 Yn 2017 yw'r Cymru Rwyr i Gwylio Rhaegonwy i Gwylio Rhaegonwy ym Mwagorol, wirwch i'n gweithio i ddweud y rwyfodol i ddiwedd ar ddigon iawn. Fawr, felly mae'n rhesyf i gyrfa John Finnie. Fawr, y genderfeydd y 1 yw'r Cymru yn ysgolig, yn ysgolig oedd y Fferisfairi, a byddwn i'n gweithio i gyd yn ei ffordd i Gwylio Rhaegonwy ym Mwagorol. I would like to welcome Martin Dorchester, chief executive, and Robbie Drummond, the group finance director for David McBrane Ltd. I invite Mr Drummond if he would like to make an opening statement, but I would ask him if it is possible, please, to keep it as short as possible. Certainly. Thank you for that. My name is Robbie Drummond and I am the group finance director of David McBrane, and this is my colleague, Martin Dorchester, who is the chief executive. We are very pleased to be here this morning to talk about the David McBrane group and the contract to operate the Clyde and Hebrides ferry services. We are delighted to win the CHIFF's contract and I would like to publicly thank our many supporters for the visible and positive support that we received right across Scotland, and in particular the cross-party support that we received from MSPs and MPs, including some of you who are here today. For those of you who are not aware, the David McBrane group is a private company solely owned by Scottish ministers governed under the Companies Act when independent board appointed by the Scottish Government. We are proud to be owned by the people of Scotland and we are aligned to delivering the policies and objectives of the Scottish Government. We are also proud to be a living wage employer and in 2016 we were awarded the Scottish living wage employer of the year. We aim to recruit locally to support local sustainability and community success. Over the past few years we have undertaken a series of improvements, including safety, new technology and customer communications. Our success in offering a good and safe service has been validated externally with a series of national and international awards. We have also worked very well in partnership with our colleagues in Transport Scotland and communities to deliver significant changes to improve our services, including new routes, increased sailings and indeed new vessels. Last year was an important one for the group, the key highlight of course being the award of the eight-year £1 billion CHIFF's contract, which started in October 2016. In addition, our expertise was similarly recognised by the military of defence, who awarded us a 35-year £1 billion contract to operate Marchwood, the MAD's key strategic military port. This contract supports our ambition to move into new markets using our skills, knowledge and experience driving a much wider benefit for Scotland. I would like to focus on some brief comments on the CHIFF's contract. There are three parties involved in managing the Clyde and Herbodies ferry services, each with their own set of responsibilities. Transport Scotland, who is responsible for procurement of the services, the service specification for routes and timetables and also setting the fares and other policies such as future vessel and infrastructure investment. The second party is CML, Caledonian Marine Asset Ltd, who are wholly owned by the Scottish Government, but they are entirely separate from David McBrain. They are responsible for procuring and owning the vessels that are funded by the Scottish Government, leasing the vessels to the ferry operator and owning and maintaining the 22 harbours. David McBrain is responsible for operating the public service contract, which we do through our subsidiary company, Caledonian Ferries Ltd. The contract stipulates that we lease the vessels from CML and that we pay harbour access dues to CML and other independent port operators. Our aim is to deliver a good service for our customers and to create long-term, sustainable economic value for our communities and the Scottish Government. However, we do recognise that we operate an ageing fleet selling into ageing port infrastructure and increasingly difficult weather conditions on the west coast of Scotland. Inevitably, that impacts our service, but we work very hard to minimise that disruption and to communicate changes to our passengers. Digital connectivity is also challenging across our network. We have invested in improved connectivity across our 80 sites, which has been much more difficult than we originally anticipated. However, it will offer an improved service for all our customers, tourists and business, which will help to support economic sustainability. We work really hard to retain the support and trust of our communities and key stakeholders, and we are therefore grateful for the opportunity to speak to you in that context. Thank you. Martin and I would like to take any questions from the committee. Thank you very much for that opening statement. I think that Mari is going to be the first one to lead off with the question. Thank you for coming to the committee today. You touched a bit about that in your opening statement, but it was really if you could provide a bit more detail to the committee on how the David McBrain group of companies is owned, managed and financed. Sure. The David McBrain group is a private company. It is owned by Scottish ministers and it is run as a private company. We do not receive any direct grant-and-aid. We tend to go out to win public contracts and earn profits through generating those contracts. Is that it? Yes, and the finance, so it would just really be operating then. We go out and win contracts and we are paid to run those contracts. Clearly, the Clyde and Hebrides contract was paid a level of subsidy to manage that contract. Likewise, with a contract down in Marchwood, we are paid to run that contract. We do not receive any direct grant from the Scottish Government. I have mentioned Marchwood, which is obviously quite a financially significant contract. Can you just explain what your involvement is there and a little bit about what is being done there? Certainly. The contract there is a long-term contract. Marchwood is the military defence key military port where munitions and goods go out from that port across the world. Our role there is to manage that port, so to act as a subcontract to the MWD managing that port and the operations. There is also a wider opportunity to commercially develop some of that site to bring in new services