Right? Good morning and I welcome everybody to the 21st meeting of the Education and Culture Committee in 2015. Can I remind everybody to make sure that all electric devices are switched off at all times? First of all, I give apologies for Leigh MacArthur, who has been a victim of the aeroplanes again. His plane has been canceled I believe, or at least delayed for three hours, so he won't make it this morning. I welcome Liz Smith, who has joined us again this morning in the committee. I turn now to our first item on the agenda. This morning we will continue our work on examining the spending decisions made and the outcomes delivered by some of the key public bodies within our remit. Today's evidence session will focus on the SQA. I welcome to the committee this morning Dr Janet Brown and Linda Ellison, both from the SQA. I invite you, I presume that Janet Brown, to make some opening remarks. I thank the committee for inviting us here this morning and for giving me the opportunity to discuss SQA's work with you. I thought that it might be helpful to the committee to provide a brief overview of the work that we do and to illustrate how our activities fit into the wider aims of Scotland's education sector and to complement the wider objective of Scotland as a whole. SQA is a non-depot mental public body that is responsible to the Scottish Government, the Scottish Parliament and the people of Scotland. The overarching purpose of the organisation is to ensure that high quality qualifications are available for all. We have a very broad remit, which is to discharge through two distinct functions, SQA accreditation and the activities of SQA as an awarding body. SQA's accreditation has the responsibility to accredit vocational qualifications that are offered in Scotland, most notably Scottish vocational qualifications, SVQs and qualifications that are required for a licence to practice. SQA accreditation approves bodies that wish to deliver those qualifications and as such this function is distinct within the organisation and has a separate governance mechanism with an oversight body, the accreditation committee that reports directly into the Scottish Government. The majority of SQA's activities are undertaken through the awarding function. This committee and indeed most of Scotland will be most familiar with the activities of SQA in its role in schools and most recently in the development and delivery of the new qualifications that support curriculum for excellence. This activity has been reviewed in past sessions of this committee and forms the basis of just over half of our work. Additionally, SQA delivers at other qualifications and awards that support the development of young people, notably skills for work and personal development, entrepreneurship and vocational qualifications that support the aims and objectives of developing Scotland's young workforce. We also support colleges, training providers and individual businesses with a wide variety of vocational and specialist qualifications at all SQF levels. These qualifications are based on national occupational standards and are aimed at supporting people both into work and as they progress through their work in their working lives. They range from entry-level qualifications to HNCs and HNDs. SQA HNDs allow successful learners to transition directly into the workforce or into the later years of degree study in university in Scotland and in many other countries. The SQA portfolio covers a very wide range of sectors, both mainstream and niche, from agriculture to engineering, from food and drink to waste management. SQA works closely with industry to ensure that our qualifications support industry requirements and, where possible, embed other industry qualifications within our own. In computing, for instance, the digital media and IT vendor alliance, Diva, is a partnership between SQA and leading global companies in information and technology and digital media. The committee will well have seen the announcement this morning of Harry Wheaton to be the head of Scotland's new digital skills academy code clan. The academy's curriculum has been tailored to fit the real-time market demands in Scotland and it is working with SQA on industry-driven professional development awards in software development. SQA also works internationally and we do this for several reasons. We do it to support the international goals of Scottish Government. We do it to learn from and share our expertise with other educational experts across the world. We do it to support the development of skills and educational approaches in other countries. We also use our core competencies to secure work that will minimise our dependency on public funding. Scotland's reputation as a centre for excellence in education and training is enhanced by the delivery of a number of our consultancy projects in areas such as assessment and quality assurance and the development of systems, processes and procedures for education and training in international markets. That work involves partnership with a variety of other agencies such as Scottish Development International, the British Council and other stakeholders to ensure that we meet the needs of international learners in the countries in which we work. First and foremost, however, SQA is keenly aware of our responsibility to establish and maintain the standard of qualifications awarded in Scotland. We work in partnership with educators, businesses, parents and carers, learners and other key stakeholders within the education and skills system to ensure that our qualifications prepare learners for work and for further study. This engagement takes place at all stages during identification of the need for and in the development and delivery of qualifications. Our remit to maintain standards is at the heart of our approach. SQA is an organisation that is recognised for its expertise in assessment and qualification development and in successful delivery. SQA, unlike many in the public sector, has a responsibility for major logistical and operational activities and every year SQA brings on board around 17,000 appointees, manages over a million assessments and successfully certificates almost 150,000 candidates on results day. The teaching professionals and industry specialists who support SQA operations help to ensure that our qualifications accurately reflect learners' knowledge and skills and provide routes to jobs and further study. I thank all those who work with us. The breadth of activity must be undertaken in a manner that maintains quality and standards but also recognises the importance of delivering value for public money. The organisation has focused on identifying new ways of working that will bring efficiencies and areas of opportunity for reducing costs. SQA has also demonstrated the ability to generate income through its activities outwith Scotland that have helped to reduce the requirement for public funds. In conclusion, we are keenly aware of the responsibilities of our role to provide high-quality, relevant qualifications for the people of Scotland at a time of significant financial austerity. It is critical, therefore, that we continue to keep a balance between maintaining standards and providing secure delivery with opportunities to reduce costs and generate additional income. I welcome the opportunity to discuss SQA's work with the committee today and thank you for allowing me those opening statements. I am going to move straight to questions now and we will begin with John Pentland. Good morning. SQA's role is so role that is perhaps about developing education policy and measured outcomes and its delivery and obviously the quality of examination. Recently, there was much controversy around the grade bandings. I am talking about higher mass here, which was so hard and so unlike the sample people who left pupils and tears. Can you give me advice to the committee on why it happened and what you are going to do to ensure that that never happens again? You rightly pointed out that the new higher mass that we identified as being harder than anticipated. What we had done is that we had developed a question paper along the same guidelines as the exemplification question paper that we put out and also the sample question paper. However, as we went through and looked at the way that the question papers had performed, there were two question papers, paper 1 and paper 2. It was very obvious that they had been of a standard that was over and above what we had anticipated. The mechanisms associated with establishing the grade boundaries allow us to take into account the difference in the challenge that is provided by any question paper. That happens every year in every subject. It is a very intense and important procedure that we undertake when we go through grade boundary meetings. It is a meeting in which there are members of the SQA community, both in terms of subject experts and senior management, and experts from the assessment community in terms of the principal assessor and other key figures within the specific subject that we are looking at. What that allows us to do is look at not only the way in which the examination and assessment has performed, but also to look at individual items, particularly in the case of maths, where we could look at individual questions and understand how they performed. On doing so and looking at the nature of the way in which the paper was set, we identified that it was harder than we anticipated it being. However, we were able to understand that it had done its job in terms of differentiating between candidates who were able to perform very well and other candidates who were able to achieve a pass. That allowed us therefore to change the grade boundaries and adjust the grade boundaries to make a robust qualification and to allow us to give the candidates the grades that they required. In terms of ensuring that that does not happen again, every year, as we do with any qualification, whether there are established qualifications that have been in place for many years, as the pre-existing hires have been, we will go back and look at next year's assessment. We will review the level of difficulty and the level of challenge, the coverage of the course work that is associated with that assessment, and we will make changes associated with that. We have done that with the new Hermas and we are confident that we will see a paper that is on standard next year. To pick up on some of the issues that you just raised there and notwithstanding the usual procedures that are put in place to ensure that no child is disadvantaged, could you explain to the committee whether you feel that the advice that was given to schools regarding the course work and perhaps their preparation for prelims was in some way lacking in the rigor that was demanded given that so many of them are complaining—I am sure that you have had many letters making the complaint—that they did not feel that the exam was the structure that they were expecting? As I said, the exam was the same structure as the specimen paper that was issued as was the exemplar paper that was issued. We believe that we did give an appropriate level of information to the schools. However, we did identify that the paper itself was of a harder nature than we anticipated it to be. However, the structure of the paper and the nature of the questions within it was part of the course and was explained to teachers through the course exemplification materials. I think that you will understand that there was a lot of concern and that it was something that was very prominent in the media at the time. How confident are you that the grade boundaries reflect what you have just said in your opening statement that we try to attract as many people into taking those qualifications as well as the academic rigor that is there? For example, in the new higher maths, the grade boundaries were vastly different from the classical studies paper and modern studies being another example. A significant difference is that you will know from the letter that is published on the committee's website that your colleague Dr Stewart makes a comment that the course assessment that is for classical studies did not function as intended for either the question paper component or the assignment. That is quite a criticism. I remind the committee that this is the first year of the new hires. Once a qualification has been well established, the