Ms Laverne McGuinness:

It is my letter to Mr. Peelo on 7 July 2009, which is directly after the meeting we had at our request with the CRC on 25 June 2009. On the first page, I said that we have an obligation because of our public accountability and the level of funding we give to the CRC to discharge our functions in that regard. On the second page, I said that I would appreciate if the CRC would review the information with its board of governors and revert to me with its proposals on how the senior staff salaries can be brought into line with the levels we indicate as appropriate and we set out those levels. The response from Mr. Peelo concerned how the CRC was going to do it.

I must draw the Chairman's attention to our legal obligations and our governance abilities under both the Health Act and section 38 arrangements. This will bring things on from 2009. Up until 2009, there were many different types of contracts in place with various service providers, of which there are over 4,000. During the course of 2009, a very lengthy engagement took place between the providers of the disability sector, etc., with a view to drawing up what is known as a standardised service level arrangement, which is a very comprehensive arrangement. There are two sections to that setting out the entire volume of service to be provided and the level of funding that we can provide in order to carry out those particular services. That is the extent of our legal ability under section 38. It is in respect of public funds.

During the course of those discussions and negotiations, it was very clear that these entities and organisations are independent and cannot be treated as subsidiaries of the HSE and that level of independence had to be recognised very clearly. Part of it is contained in the service arrangement itself. The accountability set out in the service arrangement is in respect of the public funds. We further built on that in 2010 with a view to having those section 38 arrangements signed and then built into it the requirement to comply with public pay policy as a result of what came to light when we wrote to them.