that, the circumstances that gave rise to the loss is reversed.Reversals are recognised in operating expenditure to the extent that the asset is restored to thecarrying amount it would have had if the impairment had never been recognised. Any remainingreversal is recognised in the revaluation reserve. Where, at the time of the original impairment, atransfer was made from the revaluation reserve to the income and expenditure reserve, anamount is transferred back to the revaluation reserve when the impairment reversal isrecognised.Other impairments are treated as revaluation losses. Reversals of ‘other impairments’ are treatedas revaluation gains.Assets intended for disposal are reclassified as ‘held for sale’ once the following criteria are met:The sale must be highly probable and the asset available for immediate sale in its presentcondition.Following reclassification, the assets are measured at the lower of their existing carrying amountand their ‘fair value less costs to sell’. Depreciation ceases to be charged. Assets are derecognised when all material sale contract conditions have been met. Page 107The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.8 Intangible assetsMin lifeMax lifeYearsYearsBuildings028Plant & machinery215Transport equipment07Information technology05Furniture & fittings08Note 1.8.1 RecognitionNote 1.8.2 MeasurementNote 1.7.5 Useful lives of property, plant and equipmentUseful lives reflect the total life of an asset and not the remaining life of an asset. The range ofFinance-leased assets (including land) are depreciated over the shorter of the useful life or thelease term, unless the Trust expects to acquire the asset at the end of the lease term in whichcase the assets are depreciated in the same manner as owned assets above.AmortisationIntangible assets are amortised over their expected useful lives in a manner consistent with theconsumption of economic or service delivery benefits.Software which is integral to the operation of hardware, e.g. an operating system, is capitalisedas part of the relevant item of property, plant and equipment. Software which is not integral to theoperation of hardware, e.g. application software, is capitalised as an intangible asset.Subsequently, intangible assets are measured at current value in existing use. Where no activemarket exists, intangible assets are valued at the lower of depreciated replacement cost and thevalue in use where the asset is income generating. Revaluation gains and losses andimpairments are treated in the same manner as for property, plant and equipment. An intangibleasset which is surplus with no plan to bring it back into use is valued at fair value under IFRS 13,if it does not meet the requirements of IAS 40 of IFRS 5.Intangible assets held for sale are measured at the lower of their carrying amount or “fair valueless costs to sell”.Intangible assets are recognised initially at cost, comprising all directly attributable costs neededto create, produce and prepare the asset to the point that it is capable of operating in the mannerintended by management.SoftwareInternally generated intangible assetsInternally generated goodwill, brands, mastheads, publishing titles, customer lists and similaritems are not capitalised as intangible assets.Expenditure on research is not capitalised. Expenditure on development is capitalised when itmeets the requirements set out in IAS 38.Intangible assets are non-monetary assets without physical substance which are capable ofbeing sold separately from the rest of the Trust’s business or which arise from contractual orother legal rights. They are recognised only where it is probable that future economic benefitswill flow to, or service potential be provided to, the Trust and where the cost of the asset can bemeasured reliably. Page 108The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.8.3 Useful economic life of intangible assetsMin lifeMax lifeYearsYearsInformation technology05Development expenditure08Note 1.9 InventoriesNote 1.10 Cash and cash equivalentsNote 1.11 Carbon Reduction Commitment scheme (CRC)Note 1.12 Financial assets and financial liabilitiesNote 1.12.1 RecognitionNote 1.12.2 Classification and measurementFinancial assets and financial liabilities are initially measured at fair value plus or minus directlyattributable transaction costs except where the asset or liability is not measured at fair valuethrough income and expenditure. Fair value is taken as the transaction price, or otherwisedetermined by reference to quoted market prices or valuation techniques.The liability will be measured at the amount expected to be incurred in settling the obligation.This will be the cost of the number of allowances required to settle the obligation.Financial assets and financial liabilities arise where the Trust is party to the contractualprovisions of a financial instrument, and as a result has a legal right to receive or a legalobligation to pay cash or another financial instrument. The GAM expands the definition of acontract to include legislation and regulations which give rise to arrangements that in all otherrespects would be a financial instrument and do not give rise to transactions classified as a taxby ONS.In the Statement of Cash Flows, cash and cash equivalents are shown net of bank overdraftsthat are repayable on demand and that form an integral part of the Trust’s cash management.Cash, bank and overdraft balances are recorded at current values.Useful lives reflect the total life of an asset and not the remaining life of an asset. The range ofCash is cash in hand and deposits with any financial institution repayable without penalty onnotice of not more than 24 hours. Cash equivalents are investments that mature in three monthsor less from the date of acquisition and that are readily convertible to known amounts of cashwith insignificant risk of change in value.The CRC scheme is a mandatory cap and trade scheme for non-transport CO2 emissions. TheTrust is registered with the CRC scheme, and is therefore required to surrender to theGovernment an allowance for every tonne of CO2 it emits during the financial year. A liabilityand related expense is recognised in respect of this obligation as CO2 emissions are made.The carrying amount of the liability at the financial year end will therefore reflect the CO2emissions that have been made during that financial year, less the allowances (if any)surrendered voluntarily during the financial year in respect of that financial year.Inventories are valued at the lower of cost and net realisable value. The cost of inventories ismeasured using the weighted average cost method.This includes the purchase or sale of non-financial items (such as goods or services), which areentered into in accordance with the Trust’s normal purchase, sale or usage requirements andare recognised when, and to the extent which, performance occurs, i.e. when receipt or deliveryof the goods or services is made. Page 109The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Financial assets or financial liabilities in respect of assets acquired or disposed of through financeleases are recognised and measured in accordance with the accounting policy for leasesdescribed below:– Financial assets are classified as fair value through income and expenditure.