“Session 3 reports of the Public Audit Committee — key themes”

– in the Scottish Parliament on 3 March 2011.

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Photo of Alex Fergusson Alex Fergusson None

The next item of business is a debate on motion S3M-8005, in the name of Hugh Henry, on “Session 3 reports of the Public Audit Committee—key themes”.

Photo of Hugh Henry Hugh Henry Labour

I am delighted to open the first ever debate sponsored by the Public Audit Committee of the Scottish Parliament.

Since 1999, and particularly over the past four years, the committee and its predecessors have played a vital role in holding to account those who are charged with spending taxpayers’ money. Indeed, the role that the committee plays has been recognised by others outside the Parliament.

We have been supported in that work by a tremendous clerking team present and past. On behalf of committee members, I thank the clerks for doing so much to enable us to do our job.

I also pay particular tribute to Audit Scotland and the Auditor General for Scotland for the outstanding reports that they prepare. The quality of those reports has enabled the committee to carry out its work much more effectively and robustly.

Over the past four years, a number of issues have arisen time and again. I will focus on those in my speech but, before I do so, I will highlight two areas of frustration for the committee, which I hope the Parliament will reflect on.

The committee is unable to consider any matter unless it is the subject of a report that the Auditor General or, occasionally and exceptionally, the Parliamentary Bureau lays before the Parliament. Many people believe that we have the power to initiate debates or inquiries, but we do not. To be frank, neither the committee nor Audit Scotland could cope with an unending stream of demands via the committee, but some thought needs to be given to matters of significant public concern that may be worthy of investigation.

The second frustration pertains to local authority-related expenditure. The committee is unable to investigate reports from Audit Scotland or the Accounts Commission that relate to local government issues and cannot investigate situations in which auditors have qualified the accounts of a local authority for a number of years. That is an issue of significant concern involving substantial amounts of money. Given the significance of local government expenditure, which ministers authorise, should a committee of the Parliament not be allowed to investigate publicly stated concerns about the use of public money when auditors have articulated worries? Similarly, the committee was unable to investigate the recent controversy over Strathclyde partnership for transport’s use of funds, because SPT is sponsored by local authorities. Despite significant reporting and worries, we were unable to consider the matter.

The first of the key themes that I want to address is governance or, more to the point, poor governance that has resulted in poor decision taking.

The committee conducted an inquiry into the 2006-07 audit of the Western Isles NHS Board. Our report highlighted a number of issues in relation to governance. At the time of the 2006-07 audit, the board had reported deficits for the previous four years. The committee learned that the board did not have a fully costed clinical strategy, which had a detrimental impact on the board’s finances. We were shocked to discover that the health board, which was short of cash, was paying for three chief executives at one time.

The committee was concerned that there was some evidence in the health service—and possibly the wider civil service—of a culture where poor performance is not addressed. It would appear that, rather than address the problem, the health service can move staff who underperform to other posts at a similarly senior level. The avoidance of hard decisions should not be tolerated. The committee has therefore called for a strengthening of the procedures for tackling poor staff performance. Failure should not be rewarded.

Another example of poor financial forecasting was the introduction of the national concessionary travel scheme, where the cost of electronic ticketing machines rose from £9 million to £42 million. In that case, there was a complete absence of detail as to how the initial £9 million was calculated, which the committee finds worrying and unacceptable.

The need for early intervention by the Scottish Government, particularly where nationally significant projects or policies appear to be going wrong, was also echoed in the committee’s report “Major Capital Projects”. The committee learned that the Government’s chief civil servant was not routinely made aware of developing problems across Government departments. The committee regards that as inadequate and has called on the Scottish Government to consider adopting formal reporting and audit trails based on systematic time and cost reporting. It is astonishing that the Government’s chief civil servant should be unaware of developing financial problems across Government departments.

The committee is not able to issue a formal report on the Edinburgh trams project. We hope that our successor committee will have the opportunity to consider Audit Scotland’s recommendation about Transport Scotland playing a more significant role in the project.

Generally, the committee welcomes the infrastructure projects database, which should help with monitoring the progress of projects with a capital value of more than £5 million.

However, the committee has concerns about how difficulties that public bodies or policies run into are communicated to and between senior Scottish Government staff. The committee believes that governance and accountability relationships between the Scottish Government and public sector partners need to be strengthened to engender a more collaborative approach. With less money available, the Scottish Government and the wider public sector need to work together. That issue was highlighted in the Auditor General’s report “Maintaining Scotland’s roads”.

I turn to the issue of transparency or, often more accurately, the lack of transparency. During the past four years, the committee has not always been able to assure itself that taxpayers’ money has been used wisely and appropriately. Similarly, there have been occasions when the committee has been unable to determine why and how decisions were made.

I have already outlined the inability of civil servants to explain how the original estimate of £9 million for the introduction of ticketing machines was calculated. In our report “The First ScotRail passenger rail franchise”, we said that we were not able to determine what payments had been made to a departing member of staff because of a compromise agreement that had been signed. The committee believed that it was important to be able to investigate the circumstances of that person leaving and how it related to the extension of the franchise, but we could not get to the bottom of that matter.

The committee has welcomed the steps taken at United Kingdom level to publish the names and job titles of senior civil servants with a salary of more than £150,000 a year, but we believe that more should be done, especially in relation to payments to departing staff. There needs to be greater transparency and openness.

The issue of transparency featured in the committee’s recently published report “The Gathering 2009”, which highlighted a failure by the Government to alert partners to a significant loan. There was also a failure by the Government’s chief civil servant to keep a record of discussions with a senior staff member from the City of Edinburgh Council, and the committee heard differing accounts of that meeting. Those issues were part of a wider report that highlighted major concerns about the way in which senior representatives of the City of Edinburgh Council operated. That is something that both Government officials and the City of Edinburgh Council should address.

I turn to data collection and the measuring of quality. The collection of robust and verifiable data is vital to enable the Scottish Government and public bodies to identify where productivity and efficiency savings can be made. The committee is concerned that it has not always been able to determine whether services have been delivered as efficiently and effectively as possible because the data that are collected nationally have not been sufficiently robust. One such example is highlighted in the committee’s report “Overview of mental health services”. A target for reducing the rate of increase in antidepressant prescribing had been set by the Scottish Government, but the committee learned that information on the number of people on antidepressants was not being collected. As a result, the factors that led to the quadrupling of antidepressant prescribing could not be clearly identified, which meant that it was more difficult to identify how to tackle the issue effectively.

The committee welcomes the Scottish Government’s change in focus from tackling prescribing to targeting access to psychological therapies, but we question why a target was set without corresponding work being undertaken to identify how best to measure progress against it. The committee also welcomes the statistics on outcomes and outputs that have been provided on the Scotland performs website. However, until that information can be linked to expenditure, it will be more difficult for service providers to make informed decisions on how best to provide services cost effectively while maintaining service quality.

The next session of the Parliament will bring with it a whole series of financial challenges both for the Parliament and for the Government, irrespective of who is in government and who is elected to the Parliament. The Public Audit Committee is now well established and I hope that the next committee will continue to rigorously seek out and identify areas where savings and efficiencies can be made to ensure that public funds are used properly to deliver high-quality services. In its key themes report, the committee lays down a challenge to the next Government, suggesting ways in which it can assist in ensuring that public funds are used effectively, economically and efficiently.

I thank the Presiding Officer and the Parliament for allowing our committee to do the work that it has done over the past four years. I hope that we have discharged the function that was given to us and that the next committee in the forthcoming session will be able to continue that work.

I move,

That the Parliament notes the conclusions and recommendations contained in the Public Audit Committee’s 1st Report, 2011 (Session 3): Session 3 reports of the Public Audit Committee – key themes (SP Paper 559).

Photo of John Swinney John Swinney Scottish National Party

I welcome the opportunity to debate the Public Audit Committee’s first report of 2011, on the third parliamentary session. I have listened carefully to Hugh Henry’s comments in setting out the contents of the report and will address those in my speech.

The committee’s report has assessed a number of the ways in which the Government can improve how it operates. Those observations are especially relevant as we enter a period of significant financial constraint in the years ahead. Mr Henry highlighted a frustration about the scrutiny of local authority finances. Although I understand the committee’s frustration, many of the issues that Mr Henry highlighted—which are serious and significant—can be pursued by the Accounts Commission in its own investigations and scrutiny. That has been done on several occasions when local authorities have performed poorly. Nevertheless, I understand the point about completeness of perspective that Mr Henry makes on behalf of the committee.

The committee’s report identifies three themes: transparency, governance, and data collection and the measuring of quality. The permanent secretary of the Scottish Government, as the principal accountable officer, has provided the committee with a full and detailed response that addresses each of those themes. In that response, the permanent secretary emphasises that the Scottish Government is fully committed to ensuring that its use of public funds is as transparent and accountable as possible. The response also sets out examples of the many improvements that the Scottish Government has made to its processes. Many of those improvements were made in response to previous recommendations that have been made by the committee.

On the issue of transparency, the committee reports that its ability to hold the Scottish Government and public bodies to account has been compromised by difficulties in obtaining financial and decision-making information. Examples are cited that relate to the disclosure of senior salaries, the payment of compromise payments and the need for improved guidance on the use of public funds.

Ministers recognise the importance of transparency and scrutiny in relation to public money and have a range of robust arrangements in place for the disclosure of financial information. Indeed, some changes have been made recently to increase transparency, which is an acknowledgement of the focus of the committee.

Members will be well aware of the provisions of the Public Services Reform (Scotland) Act 2010, which imposes wide-ranging duties on the Scottish Government and public bodies to publish a range of financial and other information. That regular reporting will add significantly to the culture of transparency because it will require the public disclosure of information that was not previously disclosed.

Other initiatives are under way. For example, as Mr Henry said, last June the names and job titles of senior civil servants earning over £150,000 were published by the United Kingdom Cabinet Office. In addition, last October we published information on senior civil servants earning more than £58,000. The senior civil service is a reserved matter and we await guidance from the Cabinet Office on further disclosure.

In terms of payments arising from any compromise agreement, Audit Scotland has full access to the details of any such agreement and will disclose the position if the “Scottish Public Finance Manual” rules are breached in any way. I can confirm that no compromise agreement has been entered into with a civil servant in the Scottish Government since 2008. In the interests of further transparency and in line with guidance that was issued by HM Treasury last August, we will disclose details of exit packages in a note to the Scottish Government accounts.

The committee also raised the issue of governance, particularly the need for policies and projects to have good financial and outcome measures at inception and for robust governance arrangements to be in place to manage the project or policy. Significant improvements are being made in that area.

