 Welcome to the 30th meeting in 2014 of the Finance Committee of the Scottish Parliament. Could I please remind everyone present to turn off any mobile phones or other electronic tablets? Before we move on to agenda item 1, I just want to inform the committee that Jamie Hepburn has resigned his membership of the Finance Committee following his appointment as Minister for Sport and Health Improvement. In the words of the First Minister yesterday, and I quote, Jamie Hepburn has performed exceptionally as a member of the Finance Committee. I want to put on record the committee's thanks to Jamie for his hard work and contribution to the committee over recent years, as yet his replacement is still to be decided. Our first item of business today is to continue your consideration of the draft budget 2015-16. I therefore welcome to the meeting Liam McArthur MSP, member of the Scottish Parliament Trade Corporate Body, Paul Grice, chief executive and Derek Crawl, head of financial resources at the Scottish Parliament. Members have copies of the SPCB's budget proposals for 2015-16. I invite Liam McArthur to make a short opening statement. I thank you very much, convener. I just say that the new minister for sport will be more than welcome back to his place in the Scottish Parliament football team when his diary permits. Just a few opening remarks. I thank you for the opportunity to present the details of our budget submission for 2015-16. That represents the fifth and final year of our five-year programme of savings, which is set out to match the planned reductions in the Scottish budget over the term of the UK CSR. As the graph in the Presiding Officer's letter demonstrates, we have successfully delivered that programme of savings. By the end of 2015-16, we will have achieved an 11.1 per cent real-terms reduction in the SPCB's budget compared to the 2010-11 baseline. The profile of our annual budget reduction, as colleagues on the committee will be aware, is considerably steeper in the first two years of the programme, as we delivered the vast majority of our savings early. It levels off in the remaining three years, although it still shows a modest real-terms saving. Looking ahead to the future challenges in setting out our budget proposals for next year, and particularly as we look ahead to the next session of the Parliament, we have already actively responded to a number of emerging cost pressures, including the further tax powers arising from the 2012 Scotland Act and the increasing level of outreach work to capitalise on the public engagement around the referendum. However, we are clearly not yet in a position to reflect on potential budgetary pressures that may arise from the Smith commission's proposals and subsequent legislation. In our longer-term forecast, we will therefore aim to update the Finance Committee on that when we return next year. For now, perhaps let me draw on a few thoughts on some of the key elements of the figures for this year. In terms of project expenditure, the corporate body takes its responsibility seriously to ensure that we maintain and replace our assets properly and that we invest in improvements to the Parliament's services and facilities. Examples of that in 2015-16 submission include the digital parliament programme to develop and support the effective use of digital technology. Planned expenditure on the 25-year maintenance plan for the building, improvements to roof access and other changes to make best use of the building, as well as planned replacement of some of the IT equipment. Turning to the issue of pay, our budget submission for pay is based on a continuation of the tight pay restraint that we have shown in recent years. That is important because pay for SPCB staff, members and staff accounts for around 61 per cent of our overall budget. Our current two-year pay deal for SPCB staff ends in March next year. We have not yet commenced negotiations with the trade unions on the 2015-16 proposal for budgetary purposes. We are assuming a modest increase in line with other public sector pay increases. MSP pay increased by 1 per cent this year, in line with the Ipsa determination for MPs, and will be directly linked to Scottish public sector pay rises with effect from April 2015 onwards. The corporate body has agreed to seek a resolution of Parliament to amend the Scottish Parliament salary scheme, replacing the current link to MPs pay with a new mechanism that will directly link MSP salaries to future public sector pay rises in Scotland. Finally, members' staff pay provision will be operated in April, in line with the provision of the members' expenses scheme. If I turn now to the office holders, again, as members are aware, the SPCB is charged with the oversight of those bodies and the finance committee is rightly taking a strong interest in how we exercise that oversight in previous years. We also welcome the involvement of other committees in scrutinising aspects of the various office holders, which are not within our remit. As a member of the Education Committee, we had a very useful session in relation to the new powers coming to the commissioner for children and young people last month. The 2015-16 budget submissions of the various bodies amount to £8.3 million, which is an increase of 1.6 per cent in cash terms compared to the equivalent 2014-15 budget. Overall, the office holder's budget is 8.4 per cent lower in cash terms than the baseline year of 2010-11 equivalent to a real-term reduction of 16.3 per cent. You will note from our budget bid that we have increased the central constituency for commissioners and ombudsmen by £50,000. That is to make provision for the potential staff costs, which may result from the additional powers conferred on the commissioner for children and young people pending further work to establish the justification that is very much the focus of the consideration that the Education Committee gave to that. Finally, I would like to put on record the corporate bodies appreciation for the work done by the chief executive and his team in preparing the SPCB's 2015-16 budget submission. That concludes my opening remarks. I hope that I have managed to convey a sense of the approach that we have taken to the budget for 2015-16 in the years that follow in myself and my colleagues. I will be happy to answer any questions that the committee has. Thank you very much for that, Liam. As is normal, I will start this opening questions and then I will open out the session to colleagues around the table. I will be no surprise that I am going to start with the revenue projects, because that is obviously the biggest area of increase in the year ahead. You covered that in your report and in your opening statement. I am just wondering if you can give us a wee bit more detail as to what the digital parliament programme entails. It says that the development of infrastructure systems and services to facilitate effective digital work. I am just wondering if you can give us a wee bit more information about what that will mean on the ground, so to speak. I think that you are right in pointing to that as perhaps being the principal reason, but certainly not the only reason for the increase in that budget line. The digital parliament initiative is something that has been on-going now for a couple of years, although it is building up, I suppose, in its intensity. I think that it reflects a recognition of the different pressures and requirements placed on MSPs in terms of the way that they work, the way that they interact with constituents, and the way in which they carry out their work both in the constituency as well as in the Parliament. The notion that MSPs simply work from a settled base at all times has long since passed, and therefore the Parliament needs to reflect those changing needs. Some of it is around the equipment and infrastructure that is needed to facilitate that. Some of it has to be around the training and skills development, again, that allows MSPs to be supported in the roles that they carry out. Maybe in terms of some of the specifics that I have asked Paul to talk about them, but what we will see is perhaps an intensification of that work as we go forward. It is certainly something where we are attempting to capture the views of MSPs on an on-going basis to make sure that what is being put in place just genuinely represents their needs. Those needs are going to vary very differently. I know for myself that I operate in a different way digitally than some of my colleagues and the same will be the case in each group. We need to make sure that whatever we are putting in place is not simply pushing the envelope too far for some MSPs, that it is allowing them to feel comfortable in the way that they carry out their work, but not inhibiting others who want to go further and are keen to trial new ways of working. Paul, you could add to that. Thank you, Liam. Just a few examples. There is what you might call behind the scenes investment about getting common data systems, which is really important, given that one of the underlying philosophies to digital is about trying to reuse the information more efficiently, so it is input less often and it is more consistent. For that, you need common data standards. There is a business publications project, which is enabling a shift to digital for our core business publications. Another example is a member's portal, which we hope to be launching within the next few weeks. We are briefing the corporate body on that later on this morning. Digital meeting facilities are upgrading the meeting rooms with better digital capabilities. There is a whole range of projects within the programme convener, and that accounts for a big chunk of the spend that we are proposing for next year. We hope that investment will lead to better services to members in the longer run. I think that this will be an on-going cost, but, as you will have noted, the indicative forecast for 2016-17 sees the figure fall from £3.9 million back down to £2.2 million. We will see fluctuations in this, but, as Paul said, this is something that we have committed to a couple of years back and we will be looking to roll out increasingly over the years ahead. I turn to the issue of staff pay. In terms of staff-related costs, those are budgeted to increase by about 8.8 per cent more than the current financial year. Can you talk us through that a wee bit? I think that, in relation to staff pay, we were in a position where agreement was reached to keep a lid on that. We are emerging from that, and therefore there will be increased costs resulting from it. As I said, the negotiations with the unions for next year have yet to commence, but we are building in an assumption of a modest increase. We will see something similar in relation to MSPs pay. As I said in the opening remarks, breaking the link with MPs pay is something that the corporate body is committed to bringing before Parliament for agreement on. That is probably the general gist of why that figure is going up. If it is related costs, I was asking about it. It talks here about it is important to ensure that adequate budgets remain available for staff support and need deployment, check them through training in new systems and job-related skills. I am just wondering why there has been a significant increase in the previous year in that particular budget line. The main increases in that line are around travelling expenses and job-related training, and part of it is down to, as we have reduced the number of staff in the Parliament over the past few years, there is a greater emphasis on training and redeploying staff to different areas. Part of it is down to training in specialist areas, quite a lot around the web and social media, some of the new technologies. On the travelling expenses side, there is more emphasis on travel outwith the Parliament, so a lot of the Parliament's engagement activity and Parliament days and other things is putting up the cost slightly in that area. We are hoping to encourage more of