– Financial liabilities classified as fair value through income and expenditure.Financial assets and financial liabilities at amortised costFinancial assets and financial liabilities at amortised cost are those held with the objective ofcollecting contractual cash flows and where cash flows are solely payments of principal andinterest. This includes cash equivalents, contract and other receivables, trade and other payables,rights and obligations under lease arrangements and loans receivable and payable.After initial recognition, these financial assets and financial liabilities are measured at amortisedcost using the effective interest method less any impairment (for financial assets). The effectiveinterest rate is the rate that exactly discounts estimated future cash payments or receipts throughthe expected life of the financial asset or financial liability to the gross carrying amount of afinancial asset or to the amortised cost of a financial liability.Interest revenue or expense is calculated by applying the effective interest rate to the grosscarrying amount of a financial asset or amortised cost of a financial liability and recognised in theStatement of Comprehensive Income as a financing income or expense. In the case of loans heldfrom the Department of Health and Social Care, the effective interest rate is the nominal rate ofinterest charged on the loan.Financial assets measured at fair value through other comprehensive incomeA financial asset is measured at fair value through other comprehensive income where businessmodel objectives are met by both collecting contractual cash flows and selling financial assets andwhere the cash flows are solely payments of principal and interest. Movements in the fair value offinancial assets in this category are recognised as gains or losses in other comprehensive incomeexcept for impairment losses. On derecognition, cumulative gains and losses previouslyrecognised in other comprehensive income are reclassified from equity to income and expenditure,except where the Trust elected to measure an equity instrument in this category on initialrecognition.Financial assets and financial liabilities at fair value through income and expenditureFinancial assets measured at fair value through profit or loss are those that are not otherwisemeasured at amortised cost or at fair value through other comprehensive income. This categoryalso includes financial assets and liabilities acquired principally for the purpose of selling in theshort term (held for trading) and derivatives. Derivatives which are embedded in other contracts,but which are separable from the host contract are measured within this category. Movements inthe fair value of financial assets and liabilities in this category are recognised as gains or losses inthe Statement of Comprehensive Income.Impairment of financial assetsFor all financial assets measured at amortised cost including lease receivables, contractreceivables and contract assets or assets measured at fair value through other comprehensiveincome, the Trust recognises an allowance for expected credit losses. Page 110The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)The Trust adopts the simplified approach to impairment for contract and other receivables,contract assets and lease receivables, measuring expected losses as at an amount equal tolifetime expected losses. For other financial assets, the loss allowance is initially measured at anamount equal to a 12 month expected credit losses (stage 1) and subsequently at an amountequal to lifetime expected credit loss if the credit risk assessed for the financial asset significantlyincreases (stage 2).All outstanding non-NHS receivables over one year old are included in the credit loss allowance.Any receivable relating to prescription charges that are over six months old plus any receivablewhere the Trust considers there to be a high risk of being uncollectable are included. The amountincluded for Injury Cost Recovery receivables follows the DHSC GAM guidance (an allowance of21.79% of outstanding receivables is included).For financial assets that have become credit impaired since initial recognition (stage 3), expectedcredit losses at the reporting date are measured as the difference between the asset’s grosscarrying amount and the present value of estimated future cash flows discounted at the financialasset’s original effective interest rate.Expected losses are charged to operating expenditure within the Statement of ComprehensiveIncome and reduce the net carrying value of the financial asset in the Statement of FinancialPosition.Note 1.12.3 DerecognitionFinancial assets are de-recognised when the contractual rights to receive cash flows from theassets have expired or the Trust has transferred substantially all the risks and rewards ofownership.Financial liabilities are de-recognised when the obligation is discharged, cancelled or expires.Note 1.13 LeasesLeases are classified as finance leases when substantially all the risks and rewards of ownershipare transferred to the lessee. All other leases are classified as operating leases.Finance leasesWhere substantially all risks and rewards of ownership of a leased asset are borne by the Trust,the asset is recorded as property, plant and equipment and a corresponding liability is recorded.The value at which both are recognised is the lower of the fair value of the asset or the presentvalue of the minimum lease payments, discounted using the interest rate implicit in the lease. Theimplicit interest rate is that which produces a constant periodic rate of interest on the outstandingliability.The asset and liability are recognised at the commencement of the lease. Thereafter the asset isaccounted as an item of property plant and equipment.The annual rental charge is split between the repayment of the liability and a finance cost so as toachieve a constant rate of finance over the life of the lease. The annual finance cost is charged tofinance costs in the Statement of Comprehensive Income. Page 111The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.13.1 The Trust as lesseeOperating leasesOperating lease payments are recognised as an expense on a straight-line basis over the leaseterm. Lease incentives are recognised initially as a liability and subsequently as a reduction ofrentals on a straight-line basis over the lease term.Contingent rentals are recognised as an expense in the period in which they are incurred.Leases of land and buildingsWhere a lease is for land and buildings, the land component is separated from the buildingcomponent and the classification for each is assessed separately.Note 1.13.2 The Trust as lessorFinance leasesAmounts due from lessees under finance leases are recorded as receivables at the amount of theTrust’s