setting and development of question papers becomes a lot more routine. As you start with a new set of qualifications, it is very important that you really analyse exactly what the first paper is that you have actually set. There are things that one introduces in new qualifications that you will not know whether they are going to work, how they are going to work until you have had the first set of candidates going through it. However, the mechanisms that we have in place allow us to make adjustments for that, which is exactly what has happened in terms of the grade boundaries being adjusted for not just high maths but for other subjects. I think that parents understand that not all subjects will have the same grade boundaries, but there is such a vast difference between some of them. I know that you have had many letters of complaint this year. I think that there is a real concern for the children this year who are doing the new hires. There is a great deal of concern about the standards that are applied across the curriculum that they are sitting in. Of course, that has a knock-on effect at college and university entrance. What guarantees can you give those children and parents that the new hires are properly modulated not only within their own academic boundaries but against each other, so that there is absolute confidence that SQA is delivering the quality that everybody expects? One of the things that we do—that is a really important point that one subject is at the same level of challenge as another subject—is that we look at the national rating for a qualification. Historically, we have been very focused on that as we have introduced the new qualifications. What that does is compare across all of the population of candidates undertaking the qualifications and how candidates have done in one subject versus another. The national rating that we assign is based on the statistical data of all candidates undertaking all qualifications at a given level. We aim to have the national rating for all subjects to be within about one grade band, and that is what we are monitoring this year. We have seen that the new hires are to the vast majority of extent within that one grade band. That is an important measure to be able to say that all of the qualifications at higher are at higher standard irrespective of what the subject is, and that is something that is very critical. We have also compared that to the existing hires, because one of the important things when you are introducing any new qualification is to make sure that the standard of the new hire or the national five compared to the intermediate two is of the same challenge and the same level of difficulty. It may have different content, it may have different ways of assessing skills, it may have different skills development within the two different types of qualification, but the level of challenge should be the same. When we went through the grade boundary meetings this year, we undertook, as we did last year with the nationals, each subject at each level together. We were able to look at the existing hire and the new hires in the same meeting with both sets of assessors and both sets of people who were emboldened in the development of the papers. It is very critical that you not only compare subjects across a given set of suite of qualifications like the new hires, for instance, but you also compare them with respect to the previous qualification structure that was in place. That is something that we are monitoring and we make tweaks. If we see that one subject is getting on the hard side, we will review the assessment methodology and make adjustments to bring them all back into line. How do you respond to Mr Milligan's point, which is that with an 83 per cent pass rate for an A in the classical studies this time, which comparison with things like the new maths was very much considerably lower than that for the same grade, he is questioning whether exactly what you have just said has actually happened in terms of that acceptance of the grade boundaries. That goes back to the fact that, in the discussion around setting grade boundaries, we look at the individual assessments. We look at how the level of challenge within an assessment, the level of breadth of coverage of the course, whether a particular question, because of the nature of the subject material that it is focused on, has meant that it is more accessible, easier to candidates than another area. Whilst you could say that an A grade boundary at 80 is very different from an A grade boundary at 70, you are actually saying that the assessment that has been undertaken by those candidates means that candidates who are of an A standard in one should be getting an 80 and candidates of an A standard in the other should be getting a 70, because of the level of difficulty and the level of coverage of that particular assessment. Forgive me, does that not say something about the make-up of the papers, which I think is the point that Mr Milligan goes on to make in terms of what might be deemed an easy question and what might be seen as more difficult? Parents want to know that any exam that their children are sitting has the same degree of difficulty in the way that the paper is structured and the choice within that. Are you able to give that guarantee? That is absolutely what we are trying to achieve. One of the things that I said earlier is the fact that, as we introduce new qualifications and new assessments and we are assessing different types of skills, we need to understand and learn from how those particular assessments have performed in the real environment, at the same time as not disadvantaging the candidates who have undertaken those assessments. That is where we are aiming and in many, many, many cases across the new qualifications that we have achieved. Just finished on one last question. Were you surprised by the level of criticism for this year's SQA presentations within schools? I think that if you look at overall, the criticisms of SQA qualifications across the schools is not high. There are specific subjects that people are uncomfortable with, but I think that we need to remember that every single qualification was changed. I think that the vast edge, as you can see from some of the submissions that have come in from other bodies, the overall perception is that the introduction of the new qualifications overall has gone well. There are things that we need to learn. There are things, other parts of the system, that need to modify in how they are undertaking their activities, but there are some things that we need to learn lessons from and I will openly accept that. Dr Brown, you gave a very glowing account of SQA and I just convened to put on the record that that is certainly not shared by the AIS, who say that they are very disappointed at SQA's apparent inability to respond appropriately to significant feedback from AIS members who are all teachers, and that is a matter of deep and on-going frustration. I am just wondering if you would work more closely with teachers, a bit more constructively and positively, because the criticisms were not coming from politicians. It was teachers at the chalk face, if I could use that word, and from my discussions with teachers it was not that the pupils could not do the maths, they could not understand the questions and that really fazed them, but convener I just want to ask one question and if I could do a Jeremy Corbyn here but someone has sent me an email and asked me to ask this question, let us call him Donald from wherever. I think it is a very reasonable question because this Parliament is based on the principles of openness and transparency. Where are the minutes of your grade boundary setting meetings that Liz Smith has just been asking about? Apparently the English exam boards not only take minutes but they have off-qual representatives sitting in, and yet the SQA teachers and other SQA officials who comprise grade boundaries basically decide on those boundaries in secret with no accountability. I understand that you have provided no evidence to justify your decision in relation to maths. Apparently there was a ruling two years ago that local councils cannot complain about the SQA's practices to the ombudsman. Donald, if I can call him that, essentially says that you can do what you like, including covering in his words your own dodgy tracks. Given that there has been so much criticism this year, it is only reasonable that there is openness, transparency and more accountability in terms of appeal. Can the committee get a copy of your minutes of your grade boundary settings? As Liz Smith said, the higher classical studies apparently 13 per cent was added to the grade boundaries, which obviously diminished achievement, and then we saw the grade boundary for maths coming down incredibly. If we are to maintain the excellence in Scottish education, is it possible that we can have the minutes of your meetings and that there can be more openness? Has Donald got it right? What we do in grade boundaries is we record why we made the decisions and why we changed the grade boundaries. Those are published in October and those come out as documents on a specific subject at a specific level. They are aimed at teachers and to give an explanation of why things have changed. We will get all the information about the maths in October. The course materials next month? Yes, the course documentation will be published in October. Will be given the reasons why you reduced that level past? Yes, it has been published every year. That level of information is available. It is there because there are multiple reasons why grade boundaries will be adjusted. One is the nature of the assessment. In some cases it is also associated with the course coverage in terms of making sure that teachers are fully aware of the amount of material that needs to be covered, etc. Those materials will be published in October. What happens in the grade boundary meetings is that we are probably aware that we have a qualifications committee within SQA. The qualifications committee is the body to which all of our activity is taken associated with the development of qualifications, the way in which we manage the policy of delivery of those qualifications and the way in which we undertake grade boundaries and subsequent evaluation of how qualifications are performed. That committee is made up of SQA people and SQA board members, but it is also made up of external people, both teachers, college lecturers and people outwith Scotland, in terms of being able to have that oversight ability to challenge what SQA is doing in terms of development, in terms of the assessments that we create, and in terms of the way in which we evaluate and run the qualification system, because that is critically important. As I said in my opening statement, SQA's role is to set and ensure the standard. That is all we are there for. The second point that you have answered, I look forward to reading this in October. Local councils cannot complain about SQA's practices. Is that correct? What can local councils do? For example, if you look at the deep anger and on-going frustration from the EIS, if they are not happy with the support that they have, they feel that they have let the pupils down. If they are not happy with their practices, where can they go? You are quoting the EIS. One of the things that we do with the EIS is that we meet them on a regular basis. I am quoting Donald, if you do not mind. The EIS is deep on-going frustration. Right. Do you like me to cover the local authority point? I am talking about local authorities. All most teachers are employed by local authorities. If they are finding that there is deep and on-going frustration with the SQA, with your apparent inability to respond, where can they go? They cannot go to the ombudsman. Where can they complain about you? I think that if you look at the EIS submission, the EIS submission cites the close partnership working that we have with directors of education within the local authorities. Will we meet with them both in terms of— I am sorry, convener. I am not asking about. I did read that. I read all the submissions. I did read that. I am asking a specific question. If local councils or colleges, for that matter, are unhappy by SQA's practices, who do they go to? Local authorities—anybody—can complain to the ombudsman. In fact, when we get complaints coming in, if they