Trust rapped for ‘irregular’ £116k payment to outgoing CEO

An NHS trust has been reprimanded by the public spending watchdog after it paid its departing chief executive more than £100,000 without prior Treasury sign-off.

Maz Fosh left Lincolnshire Community Health Services Trust in July 2023 when the organisation moved to a shared CEO arrangement with United Lincolnshire Hospitals.

Now auditors have said government approval should have been sought for the former leader’s £116,000 exit package. The payment, along with four other cases at different trusts, is now being considered by the Treasury for retrospective approval.

Trust accounts break down the package as a redundancy payment of £86,762 and “other benefits” worth £29,525.

It is not clear why the payment required Treasury approval. The size of the payment to Ms Fosh does not appear to be significantly larger than other similar severance packages. She worked at LCHS for 11 years, including four as CEO.

Public bodies are required to secure consent before making spending commitments that are “novel, contentious or could cause repercussions elsewhere”, according to guidance.

This includes special severance payments that are “in excess of contractual commitments”.

HSJ asked the trust what elements of the package went above contractual entitlements and what comprised the “other benefits”.

The trust said it could not release further information, citing confidentiality, but said: “We acknowledge that the severance payment did not receive the necessary approvals and we are working with NHS England and His Majesty’s Treasury to seek retrospective approval for these.”

Ms Fosh’s payment is smaller than some other recent examples of CEO exit packages, which have typically exceeded £100,000. 

Other irregular payments

In Department of Health and Social Care accounts published before Christmas, Gareth Davies, the auditor general, flagged four other cases, in addition to Ms Fosh’s, of “irregular” payments made without prior approval. Mr Davies said this included a “number of exit packages to chief executives outside of statutory or contractual agreements”, but did not specify which trusts these involved.

The four further cases were at Ashford and St Peter’s Hospital Foundation Trust, Kent and Medway NHS and Social Care Partnership Trust, and Nottinghamshire Healthcare FT, which made two unauthorised payments. The total value of these payouts was just over £180,000.

Accounts for Ashford and St Peter’s FT disclose one “non-contractual payment” requiring Treasury sign-off, at £27,000. They also reveal there was one exit package for a “board member or senior manager with significant financial responsibility”, although it did not specify whether this is the same payment.

HSJ asked the trust whether the payment related to chief executive Julie Smith, who left the trust suddenly in March 2024 ahead of a move to joint leadership, but received no response.

In his commentary on the DHSC accounts, Mr Davies recommended NHSE reinforce that approval should be sought “before any offers are made to staff”. The auditor general said NHSE should “ensure that its regional teams, who are often the first point of contact for NHS providers, are also aware of [guidance] requirements”.

However, the auditor general said the sums involved were not significant enough to stop him signing off the accounts.

Kent and Medway Partnership Trust said it had entered into a settlement and was then advised that an “additional step in the approval process” was required. The trust refused to disclose which employee the payout related to, although it said it expected final approval “imminently”.

Jen Guiver, executive director of people and culture at Nottinghamshire Healthcare FT, said: “The error occurred when the trust mistakenly interpreted legal advice, believing that executive directors and the chief executive were permitted to approve special payments for employees.”

Ms Guiver said the problem was immediately reported to NHSE when it came to light and said the trust had made changes to its processes to ensure it was not repeated.

NHSE said it would be reminding providers and integrated care boards of their responsibilities.

Last year, two specialist trusts were sanctioned after ministers ruled they had attempted to “circumvent” capital spending rules. Six commissioners were also found to have made unauthorised payouts.