that in the committee's meeting outside Edinburgh. There has always been a balance there. Quite understandably, in the early stages of this session of the Parliament, there was a recognition of some of the wider messages about tightening budgets and austerity. It was felt to be inappropriate for the Parliament to be spending too heavily in this area, but the underlying principles of the Parliament have always been about being accessible to Parliament. For all of Scotland, it will surprise no-one that is the member for Orkney. I very much applaud that endeavour, but it will remain a balance. Budgets are not going to increase substantially, but we need to ensure that we are giving effect to that underlying principle that we are accessible, that we give an opportunity for people to engage directly with Parliamentarians and officials within the Parliament. We are starting to see that through the Parliament days, the involvement of the committees. I think that it has been done in a way that is perhaps working more cleverly with the resources that we have, that we are trying to bring together through those Parliament days more of an impact in the areas that we are visiting, rather than having more sporadic ad hoc meetings, all of which, on their own, you could stand up a justification for, but perhaps we are absorbing more resources as a result. One thing that I was intrigued and delighted to see was that there has been a £906,000 reduction in rates following, and I quote, last year's success on negotiation with the Llywain assessor to secure a 19.6 per cent reduction, the higher it will value initial place in the Scottish Parliament by the 2010 rating revaluation. From my rough figures, that tells me that there is still about £4 million a year roughly being paid in rates, so I am just wondering if there is further scope for reduction in those rates, and indeed, if there is any backdating of the rating reduction to 2010, given that it was— It was to Paul, who carried out those slightly idiosyncratic negotiations. You are right that it is a sizeable reduction. It was secured after, I think, two or three years' worth of negotiations through appeal. What the scope is to reduce that further, I would not like to say, but Paul Mavie, who commented on that? It was actually backdated, and we returned what you might call a windfall gain back last year, so we handed that money back to the consolidated fund. There is a periodic revaluation every five years or so, and there was a significant proposed increase, which we challenged, ultimately successfully, so that convener accounts for the money. We had to budget initially for the amount that was claimed by the assessor, but, ultimately, they accepted our strong contest and that that was not appropriate. I do not think that there will be a further opportunity until the next revaluation. Unfortunately, it tends to be that they try to push it up and want to try to resist that, as opposed to an opportunity to reduce it. You are right that your calculations are exactly right—it is just under £4 million still paid, but, obviously, against what the threat might be to push it close to £5 million, we were pleased to secure that outcome. I should actually pay the real credit, I think, goes to Derek Croll and his team. I simply made the last phone call. The other 99 per cent of the work was done by the colleagues, but the reality is, however, that it still has a very substantial element of our spend, as you rightly say, nearly £4 million a year, and I do not see any change in that over the medium term, I am afraid. I wonder how that can justify charging rates on the Parliament. The problem is that this is a unique facility. Normally, if it is a more commercial premises, there is a market, and I think that it is a reasonably straightforward process with unique iconic buildings like this. It does come down to a matter of judgment, which is why we challenged it, ultimately successfully, but it is difficult at the end of the day. It is done by professional property valuers, but there is no market for us. There is no—you cannot look around Edinburgh and say that other parliaments tend to trade at this value. I suspect that next time around it will be a negotiation of a similar amount, but we will obviously take forward your comments to strengthen our resolve when those negotiations come. You can go into that in further detail, and perhaps other colleagues will do so, but I will leave that for the moment. I want to move on to two other things before I let colleagues have an opportunity to ask their own questions. With regard to commissioners and ombudsmen, we previously discussed with the SPCB the possible relocation of the commissioners to a single hub. Liam Lastyear said that we are working with office holders to fix savings by reducing the number of properties in Edinburgh, and we hoped that we could co-locate a number of offices in the government estate near Haymarket, but unfortunately that was unable to be achieved. Is there any further progress being made or likely to be made in that area? In terms of co-location, it remains an objective of the corporate body to achieve that where we can. Since last we spoke, there has been a move by the Children's Commissioner to larger but less expensive property in Edinburgh that also has scope for accommodating others within it, and that is an agreement that we have reached with the commissioner. The reduction in offices over the past three or four years has been from seven to four. There has been a reduction. Obviously, we have the Information Commissioner in St Andrews. It is felt at this point that moving the Information Commissioner to premises in Edinburgh does not make a lot of sense for a number of reasons. It is something that we are continually on the lookout to try to achieve lease breaks and to provide the trigger that allows us to do that in a way that releases savings. It is constantly under review, but at the moment I do not think that there are other opportunities on the immediate horizon to achieve that. Last but not least, before we open out the session with the Deputy Commander to ask questions next, I want to ask about office utilities. Obviously, MSP offices are one of the bugbears. We have discussed this before in private and by email, the issue of bills being set out. By the time it gets through the process, you are already getting final demand letters from certain organisations. One colleague yesterday, a member of the cabinet in fact, told me that he got an offer from Scottish Water of a 10 per cent reduction in his bill if he went paid by direct debit, which is not really open to us. I know that there are one or two issues in relation to that, but clearly if we could get those levels of reductions given a number of offices, we have not given all the different utilities that we have. What scope is there for introducing such measures? Before passing over to Paul, I will cover the detail on that. Obviously, I recognise the fact that, largely through your efforts, convener, we have been able to make changes in terms of the way in which utility bills are dealt with to extract better value for MSPs but the Parliament as a whole. The issue that you raise is one that we have had an opportunity to discuss. There is a concern in relation to direct debits that is perhaps different from standing orders. Nevertheless, I think that the arguments that are made about ensuring that we continue to secure savings and best follow you where we can and are ones that very much coincide with our aspirations as a corporate body. Paul has already had some initial thinking with his officials about how we might be able to achieve that. As you know, convener, from our correspondence, I think that this is a really good idea and I strongly support it. There are some technical hurdles that we have to overcome. The principal one being that, unlike a standing order, a direct debit is not for a defined amount of money. To give a third party the right to take money directly from our account is obviously a risk that we have to look at. That said, I think that the objective is well worth pursuing and I have a team working on it. I hope to get back to you as soon as I can with some ideas on that. We previously corresponded on the idea of using Parliament-negotiated contracts and making them available to members. That had an ultimately successful outcome with a significant number of members taking us up on that. In that spirit, we are going to pursue this one. There are real technical issues, but I am sincerely hoping that there is nothing that we cannot overcome. I would be more than happy to come back to you on that as soon as I can and, if necessary, brief the wider committee. That would be very helpful. The first person to ask questions will be John Macleon. Thanks, convener. Clearly, you are making the point that the budget reduction compared to 10.11 has been quite severe, although it was mainly in the earlier years, so it has evened out a bit more. Have we coped with that, as the building coped with that? I am particularly interested in the maintenance side of things that we are not cutting too many corners. I think that that is a very fair question. I think that there was a process leading up to the decisions about how this profiling of the budget would take place. I think that we are fairly confident that the strategic approach to that has meant that we have been able to absorb those savings up front but continue to make more of this real-term savings in the final three years. I am painfully aware that we would not be thanked by anybody, not least MSPs, but the wide variety of users of this building, where we have to do it in a way that started to undermine our effectiveness as a Parliament and the way in which we deal with some 350,000 or so visitors to this Parliament. I mean, each will have their own view, but I think that, as a corporate body, we are confident that we have been able to achieve this in a way that has ensured that MSPs, committees and Parliamentary businesses are supported in the way that it needs to be supported, that we have been able to take on board the new challenges, whether that is in terms of the move towards a more digitally focused Parliament in terms of adhering to our 25-year maintenance plan, in terms of adhering to the routine checks and maintenance that are required in between times. Therefore, the story is a fairly positive one. Are there areas where we could have made deeper savings? Possibly, but I think that we felt that, were we to do so, there would have been a quite serious risk of us not being able to continue to provide the level and breadth of the service that MSPs and other building users have every right to expect. I mean, the convener mentioned in the list of items that totaling the 3.9 million, the digital Parliament programme, which is the largest one, but I'm interested in some of the others that are in there. I mean, you make the point that routine maintenance is separate from projects, so I kind of understand that. But I was just wondering if you could maybe comment on some of these other ones. I mean, replacement of chamber lighting at 400,000, I take it as a little bit more than the light bulbs, and installation of restraint rail system to improve roof access. Now, I'm just wondering if that has really been a fault from the beginning, because I mean, I would have thought something like that might have lasted a bit longer than the number of years that this Parliament has been here. Let me take those in reverse order, and I think that you're absolutely right in your observation in relation to the latter. It was partly a design fault, but also an installation fault. It emerged through the sorts of investigations that are carried out on our routine fashion now. There were a number of ways that we could have dealt with that. We could have incurred a series of ad hoc spend in order to get round the design and installation faults in the roof access system, but I think that the corporate body felt that that would