are unsuccessfully resolved, they can go to the ombudsman. They can still go to the ombudsman to complain, and the ombudsman will carry out an investigation into your practices regarding boundaries. Into our processes and procedures. Into the way in which our processes are changing boundaries. The whole issue of how much a great boundary is changed is a matter of academic decision. The processes and procedures can be reviewed by the ombudsman. The academic decision is the responsibility of the SQA. I appreciate that. I understand that. That is very helpful. I am sure that Donald will be happy. Do you have any other questions in the area? There is a supplementary question. Dr Brings, you just clarified the external assessment report. When is that going to be published? That comes out in October. It will be coming out on a phase basis. And do schools know that? Yes, yes. It is every year. We publish this information because one of the things that is really important to do is, as we go through the whole great boundary process, as we look at how the assessments have performed, whether we need to change a great boundary or we do not. One of the things that we do is we try and understand how teachers have perceived the assessment, what they could learn from it. In some cases, we see really good practice in some areas where there could be improvements. It is really important that we communicate that to teachers and that teachers access that material, because that will help them in terms of understanding the nature of the qualifications. Thank you. I do not think that the date was on the website, and schools are asking about that. We will make sure that we go back and do that. As you have made to ask us in developing policy, could you maybe advise what your role has been with reference to the Scottish Government's policy on reducing the attainment gap? I will stick with the great boundaries in maths. I welcome back to that. We have got that to do. Basically, parents want reassurance about the standard of exams, and they need to be confident that this will not reoccur. Have there been any concerns regarding great boundaries in the past? Is there any evidence to suggest that lessons were learned and have not occurred on the same particular subject? I am thinking about, back in October 2005, when the standard-grade maths, one of the papers had a pass mark of 31 per cent. Did that ever reoccur again in maths over the period after that, the same level of controversy regarding the pass mark? In other words, highlighting that lessons were learned and therefore the issue did not reoccur? If you look at the nature of the great boundaries, they have been published for many years. Again, in the spirit of openness, we publish our great boundary levels every year, so this year is not unusual. One of the things that we do is look at why we had to adjust to great boundaries significantly. In some instances, it will be the nature and the way that the question is being worded, and we will not do that again. You can see that there will be slow changes in the great boundary that address some of the concerns that we have identified in those meetings. In the case of introducing new qualifications, where there are new types of assessment and new skills being assessed, it is important that we learn those lessons. In this particular round of the new highest, for instance, being instituted, there are things that we have learned in terms of the nature of how a question is being asked, how it has been interpreted and those things will be carried forward into future years. Will any of that information be published anywhere? I was thinking about the principle assessors report or anything like that. Those are published. The principle assessors report comes out to teachers. I have to admit that I do not know the date of those. I apologise, but we can get that for you. I have one final question before we move on. Can you explain how you have been dealing with the appeals process, particularly over those subjects? We have people writing to us about maths, certainly classical studies and human biology. How did you do anything different this year to try to deal with appeals in those subjects? For example, it was not Donald from Dingwall, but it was somebody else who contacted me, who made the point that they felt that their own child had been very badly impacted in the exam by an early question, which was very tough, perhaps much harder than it should have been, and then that impacted on their ability to then answer subsequent questions in the exam because they were distressed by the early question that impacted on them and then they felt therefore that they did not perform as they would have done had that early question, which was difficult to understand and perhaps much harder, as I think you have said just earlier, than it should have been. What way could you possibly take account of that, or have you taken account of that in any of the appeals? As you know, the Postal Services that we undertake looks at the marking reviews associated with individual qualifications. One of the things that teachers do when they are preparing their students for exams and for assessments is to make sure that they understand that if they find a question hard, they move on to the next one, and that is what we saw. If you look at the performance for new high maths, but for any of the new qualifications, they are as most teachers have expected and most of the performance that you see is very reflective of what you would expect from the nature of the candidates that were entered for it. Teachers prepare candidates for being able to get over those hurdles. In mass exams, as long as mass exams have existed, there have been hard questions for individual students that they cannot undertake, and they are asked to move on to the next one. That is part of what the teachers do in terms of preparing the candidates for the students. I am sorry to hark on about that, but are you saying that you do not accept that the nature of this year's new higher maths exam paper caused individual pupils to be distressed by a very difficult early question, which was a way above what was expected of them or they had been taught to, and was written in such a way as to be very difficult to understand because they had not, as far as I am, to believe, experienced a question that had been put to them in that particular fashion. You are not accepting that that is the case. I think that one of the things that we have done, curriculum for excellence in maths, one of the things that was a key focus and a key area of communication and engagement with teachers, was the fact that questions would be set in context. Things, a lot more words around the question, not just merely answer this particular, solve this particular equation, but putting the mathematics in a context that would allow them to be able to demonstrate what they can do. However, that is not a new aspect of what has been in maths papers in the past, it has always been there. The challenge here is to make sure that candidates are prepared for that, that is part of the nature of the qualification, is to be able to apply your knowledge in different contexts. We did look at how each individual question performed, and we did not see evidence that early questions caused changes to the way in which people performed later on in the paper. Is that research available or is that internal? That is done in the grade boundaries. The good news about the new qualification structure, where a significant number of them are remarked, is that we get the average mark and distribution of the marks by question. That is available to the examination team and to the people undertaking the grade boundary setting, so that allows us to see that. But it is not available outside? We do not generally publish that now. I think that we will move on now to the next set of questions that I know that members are keen to ask. I begin with Chick Brody. In the corporate plan, the mission statement says that the purpose—I will come back to the vision in a minute, if I may—is to provide products, services, skills, training and education that positively impact on individuals, organisations and society. It is fairly significant and against the landscape that has been changing. I found it surprising that, in the information that I received from Spice, the structures and management of the SQA have not been considered in detail by the Parliament since the exams crisis 15 years ago. What exchange do you have with the Government in terms of any major changes that you have made to your structure or management? It is also unclear what outcomes the SQA delivers beyond preparing and marking examinations. No information is provided in relation to how successful you are in this task, and we have just discussed the issue of the maths exam. However, the information is not there to determine whether productivity is increasing, cost-reducing or to the extent to which you are seeking to utilise new technologies. There is a whole gamut of communication of the structure, management and performance in terms of how you measure or who is measuring you and with whom do you discuss it? First and foremost, the Scottish Government has observed status on our board, so they attend every single board meeting that we have. We also meet them on a very regular basis in discussing the financial performance of the organisation and the outcomes, particularly around the implementation of curriculum fractions, for instance, where we have been meeting on a very regular basis. In terms of changes to structure and changes to management approach, one of the things that we have to do is, if we have significant management changes as in organisational structural change, we have to discuss that with the Scottish Government and we have to get their approval. Does the Scottish Government secretary, the ministers or the civil servants? We discuss it with the civil servants who seek approval from the minister if there are significant changes that are being undertaken. One of the things that we do on a regular basis is to look at whether our structure and management procedures do continue to support what we are trying to achieve. We will make adjustments, if required, to make sure that we have the appropriate management focus on different areas of the business. As curriculum fractions was introduced, one of the things that we particularly needed to do because of the complexity of the development and delivery of such a wide-ranging change within the organisation is that we introduced a programme management methodology and a programme management structure that monitored each different aspect of the development of curriculum fractions, the delivery of curriculum fractions and the evaluation of curriculum fractions within SQA. That required us to institute programme management training within the organisation, a programme management function that, in its turn, reports in through the implementation group that is led by Bill Maxwell of Education Scotland. We provided regular monthly detailed programme planning updates to the Scottish Government through that implementation board to ensure that everybody was aware of whether we were on track, whether we were late and what we were able to deliver within that given time period. We make adjustments as appropriate and make sure that we track and monitor what is going on. On a quarterly basis within the SQA, we undertake a quarterly performance review across the entire organisation of everything that we do. That activity is reported through the Audit Committee to the Board of Management. Again, the Board of Management papers are seen and delivered to the Scottish Government and they are present in those meetings. I will probably ask Ms Ellison to comment on this also. The vision within the plan states that we will digitally transform our organisation to offer customers better service by delivering efficient, scalable and new enabling approaches. I wonder if you can tell me what improvements have been made to the IT system and the IT strategy since the criticisms were levelled at SQA by KPMG in the 2013 audit report and how any changes are providing value for money. We have had experience in other areas where there has been substantial expenditure committed on IT systems and we found that they did not provide the outcomes that we wanted. How much did you spend on the IT systems that you are using? What