We have made progress on implementing recommendations in all four of the committee’s work streams with regard to major capital projects. The roll-out of the infrastructure projects database and the establishment of a new infrastructure investment board stand out as two recent significant developments. Our on-going work programme of developments and reforms has delivered improvements in the way in which we manage our capital projects. That work will play a vital role over the period of the next spending review, helping to deliver value for money and maximise the economic impact of capital investment.

On good governance more generally, we are focused on providing and promoting clear leadership and strategic direction across the public sector. We are also ensuring that regular dialogue takes place at a senior level between the Scottish Government and chief executives and chairs of public bodies, and that day-to-day working-level engagement also takes place.

Public bodies already have access to guidance such as the “Scottish Public Finance Manual”, which deals with risk management, among other things. Public bodies must also have an agreed management statement that sets out respective roles and responsibilities. We are preparing revised guidance and will take account of the committee’s report and recommendations in doing so.

As a specific example, constructive engagement and close alignment between the Scottish Government and public bodies is essential. We are revising and updating guidance on relationships between the Scottish Government and public bodies, and the “On Board” guidance for members of the boards of public bodies.

I want to highlight the points about governance that Audit Scotland made in its recent report on capital projects. It said that, in recent years, the Scottish Government has strengthened leadership and oversight of the capital investment programme and that

“The accuracy of cost estimating has improved in recent years.”

It also said:

The Scottish Government is improving its project monitoring and management of the capital programme through developments such as the new Infrastructure Investment Board” and the establishment of the Scottish Futures Trust. In all those areas, I acknowledge the absolute importance of projects being well founded, well designed, well programmed and well costed. The measures that are now in place have significantly strengthened our ability to monitor performance and ensure that wise decisions are taken.

The third theme of the committee’s report is data collection and measuring quality. That is an important issue, and I suspect that, in some areas, it is the most difficult one to address. One of the big policy shifts that the Government has undertaken has been to radically improve the pace of focusing on outcomes in policy making, but Mr Henry makes a fair point. To complete that process, one would need to be able to see how funding directly relates to outcomes. I am not going to stand in front of members and say that such a system is about to be enacted and it is all sorted out, because the process of moving from what is essentially a portfolio-based and programme-based budgeting structure in the Scottish Government to what I acknowledge would be a desirable focus on the outcomes that we intend to achieve and how resources can be channelled to meet those outcomes is immensely complicated.

In many areas, the data that are published are required to conform to the UK Statistics Authority’s code of practice for Government officials. That code of practice requires official statistics to be produced to a quality level, and we have assembled many of the statistics that are publicly available in the format on the Scotland performs website, which Mr Henry welcomed. That essentially gives a day-to-day and regularly updated assessment of the performance not only of the Government but of Scotland as a whole in achieving particular objectives. Some of that work is clearly founded on the work that is undertaken in the Scottish household survey, the health survey and the crime survey as major evidence-gathering sources for the achievement of outcomes. The quality of the information is strong and is based on the Government’s requirement to ensure that statistics—which are produced independently, I might add—conform to the requirements of the UK Statistics Authority’s code of practice.

The committee has produced thoughtful and powerful reflections on the way in which public funds are used. The questions involved are important, and they preoccupy me in undertaking my responsibilities and the civil servants who are responsible to me for the policy area. I assure members that the Government is taking seriously the thinking and contents of the Public Audit Committee’s report and that, where we can change practice to improve performance, we will undoubtedly take the opportunity to do so.

Photo of David Whitton David Whitton Labour

I welcome the chance to be involved in the debate. The Public Audit Committee is one of the most important committees in the Parliament and its work under the leadership of its convener, my colleague Hugh Henry, has rightly been recognised.

During session 3, the committee has considered and reported on matters such as free personal and nursing care, the financial fiasco surrounding the gathering event, police call management, and progress on planning for the delivery of the 2014 Commonwealth games. In total, it has considered 15 new reports from the Auditor General, of which 13 have been section 23 reports, which examine the economy, efficiency and effectiveness of the public sector, and two have been section 22 reports, which look at the audit of accounts of individual public bodies. As we have heard, all those issues are important and have raised more than a few concerns in Scotland. The committee concluded that several of the issues on which it recommended that action be taken have arisen in more than one report.

The issues have been grouped into three key themes, which we have heard Mr Henry and the cabinet secretary comment on. I, too, will start with transparency. With other members, I have long called for greater transparency in our dealings with quangos and other public bodies, such as in the salary and bonus payments to senior staff of Scottish Enterprise and Scottish Water and those within the senior management ranks of the national health service. As the cabinet secretary mentioned, the climate is changing. During times of financial constraint, the transparency of decisions on the expenditure of public money becomes essential as attention focuses on ensuring that value for money is achieved. That is particularly the case when it comes to delivering public services with reduced resources. Throughout the public sector, greater transparency is becoming the norm, and alarming as some of the stories may be—such as the one about £20,000 being paid to a celebrity hypnotist by Skills Development Scotland to tell unemployed teenagers how to think—the reality is that we need that transparency. It is, after all, taxpayers’ money that is being spent.

The committee has concerns that, despite the increased public scrutiny of how and where taxpayer funds are used, it has not always been able to assure itself that public funds have been spent in accordance with the “Scottish Public Finance Manual” or that the expenditure has represented effective, efficient and economical use of the money.

The ability to scrutinise and hold to account those responsible for the use of public funds is directly influenced by the availability of information. As Mr Henry said, the committee has found on occasion that its ability to hold the Scottish Government and public bodies to account has been compromised by difficulties in obtaining the relevant financial and decision-making information.

Frankly, that is not good enough. One clear example was from the agreement to extend the First ScotRail passenger rail franchise. Much of the committee’s report focused on the declaration and management of the share interests of the former director of finance at Transport Scotland during the negotiations over the franchise extension, the circumstances of his departure and the quality of the evidence given to the committee. In particular, the committee expressed concerns that the disclosure of potential conflicts of interest did not take place much earlier during the former finance director’s tenure.

The committee recommended that the Scottish Government consider whether standard processes beyond those attached to the recruitment procedures should be adopted to manage potential conflicts of interests. It also recommended that Transport Scotland ensure that minutes of meetings are robust and more accurately reflect the participation of individuals with a pecuniary interest in the business of the meeting.

Like others, I watched the Public Audit Committee meeting yesterday, at which it took evidence from Transport Scotland. I have to say that I remain far from impressed with evidence from Transport Scotland’s senior officials, which it could be said still leads to a certain lack of transparency.

In another example, on 3 March 2010, the committee published its report on the Cairngorm funicular railway, commenting on issues arising in relation to risk identification and evaluation, costs and benefits, the timing of Highlands and Islands Enterprise’s actions, and future plans for the railway. Again, it was difficult for the committee to gain information because of commercial confidentiality. It recommended that the Scottish Government consider producing guidance on how public bodies working in partnership with private organisations, such as banks, could approach the issue of financial confidentiality in a way that promotes transparency in the use of public funds.

The Public Services Reform (Scotland) Act 2010 imposes wide-ranging duties on the Scottish Government and listed public bodies to publish a wide range of financial and other information. It is important that we can identify expenditure on things such as public relations, overseas travel, hospitality and entertainment, and external consultancy. As someone who in a past life was involved in bidding for and securing contracts in the public sector, I have always been conscious of the need for accountability.

We have to come into the real world. After financial disasters such as Enron, the corporate reporting environment has changed dramatically in recent years. We cannot hide behind the public sector banner. Corporate reporting should be our byword. Government can no longer be restricted to a few press comments and financial statements if pushed; a broad range of additional information must also be disclosed.

Transparency enables Government, ministers, the public, creditors and market participants to evaluate the condition of an entity, be it a Government programme or a non-departmental public body. Transparency increases confidence and it is through work such as that of the Public Audit Committee that the Parliament can be confident that that is happening.

Photo of Trish Godman Trish Godman Labour

I call Jackson Carlaw. Mr Carlaw, you have a tight six minutes.

Photo of Jackson Carlaw Jackson Carlaw Conservative

Thank you, Presiding Officer. I hope that this will be a relatively brief contribution in any event.

Like others, I begin by acknowledging the role of the Public Audit Committee and in particular the convenership of Hugh Henry, which as others have said has been recognised elsewhere and by Parliament. It is important that that should be so and that the committee should be on form at this time, because the work that it does is crucial in the current climate. David Whitton detailed at some length many of the important contributions that the Public Audit Committee has made.

At this time, when the economy is under the pressure that it is and public expenditure is under the scrutiny that it should be, it is important that the work of the Public Audit Committee is listened to and respected. The concern that it expresses—that it is not always able to assure itself that public funds have been spent efficiently—is something that the Parliament, in this session and the next session, must deal with and determine how to tackle. The report is intended to stimulate that debate and, in his opening speech, Hugh Henry detailed the themes and posed several key questions for Parliament to consider and address.

The report talks about accountability and governance and, indeed, the failure at times to tackle poor governance. I note that the committee

“believes that ... failures, particularly those at a senior level should be more rigorously challenged, rather than people simply being moved to other posts, often in senior positions.”

That is a fault not just in the public sector and in Government but in the private sector, where such a move is very often seen as the easy solution. That said, I suppose that, unlike in the public sector, incompetence in the private sector is not being underwritten by public money and there is a need to address such issues more directly. For example, we have got a bit too used to allowing the NHS to pay out record compensation levels of, say, £35 million without necessarily tackling the causes behind such a payout in the first place or addressing the lack of proper accountability and governance that it represents.

The committee is quite critical of Transport Scotland and the electronic ticketing fiasco. It really beggars belief that something budgeted at £9 million ended up costing £42 million. I am also bewildered at the complete lack of understanding of the whole process that would be involved that the committee managed to establish. Those of us who travel abroad, including, I imagine, everyone in the chamber, are quite used to arriving in other countries and buying a kind of smart card that allows access to buses, trains, the underground—if such a thing exists—and various attractions. The whole operation seems to be run in a perfectly competent way. Then visitors come to Scotland, where we are unable to implement any kind of integrated system or, where we manage to implement a limited system, we do so at a quantifiable and subsequently proven public cost.

I think that the public find all of this confusing. After all, our nation produces more than its fair share of dry and deeply intense chartered accountants, who, in my limited experience, rarely leave their windowless offices other than for the occasional trip to Murrayfield. One would have thought that, with all that expertise, our nation would have been one of those most able to ensure that, when it embarks on public projects, it does so with a degree of accountability and good governance.

Hugh Henry mentioned the possible future implications of the trams and we should, of course, remember what happened with the Parliament building and electronic ticketing. However, as convener of the Forth Crossing Bill Committee, I am concerned about any potential implications if we do not ensure that the Forth crossing project has the very best governance, transparency and accountability. After all, if its budget were to have a similar overrun as that for electronic ticketing, we would be looking not at a £2.1 billion project but at a £10.5 billion project.