net investment in the leases. Finance lease income is allocated to accounting periods toreflect a constant periodic rate of return on the Trust’s net investment outstanding in respect of theleases.Operating leaseRental income from operating leases is recognised on a straight-line basis over the term of thelease. Initial direct costs incurred in negotiating and arranging an operating lease are added to thecarrying amount of the leased asset and recognised as an expense on a straight-line basis overthe lease term.Note 1.14 ProvisionsThe Trust recognises a provision where it has a present legal or constructive obligation ofuncertain timing or amount; for which it is probable that there will be a future outflow of cash orother resources; and a reliable estimate can be made of the amount. The amount recognised inthe Statement of Financial Position is the best estimate of the resources required to settle theobligation. Where the effect of the time value of money is significant, the estimated risk-adjustedcash flows are discounted using the discount rates published and mandated by HM Treasury. Thediscounted rate used by the Trust for Early Retirements is minus 0.5% (2018/19 positive 0.29%).Clinical negligence costsNHS Resolution operates a risk pooling scheme under which the Trust pays an annual contributionto NHS Resolution, which, in return, settles all clinical negligence claims. Although NHS Resolutionis administratively responsible for all clinical negligence cases, the legal liability remains with theTrust. The total value of clinical negligence provisions carried by NHS Resolution on behalf of theTrust is disclosed at note 24 but is not recognised in the Trust’s Accounts.Non-clinical risk poolingThe Trust participates in the Property Expenses Scheme and the Liabilities to Third PartiesScheme. Both are risk pooling schemes under which the Trust pays an annual contribution to NHSResolution and in return receives assistance with the costs of claims arising. The annualmembership contributions, and any “excesses” payable in respect of particular claims are chargedto operating expenses when the liability arises. Page 112The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Note 1.15 ContingenciesContingent assets (that is, assets arising from past events whose existence will only be confirmedby one or more future events not wholly within the entity’s control) are not recognised as assets,but are disclosed in note 25 where an inflow of economic benefits is probable.Contingent liabilities are not recognised, but are disclosed in note 25, unless the probability of atransfer of economic benefits is remote.Contingent liabilities are defined as:• possible obligations arising from past events whose existence will be confirmed only by theoccurrence of one or more uncertain future events not wholly within the entity’s control; or• present obligations arising from past events but for which it is not probable that a transfer ofeconomic benefits will arise or for which the amount of the obligation cannot be measured withsufficient reliability.Note 1.16 Public Dividend CapitalPublic Dividend Capital (PDC) is a type of public sector equity finance based on the excess ofassets over liabilities at the time of establishment of the predecessor NHS organisation. HMTreasury has determined that PDC is not a financial instrument within the meaning of IAS 32.The Secretary of State can issue new PDC to, and require repayments of PDC from, the Trust.PDC is recorded at the value received.A charge, reflecting the cost of capital utilised by the Trust, is payable as public dividend capitaldividend. The charge is calculated at the rate set by HM Treasury (currently 3.5%) on the averagerelevant net assets of the Trust during the financial year. Relevant net assets are calculated as thevalue of all assets less the value of all liabilities, except for(i) donated assets (including lottery funded assets);(ii) average daily cash balances held with the Government Banking Services (GBS) and NationalLoans Fund (NLF) deposits, excluding cash balances held in GBS accounts that relate to a shortterm working capital facility; and(iii) any PDC dividend balance receivable or payable.In accordance with the requirements laid down by the Department of Health and Social Care (asthe issuer of PDC), the dividend for the year is calculated on the actual average relevant netassets as set out in the “pre-audit” version of the Annual Accounts. The dividend thus calculated isnot revised should any adjustment to net assets occur as a result the audit of the Annual Accounts.Note 1.17 Value Added Tax (VAT)Most of the activities of the Trust are outside the scope of VAT and, in general, output tax does notapply and input tax on purchases is not recoverable. Irrecoverable VAT is charged to the relevantexpenditure category or included in the capitalised purchase cost of fixed assets. Where output taxis charged or input VAT is recoverable, the amounts are stated net of VAT.Note 1.18 Foreign exchangeThe functional and presentational currency of the Trust is sterling.A transaction which is denominated in a foreign currency is translated into the functional currencyat the spot exchange rate on the date of the transaction. Page 113The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Where the Trust has assets or liabilities denominated in a foreign currency at the Statement ofFinancial Position date:• monetary items are translated at the spot exchange rate on 31 March• non-monetary assets and liabilities measured at historical cost are translated using the spotexchange rate at the date of the transaction and• non-monetary assets and liabilities measured at fair value are translated using the spot exchangerate at the date the fair value was determined.Exchange gains or losses on monetary items (arising on settlement of the transaction or on retranslation at the Statement of Financial Position date) are recognised in income or expense in theperiod in which they arise.Exchange gains or losses on non-monetary assets and liabilities are recognised in the same manneras other gains and losses on these items.Note 1.19 Third party assetsAssets belonging to third parties (such as money held on behalf of patients) are not recognised in theAccounts since the Trust has no beneficial interest in them. However, they are disclosed in a separatenote to the Accounts in accordance with the requirements of HM Treasury’s FReM .Note 1.20 Losses and special paymentsLosses and special payments are items that Parliament would not have contemplated when it agreedfunds for the health service or passed legislation. By their nature they are items that ideally should notarise. They are therefore subject to special control procedures compared with the generality ofpayments. They are divided into different categories, which govern the way that individual cases arehandled. Losses and special payments are charged to the relevant functional headings in expenditureon an accruals basis.The losses and special payments note is compiled directly