changes have been made to that? In your own report, you said that you will take advantage of technology to continue to deliver improvements in your service delivery and efficiencies in the process. Is that actually happening now? Can I cover the approach and then I will ask Linda to cover the financial components of that? You are right to point out that KPMG did highlight that. We had asked our internal auditors to look at our IT activity because we felt that that was an area that we really needed to focus on as we were going forward. The reason that it is not in the subsequent KPMG report is because we have made significant changes and I suppose that the biggest thing that we have done is that we have identified how we are going to proceed. SQA, as everyone is very familiar, is an information organisation. We gather information from the point of view of assessments, we change that information and we then reissue that information through certification. IT is significantly important to us. Our IT systems are of significant age. We have been using the same IT system for the results process for a couple of decades. On that, you say that they have not changed for a couple of decades. There has been no communication with the Parliament in terms of structure and management, yet I go back to the fact that the landscape has changed substantially. You are using an antiquated, I should not say that, an old IT system. There has been real rationalisation in the public mind as to how management is changing. What impact has that had on your performance and some of the issues that we discussed earlier? One of the things that we are doing is that we have been continuously modifying that infrastructure to make sure that it continues to deliver what we need to deliver. Over the past four or five years, we have been introducing e-marking and we have been modifying our infrastructure and adding additional infrastructure to be able to undertake that change in approach to assessment. One of the things that we did as a result of looking at our IT approach was to decide that we did not want to feel that we should go for a big bang approach, we should evolve and we should slowly migrate parts of our IT infrastructure onto new systems and ensure that those new systems would be able to be managed and be modified for the future to maintain our fit for purpose as we go further forward. That has had no impact on the decision-making that you have arrived at in terms of grade-banding or anything else. You are comfortable with this 20-year-old IT system and the change in structure and the change in management. It has had absolutely no impact. The IT infrastructure that we have allows us to capture and to analyse and to provide statistical information on the way in which candidates are performed. I have no doubt as to that being absolutely appropriate. That is fine. In terms of going forward, what we need to be able to do is to be able to make sure that we can continue to evolve not just our assessment data bank but also that we can move forward as an organisation in terms of understanding our costs, in terms of being able to improve the processes that we undertake in the organisation. A lot of processes within SQA are manual and one of the things that we are doing is making sure that we appropriately apply technology to those manual processes where we can. There will always be things that we need to do as a human being but there are other things that we are doing that we need to be able to improve. A lot of that focus is around the way in which we engage with customers, so the way in which colleges and schools can give us information in terms of the candidate information that they provide, the way in which we invoice colleges and schools, and that is a big focus for us as well. The other aspect of IT that is really important, which I think is in some of the submissions, is also the fact that the support materials that we can provide, if we can provide those electronically, that helps and that allows practitioners to be able to engage with us a lot better. That is one of the areas that we are absolutely focusing on in the future. There is a percentage of your operating costs. Given that it is a 20-year-old system, there might be questions around the data that you said is not, but in my experience, as a 20-year-old IT system and all the processes around that might hinder accurate data, how much does it cost to run this? What are your intentions regarding a new IT system? We are using the same level of budget that we have always used for our IT, but we are moving gradually towards improving that system. We spend up to £1 million in capital per year on our systems, and that is in-house activity in terms of the legacy system that we have been talking about, which is a critical business system. Although it is 20 years old, we have been adding to it over the years, and that has made it effective for us, but also more and more fragile. What we are looking to do is to build what we term a parallel world where we have a new corporate business system that we are introducing to run our finance ledger and our HR activities and our appointee management activities. We are gradually moving things away from that critical business system to ensure that that continues to be robust. Over time, we are looking to take transactional activity away from that critical system to take the pressure from it. Once we arrive at the stripped-down version of the existing system, and we are trying to do that as risk-free as possible, given the importance of the information on that system, once we can strip it back to the information that is critical to an awarding organisation, we will then be able to look at whether there is something off the shelf or something that we can buy in that gives us more robustness into the future and allows us to do some of the things. That is part of our business system strategy for moving forward, and it is part of the whole digital agenda for us and our digital ambition. At the moment, the corporate business system, for example, what we are also doing is that we have an ERP system that we use SAP at the moment. That has proved to be quite an expensive system for us to maintain for the size of our organisation, so the new corporate business system that we are moving to will allow us to maintain that and support that in-house, but we are also using facilities to host that elsewhere, so we are trying to make sure that we reduce our costs and that we have as robust a system as possible. However, we are doing it in a canny way, because we know how important and how... The data on which you base any decision regarding the customer is guaranteed. I want to ask one last question. Tell me how you work with SDS. What is the process? And where is the decision making in terms of the required qualifications, and where does the training provider fit in with us? We work very closely with SDS. I sit on their advisory board, the Skills Committee. One of the things we do is we have detailed discussions with regard to their skills implementation plan that are developed by SDS for each individual sector. One of the things that occurs around that is an understanding of what the requirements of the sector is in Scotland, what the nature of the qualifications that the sector skills councils for that particular sector are developing. Those drive the nature of the qualifications that we undertake to develop for a particular sector. We also have an SDS representative on our advisory council, so we close the loop in that way. From an accreditation perspective, SQA accreditation works with SDS in terms of data that they have as to the vocational provision across both licensed practice qualifications but also across the sectors that SDS is focusing on. In terms of the new foundation apprenticeships, for instance, that are being developed by SDS, SQA is on the group that is involved in that to understand what is the nature of the qualifications and the nature of the units that need to be in place. Do we need to modify anything that we currently have? Do we need to develop anything new to be able to support the introduction of the foundation apprenticeships? That applies also to the modern apprenticeships that are in place across the piece now. Dr Brown, of course, the vast majority of pupils are learning on tablets now. You will be having a difficult decision in the not-too-distant future about whether those are permitted in exams. How advanced are your discussions about the issue? I would say that they are in the early stages and I think that they are in the early stages because most local authorities are not in that position at this point in time, so we do talk to ADES about the future direction of technology within the school sector. In colleges, it is obviously slightly different. We have online assessments at the moment, so for instance, life skills maths is currently delivered completely online. One of the things that we need to do is to make sure that we are definitely not the people holding back the teaching associated with technology and that we are able to maintain the standards that we need to maintain. The nature of assessment online is critical that we understand what that means, because we need to be able to assess the skills and the knowledge to the same extent as we do in other mechanisms. However, internal assessment allows us to do that, and I think that it is very important that we continue to have those discussions. That was given the very confident responses that you gave to Chick Brody and everything that you have done in IT. Given that KPMG noted weaknesses in your IT strategy in 2013, why were you unable to give an update on the issue in 2014? KPMG did not include it in their report, which is what I meant to say. We did a significant amount of work during the course of that year, and it did not appear as a highlight on their report. That is what I meant to say. If there is a comment on an audit report, please, in my experience, normally there is a follow-up next year. Yes. Essentially, what KPMG referred to in the original annual account that you quoted was the review of our internal audit work and the internal audit activity. We had quite a bit of work done around about our IT systems and our IT strategy, and we worked throughout that year on the action points arising from that. When KPMG came to do the external audit in the following year, when they reviewed the internal audit reports, they did not feel that there was anything material that they felt we had addressed the issues in that original report. The internal audit report to which KPMG was referring was tracked. We did have an action plan, and we did develop a detailed action plan associated with that, which was reported back through the audit committee and through the board. That is part of the evidence that was given to KPMG in the subsequent year, but we did absolutely develop an action plan to address the issues that were raised. The internal audit report. That would be the audit committee. Obviously, we all live in financial climate that we are currently living in. I would like to ask how SQA assesses the providing value for money. One of the questions that you answered is that SQA is taking steps to secure a better understanding of its costs in order to truly understand whether SQA provides value for money. From my perspective—please correct me if I'm wrong—that sounds as if you almost don't know if you are providing value for money, so could you possibly talk me through that statement? I will pass it over to Linda in a minute, but can I just cover something? First and foremost, we understand where our money goes. We do understand our value for money. One of the things that we are trying to do is understand the individual costs on an individual qualification by qualification basis, so that we understand how much it is going to cost to deliver a particularly niche qualification versus a qualification that many students will undertake. That is the nature of what we are trying to cover there, which is a much more detailed understanding and breakdown of our costs on a qualification basis. That is something that we need to do and will help us to make appropriate decisions in the future. Essentially, we monitor our costs on a monthly basis and in great detail for the organisation, as most organisations would do, but we analyse all our variances against our budgets and our forecasts. We do quarterly