Photo of John Swinney John Swinney Scottish National Party

I sympathise entirely with the member’s point but I wonder whether, in the interests of completeness, he will also reflect on the fact that Audit Scotland was very complimentary about the way in which Government now manages capital projects.

Photo of Jackson Carlaw Jackson Carlaw Conservative

I was just about to mention the cabinet secretary’s reassurance to the chamber that the accuracy of cost estimating has improved. I am happy to hope and believe that that is the case, as must everyone else. I know that, as a level 3 expense, the project costs will be examined in some detail by the Parliament but after all the dry runs of the other projects that have been mentioned, which, over time, have proven to be things that we have been unable to contain, we are about to embark on the very biggest of them all and we have to know and be sure that we will exercise that responsibility effectively.

The third parliamentary session is reaching its conclusion and we are about to embark on the fourth session. I, like others, have been talking about the need for this Parliament to consider reforming itself. I believe that there are lessons to be learned from the past three sessions and that there are ways in which this Parliament might operate better. In a parallel way, the report suggests that we need to stimulate another urgent debate on the need for further public scrutiny and our ability to scrutinise public performance; to that extent, I am very grateful for it and am happy to endorse its contents.

Photo of Lord Nicol Ross Stephen Lord Nicol Ross Stephen Liberal Democrat

The Public Audit Committee is a vital committee of our Parliament. Democracy is about more than simply the right to vote. The ability to scrutinise and challenge ministers and the Executive—collectively the Government of our nation—is a crucial part of the checks and balances that underpin a modern, effective democracy.

The Public Audit Committee does outstanding work. I will be standing down from Parliament shortly and would like to place on record that it has been a great privilege to work with all members of the committee. However, I give special mention to Murdo Fraser and George Foulkes, and to the convener, Hugh Henry, who does outstanding work on the committee. Thanks should also go to the committee clerks, who do excellent work, and to Robert Black, the Auditor General, and his team at Audit Scotland. As Robert Black recently highlighted, before we had the Scottish Parliament the chances of a senior Scottish civil servant being brought before a scrutiny committee in the Houses of Parliament in London was about as likely as being struck by lightning. That has changed, and the Public Audit Committee regularly scrutinises and challenges ministers and civil servants.

The committee bases its work on the excellent work of Audit Scotland. It has produced many outstanding reports, which have been referred to already this morning. However, I believe that the powers of the committee should be extended to enable it to carry out special inquiries that are not always triggered by Audit Scotland reports and, in certain circumstances, to scrutinise the work of all areas of the public sector, including local government. Scottish ministers do, after all, have the power to intervene when local government goes badly wrong and something as serious as a qualified audit report for a particular council should not be solely the responsibility of the council that is being criticised. Hugh Henry gave a strong example in SPT.

I am impressed by the Danish system of audit and scrutiny, in which recommendations cannot be avoided or wriggled away from by evasive ministers or civil servants. They continue to be worked through and measures that are agreed with the public audit committee must be responded to, because that is built into the Danish system as a fundamental principle.

Our principle in Scotland is that public money should be well spent, wisely spent and, unless there are exceptional reasons, spent with the full knowledge of taxpayers who fund those public services. Openness and full transparency are what we call for.

I want to touch on two areas, the first of which relates to revenue budgets and revenue expenditure. In that area, revenue budgets change year on year so significantly that like-for-like comparison can be very difficult and more continues to need to be done to tackle it. That can be a challenge for ministers as well, but unless we have good year-on-year comparison over an extended period, that is a weakness.

Another area in which the committee has taken a leading initiative is the important process of giving much greater scrutiny to money actually spent rather than simply comparing this year’s budget with last year’s budget. That is an important change.

The second area that I want to touch on relates to capital budgets and capital expenditure. Too often, we get those not just wrong but spectacularly wrong. Major capital projects require regular, hands-on, proactive management. Big projects can have costs that are not updated for years and years. That is difficult to understand or justify, and it is still happening in Scotland. We should be entitled to expect that capital projects are well managed and regularly monitored and that costs are accurate, dependable and regularly updated. In some cases, that continues not to be the case. Some such projects are big and important. There are many examples of spending going wrong in Scotland. Sadly, I suspect that that will continue.

Finally, there are the people involved. The most important point is that there are many excellent staff working in our public services. However, the staff are not exclusively excellent and too often the Public Audit Committee discovers situations in which mediocre civil servants, or good civil servants without the technical skills or experience required, are given major—sometimes momentous—and costly decisions to make, to implement and to deliver. Sometimes, those individuals appear to continue in senior positions or even to receive promotion within the civil service despite their failings or mediocrity. Loyalty to the system sometimes seems to be regarded as more important than expertise, ability and delivery.

It is important that the Public Audit Committee highlights examples of best practice and encourages the very best in all aspects of public service. However, it must also, without fear or favour, continue to shine a light into those murky areas where performance is poor. It must uncover shortcomings and weaknesses, not only of senior civil servants and quango chiefs, but of Government ministers. That is the committee’s duty, and it fulfils that duty with great professionalism and huge dedication. It has been my privilege to serve on it.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

As I was appointed to the Public Audit Committee only in November of last year, I was not part of many of the discussions that shaped the reports that the committee has produced in this session and which in turn we consider today. However, some weeks after I joined the committee, it was given the committee of the year award, which might or might not have been a coincidence.

The committee has established a reputation for robust and rigorous scrutiny of the work of the Scottish Government and other public bodies in Scotland. As Nicol Stephen said, it is a vital committee and I have enjoyed participating in its proceedings during the final months of this Scottish parliamentary session. I echo the comments of Hugh Henry and Nicol Stephen in thanking committee colleagues and the clerks for their help and support. I also thank the Auditor General for Scotland, who is in the public gallery, and Audit Scotland for the quality of their reports.

That such scrutiny can take place at all is a tribute to the first phase of devolution since 1999. Before that date, decisions that affected Scotland were generally taken by a small cabal of Scottish Office ministers, often with little electoral mandate. Scrutiny, when it came, was dependent on time being available in the cumbersome structures of the Westminster system and on the willingness of back-bench members of Parliament from Scotland to make those structures work. In short, the Westminster system traditionally did not lend itself to the highest standards of transparency. We should therefore be encouraged that devolution has improved the transparency and accountability of decision making in Scotland. That is true in relation to the legislative scrutiny and investigations that subject committees carry out and particularly in relation to the Public Audit Committee’s role in casting its eye over the wider public sector, following on from the reports of the Auditor General.

The report that is before us is a useful summary of the main themes that can be drawn from the various investigations that the committee has carried out and the reports that it has issued since 2007. The themes of improving transparency, data collection and governance throughout Scotland’s public sector provide a useful basis for understanding how we can ensure that decisions are made as effectively as possible, especially given the constrained economic circumstances in which we find ourselves. The late makar, Edwin Morgan, in his poem to mark the opening of the Scottish Parliament building, said:

“Light of the day, shine in; light of the mind, shine out!”

Transparent decision making in the clear light of day is the first step in a robust scrutiny process.

The committee has pushed hard for disclosure of information on the use of public funds, especially as regards salaries in the civil service and non-departmental public bodies. As the cabinet secretary said, matters concerning the senior civil service are reserved to Westminster, but I welcome the Scottish Government’s confirmation that it seeks to comply with Cabinet Office regulations on the publication of information about senior salary levels.

The Scottish Government has taken steps to answer issues that the committee raised about the handling of commercial confidentialities during the awarding of public procurement contracts. The Government actively discourages the use of confidentiality agreements in such contracts and procedures are in place to ensure that as much information is available as possible under the terms of freedom of information legislation. That is important in further enhancing the principles of transparency.

Measuring the effect of policy decisions, and especially spending decisions, is important for informing future decision making and for evaluating the on-going impact of those policies. The provision of accurate and timely statistical information and qualitative data, where appropriate, allows effective monitoring and evaluation of policy impacts.

The committee has considered the provision of information on a range of topics and policy areas, and the report considers in particular the availability of statistics on free personal and nursing care, health care quality, anti-depressant drugs, and the broader sweep of data on national outcomes. A proper balance has to be struck for all those things, and nobody would wish to imagine that the Public Audit Committee was asking for excessive additional resources to be spent on monitoring outcomes at this time of a squeeze on public sector finances. Although additional information is useful for casting light on the utilisation of public resources, the cost of gathering such data must be proportionate to the expenditure that is being analysed generally.

The Scottish Government has taken steps since 2007 to make reports on its policy successes and national indicators available to anyone who is interested. The Scotland performs website, to which the cabinet secretary referred, provides an at-a-glance snapshot of how Scotland and its Government are doing. It represents a new standard in governmental accountability, which enhances the already wide range of statistics and data that are available from a number of different official sources.

The final major theme to emerge from the work of the Public Audit Committee this session was the need for good governance in the public sector. In particular, effective management, monitoring and decision-making procedures in health boards and in the development of major capital projects are cited as examples of where getting it right is important. Guidance exists to ensure that those structures operate effectively, and I understand that all health boards have now completed a self-assessment process using the Scottish Government’s health board development diagnostic tool, which has led to an improved process of induction for new members of health boards.

The Public Audit Committee has played an important role during this session of the Scottish Parliament. Its work is vital for the role of the legislature as it holds the Executive to account. In that regard, the Scottish Government has responded positively to the committee, as was reflected in the cabinet secretary’s opening remarks today, and in the Government’s written response to the report, which the committee considered yesterday.

I welcome this opportunity to raise the various themes that have been discussed by the Public Audit Committee over the past four years. As I said, the committee has an important role to play, working with the Scottish Government to ensure transparency in public expenditure and in the outcomes from that expenditure. I wish whoever forms the Public Audit Committee in the next session well with the task.

Photo of Frank McAveety Frank McAveety Labour

First, I tender my apologies. A prior commitment means that, after making this speech, I have to go and meet representatives of a significant organisation in my constituency.

I echo what fellow members have said about the work that has been done behind the scenes, by the clerks and the support structure around the Public Audit Committee and by the staff of the Auditor General in compiling the various reports. David Whitton identified that there were 15 new reports from the Auditor General’s office, which indicates the level and thoroughness of the work that has been undertaken.

I pay tribute to my colleague, Hugh Henry, and acknowledge the recognition that he has received for the committee of the year and politician of the year awards. Those of us who understand European history admire places such as Catalonia, one of the autonomous regions of Spain. Among the social activities there are the castells: the wee guy at the top of the human tower is given the great opportunity to see the world round about him and get all the praise. However, Hugh only got to the top because of the hard work of all those at the bottom of the committee, day in, day out, week in, week out. Congratulations to him on that—he can reflect on that as he looks at the visions of Scotland from the top, with the politician of the year award.