be a case of throwing good money after bad. The more sensible and prudent thing to do was to put in place a system for roof access that was fit for purpose that addressed health and safety needs and recognised the frequency with which that access is required. Now, in terms of who bears the cost of that, given that it emerged from a design and installation fault at the time of the construction of the building, we made fairly strenuous efforts to pursue that through the companies involved. Unfortunately, both were insolvent and the opportunity to actually recoup that money was not possible. We were left with the question as to whether or not we wanted to continue to put in place arrangements that would probably have done the job, but we would not have addressed the fundamental problem. As members will be aware, chamber lighting is partly in relation to our environmental objectives and responsibilities, partly in relation to the need to look at making savings where we can. LED lighting has been installed in a number of different parts of the building. Obviously, the chamber represents a different proposition, not least because of the broadcast nature of it, but it is perhaps a more complex part of the building to deal with as well. We are confident that the advances in LED lighting technology allow us to look at that. If that is successful, we will have a system in terms of energy usage, but the requirement for on-going maintenance and replacement costs will come down markedly. Again, it is a judgment that having done that across a large part of the parliamentary estate, there is an opportunity to look at the chamber. There are savings that can be released from that. Obviously, it is a piece of work that is relatively costly. Paul, do you have any other comments on those? I simply agree with your point that it is not just about relamping. It is a whole new system that we are looking at. As Liam Kerr said, we very much expect this to release running cost savings in terms of less electricity use. As you will know, as people who occupy the chamber, replacing the lamps requires the building of scaffolding and LED lighting to last a lot longer—5, 10 times the length of time. Apart from the environmental benefits, there is a significant reduction in on-going maintenance, so we think that that is an investment that is worth making at this stage. There is quite a difference between the roof, which is a one-off cost. That is gone when you do those things, but when you do the lighting, there is quite a big kickback by way of savings from the way that you are speaking. In terms of what the level of that saving is, we can come up with some figures for you, but in terms of the requirements and responsibilities that, as a corporate body's apartment, we take on to reduce our carbon footprint, there are a series of benefits that come from that that we think are sensible to be making. You had figures that would be helpful, because both from the public perception as well that it seems like a lot of money, but if we are saving 20,000, 30,000 a year, that would look good. My final area, which has already been touched on, was the whole question of the contingency for the additional powers referred to the commissioner for children and young people. Can you explain to us how that is handled? Who is holding this contingency? Who will decide if it is being released? What happens to it if it is not needed? The finance committee had a key hand in the scrutiny of the children and young people's bill in relation to the financial memorandum. That was exceptionally useful for those of us members of the education and culture committee who were leading in relation to the policy scrutiny of the bill. It was an issue of the need for and the timetable for requiring those additional resources to meet the additional powers that were being conveyed through the bill. It was a subject of some debate through our consideration of the bill. There was a bit of chewing flowing between the commissioner and the committee and Scottish ministers. We felt that we had resolved it by the time the bill got to stage 3, but the bid came through the commissioner for those additional resources. It appeared that some of what was being said did not quite square with the assurances that we had been given during the discussion of that bill. Therefore, we had the commissioner back in front of us for further questioning. He provided written evidence as well, which again suggested that some staffing reallocation had already taken place, and that a mapping exercise to ascertain the level of need and the type of need was to be undertaken, all of which made us a little uncomfortable that, as a committee, this work had not already been done. As a corporate body responsible for signing off on the budget, I think that we shared those concerns. I think that what we have agreed is that that further work is absolutely essential. The staffing reallocation has already taken place in the commissioner's office to allow that to happen. Therefore, for the time being, we do not see a need to release that funding. Nevertheless, the Parliament has passed the act. It has conferred those additional powers on the commissioner. Therefore, it is only sensible for us to set aside those additional resources. It is £51,000 as part of the contingency to enable the commissioner to be made to draw those down in a timely fashion. However, until we see that further working through the mapping exercise and the further case that is developed by the commissioner, we see no reason to transfer that funding. The Scottish welfare fund bill is going through the Parliament at the moment, and the welfare reform committee has identified issues around the financial memorandum, which identifies the additional costs that look to be imposed on the Scottish public services ombudsman when they take over responsibility for the second tier appeals. Can you give us an idea of the discussions that you have had with the SPSO about what additional funding would be required and just how confident are you that the figures that have been put in the financial memorandum stack up, because questions have been raised at both this committee and the welfare reform committee about the predictions for the additional costs? Again, that is very fair. We have had initial discussions with the ombudsman. We have had discussions with all of the office holders. I think that I have gone into a pattern of having them on a reasonably regular basis to talk through a series of issues. Obviously, the ombudsman is one of those office holders that is demand led. It can be difficult to predict the pattern of need and therefore the budget resource that is required, but inevitably this is an area that is going to push up the demands on the office. I think that there are other areas that may have a bearing. In terms of the financial memorandum, I am not sure that we have taken a view on that as a corporate body, but Paul McBoo will be able to. Really, just to underline what Liam McBoo said, the short answer is that we are not in a position at the moment to say whether we think that is robust. There have been constructive discussions with the ombudsman, but I think that drawing a parallel with the point that Liam McBoo made about working with the committee and the education committee, I think that the corporate body and officials would be pleased to work with the committee and the committee on that very point so that we can come to a common view as to what the resources would be. Liam McBoo is right. I think that everyone expects there to be an increase in workload, but we are pleased to work with the welfare reform committee and this committee to get to an agreed position on what those additional resources should be. I think that the corporate body's position is that until it is satisfied and the committees are satisfied, it will not enter into any firm agreement as to what additional resources should be released. I think that from the education committee's point of view, as I said previously, it was this committee that I think sounded the first warning around the financial memorandum in relation to the new powers of the commission, as well as other issues, but particularly in relation to the new powers. Therefore, any views that you have in relation to this particular cost pressure on the ombudsman are ones that, as a corporate body, we would be very much welcome. Can I just tease out a wee bit more about the digital programme and the upgrade of that? You did say that it would be better facilities for members and I was hoping that it would be better access for the public. I presume that this programme is really about the Parliament beginning to open up digitally to other parts that are hard to reach and giving people access, is that right? Absolutely. It is recognising that the expectation on members in terms of the way that they carry out their responsibilities is changing. Different MSPs are in different places in relation to that. Each of us have our own idiosyncrasies in terms of the way that we work, but all of us, I would hope, have a personal commitment to being as open and accessible as possible, and collectively, as a Parliament, that has always been a fundamental principle of this Parliament. Whether or not it is looking at greater use of teleconferencing facilities, having witnesses give evidence by teleconference where possible. I know that, as a former member of the Rural Affairs Committee, I know that we took evidence on occasion from MEPs while they were based in Brussels or Strasbourg by video link. Similarly, there will be constituents of mine and yours who will find it far more logistically feasible to do that than, necessarily, to hike down the A9 or fly down to Edinburgh. That is just one example. If you look at the way in which casework is coming to MSPs through social media rather than through snail mail or even email now, those changing demands are ones that all of us recognise. As I say, we each work slightly differently. I think that the public's expectations of how they access the Parliament will change if I look at an issue that is of key interest to this committee. Some of what we have been doing in terms of making budget scrutiny more accessible, not just to MSPs but to the public generally, is reflecting a tool that is now available on the Scottish Parliament website that allows you a pictorial explanation of budget lines and unpacking them down to level 4. That allows you to put in different configurations on the new taxation responsibilities that we have to see what the impact would be on revenue into a Scottish Exchequer. Given the expectations in relation to more powers for this Parliament, particularly taxation powers, that is a sensible investment for us to be making and is one that we will probably have to develop yet further. In a whole range of areas, we are conscious that we cannot afford to be too far behind the curve, but we also need to recognise that different MSPs operate in different ways and we need to make sure that we are supporting all of them equally throughout the process. I will give you a couple of specific examples just to underline the point that Liam made. One of the streams within the digital programme is the online approach and our website still remains by far the most significant window on the Parliament, if you like, online. We are looking to whether we can improve that. There is an open data project within it, which I think is absolutely critical to allowing the public to access information stored by the Parliament. A recent example, as you may have picked up in the media, was significantly increasing our apprenticeship programme. We used a lot of social media to make that available to a very large number of people. We had a hugely successful event here in the Parliament last Friday, but in fact it was promoted largely through web and social media. That is some specific examples of how we think it can benefit the public, as well as members. I was particularly thinking of people whom I would like