re-forecasting, so we have a very detailed understanding of our expenditure. Our expenditure is primarily our staff costs and the costs of appointees—the 15,000 to 17,000 people that work with us in the course of the year—to help to prepare the examinations and assessments individually, marked, etc. The other aspect is the information technology costs. Those are our big key areas of expenditure, and what we are trying to understand better is what does Oliver—we have a whole lot of products, we have a whole lot of services that we deliver, and we would like to better understand which products contribute best and which products need to be subsidised by other aspects. It is getting into the real nitty-gritty of the detail of what we produce in terms of products and services and what we deliver to the people of Scotland and elsewhere so that we understand where we need support, where we need to deficit fund and where we need to subsidise from other activities. I understand that a lot better than the initial line that was in the answer there, because that makes a lot more sense, whereas the initial line there just made it give you the concern that that would be an issue, so maybe something for the future. When you are separating out the courses to quite rightly understand the costs that are involved in different courses, you mentioned courses where you have a lot of people sitting or others with a small number. What is the end game in that process? Is it to start charging higher fees for the ones where there is only a few so that you can recoup the money? Is it to perhaps eliminate those courses because they cost too much? What is the purpose of that? The purpose of it is to understand. It is really important that any organisation and any public body understands where its money is going. For us, it is important to understand it at a granular level. The value of a given qualification is not only associated with how many candidates take it. A qualification can be hugely valuable that is very specifically targeted to a particular region of the country that has that particular industry sector in it, for instance, or that has that particular interest in terms of subject. That is an equally valid qualification to be delivered. How do you assess value for money? You can assess what it costs, but how are you assessing the value of your provision of a certain qualification? The value for money in SQA is about what it costs to deliver at, but it is about the contribution to Scotland, the contribution to Scotland's learners, the contribution to Scotland's culture and the contribution to, if it is making a profit, the surplus that allows us to be able to offset our dependency on the public purse. However, it is a combination of all those things. How do you measure the contribution to Scotland's culture? We will ask people. We spend a lot of time talking to individual organisations about what is necessary that we should be delivering. We do not just make a decision as to whether or not something will cover its cost in terms of development. There is a lot of engagement with particular industry sectors and particular cultural activities whereby we will say, is this type of qualification really critical to you and if it is critical to you, we will do it. We then have subsequent conversations with the Scottish Government about the breadth and the nature of our portfolio. For my own understanding, you asked the Government, the industry sectors, who else did you mention? We ask colleges, sector skills councils and people, and we try to understand the demand for our qualification. The reason that I am asking was just in case I had missed it, but you did not seem to be asking the pupils or those who would want to set the exam whether or not they had valued it. We do do that. We make sure that we try and get as much feedback from all aspects, because it is about whether that qualification is useful to that learner, but it is also important that that qualification takes that learner a longer journey, so it has progression from it as well and progression to it. I am going to stop there, because a number of members want in that. I have got Mary Scanlon, Liz and Chick, very brief questions from all three of you. Yes, in terms of value for money, if I may just read out from the spice briefing convener. In the last 10 years you have had an 84 per cent increase in entry charges. You have had a 58 per cent increase in staff costs. You have had a 26 per cent increase in income from the Scottish Government. You have had an increase in staff of 17 per cent, although the accreditation staff stayed the same. For all those huge increases in income to the SQA, you have provided 1,092 extra certificates. In terms of your response to the convener about all the people that you have asked how you provide value for money, I will not read them over again, all my colleagues have the same briefing, but you have had huge increases over the past 10 years. Government entry fees, 17 per cent increase in staff, but 50 per cent, 8 per cent increase in staff costs. All the candidates or all the Scotland's got out of that are 1,000 extra certificates. Is that value for money? The certificates that you are quoting are the certificates that are issued on results day. Those certificates form a portion of what SQA does. We certificate on a weekly basis HNDs, HNCs, SPQs, vocational qualifications and other awards. In diet of national qualifications, and this came from the briefing research department from within this Parliament, 1,092. The breadth of the qualification portfolio that SQA has, as part of curriculum for instance, we are being asked to increase the nature of the provision that we have. We have been doing that over the past few years. There has been an increase in the number of qualifications and awards that are undertaken by candidates across the country. In terms of the specific numbers, I do not know if, Linda, you would like to cover those. In terms of the staffing cost increase that you are quoting, what we have, as Janet has said, over the past 10 years, the preparation for CFE started about 10 years ago. We started to look at bringing in staff to work with us in a temporary basis to assist us in the delivery of CFE. A lot of what we are doing is about developing and delivering the qualifications, as well as certifying them. Those costs have increased largely through the increase of temporary staff. If you look at the period, 693 staff increased to 811. In 2013-14 of that 811, 227 more temporary staff brought in specifically to utilise the funding from the Scottish Government to allow us to deliver CFE and to do that development. Our underlying number of employees fell in that period, although we have additional funding to allow us to develop and deliver CFE through the use of temporary resource. Some of those would be secondees from the local authorities and some of those would be temporary staff. The figures were taken from your website going back to 2004-5. The point I am making, convener, is huge increases in your funding. If we compare like with like on your main diet of national qualifications in 10 years, on that main diet of national qualifications, 1,000 more certificates, my question convener, was do you provide value for money? You did not answer that one. I do believe that we provide value for money because we deliver an awful lot more than 142,000 certificates a year. I am going to have to jump round because members will go and have a bit quicker thing and quick answers if you do not mind, Liz. Very quickly, the fees that are paid on behalf of a candidate in some schools in the independent sector is the parent who is paying in some in the state sector. It is obviously the school that pays and in other local authorities is the local authority on behalf of all the schools in that authority. Are you comfortable, and it is not your decision, but are you comfortable that these fees are paid through what is a very different system? We receive payment by centre. You have described how those centres collect those fees. Our job is to make sure that what we do is fair to the candidates and I think that we form part of the system. The choice of whether a candidate should be put forward for an examination for an assessment for a qualification should be the choice of the teacher and that teacher should be making that judgment based on the educational need and the educational value that qualification will provide to that candidate. To follow on the question about contribution regarding Scottish students, what return do you get on international business and how do you measure the contribution that is provided thereby? The actual figure that we get for activity outside of the Scottish market in the current year is £13.3 million. Some of that is entry income because it is about people doing their rewards and the rest of it is about £10 million of it is consultancy and other support internationally. Is that more profitable than the indigenous Scottish business? Yes. We have a very broad portfolio in Scotland which we should have and that portfolio requires a significant amount of money to keep it going and we should keep that portfolio. I have a couple of questions on how you evaluate and review the impact of your activities. From the evidence that we have received, it is clear that there is a lot of review activity but it would have been good to see some detail around what those reviews found, what you were performing well on, what areas there needed to be improvements arising out of those reviews. Can you tell me from those reviews what areas you think the SQR is successful in and what areas need improvement? From the feedback that we get, we get very strong feedback that a lot of the qualifications that we develop and deliver are relevant, particularly in specific industry sectors, for instance in oil and gas. There is a very close engagement and a very close understanding of what needs to be in a qualification and what needs to be developed, so we do that. We get very strong positive feedback that we work well with industry that we have good content, good mechanisms of assessment that allow those people to be able to be successful when they go on into employment. One of the things that we continue to need to focus on is making sure that we understand how our qualifications are delivered and that we need to make sure that we continue to respond when we need to provide additional qualifications in other areas. One of the challenges that we have is to make sure that the Swedish portfolios that we have allow people to not only enter at the early stages of employment but also develop through the course of their lives. A very strong positive that comes from not just vocational qualifications but also academic qualifications is the good progression that occurs from one level of our qualifications to the next. The new curriculum for excellence qualifications has really good progression from national 5 to higher, from higher to advanced higher. You will see that feedback from the teachers and we have seen that feedback from pupils that say that national 5 did prepare me for higher. That progression is something that we are very proud of and that we really need to continue to focus on. Will you be willing to make those survey responses public so that we can see the range of responses in areas of strength and improvement? Earlier, I had asked a question about what your role was in registering the attainment gap, and could you maybe advise the committee as to what you are doing to try to help that? I think that there are several things that SQA does that will help to produce the attainment gap. One very important feature of learning is the fact that if you enjoy your learning, you tend to do a lot better in it. I think that that is statistically proven across the piece. One of the things that we really are trying to ensure that we do is provide a suite of qualifications and awards that allows people to gain skills and knowledge in the context that excites them, that gets them engaged in learning, that makes them want to continue in learning. Curriculum for excellence is one of those things that allows that. The openness of the new courses, the fact that teachers can teach a particular subject in many, many contexts, really makes it possible to engage those students that, historically, have not been engaged in the classical pull-the-text-book-off-a-shelf scenario. For