I thank the Cabinet Secretary for Finance and Sustainable Growth for his measured contribution. That was perhaps not the John Swinney that I remember from some of the budget debates, but the gentler, softer John Swinney. I know that he is part of a programme of activity for my own rehabilitation, and I appreciate his recognition of that. Thanks for that, John.

Several important issues have been touched on already. Transparency and the way in which we gather information are key themes; the way in which we examine overall governance issues is also key.

We had a fantastic opportunity this week when we heard from the chief executive of Transport Scotland. That was a classic case not of what the minister was saying, or even of what the record said; it was more a reflection—in fact, we almost had a theological debate about the meanings of good and bad, with regard to good and bad governance.

We in the committee can produce a series of recommendations, and the minister can respond positively, as he has done in the paper that was produced for the committee. However, like everything else in life, it is what happens between the lines that is important—the understandings, the acknowledgements and the direction.

One of the key concerns that I and my committee colleagues have experienced is that as we probe the people who give evidence, particularly senior civil servants, we find that there is an incredible capacity among them for not quite being able to recollect what the discussion might have been at a particular moment in time, and it is therefore difficult to gather that evidence together. That is probably true of the previous Administrations as much as it is of the present Administration.

Photo of John Swinney John Swinney Scottish National Party

In the interests of maintaining recollections, I point out that the Government’s response to the committee comes from the permanent secretary, not from ministers. That should give him some comfort that the leadership direction from the permanent secretary—what he says to civil servants—is essentially set out in the context of that response.

Photo of Frank McAveety Frank McAveety Labour

That exemplifies the difficult nuances with which we are dealing. When we have, with that understanding, probed some of those folk who have appeared at committee in the past few months, we do not quite get those responses.

However, that is a general issue in Scotland. As a small country, we still need to ensure that those who speak on our behalf—whether they are directed by ministers or operating in a broad policy area—reflect the direction of travel for which ministers are ultimately accountable, as Mr Swinney is aware.

The second issue around governance was something that arose from a number of key inquiries. It is clear that the gathering was a difficult inquiry overall, but a key issue was information sharing, and the question of who took responsibility and when they did so. I always use the metaphor of Scottish country dancing at school: people know what the rules are, and they have been told that they have to do it, but ultimately they are not too happy about who they will be dancing with; I am sure that the feeling is mutual across the room.

The issue is that we do not get a sense from those organisations about how the Government should work. I wanted to put one particular question to the finance secretary—I apologise that I cannot be back for general questions because of my previous commitment. In the very complicated discussions on the trams, one issue was whether there were any discussions with ministers, prior to the tram money being acquired by a decision of the Parliament, on a policy of good governance, so that Transport Scotland—the key Government agency—would step back from the day-to-day activity of the trams project board because it had previously been involved in the board.

I did not quite get the answer that I was looking for the other day, but I am sure that John Swinney will respond to that in an honest and transparent way, and we will get a clearer answer.

I want to touch on two other things, although I am conscious of time. One is the issue of what we do with regard to the investment programme. We have had honest disagreements about the Scottish Futures Trust, but it is clear that a vehicle exists there that has been doing some work, although it is perhaps not as public in its delivery as I would like it to be.

There is an issue around utilising better ways of pulling together capital investment in Scotland. It would be helpful to have some transparency in relation to the structure of an organisation such as the SFT and how it will get to the next stage, to which I understand the minister is very committed.

As a final point, I went over to the United States a couple of years ago as part of a parliamentary delegation. We saw the core model for Scotland performs, which was based around the state of Virginia’s modelling for data collection. It was very impressive, but people said the same thing that we are hearing in today’s debate. How do we get beyond those statistics to change the way in which things are delivered on a day-to-day basis? It is much more complicated than people initially thought.

Photo of Trish Godman Trish Godman Labour

You should finish now, Mr McAveety.

Photo of Frank McAveety Frank McAveety Labour

I hope that the minister will reflect on those things in his response at the end of the debate.

Photo of Jamie McGrigor Jamie McGrigor Conservative

I welcome the opportunity to take part in today’s debate. As Jackson Carlaw has indicated, the Scottish Conservatives value very highly the work of the Public Audit Committee. I welcome the report’s key themes, and I pay tribute to the committee members and the committee clerks and support staff for producing a sensible and very useful report, and for all their work in the current session of Parliament.

The committee has in this session produced some excellent reports that have been of genuine importance to my region of the Highlands and Islands. Those include the 2008 “Report on the 2006/07 Audit of the Western Isles Health Board” and the 2010 “Review of Cairngorm funicular railway”, both of which addressed significant issues of public concern.

More widely, the committee’s other reports this session have been especially good, such as those on free personal and nursing care and palliative care, and the review of the First ScotRail passenger rail franchise.

I agree strongly with the committee’s recommendations and requests for updates from the Scottish Government, particularly on the need for maximum transparency in the use of public funds and the decision-making processes of ministers and officials. As the committee suggests, the Government should provide an update on how it proposes to increase transparency in those key aspects.

In the context of financial transparency, I will touch on the gathering in 2009, which David Whitton mentioned, and on the committee’s good report on it, which was published last week. There could be no more appropriate case in which more financial transparency was needed from the Scottish Government. It is a sad and damning indictment of the Scottish Government’s handling of the affair that the report concludes that all due diligence was not undertaken before the Scottish Government provided a public loan; that the permanent secretary was not informed of the loan; and that the Scottish Government has undertaken no internal audit in relation to the gathering. Where were the caution and care for the interests of taxpayers’ money? Where were the caution and care for the wellbeing of the small businesses that ended up losing money for a job well done while the Government crowed over the gathering’s success?

My wish for greater financial transparency, as suggested in the report’s key themes, is driven by a desire to protect small businesses from facing financial hardship as they did after The Gathering 2009 Ltd collapsed. It is shameful that, to this day, a group of 12 creditors of The Gathering 2009 Ltd—from caterers to public relations professionals—is still trying desperately to obtain payment of £110,000. They are small companies, which are the backbone of our economy. They deserve far better from the Scottish Government, which—arguably—steered and controlled the one-off stand-alone event.

Losing money because of one’s own mistakes is one thing, but the bitterest pill for small businesses is not to be paid for work that was well done in good faith, because that leaves a rotten taste. The creditors are adamant that, had the Scottish Government not extended a loan of £180,000 to The Gathering 2009 Ltd, the event would have been cancelled. That would have been highly embarrassing for the Government, but at least the creditors would not have incurred debts. As the key themes report suggests, transparency might have prevented financial hardship in our small business sector.

The committee slates the City of Edinburgh Council’s role in the sorry saga. I hope that those who are involved will be fully held to account and that that will happen next week.

Photo of Jamie Hepburn Jamie Hepburn Scottish National Party

Jamie McGrigor talked about good faith. Does he accept that the Government acted with good faith to try to save the event because it already had creditors? If the event had collapsed, creditors would not have been paid. Part of the motivation for trying to find a new buyer was to help creditors. Surely the Government acted with good faith.

Photo of Jamie McGrigor Jamie McGrigor Conservative

I hardly think that the Government acted in good faith when what was going on was not transparent.

The committee plays a vital role in the Parliament’s workings and I am confident that it will continue to do so in the next session. As the key themes report concludes, the pressure on public expenditure for the foreseeable future means that the report and its findings are even more timely, so it is even more important that its recommendations are adopted, whatever the make-up of the next Scottish Government might be.

Photo of Anne McLaughlin Anne McLaughlin Scottish National Party

Debates such as this are significant and have the potential to be very beneficial. The process of producing a report to highlight key themes that have reappeared before the committee and which have been of particular concern has been a worthwhile exercise. That said, the committee is soon to be dissolved, so the exercise will be truly worth while only if the Parliament in the next session, the next committee and the next Government take heed of the concerns. I urge them to do so, because we have the opportunity to bring about improvements.

Initially, I will focus on one of the report’s three themes—data collection and measuring quality. As a new member of the Parliament—never mind the committee—early in 2009, I had much to take in, and nowhere more so than on the committee. The first time that I became aware of a data collection issue was during our deliberations on the Auditor General’s report “Drug and alcohol services in Scotland” in spring 2009.

In a previous role, I worked hard to fight the closure of a residential alcohol rehabilitation centre. I joined campaigners in arguing that the move towards home-based treatment was not sufficiently tested to argue that it would achieve better outcomes. Naively, I asked the campaigners for their killer statistics that would prove that their way was tried and tested, but they had none. All that they had was anecdotal evidence and short-term data. I was again naive in thinking that that was a one-off, and that it was an issue just with that project or that area, because when I found myself studying the Auditor General’s report I discovered that in that case—and, as I later found out, in many others—there was a real dearth of data and data sharing. On something as important to our communities as drug and alcohol services, that was extremely worrying.

One shining example of good practice was highlighted in the Auditor General’s report. In the West Lothian Council area, at least, there was appropriate and detailed outcome measurement, and an outcome-based system was used for commissioning services, which made sense. That was great for looking at what was effective in West Lothian, but what of the wider Scottish context? Did we have the detailed information to advise practitioners in drug and alcohol work about what worked best for particular types of people? Did we study practices in European countries where deaths from alcohol and drug abuse were dropping, while deaths in this country were rising? Did we have the comparisons to allow us, as the Public Audit Committee, to say that public money was being spent appropriately? The evidence told us that in all three cases we did not. Coming at the issue so soon after my election, when I was still able to see things as a non-politician, I was shocked.

The present Government has made remarkable progress in having a drugs strategy that operates on a national basis, although I find it breathtaking that it was the first such strategy to operate in Scotland.

I have to say—and I will do so gently—that there have been times when, as a member of the Public Audit Committee, I have felt frustrated by the party-political basis on which the committee’s discussions have seemed to take place. To me, that is not what the committee should be about. For example, the fact that a disproportionate amount of our time was spent on a relatively small amount of expenditure was due, I firmly believe, to the political capital that was seen to be there for the taking. Eleven sessions were held on the gathering. I accept what Jamie McGrigor says, but we must remember that that event generated £8 million for the economy of Edinburgh alone. In contrast, only three sessions were squeezed in on the Edinburgh trams project, which is costing us dear on a daily basis—although we all hope that the mediation that starts next week will work. My point should be self-evident.