from the losses and compensations registerwhich reports on an accrual basis with the exception of provisions for future losses.Note 1.21 GiftsGifts are items that are voluntarily donated, with no preconditions and without the expectation of anyreturn. Gifts include all transactions economically equivalent to free and unremunerated transfers, suchas the loan of an asset for its expected useful life, and the sale or lease of assets at below marketvalue.Note 1.22 Early adoption of standards, amendments and interpretationsNo new accounting standards or revisions to existing standards have been early adopted in 2019/20.Note 1.23 Standards, amendments and interpretations in issue but not yet effective or adoptedIn light of COVID-19 pressures, HM Treasury and the Financial Reporting Advisory Board (FRAB) havedecided that IFRS 16 implementation in the public sector will be deferred until 2021/22. Page 114The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Notes to the AccountsNote 1. Accounting policies and other information (continued)Estimated impact on 1 April 2021 statement of financial position£000’sAdditional right of use assets recognised for existing operating leases18,203Net impact on net assets on 1 April 202118,203Estimated in-year impact in 2021/22Additional depreciation on right of use assets(1,433)Additional finance costs on lease liabilities(217)Lease rentals no longer charged to operating expenditure1,137Estimated impact on surplus / deficit in 2021/22(513)Note 2. Operating SegmentsNote 3 Operating income from patient care activitiesAll income from patient care activities relates to contract income recognised in line withaccounting policy 1.4.1.The trust has estimated impact of applying IFRS 16 in 2021/22 on the opening statement offinancial position and the in-year impact on the statement of comprehensive income and capitaladditions as follows:IFRS 16 Leases will replace IAS 17 Leases, IFRIC 4 Determining whether an arrangementcontains a lease and other interpretations and is applicable in the public sector for periodsbeginning 1 April 2021. The standard provides a single accounting model for lessees,recognising a right of use asset and obligation in the statement of financial position for allleases. The standard also requires the remeasurement of lease liabilities after thecommencement of the lease term. For lessors, the distinction between operating and financeleases will remain and the accounting will be largely unchanged.The nature of the Trust’s services is the provision of healthcare. Similar methods are used toprovide services across locations, since all policies, procedures and governance arrangementsare Trust wide. As a Trust, all services are subject to the same regulatory environment andstandards set out by our external performance managers. Accordingly the Trust operates onesegment.IFRS 16 changes the definition of a lease compared to IAS 17 and IFRIC 4. The Trust will applythis definition to new leases only and will grandfather its assessments made under the oldstandards of whether existing contracts contain a lease. Page 115The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 3.1 Income from patient care activities (by nature)2019/202018/19£000’s£000’sAcute servicesElective income28,13227,977Non elective income87,81679,807First outpatient income20,00219,329Follow up outpatient income16,67515,083A & E income18,38815,147High cost drugs income from commissioners (excluding passthrough costs)14,07714,927Other NHS clinical income52,29835,758All other servicesPrivate patient income290277Agenda for Change pay award central funding*02,606Additional pension contribution central funding**6,4400Other clinical income2,628999Total income from activities246,747211,910Note 3.2 Income from patient care activities (by source)2019/202018/19Income from patient care activities received from:£000’s£000’sNHS England29,93721,785Clinical Commissioning Groups215,150185,544Department of Health and Social Care272,606Other NHS providers490525NHS other103110Local authorities1964Non-NHS: private patients290277Non-NHS: overseas patients (chargeable to patient)9381Injury cost recovery scheme638918Total income from activities246,747211,910**The employer contribution rate for NHS pensions increased from 14.3% to 20.6% (excludingadministration charge) from 1 April 2019. For 2019/20, NHS providers continued to paycontributions at the former rate with the additional amount being paid by NHS England onproviders’ behalf. The full cost and related funding have been recognised in these Accounts.*Additional costs of the Agenda for Change pay reform in 2018/19 received central funding.From 2019/20 this funding is incorporated into tariff. Page 116The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 3.3 Overseas visitors (relating to patients charged directly by the provider)2019/202018/19£000’s£000’sIncome recognised this year9381Cash payments received in-year4316Amounts added to provision for impairment of receivables387Amounts written off in-year14Note 4 Other operating income2019/202018/19£000’s£000’sOther operating income from contracts with customersResearch and development632713Education and training6,7726,602Non-patient care services to other bodies2,7062,675Provider sustainability fund (PSF)5,78711,422Financial recovery fund (FRF)21,8290Marginal rate emergency tariff funding (MRET)5480Other income3,2713,024Other non-contract operating incomeReceipt of capital grants and donations9817Charitable and other contributions to expenditure00Rental revenue from operating leases101337Total other operating income41,74424,790Note 5 Additional information on contract revenue (IFRS 15) recognised in the period2019/202018/19£000’s£000’sRevenue recognised in the reporting period that was included inwithin contract liabilities at the previous period end656162 Page 117The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 6 Operating expenses2019/202018/19£000’s£000’sPurchase of healthcare from NHS and DHSC bodies6,6551,990Purchase of healthcare from non-NHS and non-DHSC bodies3,8801,950Staff and executive directors costs193,119168,513Remuneration of non-executive directors9475Supplies and services – clinical (excluding drugs costs)17,95017,572Supplies and services – general3,3953,190Drug costs20,18920,550Inventories written down018Consultancy and professional services3,5321,912Establishment1,6181,601Premises10,3289,122Transport (including patient travel)816826Depreciation on property, plant and equipment7,4947,242Amortisation on intangible assets1,8911,840Movement in credit loss allowance: contract receivables / contractassets15815Change in provisions discount rate7(2)Audit fees payable to the external auditoraudit services – statutory audit7373other auditor remuneration (external auditor only)012Internal audit costs10499Clinical negligence9,92411,115Legal fees416110Insurance117141Education and training741796Rentals under operating leases2,2921,674Redundancy11119Car parking & security459408Hospitality112Losses, ex gratia & special payments7376Other external