me, that is hugely positive. The other area is very much about the way that our qualifications are structured by units. We have small awards that encourage people and give people rewards for what they have learned at that point in time, often to someone who is uncomfortable with learning or is maybe uncomfortable with the whole issue of being assessed, doing that on a small basis, as in units or in small awards, encourages learning and makes people confident and makes people then willing to take the next step. The whole issue of raising attainment is critical across the piece. It is something that is not just within the school sector, it is also outside the school sector as learners move into college. We work very closely with colleges and with schools on personal development, making sure that we provide a nature of something that encourages people to reflect on what their skills are and enable them to put those skills to use in different contexts, which will ultimately raise the attainment of those individuals. Can you tell me what you think might be the impact of charging for appeals from those people from poor households? The whole issue of postal services costs, as we have said before, all our charges go to schools or centres. It is for those centres to decide how they provide those costs. I want to reinforce the fact that we make no charges at all for exceptional circumstances. Those are circumstances where a candidate cannot undertake a qualification and assessment because of personal circumstances or illness. We make no charges if those postal services request result in a change. The only time that there is a charge levied is when there is no change made. We believe that the local authorities are providing adequate support, but it is for local authorities to decide that. Gordon MacDonald is a very quick supplementary question. On the question of appeals that John raised, is there a difference in the level of appeals between local authority schools and private schools—the volume that I am talking about—and the number of appeals? Last year, there was. This year, we are still in the process of doing that piece of work, so we are still undertaking postal services and that will be finalised. In terms of outcomes of those appeals, are there any differences between local authority schools and private schools? This year, we do not know because we have not finalised those numbers yet. Historically, I think that there was a slight increase in number. The challenge, I think, is for a teacher to understand whether it is possible—whether they should put a candidate in for postal services, because, unlike the historical situation, if we review our marking—the marking means that the grade needs to go down, the grade will go down—that will have an impact appropriately on the level of presentation. I am going to have to follow that up. When Gordon just asked you about the numbers, the difference between local authorities and the independent sector in terms of appeals, you said that the number was what had gone up a little bit. No, I am not asking about this year. I am not asking about last year. In straight numbers, what is the difference between the level of appeals that are successful from independent schools and state schools? I do not have those numbers with me, but I can provide them to the committee. You said that the numbers went up a bit. My memory tells me that the percentage success rate in independent schools is slightly higher than it was in state schools for last year. I do not know what the situation is. I am not asking about this year, but I am asking about last year. I do not know the numbers today. That is why I am wondering what slightly means. Slightly higher? I honestly do not know. But we can definitely provide that for you. If you could provide those figures to us, I think that that would be healthy. I think that just probably falling off from that. I mean the question that Gordon has asked, if he opened up the door of you, but do you think that the reason for that is because those from the independent schools are able to afford that appeal, as opposed to, as I say, the poorer background, the poorer household, so you cannot afford that appeal? When we asked local authorities, we have had no input from local authorities that have indicated that they have not submitted candidates, that they felt that they should submit, so I do not have any evidence to support that. When a person makes an appeal, when a student makes an appeal, do they appeal direct to the local authority or do they go direct to the SQA? Besides, what do they make the appeal? When you are writing to us, I am assuming that you cannot answer it now, could you also clarify or at least give us some view on whether the level of material and supporting material that is supplied by state schools versus independent schools is different anyway? The reason that I am asking that is that, if there is a difference in success rates for appeals, which is higher for the independent sector than for the state sector, I wonder what the reason for that is, because you would think that it would average out that there is no real reason why there should be a difference. If there is a difference, could you express a view as to why that difference is? Is it, for example, that there is greater, more, better supporting material coming from the schools part of the appeal? There is no supporting material put in, because there are no longer appeals processes, there are post-result services processes, so what we do is a marking review. There are no materials sent to us. There are for exceptional circumstances, because that is extremely important that we look at alternate evidence for exceptional circumstances, but there is no— All right, okay. Well, if you could just provide the background to how that process works. Yes. The exceptions and the numbers. Yes, we will do that. Okay, thank you very much. And hopefully, by that time, we will also have this year's information as well, which I think will be very helpful. It would be helpful as well. Thank you very much, Dr Bryn. Mark Ruskell. It's okay. Just to ask how you've demonstrated leadership in making sure that qualifications continue to be relevant to students, teachers and employers. I know that you spoke particularly about the oil and gas sector, but to ask about what your surveys and reviews showed about how relevant the courses and qualifications have been across the peace in Scotland. One of the things that we try to do is engage everyone who has an interest in a qualification in both the development and the subsequent evaluation of that qualification. So when we develop qualifications for industry sectors, we will have industry as well as colleges and training providers involved. Similarly for Cric and Frexence, we had not only industry colleges but also teachers and the learner societies, for instance, involved in those. One of the things that we ensure that we do is routinely survey our customers to understand whether they believe that our qualifications are current or not. We try and have continued engagement to understand whether we need to modify our qualifications to make them current, to make modifications if an industry is moving quickly, for instance, such as IT, that we make sure that we refresh our qualifications as fast as we possibly can. I think that the other aspect of what we do is we do have an ongoing process of evaluation of qualifications. We will be evaluating the success of curriculum for instance qualifications over the coming years, based on evidence and evidence gained from discussions with teachers, parents, pupils, universities and employers who take candidates. We will also be looking at reviewing that with, obviously, the qualifications committee within SQA to make sure that we fully understand what has worked well and what has not worked and what we need to modify. One of the challenges is that, during the course of the feedback, we will get feedback that says that we would like you to add this or we would like to modify that. It is important that qualifications have a certain level of stability. For instance, during the course of the development of curriculum for instance, we have probably overreacted and overchanged. I think that we have discussed that at the committee before, but we need to continuously evaluate and continuously evolve our qualifications. Have there been any particular qualifications or courses that, with industry, further education or higher education, teachers have raised a particular concern about any particular qualification or course? Historically, the whole area of ICT was a challenge. One of the reasons why there has been such significant change in computer science, for instance, is because there was a necessity to bring that qualification up to the requirements of the receiving organisations, be they universities, colleges or employment. There are specific areas like that, but I think that we need to keep an eye on them because they move so fast. SQA plans to become self-financing. Is that an ambition or an aspiration? Is it desirable? The term for self-financing is one that I think is an interesting one. You have probably heard during the course of the session that we talk about reducing our dependency on the public person. That is a much better way of thinking about it. SQA is very much sought after as an organisation to work with outside of Scotland, both in terms of helping developing countries to establish qualifications, helping countries to establish skills development areas, etc. In doing so, we are able to generate income. In a period of significant austerity when the public person is under severe challenge, I think that it is appropriate for an organisation like ours to see what we can do, whilst still delivering exactly what we need to deliver for Scotland, to see what we can do in terms of bringing in income that will allow us to reduce our requirement for the Scottish Government grant. How far that will go, given the fact that we talk about the fact that the criteria for what is delivered in Scotland is not associated with whether or not it will bring in enough money to cover its costs, is about delivering what is required in Scotland. Therefore, the amount of funding that we would require will be significant, but it is an appropriate thing for us to be doing. It supports the Scottish Government's international agenda. We work internationally for several reasons. The first one is very much that. It is Scotland as a place on the world scene, the Scottish Government's international agenda in terms of working with specific countries. That is one of the reasons that we work internationally. Another is the learning that we undertake and the learning that we get and the learning that we can provide to others by working with other countries and with other educational systems. That is very important. Another area is associated with making sure that we support other Governments in terms of developing what they need to have to make sure that their educational systems provide value for their learners. The way that we make those decisions is that it is good for the learner in that country. Is it the right place to be? The very last reason is that if there is surplus that we can generate there, we really should, because then we do not have to ask for as much money from the Scottish Government. In generating that commercial income, is there not a danger that you may be sidestepped into taking away the focus for your core function? No, I have to say that we are a national public body and we take that role and that remit extremely seriously as does our board, the qualifications committee and the Scottish Government and our sponsor division. It is not something that takes second stage to anything. The reason that we look to generate income is not to generate income, it is to generate income, so we reduce our dependence on the public purse. Talking about commercial income, could you perhaps tell us what the current level is that has been raised and what sources have come from and how profitable has it been? I think again, there are many reasons why we undertake work outside of Scotland that we get funded for, we get paid for. Some of that funding comes from the World Bank for instance, whereby we are working with other agencies to help develop educational systems across the world. We would not expect to make a significant profit on that if any. We should