It often felt that the committee’s remit extended only to scrutinising the expenditure of the current Government and not to scrutinising that of the previous Executive. It was as if problems with data collection, transparency and governance were the result of SNP decisions rather than long-term issues that had been overseen by the previous Executive. It was interesting that members were astonished or outraged at a compromise clause in a senior civil servant’s contract—we have heard that again today—which led to suggestions of secrecy within the SNP Government, yet the very members who were so astonished were in government when the procedures for those compromise clauses in contracts were drawn up. I often found myself resisting the temptation to say, “If you feel that strongly about it, why didn’t you do something during the eight years you were in power?”

Photo of Anne McLaughlin Anne McLaughlin Scottish National Party


That said, I believe that the Public Audit Committee fulfils a vital function. I agree with Hugh Henry that the committee’s remit ought to be broadened so that we can initiate reports, although I think that it is important that we guard against taking a partisan approach to that.

Like my colleagues, I thank the clerking team past and present for always being on the ball and keeping us informed at all times, and I pay tribute to the Auditor General for Scotland Robert Black and his entire team. I have learned more on the Public Audit Committee than anywhere else in my two years as an MSP, and that is largely due to the quality of the reports by the Auditor General’s team and the quality of the people who come to every meeting, each of whom is completely on top of their game. I have waited two years for one of them to say, “I don’t know,” or even just to falter slightly, but it has never happened. They are experts in their field. I pay tribute to the Auditor General and all his team, and thank them for the tremendous work that they do, which I believe has enabled the Public Audit Committee to perform as effectively as it has done.

Photo of James Kelly James Kelly Labour

I welcome the opportunity to take part in the debate and tender my apologies, because I will have to leave before the end to attend an urgent meeting on a constituency matter.

Like other members, I congratulate the Public Audit Committee’s members and clerks on the work that they do. I pay particular tribute to Hugh Henry, the committee’s convener. The committee’s work was recognised at the Scottish politician of the year awards; the award that it received was richly deserved. The committee does important work.

I disagree completely with the tenor of Anne McLaughlin’s remarks. The committee has not limited itself to scrutinising aspects of the Government’s work over the past four years; plenty of the reports that come before it make comparisons with what happened in previous years. The cabinet secretary referred to capital projects. The committee was complimentary about the improvements that have been made to monitor and measure such projects.

The key themes are governance, transparency and accountability, and they are brought out in a number of the committee’s reports. The First ScotRail franchise report highlighted serious concerns about the lack of a documented business case on whether the franchise should be extended. It was a case of government by PowerPoint. The information may have been available in different files and sources. However, when in my previous life as an internal auditor I asked an organisation to provide a business case, I expected to see it in a file, properly documented. We did not get that in this case.

Astonishingly, it transpired that Guy Houston, the previous finance director of Transport Scotland, held shares in FirstGroup at the time that discussions were taking place about whether to extend the franchise. Not only was that quite staggering, but it was difficult for the committee to establish whether Mr Houston was involved in any of the discussions about extending the franchise. Initially, the committee was told that he was not, but it transpired that he attended meetings relating to the issue. To me, that showed that there were some difficulties with the civil servant. Hugh Henry was right to take a robust approach with the permanent secretary. It is important that, when a civil servant appears before a parliamentary committee that is scrutinising aspects of work, they realise that they must be open and transparent and must take the committee seriously. It is unacceptable for civil servants to be, at best, inconsistent in some of their explanations.

The examination of the First ScotRail franchise report raised a number of key issues, some of which fed into the committee’s work on The Gathering 2009 Ltd, which Jamie McGrigor has highlighted. The Government gave a loan of £180,000 to the company. The lack of robust checks and due diligence around The Gathering 2009 Ltd raised concerns about what was involved in passing over the loan. Those were compounded by the fact that the Government did not join the steering committee and did not pass on to it information that the loan had been made. In fact, the First Minister admitted to the committee that that approach was not correct. In addition, the steering committee lacked accurate and up-to-date financial information to examine, which led to some of the problems. The people who suffered at the end of the day were the creditors, because they were left in the dark about what discussions were taking place.

On capital projects, as I said earlier, I recognise that some improvements have been made in measuring up-to-date information, which is important, as Nicol Stephen said. However, the revenue consequences of capital spend are also important. A recent Audit Scotland report highlighted that in forecasting future spend there are difficulties in establishing future revenue because of factors such as depreciation, so that issue must be looked at.

This debate has been worth while. There are lessons to be learned around accountability and transparency. I compliment the Public Audit Committee on its effective use of parliamentary resources.

Photo of Iain Smith Iain Smith Liberal Democrat

I apologise to those who will speak in the closing part of the debate because I, too, have a prior engagement and will not be here. School pupils from my constituency are visiting the Parliament and I am hosting a meeting with them.

This will probably be the last opportunity for me to speak in a debate at the same time as my esteemed friend and colleague Nicol Stephen, who as we know is retiring from the Parliament this year. He has made a significant contribution to the work of the Parliament and, indeed, to the previous Administration as a minister and Deputy First Minister. His contribution to the Parliament will be deeply missed, but I am sure that he will be a great asset to another place.

I, too, can have a bit of reflected glory, because I was once a substitute member of the Public Audit Committee. Indeed, I attended one of its meetings back in 2008. It is perhaps not as much reflected glory as Jamie Hepburn’s, but I can make some claim to have been part of the Public Audit Committee’s success in becoming committee of the year, which included the work of the convener, Hugh Henry. However, it is of some concern to me that the Public Audit Committee should be committee of the year. Surely it is a reflection of failure somewhere within the system that the committee must take actions that draw such attention to it. The Public Audit Committee should be able to sit in the background doing its work quietly and not have to make headlines and jump up and down.

Photo of Iain Smith Iain Smith Liberal Democrat

I will just finish this point, then I will let the member in.

I was particularly concerned that in the report on the First ScotRail passenger rail franchise the committee had to make fairly strong recommendations and express its concern about being

“given incomplete or incorrect information on a number of occasions.”

The report also stated:

The Committee’s work has been frustrated by having to prise information from senior civil servants and having persistently to question responses given.”

The report concluded:

“The Committee is of the view that openness and transparency are the best means by which to remove any public concerns about the conduct of public bodies.”

Surely civil servants should give accurate information from the start and the committee should not have to prise out that information. I understand that the committee’s persistence has led to it receiving awards, but surely that should not be required.

Photo of Willie Coffey Willie Coffey Scottish National Party

The member said that the recognition afforded to the committee was an indication of failures in the system, but it is not, because that is not what audit is about. It is about identifying opportunities for improvement. What the member said about failures is the classic mistake that people who do not understand audit say about it.

Photo of Iain Smith Iain Smith Liberal Democrat

I think that the member misses my point, which is that the awards have come to the committee because attention was drawn to it through its persistence in prising out information that it should have got right away. It should not have to prise out such information and should not be in the public limelight as much as it is.

A couple of particular issues arose from the report on the First ScotRail franchise. I want to highlight one in particular, which is included in the key themes report that we are considering today, at paragraph 16, in relation to compromise agreements. It is important that such agreements are clarified, because there is concern that they can be used, particularly by arm’s-length bodies and quangos, to prevent proper scrutiny of certain items. That clearly happened in the case of the First ScotRail franchise consideration, and there is a risk that it could happen in other cases. I hope that the Government will take on board the Public Audit Committee’s concerns about that.

I want to talk about the gathering, to which Jamie McGrigor referred. I was one of the two MSPs who referred the matter to the Auditor General in the first place. His report led to the Public Audit Committee’s consideration of the gathering.

The First Minister is well known for trying to claim that the Scottish Government’s actions were vindicated by the Auditor General, by taking slightly out of context his comment in oral evidence to the committee that

“The ... Government, I guess, would have taken the not unreasonable view that in order to allow the event to proceed it should assist”.—[Official Report, Public Audit Committee, 23 June 2010; c 1820.]

However, my concern is about how decisions were taken, and the Government has yet to provide an adequate response in that regard. The temporary loan of £180,000 might have been reasonable if the money had been properly guaranteed against the cash flow for which it was put forward. It was needed, apparently, because there was a problem to do with getting the income from ticket sales, which was being held in an account by WorldPay. Surely it would not have been beyond the realms of possibility directly to have guaranteed the £180,000 against the income stream that the loan was supposed to deal with.

I am even more concerned that there appears not to have been a robust analysis of the event’s finances at the point when the loan was made, to determine whether cancellation or continuation was the best way forward. There is some evidence that The Gathering 2009 Ltd was insolvent by then. As Jamie McGrigor suggested, the small businesses in Edinburgh and throughout Scotland that became creditors might have been better off if they had known that, because they might not have offered their business to the event and thereby incurred losses. It might be that losses would have been greater if the event had been cancelled, but we have no way of knowing whether that is the case, because no robust analysis was undertaken.

I find it staggering that loans of public money of more than £250,000 were written off within days of the company’s financial circumstances becoming known. That is incredible, and I cannot understand why it happened. It normally takes a considerable amount of time, sometimes years, before a debt of that nature—

Photo of Iain Smith Iain Smith Liberal Democrat

Let me finish my sentence, Presiding Officer. It is usually years before such debts are written off by a public body; that does not happen immediately. The Government must explain why the loans were written off so rapidly. It seems to have got its priorities wrong.

Photo of Willie Coffey Willie Coffey Scottish National Party

I will be staying for the entire debate.

It has been an enormous pleasure to serve on the Parliament’s Public Audit Committee for the entire parliamentary session. Contrary to popular belief, the committee is one of the most interesting and challenging committees in the Parliament. It covers every area of the public sector in Scotland and offers members a real opportunity to learn how Scotland works. One minute we might be looking at the cost of hip replacements in the NHS; the next we might be skiing down the slopes of the Cairngorms, clutching the audited accounts as we go. The diversity of the committee’s agenda was as fascinating as it was challenging. I recall spending many a late night poring over some new aspect of the public services and trying to give of my best to hold it to account.

A mention of audit is usually the signal for our colleagues to announce that they have something else to attend to and scurry off to the garden lobby. Little do they know that they are missing a great opportunity to get their teeth into just about every corner of the public sector. Our members know the value of the experience and jealously guard the committee’s reputation.

Audit, of course, is about looking at systems and processes, taking a snapshot in time, reporting what is observed and recommending actions for improvement. It is not about blaming and finger pointing—although the temptation to do that when politicians are in the frame is sometimes overwhelming. In the main, Audit Scotland’s reports have painted a picture of excellent service delivery in Scotland, which we should recognise.