to give evidence to committee, but living in Shetland or the Western Isles were some of the furthest-flung parts. That merits working with other organisations that are equally digitally advanced. I presume that that is happening through the health service that is developing a lot of digital work themselves or the University of the Highlands and Islands, which has an extraordinary network and local councils. Those partnerships can be made, too. That is a fair point, Jeane. There is no point in developing a digital presence that does not speak to what is happening in other parts of the public and third sector and the private sector for that matter. I can recall instances in which setting up a video conference was frustrated by the fact that the operating system within the Parliament was different from the operating system in one of the local schools in Orkney. If we have different operating systems, we can claim all that we like that we are more accessible because we are making investment in digital technology. However, if it is not speaking to the technology that is used by some of those who would potentially make the best use of it, it does not seem to have gone any way towards achieving the objective. I think that continually talking to those partners in the public and third sector and indeed private sector is going to be crucially important. Just a wee question on the shop, being the only female member of the finance committee, I hate to ask about the shop. It is interesting that it is really good to see it turned around and making a contribution. Will I be right in thinking that the 260 town over is possibly reflected in the great tapestry of Scotland exhibition and that the book sales and having the highest number of attendees at that exhibition, am I right in saying that, that would have reflected in the shop sales? At the outset, thank you for asking the question about the shop because the shop kept coming up when it was making a loss. The fact that it is now making a profit needs to be acknowledged now. There is no doubt that some of that is to do with the footfall generated by the great tapestry exhibition over the last couple of years, the warhole exhibition as well. It has a positive impact in terms of the numbers that we are coming through the building. I think that the location, some of the decisions that we are taking about staffing and also the product lines as well, I mean that all of those have had a bearing on turning this around. As you will see, the projections going forward are to continue, it is not going to be a cash cow, but to continue to show a modest profit. I think that that illustrates our confidence because of what we have done in terms of the relocation of the product lines, but also our commitment to looking at further initiatives. The great tapestry has been a rip-roaring success. This year, I think that we were able to plan for that success rather better than the previous year where it caught us a little bit by surprise. However, the commitment is to look at other ways in which we can encourage people to come into the Parliament that perhaps otherwise we would not have done so. I think that that was the other thing about the great tapestry and the warhole exhibition. We were seeing people that were coming to the Parliament for the first time and I think that we always need to be conscious of the need to try and do that. I am really pleased to hear that. The other thing, and it is just a suggestion, is that it seems that we get a large number of visitors to Scotland to the Parliament. It occurs to me that there might be an opportunity, I suggest, to reflect some of the wonderful craft products and so on from all of our different parts of Scotland, but it could be reflected even for a period of time, a kind of three months reflecting Orkney or three months reflecting Arran or whatever. I just wonder whether that is something that you would consider doing. It is certainly something that we have taken on board in the past. I declare an interest. I pressed the case quite vociferously on behalf of Sheila Fleet not so long ago and successfully. There are other examples of that. Again, I think that there is always a balance between trying to have product lines that are going to shift. I think that we have recognised that a lot of people, particularly school parties who are through here on such a regular basis, are looking for something that is a bit of a souvenir, but it is. I understand the stock that is there and why it might be there. I was just really thinking that it might reflect some of the produce of Scotland. I think that that is a fair point. It is something that we look to try and do. I do not know if Paul has examples of particular initiatives in that respect, but it is literally a short window. Therefore, if we can use that to best effect, even if it is not at a commercial level, it just raises awareness of other Scottish producers, then we can do that. Just briefly, our ambition is just that. Liam said that we have to strike a balance at the end of the day, but our ambition is just that. A number of members contact the shop and I would just say that they are always happy to talk to members if they think that there are particular products from their regional constituency that they think would reflect well on Scotland and would sell. I would encourage any member to talk to the shop manager. As Liam said, I can think of two of the others where we have followed that through and they have become feasible lines. As you say, sometimes for a short run, sometimes they have become on-going stocks. Any member who thinks that they have something like that in their constituency or region should just get in touch with the top. I cannot promise that we will stock them, but we will certainly talk to the member and explore that with him. I am just looking at the shop figures here. The change should not feel bad because it is one of the things at the end of the committee that I was going around all four in terms of the shop. I would say that it is difficult not to make money when you are selling single malls at 36 quid a bottle. The number of those that we had to get signed for auctions and raffles over the last few months to run up to referendum might want to have punted up your sales. Anyway, Gavin. Right, he became particularly animated when the suggestion of product lines from Arran was suggested that he really picked up at that point. There is not much left to ask, but the first one is that, in terms of the maintenance budget, in the schedule that you have given us, there is a small increase this year, up to just over £2.1 million for 2015-16. You then add the statement, that the nature of this work is that there will be peaks and troughs over the years in line with our 25-year maintenance plan. I suppose that my question is being realistic. Are there peaks and troughs in terms of maintenance, or is it something that we will just see a small increase year on year over the next few years? I think that with the 25-year plan, there is a bit of flexibility in terms of where we carry out that work and we try to respond to what else is going on in the building and in the budget at the time. Obviously, the on-going checking and maintenance is a crucial part of identifying the issues before they become problems that have to be reactively and inevitably costly dealt with. I think that this is a building that is particularly iconic. It is heavily used. The expectations around the standard to which it is kept are pretty high. Even against the backdrop of a type budget, we have tried to make sure that that maintenance spend has been consistently preserved. I think that there is a bit of an ebb and flow to it, because there will be bigger ticket items that will come along, which can be done one year and put off to the next year, but will have to be done within a two-three-year window. That will result in the budget being higher that year than the previous year or the subsequent year. As I say, it is part of a 25-year plan that is aimed at trying to make sure that we do not get horrific spikes or that we rein back on the on-going maintenance of the fabric of the building, for which I do not think that we would be thanked. I do not know if Derek is at anything, particularly if you want to. It is an area in which we have seen bigger movements year on year in previous years. It is quite a small differential this year, but FM does try to smooth the pattern as much as it can. On the other question, just coming back to one of your earlier answers about commissioners and ombudsmans and the property costs of those, I think that it was a convener who pointed out last year that I think that you were hopeful that there might be scope to save costs on offices by merging offices as such. From your answer today, it suggests that that is probably unlikely. If one is going to be based in St Andrew's, if one has recently moved offices and presumably signed a medium-term lease, I would imagine. Looking forward, I suspect, is that just unlikely that we are going to make costs by moving offices together? I think that we have got a bit of co-location at the current time. There is additional capacity in the Rosebury House facility that the Children's Commissioners moved into, and we have made it abundantly clear that we see this as an opportunity for utilising that space for others, which will, I would assume, release some saving. In terms of additional co-locations, we are at the point at the moment where we do not see an immediate way of triggering other opportunities. Okay, that is all. You say that, since the baseline year of 2010-11, the staff pay budget has reduced by 9.2 per cent in real terms. Is that, to what extent, a reduction in the number of staff, or has real terms pay been going down to an extent as well? I think that we have seen a reduction in staffing of, I think, 64 full-time equivalents, about 12 per cent of the overall staffing. Obviously, we have been able to do quite a bit in changing patterns of work and the like, which again has enabled us to release some savings or work more efficiently through the clocking team, through SPICE, through security, but in terms of actual real terms pay, Paul, the view? Yes, it has been a combination of both. As Liam said, the permanent head count is down by around about 60 posts, but there has been pay restraints as well, broadly following Scottish public sector pay, which has been a real-term reduction. It has been a combination of the two, which has delivered that saving. Obviously, I am concerned about staff pay, not least staff in the room, but I suppose I am particularly concerned about those on low pay. Does everybody in the Parliament receive what is now called the living wage? We are hopeful. In fact, I am going straight from this committee meeting to a meeting at the corporate body where, hopefully, we will be able to discuss and sign off on a paper that will allow us to make an announcement in the not-too-distant future in relation to the corporate body staff. Obviously, the staffing arrangements for individual MSPs are a matter for them, but given the publicity surrounding the issue, I think that all the parties have made it fairly clear where they stand on that, but it is obviously not something that the corporate body can directly intervene in, but certainly in relation to corporate body staff. We are confident that all are paid above the living wage and, in terms of those that we contract in, while we have not been able to put this as a provision within the contracts that we have signed, negotiations have then taken place about ensuring that all those that are employed within the Parliament are paid above the living wage. There are issues around pay differentials and the knock-on implications for those contractor staff in other locations, but the discussions that we have had so far have been pretty constructive and, therefore, we believe that we have made progress. Before making any public declaration, as I say, it is an issue that we are discussing