and operations into that port that would generate additional revenue for the group. I thought that it was great to ask my finance director to be brief, which was terrific, and I am looking at all of that. Let me address two points. One in terms of our structure and our ownership. If you think of us in terms of a private company with shareholders, our shareholder is the Scottish Government. We generate revenue by bidding and winning for contracts, which then gives us a mix of fair box revenue from customers and from retail and what we sell, as well as the amount of subsidy that is aligned to that contract. That is how we generate revenue. In terms of Marchwood, if I just slightly phrase it differently, we bid as a joint venture to win a contract to deliver services in Marchwood, but we will not, as it were, deliver the services. We set an organisation up there, which we sit behind and they will procure from us the services that they need around things like finance and marketing, to deliver that. We do not sit in their day-to-day and run that. We sit above it and they deliver that contract. We will get a fee for the services that we provide and when that business generates its margins at the end of the year, we will get the premium from that. Does that help? The premium from that, I am interested, because it is an important contract. It could lead to other things, if there were other ports or hubs that were established elsewhere. Does the premium that comes from that come back and invested in the services that you are providing in Scotland for the ferries or does it go back to the shareholder? Potentially, it could do both. We have the same discussion that anyone would have with a shareholder that says, we have made this level of profit this year. Within the CalMac contract, there is a clawback facility that pulls that back in. Within the DML group, there would then be the opportunity for the DML group to say what do we want to do with our profits going forward and how would we invest them. As you would expect, we would talk to the shareholder about how we wanted to invest going forward. When did the contract start? We took the official handover on December 1, 2016. That is a 35-year concession, which the Scottish Government might want to consider on ferry services as well going forward. The year end will be December 2017, a reporting period. The actual operating year end will be that, but we will do it fiscal April to April. At that stage, we can see how much money you are going to be investing back into ferry services. It is just a very small question. I know previously that you ran an Irish ferry service for I think the Northern Ireland or Irish. I just wanted to ask the general question. It is therefore part of your business plans to opportunistically bid for contracts outwith Scotland where it appears that that will complement what you are doing and enable you to make money. Yes. We actively look at what opportunities are out there and then we would do what all of the businesses are doing and look at what are the risks around that and do we believe that we can make money out of it and therefore we will go and do that. I have a quick question on the back of that. Do you operate any routes at a loss currently? I could get into what we mean by loss or not. The reality is that we run a fundamental lifeline service. In terms of if you did it discreetly, the routes run at a loss, but that is why you bid for the contract and get the subsidy plus the revenue to do that. It is probably worth clarifying all of our contracts, the CHIFs contract and indeed the German contract that are run profitably. I think that I am right there. Bidding for the Northern Isles ferry service. Absolutely. Jamie, I think that I will fill up and then I want to come to the next question to Peter. I know that we have a lot to get through, so apologies, but I think that opening statement just opened up a whole raft of questions for us. No, it is very informative. I think that maybe for the benefit post this is maybe a nice little flowchart of how the company is interlinked. I was quite interested in the way that the leasing of vessels and the relationship between the franchise is all bit confusing to an extent. Given that your shareholders are Scottish ministers or the Scottish Government and the Scottish Government are issuing tenders for new services, of which you are successful in one and probably bidding in others in the future. Have you ever come across any conflict of interest in the sense that it is absolutely in the interests of the Government to give contracts to a company which it already owns as opposed to go out to the wider commercial market and it is not a criticism, just an observation? Yes. Thank you. I've heard companies before say that you didn't win it and I say, well, we did. There are strict rules around the governance of the issue of contracts and those contracts then get published for people to look at. On a level playing field we are very confident as a company that we don't get a free pass, that we win what we compete for. I think that the scrutiny that is put under for civil service issue in contracts would say that there is no free pass on those. We are very confident that we compete on a level playing field and we win on a level playing field. Thank you for that. Peter, I think that we've got the next question. Thank you and good morning, Gents. You've just won the new contract, which kicked in on 1 October, and congratulations on that. One of the key things that you said during that bidding process was that you were going to increase passenger and vehicle traffic by 10 per cent and commercial traffic by over 12 per cent over the period. I'm interested to see how you intend to do that. If you don't manage to do that, what effect will that have on your finances and maybe the need for taxpayer support to see you through? There are two key ways that we want to grow passenger growth. The first one is working harder at how we work with local organisations and market our services. Can we work with our partners? Can we target our customers in a better and more targeted way? We are investing in some technology that allows us to target customers better and perhaps offer more interesting ways and routes to get onto the islands and use the services that are there. We are working at some of the off-peak areas, so some really clever commercial, targeted marketing will help with