services276267Other435364Total286,048251,680 Page 118The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 7 Other auditor remunerationNote 7.1 Other auditor remuneration2019/202018/19£000’s£000’sOther auditor remuneration paid to the external auditor:Other assurance services012Total012Note 7.2 Limitation on auditor’s liabilityNote 8 Impairment of assetsThere were nil impairments in 2019/20 (nil in 2018/19).Note 9 Employee benefits2019/202018/19£000’s£000’sSalaries and wages124,956114,601Social security costs12,31912,045Apprenticeship levy605566Employer’s contributions to NHS pensions21,14413,467Pension cost – other3521Temporary staff (including agency)35,86529,182Total gross staff costs194,924169,882Recoveries in respect of seconded staff00Total staff costs194,924169,882Of whichCosts capitalised as part of assets1,7941,250Note 9.1 Retirements due to ill-healthDuring 2019/20 there were three early retirements from the Trust agreed on the grounds of illhealth (none in the year ended 31 March 2019). The estimated additional pension liabilities ofthese ill-health retirements is £151k (0k in 2018/19).These estimated costs are calculated on an average basis and will be borne by the NHS PensionScheme.The limitation on auditor’s liability for external audit work is £2m (2018/19: £2m). Page 119The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 10 Pension costsPast 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 Pensionswebsite at Both are unfunded defined benefit schemes thatcover NHS employers, GP practices and other bodies, allowed under the direction of theSecretary of State for Health and Social Care in England and Wales. They are not designed tobe run in a way that would enable NHS bodies to identify their share of the underlying schemeassets and liabilities. Therefore, each scheme is accounted for as if it were a definedcontribution scheme: the cost to the NHS body of participating in each scheme is taken as equalto the contributions payable to that scheme for the accounting period.In order that the defined benefit obligations recognised in the financial statements do not differmaterially from those that would be determined at the reporting date by a formal actuarialvaluation, the FReM requires that “the period between formal valuations shall be four years, withapproximate assessments in intervening years”. An outline of these follows:a) Accounting valuationA valuation of scheme liability is carried out annually by the scheme actuary (currently theGovernment Actuary’s Department) as at the end of the reporting period. This utilises anactuarial assessment for the previous accounting period in conjunction with updatedmembership and financial data for the current reporting period, and is accepted as providingsuitably robust figures for financial reporting purposes. The valuation of the scheme liability asat 31 March 2020, is based on valuation data as at 31 March 2019, updated to 31 March 2020with summary global member and accounting data. In undertaking this actuarial assessment,the methodology prescribed in IAS 19, relevant FReM interpretations, and the discount rateprescribed by HM Treasury have also been used.The latest assessment of the liabilities of the scheme is contained in the report of the schemeactuary, which forms part of the annual NHS Pension Scheme Accounts. These accounts canbe viewed on the NHS Pensions website and are published annually. Copies can also beobtained from The Stationery Office.b) Full actuarial (funding) valuationThe purpose of this valuation is to assess the level of liability in respect of the benefits dueunder the schemes (taking into account recent demographic experience), and to recommendcontribution rates payable by employees and employers.The latest actuarial valuation undertaken for the NHS Pension Scheme was completed as at 31March 2016. The results of this valuation set the employer contribution rate payable from April2019 to 20.6%, and the Scheme Regulations were amended accordingly.The 2016 funding valuation was also expected to test the cost of the Scheme relative to theemployer cost cap set following the 2012 valuation. Following a judgment from the Court ofAppeal in December 2018 Government announced a pause to that part of the valuation processpending conclusion of the continuing legal process. Page 120The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 11 Operating leases2019/202018/19£000’s£000’sOperating lease revenueMinimum lease receipts101337Total1013372019/202018/19£000’s£000’sFuture minimum lease receipts due:– not later than one year;101101– later than one year and not later than five years;247247– later than five years.146194Total4945422019/202018/19£000’s£000’sOperating lease expenseMinimum lease payments2,2921,674Total2,2921,6742019/202018/19£000’s£000’sFuture minimum lease payments due:– not later than one year;2,0891,291– later than one year and not later than five years;6,9423,702– later than five years.9,3204,955Total18,3519,948Note 12 Finance incomeFinance income represents interest received on assets and investments in the period.2019/202018/19£000’s£000’sInterest on bank accounts8575Total finance income8575Note 11.1 The Princess Alexandra Hospital NHS Trust as a lessorThis note discloses income generated in operating lease agreements where The Trust is thelessor.This note discloses costs and commitments incurred in operating lease arrangements where theTrust is the lessee.Note 11.2 The Princess Alexandra Hospital NHS Trust as a lessee Page 121The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 13.1 Finance expenditure2019/202018/19£000’s£000’sInterest expense:2,0191,643Loans from the Department of Health and Social CareTotal interest expense2,0191,643Unwinding of discount on provisions21Other finance costs1110Total finance costs2,0321,654Note 14 Other gains and lossesNote 15 Intangible assetsInternallygenerated ITDevelopmentexpenditureTotal£000’s£000’s£000’s15.1 Intangible assets – 2019/20Valuation / gross cost at 1 April 20194814,86014,908Additions68435503Valuation / gross cost at 31 March 202011615,29515,411Amortisation at 1 April 2019215,8665,887Provided during the year151,8761,891Amortisation at 31 March 2020367,7427,778Net book value at 31 March 2020807,5537,633Net book value at 1 April 2019278,9949,02115.2 Intangible assets – 2018/19Valuation / gross cost at 1 April 20184814,59414,642Additions17266283Disposals / derecognition(17)0(17)Valuation / gross cost at 31 March 20194814,86014,908Amortisation at 1 April 2018324,0324,064Provided during the year61,8341,840Disposals / derecognition(17)0(17)Amortisation at 31 March 2019215,8665,887Net book value at 31 March 2019278,9949,021Net book value at 1 April 20181610,56210,578Finance expenditure represents interest and other charges involved in the borrowing of moneyor asset financing.There were no gains or losses from disposals of assets in 2019/20 (nil in 2018/19)Note 13.2 The late payment of commercial debts (interest) Act 1998 / Public ContractThere were nil interest charges on late payments in 2019/20 (nil