THE outgoing chief of NHS Scotland has defended a pay-off which saw the disgraced former boss of NHS Tayside bank £32,000 more than she was contractually entitled to, insisting it was "good value for money" for taxpayers.

Paul Gray said the £91,280 settlement paid to Lesley McLay had been "let down by errors in the process" surrounding how it was signed off, but stressed that the sum itself was "reasonable and represented good value for money" because it was less than the estimated costs of a potential legal battle over unfair dismissal.

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It comes days after former SNP health secretary Alex Neil accused NHS bosses of "total incompetence" after it emerged that Ms McLay had received an extra £32,105 after her notice period was doubled to from three to six months without the approval of NHS Tayside's Remuneration Committee.

The health board also mistakenly paid Ms McLay £19,135 in pensions contributions linked to her notice period which Audit Scotland said "should not be paid", and which NHS Tayside is now attempting to claw back.

Speaking to the Herald, Mr Gray, who is due to step down as chief executive of NHS Scotland in February after five years in the post, said: "Audit Scotland said the steps taken to reach the settlement were reasonable but there were errors in the process.

"The error in the process, which was the failure to go through the Remuneration Committee, has been put right - albeit retrospectively.

"What Audit Scotland also said was that the total costs of the negotiated settlement to NHS Tayside were less than the Central Legal Office's estimate of the cost of fighting an unsuccessful legal case, so what they did was - according to Audit Scotland - reasonable and value for money.

"In that sense, the failure to follow due process was not right and I'm glad they put it right, albeit retrospectively.

"But it's disappointing that a settlement that was reasonable and represented good value for money, which would be very important features to me as the accountable officer, fell short in terms of process."

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Ms McLay was ousted as chief executive in April after the Herald revealed that NHS Tayside had spent millions of pounds in charitable donations on general NHS spending instead.

A total of £3.6 million was taken from its endowment fund in 2014, months after Ms McLay was appointed, with the bulk of it spent on IT services.

A report published by Audit Scotland on December 6 revealed that she had officially departed in July on a package that included a payment of £64,211.52 in lieu of six months' notice, even though the notice period in her contract was only three months.

Audit Scotland noted that the switch from three to six months was made following discussions between senior leaders at NHS Tayside with Shirley Rogers, the Scottish Government's Director of Health Workforce, and representatives from the Central Legal Office. Consequently, Ms McLay was paid an extra £32,105.

The public spending watchdog said NHS Tayside's leaders "believed this was required to bring parity with other chief executives across the NHS" but added that the health board "cannot provide evidence to substantiate this".

Read more: Lesley McLay settlement included £32k 'she was not contractually entitled to' - despite NHS Tayside previously insisting package did not exceed 'legal or contractual' entitlement

Subsequent investigations by the auditors established that the current chief executives of seven NHS boards have contractual notice periods of three months, meaning that the "assumption that [Lesley McLay's] notice period needed to be changed to bring parity with all other boards was, therefore, not correct".

The Audit Scotland report added: "Any extension of the Chief Executive's notice period to six months should have been explicitly approved by the board's remuneration committee. The board was unaware that the Remuneration Committee

was required to approve the change in the notice period, until the auditors brought it to the board's attention.

"This was approved by the Remuneration Committee, retrospectively, on 15 November 2018."

As a result, Ms McLay has no obligation to repay the £32,000.

Giving evidence to Holyrood's audit committee last Thursday, NHS Tayside's chairman John Brown said he believed the approach taken by the board "was the right thing to avoid a drawn-out legal process which would have cost the public purse a significantly larger sum".

Mr Gray added that his reaction to the revelations of NHS Tayside's misuse of charity funds "was one of disappointment".

He added: "I think we've worked hard to establish the facts and I know the current leadership of NHS Tayside have sought to put right the use of the funds, that wasn't appropriate, and we've checked with all the other health boards to ensure that there are no similar instances.

"But I accept as the chief executive of NHS Scotland that the buck does stop with me. I don't think you can take a job like this and then try to dodge it."