in the corporate body later on this morning, and, hopefully, we will be able to say something in pretty short order. Are there any zero-hour contracts in the Parliament? There are. In relation to, for example, the events team, where what you have is fairly specific short-term arrangements around particular events, there may be some zero-hour contracts, which, frankly, seem to suit the interests of both parties, just given the nature of the type of work. However, I am confident that, across the piece, there is not an inappropriate use of zero-hours contracts in terms of staffing within the Parliament. I was pleased to hear just one other topic about, I suppose, the spend to save on lighting in the chamber. Is that possible at all for the committee rooms? I am always worried about the amount of light that seems to be shining on us when we are in committee rooms. That is the purpose of committee meetings, is it not? I think that we have looked to do it progressively, starting with the obvious and the easiest places to do it. The chamber is, for a whole series of reasons, a more complex proposition, but we believe that we are now in a position to be able to do that and to release the environmental and the financial savings that will result from it in terms of the committee rooms at the moment. Paul, if you have. Obviously, as part of the project, we are looking at the technological solutions. If we can find a solution for the chamber, then, as you will know, we use very similar technologies in the committee rooms. If the chamber is successful, I would certainly expect the FN team to look at how we might roll that out to committees over the course, but I think that we will get the chamber established first to say that if that is successful, we know that we can deploy that technology. As Liam Kerr said, those rooms would be easier than the chamber, so if the chamber is successful, I would expect us to come forward with proposals over coming years to resolve the committee rooms as well. The deputy convener has just whispered to me that it would be no easy to start with a committee room and then if it is successful, we will move on to the chamber rather than the way around. The reason why we are doing it in the chamber first is that it is by far the biggest consumer of electricity and it is far more expensive. You do not actually need to erect the big scaffolds in here, so I think that the potential benefits of doing the chamber are very much more substantial, so I think that that is the reason why we are doing it that way around. When I was beginning to ask myself as always speaking that, it was John's that wasn't mine, he was a bit getting too shy to say it himself. That concludes the question for the committee. I just really wanted to finish off with just to round things off. Malcolm O obviously asked about the issue of staff salaries, et cetera, and on the page 2 of your report in the section approach to setting the budget, you talk about on-going pay restraint below the level of inflation for members and staff. I touched on this already and I was intrigued by the fact that you said that there is a 9.2 per cent reduction in real terms, but there has been a 12 per cent reduction in staff numbers. That tells me therefore that the pay of staff members has been a real terms increase of about 3 per cent. Clearly, a lot of members have not had any pay rise above inflation, so how is this disparity? How do you explain it? Is it because people have been promoted within the ranks? What is the position? There will definitely be a progression, and I think that in terms of the redeployment as well in different roles, roles will not necessarily equate in the same way across that piece. I suspect that that will have had some bearing. There are two particular factors. One is incremental rise. I believe very strongly that incremental rises are part of the contracts that we have with staff, so I think that we should honour those and we have done them. That continues whereas the annual pay rises, the inflation-related ones. The other is that within the whole staff pay budget, there are also temporary staff or additional staff. For example, the apprentices that I talked about earlier are supernumerary, given that the idea is that, having completed their apprenticeship, they will be able to compete for permanent jobs. There are other factors in there, which I think explain the discrepancy that you picked up. In terms of the incremental rises, that means that there are a lot of staff who now are no longer getting incremental rises because they are at the top of their scale? That is the case. We are relatively low-turned over organisation, so a significant number of staff are at the top of it, and they would only get whatever the inflation pay rise was each year. That is absolutely right. In 2016-17 figures, I do not want to go into them, but there seems to be a significant increase in terms of pay relativity this year, 3 per cent or so. Are you hoping that perhaps the settlement—I know that you are still negotiating with me, but I hope that the settlement will be a bit more generous in that year—in terms of staff who, perhaps, are at the top of their scale and have not received any significant pay rise for a number of years? We have seen evidence of policy negotiation on the rates issue, so clearly nothing is a foregone conclusion, but we are anticipating a modest increase. I am very reluctant to come before the committee and not give a helpful answer, but we are just about to begin negotiations. If you do not mind, I think that I would prefer just to say nothing on that. I am just hoping that that is the end of the tunnel for the staff. There is always light at the end of the tunnel, convener, but it is beyond that. There is also no train coming in the other direction. One final question is just a small one. I have been looking at the figures for the standards commission, which have seemed to have oscillated a wee bit over recent years. The standards commission is going up by about 5 per cent. I am just wondering if you can tell us why they are just going up by 5.1 per cent over the next year? I think that, as I said earlier, some of the office holders are in a bit of a demand-led situation. One of the issues that we have been keen to discuss with them when they have come in to speak to us is what proportion of the work are they doing to try and manage that demand down by raising awareness amongst local councillors and public bodies about the responsibilities in this area. I think that we are still seeing it at certain points in the political electoral cycle that you will get spikes in the number of complaints that are raised. In relation to standards, there is an attempt to try and triage that more effectively so that you are not seeing complaints run unduly long and dealt with in a more efficient and effective way, as well as the proactive work that is being done to try and raise understanding about what the code says and the behaviour that is expected of public authorities. Some of this, we think, we are seeing evidence of being managed down to an extent, but I think that we are still conscious that, for reasons to do with probably politics and elections, there will still be periods in which you will almost get tit-for-tat complaints being raised. Even if you triage them, you are still loving to deal with them. There is still a 16 per cent reduction overall from baseline in terms of the standards commission, which is 70 per cent for all the officials. I was just wondering why there was that way increase, which seems anomalous to others, but that was a fairly good explanation. I think that that appears to have concluded all the questions today. I would like to thank Derek Leam and Paul for coming for us today. Is there anything else that you would like to point out to commit to any further points that you wish to raise? Beyond thanking you for your scrutiny and continued support and a lot of the work that we are doing, one area where perhaps we didn't cover this morning in relation to potential additional powers and some of the pressures that that is likely to put on the Parliament as a whole and on our resources. I am conscious of the visual kind of statement, so I didn't really want to go on to that because I think quite clearly until we know what they are, it's kind of difficult to ask about it. Exactly. Clearly we may return to this same time next year, but I think that if in the interim, once the picture becomes a little clearer, given that the Finance Committee is likely to be one that is going to see an additional kind of pressure on your own capacity and resources, I think as a corporate body, we would value your input as to how we manage that because there's no doubt that those additional pressures will present additional challenges to us in terms of managing that budget, so perhaps it will be an opportunity at some point in the middle part of next year to sit down with the committee and discuss those. I certainly appreciate that, that would be great. Thank you, Liam. Thank you very much. I'm now going to call a five-minute recess in order to a change of witness and allow members a natural vote. I'll give apologies on behalf of Michael McMahon, who is convener of the welfare reform committee. He has to meet a group downstairs who are coming to committee next week who have mental health issues and wants to show them their room, etc., so he'll perhaps join us in 15, 20 minutes or so, so we'll continue without him. On the next item of business, to open the session formally, I state evidence on the devolved taxes implementation from Eleanor Emberson, head of revenue Scotland, the Scottish Government, John King, director of registration, registers of Scotland and John Kenny, head of national operations Scottish Environmental Protection Agency. Members have received copies of the most recent progress updates from our witnesses, so we will go straight to two questions. I mean veterans of the committee, so you'll know the drill, so to speak. I shall start off first. The first question is to Eleanor Emberson, basically. You talked about the most recent estimate for total cost and set-up for the first five years being £21.2 million, a figure that excludes the estimated cost of £730,000 of Scottish tax tribunal, which was included in the RSTP Bill's financial memorandum and Revenue Scotland's previous progress report, but it's now being excluded as being quite separate. I wonder if you can explain to us why it's now quite separate when it wasn't before, and also explain why there's been a quite significant increase of about 9 per cent in terms of the cost for establishing and running the devolved taxes. The costs of the tax tribunal were, I think, properly included in the financial memorandum of the Revenue Scotland and Tax Powers Bill, because they were costs that are relevant to that legislation. The reason I've excluded them this time round is that it's the comparison back to that HMRC estimate of £22.3 million. The £22.3 million that HMRC quoted would never have covered costs of tax tribunal—whatever had been done about a tax tribunal. Perhaps, with hindsight, we could have made that clearer at the time of the financial memorandum, but they're not costs that HMRC would have borne. They're not costs that Revenue Scotland bear. They're costs overall associated with running the taxes, so they were properly in the financial memorandum of the bill, but they're not part of the cost that we like to add up and compare to the original HMRC £22.3 million estimate. As far as the increasing cost goes, I can obviously answer more questions about the detail, but, as I broadly explained in my update, this is almost exclusively staff cost associated with the implementation. There are three broad groups. There are programme and project management staff, which we've bolstered as a response to gateway review recommendations and, indeed, in our own need to manage the programme and project very tightly through this last nine months, ten months