Guiding the committee on its merry way are, of course, Audit Scotland, led by Robert Black, the Auditor General for Scotland, who is in the public gallery, and our hard-working team of clerks. Audit Scotland’s reports are superb. They provide us with a framework that allows us to examine various services in minute detail. The quality of reporting and the advice that is given are of great benefit to the committee and ultimately to the Government in planning future services—the advice must surely be the best that any Government could wish for. Our wonderful clerks hang it all together. Their diligence and skill in interpreting members’ views have been a great help to everyone who has served on the committee.

During the past four years we have been on quite a journey together. We have looked at a wide variety of areas in Scottish public life: police call management; local authority audits; numerous NHS services—one or two members mentioned our visit to the Western Isles; major capital projects; prisons; the Commonwealth games; public finances; the Cairngorm funicular; civil contingency planning; the national fraud initiative; VisitScotland; the gathering; and the ScotRail franchise.

I am sure that members recall the visit to our committee in December 2009 by members of the Northern Ireland Assembly, including members from Sinn Féin, the Social Democratic and Labour Party, the Democratic Unionist Party, the Ulster Unionist Party and the Progressive Unionist Party, who all worked together with us, here in Scotland. That was a wonderful day.

For me, one of the most important messages to come out of Audit Scotland’s reports is the clear need for our public service providers to adopt recognised management systems, to invest time and energy in the planning and cost estimation phases for capital works in particular, and to learn lessons by doing thorough post-project evaluations to assist them with future service design. That was a recurring message throughout the past four years, and I am hopeful that our public service providers will fully embrace that wise advice from Audit Scotland and our committee.

Our meetings were not without their lighter moments. I recall that the committee flew into Stornoway one day in an aeroplane that sounded and looked more like an oven on wings. We had great hospitality, and I recall one of our members, Stuart McMillan, rushing off after the meeting to get his order of Stornoway black pudding before he left. We heard the business plan for the Cairngorms ski facility that might have ended up not involving any skiing at all. That was a bit concerning. We also heard some classic “Yes, Minister”-type responses from some of our civil servants, who are occasionally masters of the evasive, but in a very polite way. We were told about some unfortunate people in hospital who were forced to remain there for weeks on end because there were no buses to get them home. We eventually ran out of adjectives and were right sair astonished on many occasions. We have been astonished this morning as well.

My personal favourite must surely be the much-loved Queen’s and Lord Treasurer’s Remembrancer, which I am sure I do not have to remind members had no accountable officer for months on end and did not produce any accounts for two years. However, nobody noticed until Audit Scotland came along. I recall fondly the comments of Mr Phil Grigor of Audit Scotland, who announced to a stunned committee that it was

“A treasure trove” worth £5 million and that

“anything that comes out of the ground that is of value ... is passed to the state ... Anything that belongs to no one becomes the King’s—or the Queen’s, in this state—is the remembrancer’s mantra.”—[Official Report, Public Audit Committee, 17 June 2009; c 1175.]

It was the only time that I saw the convener stumped for words. It was a classic moment in the life of the Public Audit Committee. Who said that audit cannot be fun?

The Scottish Parliament’s Public Audit Committee, aided and abetted by Audit Scotland, delivers a hugely important service to the people of Scotland. The system that we have is respected throughout Europe and should be cherished.

In line with its own preaching, the system should also look at ways of improving. A thought from me is that the committee, Audit Scotland or some other body could take on the role of checking up on whether Scotland’s public services have paid heed to the recommendations that we have made over the course of our work.

I commend the committee’s report to the Parliament.

Photo of Lord George Foulkes Lord George Foulkes Labour

I join in the effusive congratulations to my colleague Hugh Henry on his tenacious work as convener of the Public Audit Committee, which culminated in his award as politician of the year and the committee’s as committee of the year. As Willie Coffey ably illustrated, it has been a fascinating committee on which to serve.

There is an almost symbiotic relationship between the Auditor General, who is exceptional, his talented staff and a committee that has pursued issues like a ferret. That has been one of the positive achievements of this third parliamentary session.

It has not escaped notice that the cabinet secretary needs eight civil servants to enable him to respond to the debate. The committee has exposed the lack of transparency in the civil service with the frankly inexcusable cover-up of the arrangements for payments to get rid of embarrassments in high office. I welcome the cabinet secretary’s assurance on that.

On data collection and quality measurement, the committee has shown up the inadequacy of information in policy formation for sensitive policy areas such as children in care and free personal and nursing care for the elderly. More recently, we have been concerned about governance arrangements in the delivery of the Edinburgh trams.

I will mention some of the matters about which I have had particular concerns. The first is the intransigence of civil servants about even considering a national non-emergency number to relieve the pressure on 999 calls. In the case of evidence to the committee, that intransigence amounted almost to dumb insolence.

The second is the way in which the Scottish Government seemed totally blind in its determination to press ahead with the Forth replacement crossing, irrespective of the open-ended nature of its cost and the effect on other capital projects, not just in transport but in health and education.

Photo of Lord George Foulkes Lord George Foulkes Labour


That is a looming fiasco, which a future Public Audit Committee will have to look at.

The third is the unacceptable and unexpected cost increases for electronic ticketing machine technology on buses to calculate the use of buses by elderly and disabled people, which Hugh Henry mentioned.

The fourth is the failure of ministers to protect the public purse. Time and again, we have seen money thrown at projects without prior scrutiny and planning.

Most of all, I, as a former councillor on the City of Edinburgh Council—in the days when it was effective and efficient and Labour controlled—have been astonished and embarrassed by revelations of how dysfunctional the current Liberal Democrat-SNP administration in Edinburgh is in both the delivery of the trams and the organisation of the gathering 2009.

On the trams, there has not been leadership from the council. Its leader and deputy leader have failed to take responsibility and have made no substantive attempts to resolve the mess. They have been content to sit on the sidelines while the contractors fight it out. That is perhaps understandable, given that we are led to believe that Councillors Dawe and Cardownie do not even talk to each other. The project has been jeopardised by their serious lack of commitment and organisation. The fact that 78 per cent of the funding for the project has been spent and only 28 per cent of the project has been completed says it all.

On the gathering, the council leader and deputy leader have tried to wash their hands of any responsibility for the misleading press release that gave creditors the deliberately false impression that their outstanding debts would be paid—the press release was designed to do just that. It might have been drafted by the Scottish Executive, but it was issued by the council.

The shoddy evidence that the councillors provided to the Public Audit Committee does not stack up. Both the leader and deputy leader said that they were horrified that the press release went out when it did, but according to the council’s own senior media officers, Ms Isabell Reid, head of communications, and Stewart Argo, media manager—not junior officials, as the councillors called them—the timing of the press release was discussed in considerable detail and agreed by the councillors.

Councillors Cardownie and Dawe were aware that the situation with the Destination Edinburgh Marketing Alliance had not been resolved, but at no point did they instruct their senior press officers to stop issuing the press release. In fact, they both gave verbal approval for its issue.

Those are just a couple of examples of the catalogue of inconsistencies in the councillors’ evidence.

I welcome the decision of the Conservative group on the City of Edinburgh Council to table a motion of no confidence in those two councillors. It is essential that they are held to account for their mishandling of the whole affair.

As Jamie McGrigor said, we must also keep up the pressure on the council to pay the small companies that gave their services in good faith and which are still owed substantial sums of money. Given that Anne McLaughlin said that people in Edinburgh and the council made money as a result of the gathering, that responsibility is even stronger.

Councillor Dawe is refusing to use the increased capital city fund to pay the creditors. However, given that the council saw fit to pay Portakabin, a multimillion pound company, it has an even greater responsibility to pay the small businesses in Edinburgh, which need the money more.

I heard today that there is more still to come out in relation to the gathering, particularly in relation to the First Minister’s involvement in this grubby affair. It will be for a new public audit committee to look into that. I wish it well. I will watch it from afar.

Photo of Lord Nicol Ross Stephen Lord Nicol Ross Stephen Liberal Democrat

As many members have highlighted, the Public Audit Committee is a fascinating and endlessly interesting committee of which to be a member. It ranges over many important areas of the public sector in Scotland and it achieves its successes because of a big team of dedicated and professional people. It has been one of the major success stories of devolution. It is something new, something different and something that has worked extremely well.

In my view, the key people in achieving the good reputation that the committee now has are not the politicians; they are the Auditor General, Robert Black, and his team. Robert Black deserves singular praise for all that he has done to establish the reputation of Audit Scotland and the Public Audit Committee.

The Government is a big organisation, and things go wrong in big organisations—sometimes badly wrong. I have already touched on that. As a big organisation, the Government collects massive amounts of information and data. Are they useful to the organisation? Are they used at all by the organisation? Do they improve the organisation? I will address two reports that highlight the issue.

In researching the committee’s report on the Audit Scotland review of orthopaedic services in the NHS, we discovered huge variations in costs between health board areas, including the costs of operations and the costs of devices—often the same devices, which were being used in hip replacement operations and knee operations. However, those data were not being collected, analysed or used by the Government until Audit Scotland came along and triggered the report. They should have been, because it would have made a significant difference if they had.

There was also the committee’s report on looked-after children in residential care in Scotland. The issue remains one of real national shame—we should be doing more for those looked-after children. It became clear to us that there was little or no knowledge of what worked or did not work in other countries. No data were collected on the issue and no attempt was being made to learn from the best practice of other nations. That, surely, must be a weakness.

The Public Audit Committee has also uncovered some very bad mistakes. The treatment of the private sector creditors of The Gathering 2009 Ltd has been shocking. There was no Government inquiry or follow-up when the loan was lost and there was a failure to secure the loan against the funds that would become available from WorldPay.

Mistakes were also made in the review of the First ScotRail passenger franchise, with Transport Scotland displaying poor handling of conflicts of interest.

Then, there was the trams project. The committee was staggered by a new principle of Government that seemed to emerge yesterday, whereby the Government should step back from partnership or participation in the management of a project if it is the major funder of the project. If that new approach is an example of what was described yesterday as good governance, my question to the minister is this: does he feel that that example of good governance has worked, and has it been effective?

We continue to be dogged by big overruns, poor practice and poor management in major capital projects, and the problem will not go away. I do not suggest that only the Scottish Government faces major challenges in that respect, nor that the situation is confined to the UK—it is an international problem. Nevertheless, it is a major issue that will continue to create big challenges for the Government and will be an important area of work for the Public Audit Committee.

The committee has explored in detail other issues that have not hit the headlines in quite the same way, but which have revealed staggering mistakes, as well as weaknesses. I am thinking of our discussions on the Western Isles NHS Board, the Mental Health Tribunal for Scotland, the Cairngorm funicular railway and the Queen’s and Lord Treasurer’s Remembrancer.

The work of the committee is wide ranging and endlessly fascinating. Inevitably, it focuses on the major issues, the big challenges and the bad mistakes. Sometimes, those mistakes do not involve huge amounts of money, but are no less important, because they have a high profile or raise crucial issues. We should continue to go there. No issue of significance or importance should be too small for the committee to scrutinise and study.