be doing that as part of our role as a nation. In other cases, we will go for significant income and that is a value for us. I mentioned earlier that about £13.3 million in the current year is generated and that is about £3 million of that in other countries in which pupils are taking perhaps HNDs awarding type activity. The rest of it is consultancy or contracts, in which we deliver either consultancy to support in terms of vocational training or national occupational frameworks in countries that we are abroad. Some of it is contracts that we deliver for the UK Government where they have asked us to or where we have won contracts to deliver activities such as dangerous goods driver training and other licences to operate. Those are areas in which we can generate some funding that helps to offset the requirement for Government funds. You might be able to tell us in what you have been able to advise about the income, but what has been the resource cost to deliver that income? We use the surplus from that activity to offset what means from Scottish Government, but the actual amount of income that we generate from that activity, we have to set the costs against that because it is very important that we charge the right costs for that and we do not subsidise it from our other activity. We have elements of that that are more profitable than others. The total surplus from it is probably about the last time that I looked at that. I will verify that and I will send you the information if that is not quite correct, but we generated about £4 million surplus towards our activities in the current year, or we predict to be will. I can understand that you want to reduce the pressure on the public purse in relation to generating income, but in the final sentence of your submission on page 14, it suggests that qualifications are delivered at a minimum cost to the public purse. Obviously, if that is a reference to grant and aid, our fees from local authorities, schools and colleges are not considered to be from the public purse. Yes, they are considered to be from the public purse. We have not increased our charges to colleges and schools in Scotland since 2010. If you are reducing the grant aid from the Scottish Government, is there any possibility that you could very well be increasing the charges to local authorities and to schools? We are currently in discussion with the Scottish Government about the whole way forward, particularly around curriculum fractions. As curriculum fractions are introduced, the different patterns that are uptake would likely have an impact on the number of qualifications that are being undertaken. It is really important that we consider the Scottish Government's requirement for resource across the piece. That is one of the discussions that we are having with both the Scottish Government and the Scottish Government at the moment. However, the goal is to understand that the public purse includes the local authorities and that the amount of money that is available in the entire system is limited, which is one of the reasons why we are looking at increasing the amount of money that we could potentially bring in from outside, while maintaining our focus on what we do in Scotland. Explaining what John Pentlands has been asking you about, can you explain what you have identified as other income that you have in your income expenditure budget and also in your 2013-14 accounts? Other income in 2013-14 was £7.3 million, which was lower than what your other income was in 2006-07. What gives you the confidence that you will be able to increase that amount of other income by 50 per cent in a two-year period when you have not been able to achieve that in the previous seven years? Are you asking with our self-financing goal? Trying to understand what makes up other income and why it has decreased over a period of time and you are expecting it to grow by 50 per cent over the dip. We do not have 2014-15 numbers. We have only got the last published accounts, which is 2013-14, compared with your budget for 2015-16. That has shown nearly a 50 per cent increase in other income. When I looked back at the 2006-07 accounts, the other income was £8 million. Other income has dropped since 2006-07, as you have identified it, and you are expecting it to increase by 50 per cent over the next two years. I am trying to understand what feeds into your other income and what gives you the confidence that you will be able to increase it by 50 per cent when you have actually seen it drop over the last seven years. I will just cover what is in the other income, and Linda can talk to the numbers. The other income is what we have talked about in terms of consultancy, where we will be working with other regions of the world in terms of helping them to develop qualifications for instance, in terms of helping them to develop their qualifications geared to their countries, geared to their areas. We work across the UK in terms of delivering specific programmes like the dangerous goods drivers training, and that is the nature of the other income that is in place. We also have a significant activity in China as a result of the engagement that the Scottish Government had with China back in 12 years ago now, where we deliver HNDs in China, to Chinese universities. That is the nature of the types of other income that we have. The other income, we have actually submitted a graph showing the gradual increase of our other income over time. It has stayed quite static for a while, but it has been growing quite a bit since about 11-12 onwards. We have started to see quite an increase in it. In 15-16, we are predicting our other income to be £10.7 million. That is from known projects that are coming through. We already are aware of the contracts that we have won or the consultancy that we have and the pipeline to undertake, so we are confident of that figure. I want to follow on from that. The total expenditure in 2013-14 was £71.6 million, and your budget for 2015-16 is £76.4 million, an increase of £4.8 million. How much of that £4.8 million relates to that other income being increased? Elements of it will do. The majority of that increase, though, is the normal cost that we have to build into the budget. Some of it is inflation and some of it is the cost of staff who are seconded to work on CFE coming back into our core budget. Our staff costs have increased as a result of that, but I can give you the figure, but there will be some element of that increase that relates to the success in commercial income, because you have the costs to deliver that. That goes back to the fact that some of our non-Scotland work will be negative, but it will be zero surplus, and others will be positive and significant positive. I am not confused. I am amazed that, in looking at your report, there is no detail around the nature of your international engagement and no information about the cost and cut. Now we are hearing that it is £13 million, but it is not really £13 million, it is £3 million because you are doing consultancy work. You must know, in terms of your strategy and where you are going to put your effort, by some means of profit centre activity, exactly where you are going to put your emphasis. I am now very concerned that the core business is looking at the Scottish qualifications as far as I am concerned, but when you say that it is more profitable, the international stuff and RBS is more profitable than the other stuff, given the drive towards self-financing. That would encourage one to look more and more at the consultancy work, at the expense of indigenous work. Is that not true? Do you have profit centres, so you know where your focus is going to be? We absolutely know where our income is coming from. We do know— I do not know where our income is coming from and what are the costs associated with that. Yes, we do know where our income is coming from and we do know outside of Scotland exactly how much it costs us to deliver that. That is very critical, because we have to know that to be able to decide whether we make those decisions. When a contract comes up, for instance, we will have a very detailed business plan drawn up that will say that this is exactly the amount of resources that it is going to take, this is how much it is going to cost, and this is what the price of the contract is likely to bring in. We are very aware of that. We have a committee that specifically focuses on that as well, and we have a very detailed understanding of the pipeline that is coming in. That is one aspect of what we do. We are not an organisation that is tailored and geared to increasing that income stream for the purpose of increasing that income stream. Is that your self-enhancing? Anyone would consider that, where the prime focus would be? I think that it depends on the criteria that you use for accepting a contract. We accept contracts that have zero profit, because it is part of our remit to undertake activity to support the development of nations and qualification structures that are part of Scotland's focus. Forgive me, I am sorry to interrupt. If I have very profitable business over here from RPS internationally and zero profit over here and someone is saying to me that you have to become self-enhancing, where do you put your focus? Where would one normally put their focus in these circumstances? I am an NDPB, I am not a business. I am an NDPB. I am an NDPB who has got a challenge to try and continue to deliver a quality service to Scotland, a very broad portfolio of services to Scotland, and to be able to find a way to do that in the most cost-effective manner that requires as little public funding as possible. That is the nature of the decisions that we make. I am not sure where the RBS references are coming from, but it is the World Bank that Janet referred to. No, it is not the Royal Bank, it is the World Bank. It is the World Bank, so it is charity funders. It is the European Union, it is the development of countries that are developing. It is absolutely not RBS. You may have said that. No, I think you said that. I think that you said what people thought you said. We will clarify that now. It is my accent then, sorry, but we have never been funded by RBS. But we do get funding from the World Bank, we get funding from other development organisations that are developing countries around the world, so I apologise for that confusion. RBS, the World Bank, the principle still stands, that you will chase yourself and you will choose where the profit is. No, I am going to move on. Linda had mentioned earlier about static. Some of the charges remain static, and I noticed from the stress briefing that some of those static charges were in the private sector. Can I ask what the commercial thinking was behind that? The static pricing that we are talking about is for the schools, the local authorities, because we have held our prices at 20 to 10 levels. It also impacts on colleges and training providers, so we have to keep the pricing constant there. Any other private activity or other commercial activity in Scotland to be charged with the project right? For the qualifications, the fees that are charged for the qualifications, whether it is local authority or private, it has been frozen since 2010. Yes, absolutely, in those cases. Independent schools? Yes, independent schools. Not the commercial income, the independent schools. So the independent schools and the state schools, the figures are the same and it has been thrown at that. Yes, it is. Why? Because we deliver the same sort of qualifications to all schools. We charge for a national five, we charge for a higher, and it is the same price, whether it is a state school, an independent school, a college or a community service organisation. I have one or two specific questions about the annual report on accounts 2013-14. Before I dive into them, I was looking at the submission that you made to the committee, page 10, the second paragraph from the bottom, and I note that you are saying that SQA is taking steps to secure a better understanding of its costs. Which costs are you trying to get a better understanding of? That touches on the earlier question. We understand our costs. Overall, what we are trying to do is understand our costs at a qualification level so that we understand how much it costs us to not only develop but deliver individual qualifications. Coming back to the annual report on accounts, one area that