of implementation work. We've also got additional staff on business analysts working between the process design and their IT contractor, so we know that there have been in the past problems with government IT projects. Things can sometimes overrun or not deliver as required. We've put in additional business analysts to make sure that, as we go through every iteration of the IT system, we're completely on top of managing that very tightly and that it's going to deliver what it needs to deliver and stay within its budget. The third group is additional staff that I've put in to make sure that we will deliver all that is required in time of all the different aspects of set up in time for April. It's set up costs associated with staff. You mentioned earlier that increased investment staff costs for implementation are now falling in 2015-16. You talked about most of the additional cost-being staff, but we didn't really get a breakdown of that in terms of the report that was given. You talked about managing things very tightly, but there seems to be quite a divergence in the number of staff. You anticipated future staff 41 in the first live year of operation, compared with an estimate of 30 in the bill's FM, so there seems to be quite a wide divergence in terms of the number of staff that's being required. I know that you've said that this is to provide additional capacity in the critical early months, but we've not received any detailed estimates provided for that. I mean, if it would be helpful to the committee, I can send you a staffing structure now and show you who the 41 are and what they'll be doing. I'm very happy to send that in if you would find that useful. In the financial memorandum of the bill, we were talking a number of the order of 30. We also had the additional investment in compliance, so there are three staff that come from that as well. We're talking about probably eight posts here between what we said in the financial memorandum and what we're saying now. Our best estimate of what it needs is to make sure that we can do this safely, reliably, and make sure that we can deliver the service and get the money in the door. How likely are those figures going to change again in the months ahead? I don't expect us to be recruiting beyond the 41. We have a plan of how we're going to staff up for the 41. We have 12 of those people identified already. We have another eight that are being interviewed for in the next two weeks, and then the further tranche is coming on behind that. That's what we are going to go live with. Obviously, once we go live and we see how we're doing, I can't speak for what changes might be made in future years, particularly once we have a board, and once we have some experience of live running, but that's the structure that we're working to and that's for the foreseeable future. How flexible will your structure be should additional powers be devolved to Scotland? We obviously recognise that we may need to respond to that. It would depend entirely on what the additional powers were. If there were further small taxes, transactional-based taxes, we'll have a good platform to build on, but I would expect that any significant extra power would involve some more staff and some more implementation work, because that's just the nature of what we have to do. In terms of the RST, we will FM, which stated that the intention is for Revenue Scotland to delegate operational responsibility for the collection of SLFT to SIPA, but the latest progress report said that it's agreed that SIPA will not collect tax data or process any SLFT transactions on behalf of Revenue Scotland. I'm just wondering why there's been that change with regard to the Scottish landfill tax. I don't know if you wish to respond, or Mr Kenny. Let's say something first and then, in light, John, to come in. I think that when we last were in front of the committee, we would have explained about the IT system change. I have to go a long way back in the development here. When you saw the financial memorandum for the Revenue Scotland and Tax Powers Bill, that included a new additional investment in an IT system for Revenue Scotland, and that was based on work that had been done, the detailed business analysis, the detailed requirements around IT work that we had done, which highlighted that a more efficient way and a more robust way of delivering the online system for collection of landfill tax and collection of land and buildings transaction tax was going to be development of a system at Revenue Scotland and integrated appropriately with systems at SIPA and at registers, rather than simply a system at SIPA and a system at registers and nothing sitting in the middle. As we've worked through all of that, it means that the actual up-front collection role for SIPA isn't particularly significant because people will make their returns and Revenue Scotland will process that and we will handle all of the payments and we will store the taxpayer data. However, SIPA's role is very significant around two areas, particularly the biggest one being compliance and making sure that taxpayers are accurately paying the correct amount of tax and indeed, as you know, tackling the illegal dumping problem and trying to recover tax from people who have been illegally dumping. The other role that SIPA will have in all of this is information because SIPA will have staff going out on to landfill sites. They are bound to be asked questions about tax, among other things, so they will be able to help us to spread the word and they are already helping us to work with landfill operators to make sure that this all goes as smoothly as it can. John Lennon would like to add something to that. It was really around the IT system change and the recognition that it was in a more efficient way of delivering a system across the taxes and also a better way of holding the sense of data for Revenue Scotland to be the holders of that data in its entirety. That's the reason for the change. It's just that neither the revised set of burning costs have been included in the figures to the committee. They've been agreed with Revenue Scotland but we haven't received any figures for that. Okay, I can tell you what the revised costs are for the running costs. The set-up costs are reduced by £250,000 on the back of the IT change. So what about running costs? What about the running costs? The running costs have come down a little. The main cost in it was setting up the IS system, so the running costs have come down a little from about £610,000 to just under £600,000. Thank you. Mr King, Reuters of Scotland is self-financing from the income that it receives for the services that it has provided. The cost that it incurs in relation to LBT to the Government is the RSTB bill that estimates the set-up costs of £335,000 and the running costs for those five years of £1.625 million, but I'm just wondering if there's been any changes to these estimates or if those estimates remain as before. We've certainly been reviewing our estimates, we do that every month. In terms of the set-up costs, we still envisage that they'll be in the region of £335,000, certainly no more than that. There has been some reallocation of the individual components within that £335,000 figure. An example of that would have been the IT costs that have come down from £85,000 to £70,000. Our spend to date is in the region of £176,000 and we anticipate that our spend by the time we get to the end of March, by the time we get to go live, will be in the region of £300,000 to £335,000 maximum. We'll be in a position within the next four to six weeks to have a very high degree of certainty as to what that end spend will be. It's dependent on just the refining exactly what it is. We are particularly on the IT side, what we'll be delivering along with Revenue Scotland's IT provider. I'll look back to you and just ask a wee bit about the tax gap for LBTT. You've seen your report that this could be around £4.5 million a year and you go on to talk about an additional investment in tax compliance of £230,000 in reducing the expected tax gap. Two questions here. What is the gap currently in terms of LDLT and what do you expect to reduce the tax gap by for this investment of £230,000? I do apologise. I don't have the figures for the LDLT tax gap in front of me here. We did look into that when we did the financial memorandum for the Revenue Scotland and Tax Powers Bill, but I don't have the figure in my head. I know that we took the LDLT estimate and we reduced it somewhat as an estimate for LBTT because we recognised that the legislation that the Parliament has passed for LBTT has already attempted to close some loopholes and some routes for avoidance. We had already taken the LDLT figure and scaled back somewhat. We haven't attempted to estimate how much we can close the gap by. What we have said is that the £230,000 estimate for additional investment in compliance—the refined figure or my latest estimate for that is £259,000—is £165,000 for three staff at Revenue Scotland and £94,000 for staff at SEPA, so it is across the two taxes. The three staff at Revenue Scotland will be focused mostly on man and buildings transaction tax. Our aim is that those staff will pay for themselves several times over and we will be monitoring over time how much we are bringing in through the additional compliance activity. That will allow the committee to understand something about how successful we are. We simply do not have the detailed information about the tax gap. We do not have any track record with this brand new tax, really, on which we could make a robust estimate of how much we expect to close the tax gap. We have gone down the road of saying that we understand what it will be costing us and we will monitor closely what comes in and we will report that to the committee as we go along. I understand that the staff duty of one tax is £9 million at present. The gap is £9 million, so it is £4.5 million a year in Scotland. The introduction of LBTT itself is estimated to reduce it by some 50 per cent. I have to say that that is an estimate. We do not know that. My concern would be not to mislead the committee by trying to give you some figures about what we think we will be able to bring in that might look very accurate and very confident, but until we are really doing this, we do not know how successful we will be. That is something that the committee will obviously look at as we go forward. I have one or two more questions, but I think that I might leave them to the end to see whether they are not covered by colleagues around the table. We will open up with Gavin to fall by John. Obviously, as with many reports that have been given to committee and witnesses appearing before us, there is a slight time gap. Obviously, your reports are all from October. Given the tight timescale that we have now got, has anything materially changed for any of your organisations since you submitted your written reports in October? There has been a lot of progress, but there is nothing negative that I need to report. We are still on track on all the areas. There is quite a number of things that have happened since early October. We now have draft technical guidance out for consultation. Our website is live. We have seen further demonstrations of IT, so a lot of progress has been made since then. I echo that. I know that it is a question that the committee has asked previously about roles and responsibilities between ROS and Revenue Scotland. From an ROS perspective, we are now very clear what those roles are for our role. That is helping us to refine the detail of what our operational activity will be post 1 April. In previous reports and previous appearances before the committee, you have submitted alongside a sort of written report a dashboard that uses a system of green amber and red, which is a project management tool, and lots of things were green. There is occasional amber, but I do not think that you had many reds. If you use that analogy of green amber red in any