I wish the members of the next committee and its support team, both in the Parliament and in Audit Scotland, all the very best. I will miss being involved in its work. I hope and believe that it will continue to carry out its work in a fearless and fair manner.

Photo of Jackson Carlaw Jackson Carlaw Conservative

As this debate on the Public Audit Committee has progressed, I have wondered whether the committee might conduct an audit of the capacity of, and stamina required by, members to survive its length, as colleagues seemed to drop off one after another.

The motion was introduced effectively by Hugh Henry. I was impressed by the commitment that the cabinet secretary gave with regard to the non-signing of future compromise agreements and I enjoyed Mr Whitton’s characteristically dry contribution. It was so dry that, as Mr Whitton told us that he had been responsible for procurement in a former life, the scales fell from my eyes and I began to wonder whether he had been one of those dry, deeply intense chartered accountants to whom I had referred. I see that he is shaking his head, which reassures me. However, he did justice to the litany of examples of poor governance and lack of transparency. In his opening and closing speeches, Nicol Stephen demonstrated the characteristic freedom of perspective of the soon-to-be departed.

Following the opening speeches, Jamie Hepburn canvassed himself as a poster boy for the committee’s recent recognition, and Frank McAveety characterised Mr Henry’s position by referring to the Catalonian tower that he had ascended and from which he now looks. Of course, politics is a dangerous game and those at the top of any tower have to be concerned about the colleagues pushing behind them, who may be only too keen to push them off—no doubt to be caught by the arms of the country dancing classmates of Frank McAveety, with whom there seems to have been some previous altercation.

Jamie McGrigor cut through much of the academic, collegiate atmosphere of the debate to illustrate a recent example of poor governance and a lack of transparency in relation to The Gathering 2009 Ltd.

Willie Coffey did his triumphant best to make the lot of the Public Audit Committee sound like a barrel of fun. He is clearly persuaded but, although we accept that it is an important committee, those of us who are agnostic on the issue are not altogether persuaded that it is the key source of hot entertainment in the Parliament. Nonetheless, I respected and enjoyed his speech.

We heard a characteristically trenchant speech from George Foulkes, although his idiosyncratic views on the Forth crossing are not exactly the ones that I was trying to allude to. I do not necessarily see it as a fiasco waiting to happen, but as a fiasco that must be avoided. That is why it is imperative that the Public Audit Committee and Parliament have the ability to scrutinise it with all necessary diligence. Nonetheless, I look forward to further trenchant comments from George Foulkes, even if they are made in his dotage on the red leather elsewhere.

The key point in the debate is the need of the Parliament and public to be reassured about the governance and transparency of major public sector projects. Earlier, I said that the public are bewildered by our seeming inability, at times, to give effect to good governance and transparency. However, a better word than “bewildered” might have been “embarrassed”. When we find that we have been unable to contain the costs of a project and, for example, it has gone from £9 million to £40 million, people feel that it reflects badly on Scotland and belittles our reputation as a country of good governance and transparency, and that it belittles the reputation of the Scottish Parliament as a body that can bring about proper scrutiny in such matters. That is why we have to have a Public Audit Committee that is as effective as this one has been and which, in the next session, must have the ability to scrutinise further and deeper still.

Photo of David Whitton David Whitton Labour

As I said in my opening remarks, the Public Audit Committee is an important committee of this Parliament, and it is true to say that its work has been noted at home and abroad. Last year, I undertook a trip to Macedonia on behalf of the Westminster Foundation for Democracy to meet members of the Macedonian Parliament to discuss budget and financial matters. I did my best to explain how our budget system works, but the members were more keen to have a detailed explanation of how the Public Audit Committee works. Those who were most enthusiastic were members of the opposition parties, although members of the governing party also took a keen interest. Subsequently, that group of Macedonian MPs paid a reciprocal visit to Edinburgh, where, I believe, they also had a briefing on the work of the Public Audit Committee. I think that those members would have been interested in this morning’s proceedings.

We have listened to a debate on the Public Audit Committee and, as I said earlier, we welcome the key themes that have emerged from its inquiries in session 3. Labour members also welcome the Scottish Government’s response to the committee’s report.

It has been said that the Public Audit Committee exists to help to ensure that public funds are spent wisely. It holds to account those who are charged with spending taxpayers’ money. We can add to that the briefings from the Auditor General—who has rightly been praised this morning—on Audit Scotland’s forward programme of performance audits, the annual report for 2009-10, the code of practice and the national fraud initiative. There has been no room for complacency.

As other members have commented, it is little wonder that the committee has twice won the committee of the year award. Its convener, Hugh Henry, was politician of the year this year. It says something about politics in Scotland that the convener of the Public Audit Committee is the politician of the year. Perhaps that highlights some of the issues that Mr Carlaw raised.

Many have commented on the committee’s merits. As I said earlier, it has a hugely important role, and it covers important issues. Its workload this year has included many important examinations, such as the overview of mental health services, the audit of Transport Scotland and the overview of NHS Scotland’s performance in 2008-09. Many other subjects have been touched on. It has been said that all that work has been done without fear or favour. The First Minister has been summoned to give evidence, and the former permanent secretary—the former top civil servant in Scotland—was on the end of a number of torrid interview sessions. Those in the most senior positions of a number of public bodies have been called to account at various times, and that is how it should be. Transparency and the measuring of quality and governance demand that high level of interrogation.

I will comment briefly on some of the other speeches that have been made. Nicol Stephen paid particular tribute to the senior members of the committee: Murdo Fraser, George Foulkes and Hugh Henry. Imagine being summoned to be questioned by those three. I was going to say that they are three grumpy old men, but it suddenly occurred to me that Mr Fraser is, of course, a lot younger than I am.

I thought that the debate would be fairly consensual, but Anne McLaughlin spoiled that a bit by claiming to detect party-political bias in some of the investigations. I gently point out to her that, in my opening report, I mentioned Western Isles NHS Board and the Cairngorm funicular railway, and Jackson Carlaw raised the issue of concessionary ticket machines. All those issues arose under the previous Administration, and they were all examined in detail by the committee.

As ever, Mr Willie Coffey rose to the occasion. He linked hip replacements to ski resorts—I wonder where the connection is—and mentioned the committee’s meeting with Northern Ireland Assembly members of all political colours. It is a pity that such harmony did not exist after last night’s old firm game. His phrase of the day came when he commented on the evidence of some civil servants. He referred to “masters of the evasive”. I will certainly file away that phrase for future use.

Another area of concern to the committee, which has been mentioned before, is the collection of data and the measuring of quality. Those things are not always as easy they may seem to be. The report highlights that the charges that are levied by Scotland’s 32 local authorities for free personal nursing care do not match up, and that has caused problems, as the data that the local authorities collected did not provide an adequate basis for the Scottish Government to know how much had been spent by them on free personal care or to make adequate projections of future costs. Although the figures on free personal nursing care are published as national statistics for Scotland, I welcome the news that the Scottish Government has been working with the Convention of Scottish Local Authorities to develop a new data collection process that records eligibility criteria and the waiting times of clients who receive a new free personal care service. I understand that that is to be made available on 29 March.

It will be interesting to see the revised guidance on the relationship between the Scottish Government and public bodies, which is also due to be published later this year. Whatever that guidance is, the Public Audit Committee’s work will remain an important part of the Parliament’s work. In my opening comments, I referred to Macedonia. The Macedonian Parliament—which is, like the Scottish Parliament, a young Parliament—is keen to know how it can hold its Government and civil servants to account. It is a tribute to the work of the Scottish Parliament’s Public Audit Committee that it is being recognised in that way, and I wish it well in its continuing work in the next session.

Photo of John Swinney John Swinney Scottish National Party

Let me begin with two discordant notes—I will get them out of the way.

First, it is nice that some members have remained for the closing speeches in the debate, which perhaps could be considered in all the reflection about the way in which Parliament disports itself in its business. If members want to hear the responses that are articulated, it would be nice if they would stay around. That applies to the committee’s deputy convener, as it does to me or anyone else. That is the first discordant note out of the road.

The second discordant note is that Mr Whitton stole my thunder—I hope that it will be the last time he ever does that. There has been a sense in some of the debate that the past four years have been the first time there has been a problem with a publicly financed project. Mr Whitton generously acknowledged, however, that a number of the projects that were talked about and which required scrutiny had been the subject of decision making long before the current set of ministers came to office.

In a sense, that sets the standard for the role of the Public Audit Committee: there has to be an acceptance across the political spectrum that because some of us might be in opposition on one day and in government the next, there must be a dispassionate tone to the proceedings of the Public Audit Committee and never a pejorative or party-political tone. We never know on which end of the table we might find ourselves, so it is important that the Public Audit Committee proceeds on the basis of dispassionate evidence rather than on what might suit a particular political narrative.

There have been interesting and substantial contributions in today’s debate, and I will respond to a number of them. Let me start on data. One thing that is relevant to improvement in the availability of data, and therefore to the ability to scrutinise how public finances are utilised, is the monthly publication of expenditure of more than £25,000 by the Scottish Government. Former ministers will not be surprised to hear that when I first broached with civil servants the idea that we might do that, I was told that it would be a colossal undertaking. Well, it has happened and the world has not come to a halt. The information is published every month. I have the document from November with me; it comprises 22 pages of very tightly printed information about all the Government’s financial transactions of more than £25,000. The volume of information that is available has been substantially enhanced.

There have been interesting reflections on the Scotland performs website. I appreciated Mr McAveety’s comments that Scotland performs is a helpful and positive step in the right direction. Further developments can be undertaken in its use, particularly in ensuring that it gives us a sense of how much progress we are making on the achievement of particular outcomes and how we utilise public expenditure to support those outcomes. I accept the point that was made by the convener that there is a necessity to link financial decision making with the focus of policy making rather than the support of programmes—although that will take some time to achieve.

There has also been a major focus on capital projects in the debate. I re-emphasise the points from Audit Scotland about the way in which we approach capital projects, which I put on the record earlier. Nicol Stephen made the comment that some projects go wrong and end up costing much more than we estimated. In some cases, that is not necessarily because the project has been badly managed but because the estimate was hopelessly ridiculous in the beginning—and there is a lot of evidence of hopelessly ridiculous estimates. That is not to say that monitoring projects continuously, assiduously, thoroughly and regularly throughout their lifetimes is not essential, but if we are trying to balance a project against a number that is ridiculous to begin with, we will never bring a project in on budget. Our being up front and open with Parliament about the real costs of particular projects is therefore important.