is a bit concerning is pension provision. It has been a concern right across the public sector, I would imagine. Your previous years report shows that the defined benefit liability increased from £12 million to £16 million. Based on other organisations that I have seen, I would imagine that it has not improved this year. Where are you on that and how are you managing it? Essentially, we are predominantly part of the local government pension scheme through Strathclyde pension fund. We receive that statement every year from the actuary and pension fund saying that the condition of the fund is now and that the liabilities are. Essentially, we have no real control over that. However, what it does do is have a knock-on effect to some of our costs and we are having to try to absorb those and deal with them. Prudominantly, because it is a value of a fund on a particular day in the year, depending on markets and depending on guilds, it is extremely difficult to do anything other than try to absorb anything that costs arising from it. Are you absorbing that cost? If the deficit was £16 million, where are you going to get that money from? We are not reflecting that. We are showing that as a liability in our accounts but we are not having to find that money because that moves year on. What is your understanding as to how it is being managed? We are members of the Strathclyde pension fund, so we get regular reports from them in terms of how the fund is doing. To be honest, we have no opportunity to influence that in any way. As members, we have to receive what the actuary provides when they do their valuations every three years or try any other way. The world of the actuary is a very complex one, and you just accept what comes out at the end of the day. However, you have got this liability. What do you do with it? Do you just report it on your report and that is it? Or how do you deal with it? We report it in our accounts and we report it to the Scottish Government, so that they are kept aware of the position. As you mentioned earlier, our share of that deficit for our members is significant. However, the police authority, for example, is huge. It is something that, as a public sector community, we have to try to manage, but we have very little influence over that. I realise that this is a problem across the public sector, but it is obviously a concern. Again, with the report, bad debts, you showed in the 1314 report a bad debt provision of £303,000, with £38,000 being written off. Those debts surely must be in the public sector. In that particular case, it was a provision that we were setting aside for our activity in China. It was because there was a change in the tax regime and our partners in China had advised us of that change in the tax regime, so we provided for the potential that we would be charged extra because it was a retrospective element that they maintained that the partner had been charging us the wrong tax rate. As it turned out, it did not come to fruition. That was cleared up and we released that provision in the following year. We monitor our debtors very closely and we have very few. The ones that we have that are perhaps private sector are few and far between, and some of them are about half of us and who are on payment plans, but we do not have a lot of bad debt right off. The provision of £303,000 was entirely in connection with China and the tax situation there. That was resolved. You did write off £38,000. I would have to provide that information to you, but I do not have that to hand. I am sure that it is if somebody in the public sector has failed to pay the— Sorry, no. It would not be a public sector. It would be one of the private sector training providers that we deal with. It could be some of the organisations that we deal with in the rest of the UK who have private organisations. Or it could be a printer or in some cases we have people who produced exam papers in the past for us and so forth. It is that type of commercial activity that we might have a problem with, not with the public sector. Would it be possible for me to find out who it was? Yes, I can give you that make-up. Is it likely that there will be more write-offs this year? No, there will be no write-off. You have got business development specialists. There is no real explanation as to what this relates to, but you spent just over £3 million on them. In 1314, are they consultants or some sort of agency staff? I am not entirely sure. There does not seem to be an explanation, given the fact that staff numbers have been increasing. The business development specialist—I do not have that in front of me, but I will give you the exact breakdown of that, but business development specialist will be the people that we use to help to deliver our contracts and consultancy services overseas. Those will often be academics who work with our business development team to deliver the service overseas. Are they staff that are contracted to carry out the function? It seems quite a lot of money. We are undertaking consultancy activity external to Scotland. That is something that will be current one year but will not happen the next year. We bring on board temporary consultants to be able to deliver that for us. We are not taking staff from SQA and going and delivering some of this activity. The flexibility that that gives us allows us to undertake significant contracts. As you can see from the amount of income that we bring in, it is significant amounts, so that level of cost is not unsurprising. Excuse me if you have already said that, but what is the net profit on the overseas activities? It is something like £4 million out of £13 million, so it is not a bad profit margin. Some of them are, however, reinforced. Some of them will be done at zero profit because they are done for different reasons. Just one last thing. In the report, there is not about £2.3 million of additional funding relating to HM Treasury and changes in the way that income tax is managed. That was one of the situations in which the Scottish Government assisted us. The appointees who work for us are 15,000 to 17,000 people who are teaching professionals from across the country who work with us. We traditionally paid the tax associated with the payments that we make to those individuals once a year, and we made it in the April of each year. With the advent of real-time information for HMRC, we were obliged to move to monthly accounting of the tax for those individuals, which meant that we were going to be paying the tax twice in the same year, so the tax for the previous year that we would normally pay in April, as well as the monthly tax for that year. We had an extra £2.3 million that we had to find and the Scottish Government assisted us with that, and we were able to assist us with it because the £2.3 million that we pay out in April was related to activity in the previous year, so they were able to give us that cash funding to allow us to meet that additional one-off cost. Those thousands of people are actually salaried, and they are not contracted staff. They are the teachers that we bring on board, the lecturers that we bring on board to help to deliver the diet every year, so they are not staff. We pay them, but we have to pay their income tax associated with the fees that we pay them. That is quite interesting. The actual administration for that must be quite substantial, given the sheer volume. That must add considerably to the costs. It is also not helped by the fact that they are designated as workers for pension auto-enrollment purposes. We provide for pensions as well. National insurance? We have significant logistical activity in the SQA. Mark Nyn. A question about the zero-profit contracts that you work under. Do you take the decision on which areas the zero-profit contracts operate? Is that done on a philanthropic basis in terms of developing countries where we have a close relationship with, for example, Malawi, or is it driven by commercial relationships, by Government? Who takes the decision on whether a contract should be a zero-profit or not? We take the decision, and we would do that based on the fact that we would be working with a country that is developing. As you rightly pointed out, we did that in Malawi, for instance. We have done it in Botswana. We have done it associated with the World Bank. Are there any zero-profit contracts in countries that are not developing countries that would have significant reserves? No. Without breaking any commercial confidentiality, how much do you pay those appointees per day? Exactly the same as Education Scotland pays, and I do not actually know it. 600 pounds? 700 pounds? No, no. They are currently serving teachers in the majority. Two final questions from me. Would you be able to provide us with a full breakdown of all the international activities that we are all at interest around the table? Could that be provided to the committee in terms of international activities and what we have discussed about how you charge and who you charge etc? Is that possible? Go back and look at that. And send it to us. You are hesitating. I am hesitating, because there are some of those commercial contracts that we sign as a commercial entity. We will provide you with what we are able to do. Well, hang on. If you could certainly look at it, I would appreciate that. But there is no reason why I do not think that you could provide it to this committee on the same basis. That is the same commercial confidentiality. Okay, that is fine. I appreciate that. I think that we want a breakdown of all the activities as much as we can, as much as feasible, so that we can understand it properly. That is what I am saying. If it requires confidentiality between yourselves and the committee, then we understand that. That is fine. Okay, thank you. Final question that I want to ask is about your corporate plan. On page 5 of the 1518 corporate plan, it talks about your mission statement and vision. In the vision, I want to quote from it, it says, We will digitally transform our organisation to offer customers better service by delivering efficient, scalable and new enabling approaches. I have to be honest, I am a fan of corporate speak. But Janet, what does that mean? Well, can I just say that we are trying to say that a lot better in next year's corporate plan? Well, it is not better. I would look clearer. Yes, that is what I mean. That is what I mean. What we are trying to understand is where we can use technology to make ourselves more efficient, where we can use technology to make us more beneficial to our customers, to our learners, to our centres, and where we can engage with our centres in using digital, send the information to our centres and share information with our centres digitally as opposed to through paper. For instance, there is the classic case of when we build a college, we build a college at this current time, and Linda has explained that we are in the process of changing this. We build our colleges electronically, but the information that goes along with that goes along as paper. You have a lot of activity in colleges trying to match the paper with what has actually come in with the electronic data transfer, and we need to change that. It is about thinking about how we can use technology to improve everything that we do, how we can use technology in terms of improving the processes within the organisation, but to Liz Smith's point, how we can use technology to improve learning and to improve assessment. That is really what we are about. I have to be honest, but that is not what I understand. I know, and I am really sorry for that. I am really sorry for that. I look forward to next year's things when I say it. I thank you both very much for coming along this morning. We do appreciate you taking the time about two hours this morning to attend the committee, but I can ask you just to mean seated while we just do the final item on the agenda, hopefully a quick one. Our next item is to consider the following pieces of subordinate legislation. The first is the Queen Margaret University, Edinburgh, Scotland amendment order of council 2015, which is SSI 2015-305, and the education assisted places Scotland revocation regulations 2015-SSI 2015-318. Do members have any comments on those instruments? No, therefore does the committee agree to make no recommendation to the Parliament on the instruments? Thank you very much, and I close the meeting.