of your organisations, is there any specific part of the project? Is there anything that would have either an amber or a red light of this stage that you think ought to be flagged up? Is there anything that could hold progress back for any of your organisations between now and the start of April? The answer has to be yes. Of course, there are things that could happen that could hold us back between now and April. We are using the green amber red system. We have been working on reddiness criteria, a series of descriptions of where we need to be. Green amber red against every single one of those. We report that weekly. On a weekly basis, we have had small numbers of amber indicators out of two dozen or so criteria. We have been working hard to turn some of the ambers back to green. We are doing an assessment, in fact, this week, as I end November to check where we are on reddiness. We will be doing another full assessment at the end of January. I would say that we are still on track. Amber indicates to us that something is not exactly on the plan that we had, but we have a way of bringing it back. If we did not think that we had a way of bringing it back, it would be red. Obviously, at that point, warning lights go off and we intervene. We have nothing currently at red. Across all three organisations, things could go wrong and things could happen, but for each of your organisations, there is nothing that would be in the red category, so to speak, that is likely to hold things back. In terms of registers of Scotland, we are very clear about what it is that we have to deliver. All aspects of that delivery are standing at green. In terms of the IT components that we have to deliver, the main one has already been delivered, so it is already in place. The remaining IT is more behind the scenes. Again, we are aware of what has to be delivered there and that is on track. From an ROS perspective, we are very confident that we have everything in place that will support and effective delivery. With SIPA, similar to Eleanor's answer, across the board, we have a number of individual parts of the projects that are at Amber. Again, as Eleanor says, Amber means that we are still expecting to deliver them. There are challenges within that, but the majority of them agree. Without being as deeply involved in the project as any of you are, the one that just as an outsider strikes me as potentially the riskiest, as with many projects, is the IT systems. If the IT systems function, we can probably get over most hurdles. If they don't, then there is an immediate issue. Mr King, you said that the IT system is complete. I got the impression that it was nearly there. Can you give us absolute assurances that the IT system is being tested robustly and that there is some kind of contingency just in case something goes wrong on day 1, which will obviously not get us off to a great start? Maybe I should just clarify. In terms of the IT system, what I was referring to, and I should have been clear about this, was one component that ROS had agreed to deliver because we were building it for our internal IT systems. That is an authentication server. That is a way of validating users to a system. We are sharing that with Revenue Scotland. That system has already been delivered and tested, and it is available for the Revenue Scotland's IT team to use. In terms of more general IT, it is probably more appropriate for Eleanor to comment on that. First of all, yes, I can give you an absolute assurance that everything is being thoroughly tested. There are various components to the full system, and I am not the technical expert, so I will describe them in plain language. There are proper technical descriptions, but there is what you might call an electronic form that captures all of the data, which is not a static thing. It responds if you take certain boxes and then it does not ask you certain other questions in that sort of way. There is a case management system, which is what Revenue Scotland uses around any individual tax case, so stages where there is a return or a payment, but potentially if there were a dispute or some inquiry or whatever, so there will be a whole case management system. There is a set of linkages that go on, and there is something that looks out to the public, which looks out to solicitors for land and buildings transaction tax and landfill operators for landfill tax, where someone would actually then, who was not within Revenue Scotland or Rosasipa, would then interact with our system. We are intending to deliver all of this in time for April. In fact, we are intending to deliver all of this for the end of January, tested and what our intention is in February and March to be doing what I would as a lay person describe as snagging, just making absolutely sure that there are not any little glitches. The electronic form part is starting its testing imminently, and the case management system and so on, behind all through December, the outward facing part will be being tested in January. Most of the work for all of this is already done when I'm stitching everything together. Another thing that has to happen at the end is full security testing and full security accreditation to make absolutely sure that taxpayer data will be secure and nobody could do anything bad with any of our systems. As I say, we're on track to deliver all of that, but you're absolutely right. We of course need a contingency plan in case any element of that fails when we get to the testing stage or we don't get the security accreditation. We have our contingency plan based on paper returns because we're going to continue to offer paper returns as an option. Solicitors were not all keen to move fully online. We might want in time to move fully online, but it would have been too big an ask to say that we're going to compel you to use an IT system that you've never seen and which I can't prove works and which I can't prove is going to be robust and good. We've agreed that we will offer a paper return initially, and that also means that for our contingency plan, if we had to, we would do fully paper returns. We prioritised the order in which we built the IT system to make sure that, if we did have to do the paper returns, we'll have all the behind-the-scenes parts of the system to process the paper returns on to. We are, I think, as robust as we can be. We've mapped out staffing requirements for doing the paper return and so on. The convener asked about staff numbers, and he talked about 30 in the initial bill, and 41 is the current complement. Certainly in the written report, one of the reasons given was that we wanted to make sure that we had an extra complement for year 1 to make sure that it was a success. Based on current plans, is that 41 simply for year 1 and you would see it potentially reducing over time, depending on what other responsibilities come your way? Or is the 41 likely to be more medium-term? It's probably more medium-term. On the run of estimates that I have in front of me, we would come down by probably only a couple of posts or so in 2016 and 2017, and then we would do what we needed to do from then on based on—we would have proper experience by then of how well it was all working in operation. The figures that I've used in order to develop the estimate, I've only assumed that we drop by a couple of posts in 2016, 2017 and beyond. The final question might be one more for ministers, but you may be able to answer it anyway. In terms of subordinate legislation for the two devolved taxes, I mean, as far as revenue Scotland are concerned, are we on track for all the subordinate legislation? My understanding is that the subordinate legislation will all appear in December, and if that happens, then that's fine from a revenue Scotland point of view. I'm still a little bit confused about the total cost, so you could just clarify my failings. In the spring, what was it in March, 14 report, there was again reference to the £16.7 million that had been quoted from revenue Scotland as compared to HMRC £22.3 million, and the fact that was a 25 per cent less. The statement at that time was made, our estimated costs for the basic collection of the taxes have not changed, they remain at £16.7 million. In the current report, we have £21.2 million, in page 3. The total cost continues to compare favourably with the original estimate of £22.3 million. I suppose that that £21.2 million is an increase of £16.7 million. If we had gone with the £22.3 million from HMRC, would we also have had that same increase, i.e., we haven't worked it out for about £4 million extra on top of that? Is all of that extra costs, or is any of that just an increase in the £16.7 million base? The £1.7 million that I highlighted to the committee is effectively an overspend against the estimates that you saw back at the March report. Of that, if we were trying to apportion it, about £1.4 million would be an overspend against the £16.7 million, and the rest would be a slight overspend against the so-called additional costs. It's very difficult to know what HMRC's estimate would be if you asked them now, because HMRC did an estimate way back in the summer of 2012, on the basis of the taxes being identical to the UK equivalents. Obviously, if HMRC had been doing the development, it would have also had to respond to the fact that there are differences now between the Scottish taxes and the UK taxes. I have no idea what HMRC would be quoting at this point, but I think that there is at least a chance that their costs might have gone up also in responding to the different design. However, I can only speculate, because we don't know now. As far as you are concerned, you and HMRC both quoted on the same basis, as far as we are all aware. It is not that you did not quote correctly or anything, it is just that, as things have developed, all the extra costs have come in, and probably, as far as we know, they would also come in on the HMRC site. As far as we can tell, the bulk of the additional cost is to do with making sure that the systems match the design of the Scottish taxes. There is an element in this, which is that my estimates have not turned out to be completely accurate. That is what I am being honest about now. We have had to put more additional resources in to deliver, but the bulk of the difference between 16.7 and 21.2 is to do with making sure that the design of the systems matches the aspiration for Scotland. I appreciate your straightforward answer. That certainly helps me to understand it. Within that remit, or within that area, this whole question about the tax gap, I suppose that I do understand it, but it seems odd that we start a new tax and immediately there is a tax gap. That, to some people, would make people think, well, that does not mean that they are not doing their job properly because, surely, there should not be a tax gap. I would love to be in a world where you legislate and people are required to pay, and all that revenue Scotland has to do is just provide the system for the money to flow in the door. However, I do not think that that is the world that any of us expect to be in. There are, even with the tightening of the legislation that the Parliament has done for land and buildings transaction tax, and even with the powers given, I imagine that there will be an amount of testing and an amount of settling down exploration of any grey areas or any room to manoeuvre. I do not think that we have a robust estimate of the tax gap. The £4.5 billion quoted is the best that we could do. I totally accept that that is uncertain. It is not in the nature of tax that you simply put it out there and everybody pays it, and there is nothing more to do. Obviously, HMRC accepts that, because they are also not just on this tax, but all taxes are clearly identifying this and trying to kind of eat into it as well. Did you want to say something, Mr Kaye? I was going to say, excuse me, that the illegal waste sites for landfill that were not previously subject to tax under the UK landfill tax