in 2018/19) Page 122The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 16 Property, plant and equipment –2019/20LandBuildingsexcludingdwellingsAssets underconstructionPlant &machineryTransportequipmentInformationtechnologyFurniture &fittingsTotal£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sValuation/gross cost at 1 April 20198,15080,4451,84926,5207618,0681,169136,277Additions01,7729,8541,7391323,412016,909Revaluations0(2,107)00000(2,107)Reclassifications066(66)(71)71000Disposals / derecognition000(160)000(160)Valuation/gross cost at 31 March 20208,15080,17611,63728,02827921,4801,169150,919Accumulated depreciation at 1 April 20190535017,783289,4401,11428,900Provided during the year02,75402,149102,571107,494Revaluations0(2,720)00000(2,720)Reclassifications000(71)71000Disposals / derecognition000(160)000(160)Accumulated depreciation at 31 March 20200569019,70110912,0111,12433,514Net book value at 31 March 20208,15079,60711,6378,3271709,46945117,405Net book value at 1 April 20198,15079,9101,8498,737488,62855107,377Note 16.1 Property, plant and equipment –2018/19LandBuildingsexcludingdwellingsAssets underconstructionPlant &machineryTransportequipmentInformationtechnologyFurniture &fittingsTotal£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sValuation / gross cost at 1 April 20188,15076,66744127,72319016,9231,310131,404Additions06,0611,5312,258291,772011,651Revaluations0(2,406)00000(2,406)Reclassifications0123(123)00000Disposals / derecognition000(3,461)(143)(627)(141)(4,372)Valuation/gross cost at 31 March 20198,15080,4451,84926,5207618,0681,169136,277Accumulated depreciation at 1 April 201800018,9701667,7711,24528,152Provided during the year02,65702,27452,296107,242Revaluations0(2,122)00000(2,122)Disposals / derecognition000(3,461)(143)(627)(141)(4,372)Accumulated depreciation at 31 March 20190535017,783289,4401,11428,900Net book value at 31 March 20198,15079,9101,8498,737488,62855107,377Net book value at 1 April 20188,15076,6674418,753249,15265103,252 Page 123The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 16.2 Property, plant and equipment financing – 2019/20LandBuildingsexcludingdwellingsAssets underconstructionPlant &machineryTransportequipmentInformationtechnologyFurniture &fittingsTotal£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sNet book value at 31 March 2020Owned – purchased8,15079,60711,6378,1101709,46945117,188Finance leased0008300083Owned – donated000134000134NBV total at 31 March 20208,15079,60711,6378,3271709,46945117,405Note 16.3 Property, plant and equipment financing – 2018/19LandBuildingsexcludingdwellingsAssets underconstructionPlant &machineryTransportequipmentInformationtechnologyFurniture &fittingsTotal£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sNet book value at 31 March 2019Owned – purchased8,15079,9101,8498,681488,62855107,321Finance leased00000000Owned – donated0005600056NBV total at 31 March 20198,15079,91018498,737488,62855107,377Note 16.4 Donations of property, plant and equipmentNote 16.5 Revaluations of property, plant and equipmentThe Trust has undertaken a revaluation of land and buildings as at 31 March 2019. This work was performed by Mr Giles Awford BSc (Hons) MRICS,Principal Surveyor, District Valuer Services (DVS), the specialist property arm of the Valuation Office Agency (VOA). The valuation has been undertakenin accordance with International Finance Reporting Standard (IFRS) as interpreted by the HM Financial Reporting Manual (FREM) compliant with theDHSC Group Manual for Accounts (DHSC GAM). The valuation approach continues to adopt the Modern Equivalent Asset (MEA) concept. DHSCguidance specifies that land and buildings should be valued on the basis of depreciated replacement cost, applying the MEA concept. MEA is defined as‘the cost of a modern replacement asset that has the same productive capacity as the property being valued’. Therefore MEA is not a valuation of theexisting land and buildings that the Trust holds but a theoretical valuation for accounting purposes of what the Trust could need to spend in order toreplace the current assets.The Trust has received capital asset donations from The PAH NHS Trust Charitable Fund (Registered Charity No 10547745) totalling £98k (2018/19 Page 124The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 17 Inventories31 March202031 March2019£000’s£000’sDrugs1,4511,395Consumables3,0463,004Energy3280Other3636Total inventories4,5654,515Note 18.1 Receivables31 March202031 March2019£000’s£000’sCurrentContract receivables47,66617,365Allowance for impaired contract receivables / assets(1,193)(1,066)Prepayments (non-PFI)1,2411,514Interest receivable44VAT receivable1,406882Other receivables713172Total current receivables49,83718,871Non-currentContract assets692912Total non-current receivables692912Of which receivable from NHS and DHSC group bodies:Current45,16414,300Non-current00Note 18.2 Allowances for credit losses2019/202018/19£000’s£000’sAllowances as at 1 April – brought forward1,0660Impact of implementing IFRS 9 (and IFRS 15) on 1 April 201801,058New allowances arising175211Changes in existing allowances0(9)Reversals of allowances(17)(187)Utilisation of allowances (write offs)(31)(7)Allowances as at 31 March 20201,1931,066Inventories recognised in expenses for the year were £31,347k (2018/19: £30,816k). Write-downof inventories recognised as expenses for the year were £0k (2018/19: £18k). Page 125The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 19 Cash and cash equivalents movements2019/202018/19£000’s£000’sAt 1 April1,1971,262Net change in year(53)(65)At 31 March1,1441,197Broken down into:Cash at commercial banks and in hand2246Cash with the Government Banking Service1,1221,151Total cash and cash equivalents as in SoFP / SoCF1,1441,197Note 19.1 Third party assets held by the trust31 March202031 March2019£000’s£000’sBank balances1615Total third party assets1615Note 20.1 Trade and other payables31 March202031 March2019£000’s£000’sCurrentTrade payables8,5984,434Capital payables6,7573,214Accruals7,6679,140Social security costs1,8631,661Other taxes payable3471,487Other payables1,836102Total current trade and other payables27,06820,038Of which payables from NHS and DHSC group bodies:4,6632,447Note 20.2 Early retirements in NHS payables aboveCash and cash equivalents comprise cash at bank, in hand and cash equivalents. Cashequivalents are readily convertible investments of known value which are subject to aninsignificant risk of change in value.The Trust held cash and cash equivalents which relate to monies held by the Trust on behalfof patients or other parties and in which the Trust has no beneficial interest. This has beenexcluded from the cash and cash equivalents figure reported in the accounts.There are no early retirements included in NHS payables (nil in 2018/19) Page 126The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 21 Other liabilities31 March202031 March2019£000’s£000’sCurrentDeferred income: contract liabilities1,158656Total other current liabilities1,158656Note 22.1 Borrowings31 March202031 