Mr Kelly—who is sadly not here to hear my thoughtful reflections on his comments—made the point that there is a concern about the future revenue implications from capital investment projects. He is correct. One point that I have frequently made to Parliament is that private finance initiative projects were commissioned on the basis that public expenditure would consistently continue to grow in real terms in all future years. Of course, this year I am having to manage the rising cost of PFI projects in revenue terms with a declining budget—the first time any finance minister has faced that situation.

The Auditor General’s point about long-term financial planning for the revenue implications of projects is a substantial one; indeed, it is why I have put in place a framework that limits the amount of the Government’s budget that can be allocated to revenue-financed projects. That provision was not in place until I became finance minister in 2007.

With regard to members’ comments on conflicts of interest, I point out that such matters are discussed at mid-year and end-of-year reviews with civil servants and are disclosed and recorded on the Government’s human resources system to ensure proper tabulation of any potential conflicts of interest that civil servants might face.

Mr McAveety made a very interesting speech—I am regularly assisting him in his rehabilitation—and I thought that he made some very constructive comments about SFT. There is a job to be done there, and the trust is now doing it well and delivering real value to the public purse.

As for Transport Scotland’s role in the governance of the trams project, let me try to help Parliament. The decisions that have been taken on this matter have been about the proper level of control and responsibility that should be exercised by individual parties. In that respect, Transport Scotland is neither the project owner, which is the City of Edinburgh Council, nor its director, which is Transport Initiatives Edinburgh; it is a funder of the project, albeit a significant one.

A careful judgment has had to be made on this matter. Previous reports, for example, have referred to confusion in the governance structure and, as members will understand, any confusion about who is responsible for leading or directing a project can result in uncertainty. Decisions on governance have been taken in that context to make it absolutely clear that TIE was the project director, the City of Edinburgh Council was the project owner and the Government was providing the funding.

That is not to say that we have had no conversations about the issues. Clearly we have; Transport Scotland has been in regular dialogue with the City of Edinburgh Council and TIE on the project’s management. I have seen the leadership of the City of Edinburgh Council and TIE many, many times over the past four years—I cannot give Parliament an exact number—and I asked the council to embark on mediation. In fact, I did not ask—I insisted that it do so to try to resolve the situation and ensure that we could complete the project in a way that the public purse could sustain. Insisting that such work is undertaken is, to me, the correct intervention for a minister to make.

Photo of Lord George Foulkes Lord George Foulkes Labour

I commend the cabinet secretary on the way in which he has intervened in that matter. Will he respond to those of us who are still here on the question whether he will consider intervening in relation to the creditors who are still due money from The Gathering 2009 Ltd? Does he agree that if the City of Edinburgh Council has paid Portakabin, it has a moral responsibility to pay the small creditors as well?

Photo of John Swinney John Swinney Scottish National Party

It is a difficult issue for me to become involved in, but let me set out what the Government is trying to do. Sadly, Iain Smith is not in the chamber, but I will use as a peg for responding to Lord Foulkes his question about why the public sector debts were written off. The principal accountable officer decided to write off the amounts that were owed to the Government on the basis of a judgment that the debt was not recoverable. The timing of the decision was influenced by the fact that it would have facilitated the transfer of the company in question to Destination Edinburgh Marketing Alliance as part of the Scottish Government’s determined efforts to find a solution, once we became aware of the financial difficulties. That move would have enabled the situation with the creditors to have been properly resolved.

That said, when the First Minister went before the Public Audit Committee, which itself indicates the absolute importance of the committees of the Parliament holding ministers to account, he agreed in his evidence that lessons had been learned from the gathering and that the Scottish Government should have insisted on EventScotland informing the steering group that a short-term loan had been awarded to The Gathering 2009 Ltd. As I say, that reflects the importance of ministers setting out where lessons have to be learned. We will take the same approach to the Public Audit Committee in the years to come.

Photo of Murdo Fraser Murdo Fraser Conservative

I am grateful for the opportunity to close the debate—the first ever plenary debate for the Public Audit Committee—on behalf of the committee. There will have been audible groans at the prospect of participating in the debate from members who looked at the Business Bulletin and saw a committee debate scheduled for a Thursday morning. When they read further and saw that it was a debate on audit, those groans would have become wails of anguish. I am therefore delighted to thank all members who have contributed this morning, especially those who have stayed until the end of the debate.

I join other members in putting on record my thanks to the Auditor General and his staff for their sterling work in informing the work of the committee. I also join other members in thanking for their work the committee clerks, who serve us so well.

Other members have referred to the awards that have been won by the committee. It has twice won committee of the year, and the convener’s personal award as politician of the year is richly deserved. It is interesting to reflect, as we consider the various members of the committee, some of whom have come and gone over the past four years, that we have in our ranks—I think that we are unique in the Scottish Parliament in this respect—no less than two members of the House of Lords, in Lord Foulkes and Lord Stephen. I am not sure what that tells us about the work of the committee, but I reflect on the fact that the committee, and the Parliament, are shortly to be losing the services of those two noble lords. That will be our loss and the Westminster upper chamber’s gain because this place will be poorer and less colourful without them.

I will respond to some of the points that have been made during the debate. Members including Mr Whitton and Mr Carlaw referred to the important work that has been done by the committee, particularly at a time of pressure on the public finances. That is an appropriate point. We all know that money is tight, and when money is tight it is all the more important that we ensure that every penny is spent as effectively as possible. That is what the committee tries to ensure—backing up the able work that is done by the Auditor General.

A number of members referred to specific reports that have been published by the committee over the past session, particularly “The Gathering 2009”. I want to address points that were made by Jamie McGrigor, George Foulkes and others about the gathering. The irony of the report, as Nicol Stephen said fairly, is that sometimes the greatest concerns we have as a committee arise from what are actually quite small sums of money. The public cost involved in the gathering—a few hundred thousand pounds—was not substantial, yet the committee felt that the way in which that money was spent merited further investigation.

One of the interesting things about the gathering report is that although we started with a focus very much on the Scottish Government’s involvement, as we went further into the issue our focus turned to a greater extent towards the actions of the City of Edinburgh Council. Jamie McGrigor made a fair point that if the Scottish Government’s loan to The Gathering 2009 Ltd—a loan that was not publicly disclosed—had been made known to the private sector creditors, they may well have rethought their involvement in the project. The sum that The Gathering 2009 Ltd ended up owing to private sector creditors may not have totalled £344,000. We can only conjecture on that. The private sector creditors should at least have been given that information so that they could have made an informed decision on whether to proceed with their involvement with the company.

The committee’s biggest concern related to the actions of the City of Edinburgh Council—in particular the issue of the misleading press release that was issued, which was referred to by George Foulkes. This is not some dry academic subject, because we know that the issue of the press release by the City of Edinburgh Council saying that DEMA would take on the obligations to the private sector creditors was instrumental in those creditors holding off from taking legal action to recover the sums. As George Foulkes said, the one creditor—Portakabin—that ignored the press release got a settlement out of the City of Edinburgh Council. The others, which believed what they were told by the council, got nothing and to this day have received not a penny.

The committee considered evidence that we heard from leading figures in the council to be literally incredible. It did not live up to the quality of evidence that we, as a parliamentary committee, have a right to expect. The whole system of parliamentary inquiry depends on witnesses who come to committees being prepared to give accurate and truthful evidence. It is a source of regret that that was not done in that particular case. The matter is being pursued elsewhere, but it is worth reflecting that, had it not been for the work of the Public Audit Committee, we would not have known about the issues in the first place.

I turn to the issues of accountability and performance management of staff in the Scottish Government and its agencies. Throughout the session, the committee received evidence that staff performance issues have not always been directly addressed, with staff being moved sideways or sometimes even to more senior posts when concerns have been expressed about their performance. Members have referred to the audit in 2006-07 of Western Isles NHS Board. Willie Coffey remembered travelling in what I think he called a flying oven to Stornoway to take evidence. I regret to this day that I was not part of that delegation, because I was on paternity leave. My colleague Derek Brownlee had the wonderful opportunity of sitting as my substitute on the committee that day. For weeks afterwards, he expressed his gratitude to me for his participation in the event.

The committee’s report on that health board demonstrated that several weaknesses in staff performance had contributed to deficits that culminated in a total of £3.36 million. As members have said, at one point, there were no fewer than three chief executives—one was on leave, another was seconded elsewhere and a third interim chief executive had been brought in to tackle budget issues. The Scottish Government health department did not address performance issues, including at board level, quickly enough. The problem was exacerbated by staffing issues in the board’s finance department that had not been tackled during previous years, notwithstanding the fact that the auditor had expressed concerns about governance in the board.

Good staffing and performance management are increasingly important in times of financial austerity, particularly when levels of staffing in the civil service might be reduced. The Western Isles case is an example in which a lack of clarity on responsibilities contributed to financial losses year upon year, despite those having been identified in external audit reports. Clear lines of accountability ensure that health boards can challenge poor performance earlier and prevent losses. Although we are aware that boards need to remain independent, the committee felt that improved monitoring and scrutiny by the Government’s health department of individual boards would ensure that failures at board level can be challenged and addressed at an earlier stage.

Another staffing issue that the committee encountered related to knowledge transfer when civil servants or policy responsibilities move between Government departments. That issue was particularly in evidence in our report “National concessionary travel”. In that case, insufficient knowledge transfer between staff when the policy moved to Transport Scotland meant that officials who came to the committee were unable to explain how the original costs of the scheme technology, which were assessed in 2004 at £9 million, had originally been conceived. The costs increased to £42 million by 2010 when the technology was implemented, but nobody could explain to us why and how the figure of £9 million had been arrived at. We have therefore urged the Scottish Government to ensure that record keeping from the initial stages of policy implementation is sound and that robust procedures are put in place to provide continuity and proper knowledge transfer between staff.

We also addressed the issue of major capital projects, to which members, including John Swinney in his closing remarks, referred. For any project, there must be from the outset clearly identified outputs and outcomes in the business case. That helps to ensure value for money, provides a base to manage any changes during implementation and helps to realise intended benefits. However, the committee learned that business cases were not available for some projects and that others had not been kept up to date, resulting in cost overruns and delays as staff could not clearly identify decisions that were taken from the outset of the policy.

The committee’s key themes report distils into three broad areas the key recommendations that the committee has made in the past four years. The committee undertook that work to assist any future Government to learn the lessons from the past, which, as I said, is crucial during a time of financial constraint. We hope that, in the next session of Parliament, those lessons will be learned, resulting in better value for money for taxpayers. I send my good wishes to the members of the committee in the next session of Parliament, whoever they may be. It will be interesting to see whether they win quite as many awards as we have.