scheme are now subject to tax. They are illegal sites and, by definition, you might not know where they are. Now, we have had sites individually that we have come across that would have had a seven-figure tax liability, so we know that it is there and there is a gap there, but it is difficult to quantify because they are illegal sites. We were finding them under the present or the past regime every so often. They turned up, didn't they? They turned up and we are confident now with the resources that we have been given that will be in a better position to identify them and bring them into the tax thing, but it is very hard to quantify them other than to say that they are there and they are potentially large-scale and the beauty of this new tax and new system is that we can go after that tax whereas we could not under the UK system. Presumably, with any tax gap, you spend a bit more, you get quite a lot more tax in, you spend a bit more, you do not get so much tax in, so there is a kind of balance in there. How do you judge what is the right balance? I think that you will judge us on track record. Part of the reporting that we expect to have to do to the Parliament, to the public, is about how much money flowed in through the normal process of people doing returns and making their payments and then how much money perhaps was collected as a result of further investigation, work done by SEPA or by Revenue Scotland on either of the taxes. I think that that is probably your best measure of how effective we are. You will understand how much we are spending on our compliance, you will see how successful we are being. I do have to manage your expectations that you might not see that in the first six months because, obviously, there is a sort of a build-up of those things. You start the process of inquiries, you start taking action against people, but I would say over the first two, three years of the operation of these taxes, you would start to see how successful we are being in bringing that money in. I would imagine that that is one of the things that you will want to be exploring with us regularly. If it was £230,000, would you be able to identify how much tax you think that £230,000 has produced? Mr King, your paper talked about your roles and responsibilities and they were quite clear. The fourth one, I was not sure that I was understanding it, said that we have a role to play in the event that system contingency has to be invoked and the detail of that is being worked upon. Can you explain what that actually means? In the event that there is a problem with the system, people and taxpayers are not able to submit returns online. What would they do in that particular scenario? We have been in discussion with Eleanor and her colleagues about the role that registers in Scotland. We would have to play in that and simplify the process for the tax payer. Eleanor mentioned that paper returns in general will still be an option. I know how that will work, because paper returns will be sent in to registers of Scotland. We expect that those returns to be sent to us along with paper applications for registration of the property transaction. They will come in potentially in the one envelope. In terms of contingency, we are looking to extend that. If customers are used to sending paper returns to ROS, in a contingency situation, they will continue to send a much wider or greater volume of paper returns to ROS. That is helpful. Contingency gets used in different ways by different people. The tax gap thing, you say that you will be able to measure over time the impact of the £230,000 on reducing the gap, but we do not really know what the gap is. You are only guessing that it is £4.5 million or £3 million or £6 million. What about the impact of the general anti-avoidance rules? They should reduce the tax gap quite substantially, if not a virtual eliminate. Issues such as sub-sale relief, which we are going through the ball, have not been eliminated. We are still trying to find where the tax gap could appear from. I do not personally find the term tax gap that helpful, but it is in common usage. I appreciate my uncle. The general anti-avoidance rule is there to allow Revenue Scotland to take action to get the money in. It does not sit there of itself without any staff of Revenue Scotland or SIPA taking some action against the taxpayer. The general anti-avoidance rule will not achieve anything. Understand that the additional staff that I want to bring in will use the powers that the Parliament has given them in order to go off to the money. It is not a tax gap as in you have legislated to leave a gap. It is a gap as in you have legislated. We expect that people's behaviour will not be that 100 per cent of everything that should have come in will come in, and we will need to take action in order to tackle the bit that would otherwise not have come in using the powers that the Parliament has given. That is quite interesting to me, because you are basically saying that you are going to spend an extra £230,000 to reduce the tax gap, because you said that there is no point in having the effective rules that you have now got the people to enforce them. Surely, when the original costings in terms of staff and what the staff have been needed for were first considered, surely there must have been some consideration that this would be part of the staffing structure, that there would have to be a section for compliance. It is not just that we have got these rules that we now need to bring in staff to try and ensure compliance. I would have thought that that would have been part of the whole structure from the off. Indeed, it is. There are other staff who will be doing compliance work within. There is a staffing structure. There will be people who will be doing compliance work. The £230,000 was to allow us to have a conversation with the Parliament about that it is about the net tax collected, if you like. I could take the three additional posts in Revenue Scotland out of the equation. Of course, we would collect tax with 38 staff. Yes, of course, they would undertake some compliance work. As the legislation has been developed and the draft legislation was introduced with the general anti-voidance rule, we think that there is more action that we could take. I therefore earmarked some additional posts to take further action on compliance. We will be able to explain what we will track because we know that it is of interest. We will be able to explain what has been achieved with those additional posts. Effectively, it is to allow the Parliament to have that choice of, you might in future scrutinise this and say no, that we have not demonstrated that it was worthwhile having those extra posts. We would go back to having a structure with some basic compliance only. Alternatively, we might decide that this has been successful and that it might be worth ramping the efforts up. There are choices to do that. It is difficult to give them that we do not really know what the tax gap is or if it exists, whether it is £4.5 million or whatever. It is hard to see how you will be able to measure the impact of the additional compliance officers on reducing something if you do not know what it is. You could say that it is £3 million quid, so those three people have reduced it to £1.5 million, but they might not have because they might not have been a £4.5 million gap to start off with. I will not measure it that way. What I will tell you about is what they have brought in, not whether they have reduced a gap that I cannot really estimate by an amount. We will not be able to say to you that we now know that the tax gap is some very precise number and it has come down by some very precise number. What we will be able to tell you is that the actions of the additional compliance officers have brought in a certain amount of additional tax revenue or they are on track to do so if we are looking at the very early stages. That is why, with hindsight, it might not have been the best way to cast this in terms of the tax gap. It is a term in common usage. We should probably have really related this back to action to make sure that all the tax is paid and that you would see an increase in tax take as a result of the work that these people would do. I do not know if that helps. No really. Malton. Just to ask you about something more general, I may be missing something here. In your section called revenue, Scotland staffing, you say that there are two divisions with around 40 staff and then you go on to say that we have agreed the anticipating future staffing structure and we are currently completing the detailed planning and preparation for the recruitment of 41 staff. I am just a bit confused here. What is the total number going to be at the end of that recruitment phase? You can see the point that I am making out. Are these different people or are the other people going to go and do something else once the other people have come in or what? Most of them, yes. We have a team of 40 who are doing the set-up work, and we have designed a staffing structure for go live with 41 posts. A small number of people, I think currently four or possibly five, are going to move from the set-up team into operational posts eventually, but the others who are involved in the set-up will, as their work comes to an end, leave and will meanwhile be building up the operational team of 41. At the peak, which will probably be around February-March time, we will have a lot more than 41 because we will have people who are still finishing set-up work and we will have people coming in ready to do the operational work and then one team will do window to zero and the other team will build up. Will there be people from other parts of the civil service or is it open, advertisements and such like? In the meantime, we are only looking within the civil service but we are potentially looking beyond the Scottish Government because we want some people with tax experience. Will those numbers, when it comes to 2016, have to increase further at that stage or when the full Scotland Act provisions have kicked in? We do not anticipate any further increase based on the 2012 act because Scottish rate of income tax will not impact on revenue Scotland. Obviously, if there are any further powers to come, there will be further set-up work to do and there will be whatever impact that winds up having on operational staffing structure but nothing on the existing plan. In general, in terms of your table, the budget is declining significantly between 14, 15 and 16. Is that right? Yes, that is right. I am currently trying to read the right figure so I have at least £600,000 worth of set-up costs for revenue Scotland and a bit more than that in terms of IT set-up running into 2015-16 but that would drop away on the current plan if there is no further taxes to set-up. In terms of funding allocated to see power registers of Scotland, is that is we got a figure for that? In terms of set-up? In 15, 16 costs are projected fairly steady, do you want to comment on that? The £595,000 to £600,000 for that. Are the registers of Scotland predicting a running cost in the region of £325,000? Okay. The allocation for 2015-16 has been reduced from £40 million to £25.7 million. It is partly explained by the transfer of £4.3 million to a new budget line for revenue Scotland. Can you explain what that budget line is? That is revenue Scotland's budget and the budget to pay for Ros and for SIPA for the costs of operating the taxes in 2015-16. Up to now, we have operated with those costs being paid from within the 2012 act implementation budget but obviously from April you have an independent body, so it needs its own budget line. That is why the transfer is out. That appears to have exhausted all the questions from members of the committees. Is there any point that you wish to make on any issues that we may not have touched upon? Thank you very much. That being the end of the deliberations today, I recall the committee to an end. Thank you everyone.