March2019£000’s£000’sCurrentLoans from DHSC150,92857,952Obligations under finance leases300Total current borrowings150,95857,952Non-currentLoans from DHSC066,383Obligations under finance leases400Total non-current borrowings4066,383Note 22.2 Reconciliation of liabilities arising from financing activities – 2019/20Loans fromDHSCFinanceleasesTotal£000’s£000’s£000’sCarrying value at 1 April 2019124,3350124,335Cash movements:Payments and receipts of principal26,511(20)26,491Payments of interest(1,937)0(1,937)Non-cash movements:Application of effective interest rate2,01902,019Other changes09090Carrying value at 31 March 2020150,92870150,998Note 22.3 Reconciliation of liabilities arising from financing activities – 2018/19Loans fromDHSCFinanceleasesTotal£000’s£000’s£000’sCarrying value at 1 April 201894,6821894,700Cash movements:Payments and receipts of principal29,274(18)29,256Payments of interest(1,532)0(1,532)Non-cash movements:Impact of implementing IFRS 9 on 1 April 20182680268Application of effective interest rate1,64301,643Carrying value at 31 March 2019124,3350124,335 Page 127The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 23 Finance leasesNote 23.1 The Trust as a lesseeObligations under finance leases where the Trust is the lessee.31 March202031 March2019£000’s£000’sGross lease liabilities710of which liabilities are due:not later than one year;300– later than one year and not laterthan five years;410later than five years.00(1)0Finance charges allocated to future periodsNet lease liabilities700of which payable:not later than one year;300later than one year and not laterthan five years;400later than five years.00Note 24 Provisions for liabilities and charges analysisPensions:earlydepartureLegalclaimsOtherTotal£000’s£000’s£000’s£000’sAt 1 April 2019858780936Change in the discount rate7007Arising during the year502828091,141Utilised during the year(75)00(75)Reversed unused0(58)0(58)Unwinding of discount2002At 31 March 20208423028091,953Expected timing of cash flows:not later than one year;753028091,186later than one year and not laterthan five years;30000300later than five years.46700467Total8423028091,953At 31 March 2020 £107.9m was included in provisions of NHS Resolution in respect of clinicalnegligence liabilities of the Trust (31 March 2019: £125.4m).Note 24.1 Clinical negligence liabilities Page 128The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 25 Contingent assets and liabilities31 March202031 March2019£000’s£000’sValue of contingent liabilitiesNHS Resolution legal claims(38)(16)Employment tribunal and other employee related litigation(128)(127)Gross value of contingent liabilities(166)(143)Note 26 Contractual capital commitments31 March202031 March2019£000’s£000’sProperty, plant and equipment8,2653,766Total8,2653,766Note 27. Financial instrumentsNote 27.1 Financial risk managementCurrency riskInterest rate riskThe Trust can also borrow from the government for revenue support funding, subject toapproval form NHS Improvement. Interest rates are confirmed by the lender (Departmentof Health and Social Care) at the point borrowing is undertaken. The Trust therefore haslow exposure to interest rate fluctuations.Financial reporting standard IFRS 7 requires disclosure of the role that financialinstruments have had during the period in creating or changing the risks a body faces inundertaking activities. Because of the continuing service provider relationship that theTrust has with Commissioners and the way Commissioners are financed, the Trust is notexposed to the degree of financial risk faced by business entities. Also financialinstruments play a much more limited role in creating or changing risk than would betypical of listed companies, to which financial reporting standards mainly apply.The Trust’s cash management operations are undertaken by the finance department withinparameters defined formally within the Trust’s standing financial instructions and policiesagreed by the Board of Directors. The Trust’s treasury activity is subject to review by theTrust’s internal auditors.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 overseasoperations. The Trust therefore has low exposure to currency rate fluctuations.The Trust can borrow from the government for capital expenditure, subject to approvalfrom NHS Improvement. The borrowings are for 1-25 years, in line with the life of theassociated assets, and interest charges at the national loans fund rate, fixed for the life ofthe loan. Page 129The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Credit riskLiquidity riskNote 27.2 Carrying values of financial assets31 March202031 March2019Carrying values of financial assets held at amortised cost£000’s£000’sTrade and other receivables excluding non financial assets47,37717,387Cash and cash equivalents1,1441,197Total at 31 March 202048,52118,584Note 27.3 Carrying values of financial liabilities31 March202031 March2019Carrying values of financial liabilities held at amortised cost£000’s£000’sLoans from the Department of Health and Social Care150,928124,335Obligations under finance leases700Trade and other payables excluding non financial liabilities24,85816,890175,856141,225Total at 31 March 2020Carrying values of financial liabilities as at 31 March 2019Totalbook value£000’sLoans from the Department of Health and Social Care124,335Obligations under finance leases0Trade and other payables excluding non financial liabilities16,890141,225Total at 31 March 2019Note 27.1 Financial risk management (continued)A majority of the Trust’s revenue comes from contracts with other public sector bodies, theTrust has low exposure to credit risk.The Trust’s operating costs are incurred under contracts with Commissioners, which arefinanced from resources voted annually by Parliament. The Trust mainly funds its capital frominternally generated funds. The Trust is therefore not exposed to significant liquidity risks.IFRS 9 Financial Instruments is applied retrospectively from 1 April 2018 without restatementof comparatives. As such, comparative disclosures have been prepared under IAS 39 and themeasurement categories differ to those in the current year analysis. Page 130The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 31 March202031 March2019£000’s£000’sIn one year or less175,85674,842In more than one year but not more than two years025,663In more than two years but not more than five years040,720Total175,856141,225Note 27.5 Fair values of financial assets and liabilitiesNote 28 Losses and special paymentsTotalnumber ofcasesTotal valueof casesTotalnumber ofcasesTotal valueof casesNumber£000’sNumber£000’sLossesCash losses2424Bad debts and claims abandoned313246Stores losses and damage to property333964Total losses36691574Special paymentsCompensation under court order orlegally binding arbitration award49531Ex-gratia payments53101Total special payments9121532Total losses and special payments458130106Compensation payments received00Note 29 Related partiesThe Department of Health and Social CareHM Revenue and CustomsOther NHS ProvidersNHS Blood and Transplant ServiceCCGs and NHS EnglandNHS ProfessionalsNHS West EssexNHS Pensions AgencyNHS East and North HertfordshireNHS England and NHS ImprovementNHS EnglandHealth Education EnglandNHS ResolutionNHS Property ServicesNHS Business Service AuthorityLocal AuthoritiesOther Health Bodies and Government Departments e.g. HMRCThe carrying value of financial liabilities is at book value (carrying value) as it is considered thatthis is a reasonable approximation of fair value.2019/202018/19In accordance with IAS 24 and paragraphs 5.184-5.188 of the GAM the Trust is required todisclose the main entities within the public sector that the Trust has had dealings with. TheDepartment of Health and Social Care are regarded as a parent department. Related partiesinclude :-Note 27.4 Maturity of financial liabilities Page 131The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 29 Related parties (continued)Name of Related PartyName of TrustEmployeeTitle of Trust EmployeeRelationship withRelated PartyExpenditurewith relatedpartyIncome fromrelated partyAmountsowed torelated partyAmounts duefrom relatedparty£000’s£000’s£000’s£000’sLiaison Financial ServicesAndrew HoldenNon-Executive DirectorBoard Director4,3140110Addenbrooke’s Charitable TrustHelen HoweAssociate Non-ExecutiveDirectorTrustee2000Anglia Ruskin UniversityJohn KeddieNon-Executive DirectorGovernor2446110Anglia Ruskin UniversityJames McLeishDirector of QualityImprovementFamily member anemployee2446110Care Quality CommissionAhmed SolimanAssociate MedicalDirector – Urgent CareSpecialist ClinicalAdvisor151000East of England AmbulanceServiceJames McLeishDirector of QualityImprovementFamily member anemployee45020Holly House HospitalJohn HoganNon-Executive DirectorPrivate Practice631290St Clare HospiceMonica BoseConsultantGastroenterologistAMD CCCSTrustee22030University of SuffolkSteve ClarkeChairmanIndependentDirector1002Barts Health NHS TrustJohn HoganNon-Executive DirectorConsultantCardiologist386425301343All Board members and the most senior managers of the Trust with key controlling influence have been requested to confirm any material related party transactions,including any transactions of close family members. The Trust also maintains a hospitality and declaration of interest register.PAH NHS Trust Charitable funds (Registered Charity 10547745). The Trust receives revenue and capital payments from this charity and certain trustees are alsomembers of the Trust Board. The charity’s objective is to provide support both generally and in certain areas of the Trust’s activities. During the year the charitycontributed £286k (unaudited) to the Trust (2018/19 £278k). Page 132The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 30. Prior Period AdjustmentsNote 31. Events after the reporting dateNote 32 Better Payment Practice code2019/202019/202018/192018/19Non-NHS PayablesNumber£000’sNumber£000’sTotal non-NHS trade invoices paid in the year49,00276,08351,66567,947Total non-NHS trade invoices paid within target43,72264,32036,58349,942Percentage of non-NHS trade invoices paidwithin target89.2%84.5%70.8%73.5%NHS PayablesTotal NHS trade invoices paid in the year2,22756,4462,55342,033Total NHS trade invoices paid within target1,80547,3791,81036,631Percentage of NHS trade invoices paid withintarget81.1%83.9%70.9%87.1%Note 33 External financing limitThe Trust is given an external financing limit against which it is permitted to underspend2019/202018/19£000’s£000’sExternal financing limit (EFL)30,08332,286Cashflow financing29,48932,088Unadjusted EFL594198CT Scanner funding deferred to 20/21 included in 19/20 limit(447)0Underspend against EFL147198There have been no prior period adjustments with IAS8 that has required restatement ofcomparative information due to either changes in accounting policy or material prior perioderror.The Better Payment Practice code requires the NHS body to aim to pay all valid invoices bythe due date or within 30 days of receipt of valid invoice, whichever is later.On 2 April 2020, the Department of Health and Social Care (DHSC) and NHS England andNHS Improvement announced reforms to the NHS cash regime for the 2020/21 financialyear. During 2020/21 existing DHSC interim revenue and capital loans as at 31 March 2020will be extinguished and replaced with the issue of Public Dividend Capital (PDC) to allow therepayment. Given this relates to liabilities that existed at 31 March2020, DHSC has updatedits Group Accounting Manual to advise this is considered an adjusting event after thereporting period for providers. Outstanding interim loans totalling £150,928k (includinginterest accrual of £461k) as at 31 March 2020 in these financial statements have beenclassified as current as they will be repayable within 12 months.The Trust has no other adjusting events after the end of the reporting period. The Accountswere approved by the Board of Directors on 28 May 2020.Adjusted financial performance (management control total basis): Page 133The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 34 Capital Resource Limit (CRL)2019/202018/19£000’s£000’sGross capital expenditure17,41211,934Less: Donated and granted capital additions(98)(17)Charge against Capital Resource Limit17,31411,917Capital Resource Limit17,72112,102Unadjusted CRL407185CT Scanner funding deferred to 20/21 included in 19/20 limit(447)0COVID CRL Support for 2019/20 to be adjusted in 20/215090Underspend against CRL469185Note 35. Breakeven duty and financial performanceNote 35.1 Breakeven duty by Control TotalControlTargetActualOutturnUnderspend£000’s£000’s£000’sNet Control Total – 2019/20(6,168)506,218Net Control Total – 2018/19(20,436)(16,542)3,894Note 35.2 Breakeven duty financial performance2019/20£000’sAdjusted financial performance surplus / (deficit) (control total basis)50Add back income for impact of 2018/19 post-accounts PSF reallocation368Breakeven duty financial performance surplus418Adjusted financial performance (management control total Page 134The Princess Alexandra Hospital NHS TrustAnnual Accounts 2019/20 Note 35.3 Breakeven duty rolling assessment1997/98to2008/092009/102010/112011/122012/132013/142014/152015/162016/172017/182018/192019/20£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’s£000’sBreakeven duty in-year financialperformance511415461122(16,403)(21,998)(37,714)(26,715)(28,435)(16,542)418Breakeven duty cumulativeposition1,5362,0472,4622,9233,045(13,358)(35,356)(73,070)(99,785)(128,220)(144,762)(144,344)Operating income172,171179,388180,790184,568177,739190,478196,124209,742213,231236,700288,491Cumulative breakeven position asa percentage of operating income1.19%1.37%1.62%1.65%-7.52%-18.56%-37.26%-47.58%-60.13%-61.16%-50.03%The amounts in the above tables in respect of 2005/06 to 2008/09 inclusive have not been restated to IFRS and remain on a UK GAAP basis. Page 135The Princess Alexandra Hospital NHS Trust, Hamstel Road, Harlow, Essex, CM20 1QX01279 44 44 55Keep up to date with our latestnews on social media:@[email protected]


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