that. We are working very closely with VisitScotland and local market organisations. The other thing that we are doing is capacity constraints, which is an issue for us particularly in the summer. We have got some initiatives to look at how we make sure that the vessels are travelling with as much capacity or as full as we can. We are looking at technically how we solve that. We are also looking at how we reduce the number of no-shows and make sure that people can actually get onto the boats and that will help increase that revenue. We are quite confident over the period of the contract that we can grow revenue by 10 per cent. We have committed to doing that. You talked about risk. If we don't achieve that, then that is risk that sits with us. This is a fixed-price contract. If we don't achieve that, then that is an issue that we are going to have to deal with and manage. If you don't achieve that, the taxpayer is not going to end up with a bell at the end of the period. As I was saying, it is a fixed-price contract. The amount of subsidy that we receive over the eight years, that is the amount that we have to manage within. If we are not generating the amount of farebox revenue, then we will have to address that. The other thing that is worth pointing out is that we have also talked about increasing our on-board spend, so we have initiatives to make that more effective. Having a better service for customers, both in our food and retail offerings, is making that more attractive, which will help with that objective. In companies, deficits fall to the shareholders, surely? We have to cut our cloth. If we don't hit our revenue targets, then we have to cut our cloth. That is how we as a business are. As Robbie said, it is a fixed-price contract. There is no get-out of jail card for us. There is no more money. It would just be a reduction in services. We would have to find other ways of managing that. If you think about it in terms of a layer-in effect, we have a minimum level of service that is specified because we run a lifeline service, so that will not diminish. Built above that, we have put revenue projections in about things that we could do. We will have put money versus those revenue projections about what we would invest in marketing to drive that sales. If that is not happening, we have to start cutting our cloth without diminishing the service. Do you want to follow up on that? I just heard 10 per cent revenue increase. My notes say traffic increase. I just wanted to be clear which it was. It's revenue. That's fine. Thank you. Do you want to answer the next question? I will answer the next question. This can be dealt with very briefly, by the way. I just wanted to ask it well. Your managing is very well. I'm a techie. No, I'm a techie, so there's a danger. I just wanted to ask about smart cards, which you're introducing and what you think the benefits are, and in particular, as my wallet is increasingly with smart cards. There are two of my ITSO smart cards, which is the UK Government standard that basically everybody uses. I just want to be clear that you are seeking to make sure that your smart card service isn't exclusively available on a smart card that's got CalMac on it. It can actually be, because I think that people really, if they're going to go smart ticketing, want to have one piece of plastic that they're able to use it. It's an issue for others, but where do you stand? Any technology that's been introduced for the benefit of customers and smart and integrated ticketing will drive real benefits for customers. You can be sure that any technology that we use will be integrated with other transport operators, including rail and bus operators, so those cards will be interchangeable. I think that it's wrong just to look at cars, because actually the next technology is looking at using mobile phones, using credit cards, and that technology is also coming down there. We'll be clever about the way we introduced that. We're clearly talking to our other partners in the transport industry and of course Transport Scotland to make sure that we have the right solution. So, when a customer buys a through ticket that covers the cost of ferry and rail, they will, for example, simply be able to use the smart rail card. That will be the intention. Thank you. Richard, I think that you're next. Good morning, gentlemen. When companies win contracts, they make quite a lot of promises in order sometimes to win the contract. Amongst providing creation of a directive community, retaining your head office in Gwyrwch, all existing routes and services continue to operate as before, but you also made the one fundamental promise that you had plans to increase local employment and also opportunities, especially creation of more apprenticeship opportunities. Who would you do that and how would you do that? One of the things that we perhaps have a benefit in our shareholder is that we can choose within those envelopes where we spend our money. So, what I mean by that is therefore I wouldn't necessarily have to go for the cheapest deal for something if it's in my envelope then I can spend it locally and so we do that. We have committed to supporting local businesses so some 60 plus percent now of our food that we sell on board comes from local suppliers. As we can go now and give them three, five, eight-year contracts, that allows them to get through that hard period as organisations do of survival, so we do that. We advertise locally and therefore recruit first cut from local businesses. Because of the way we're structured, we don't go and give money as it were, but what we can and we do now is we support local businesses with longer-term contracts or we support them with employment. We run a programme along with HIE and other organisations called Vital Spark that operates out of Danone, Rothsea and Campbelltown to generate start-up businesses. The benefit, as I said again, that we then bring is that we can go in there and say, if you go to start-up business and it's a good idea, we'll give you a three-year contract and it gets them through there. We do that as apprentices. It's sadden and it's good in a way, but CalMac is the largest employer of apprentices in maritime shipping and we do 30 a year. So, when you think of the size of the maritime industry and we're the largest players that we're in that, that's a big challenge. Off the back of that, our challenge becomes then, I don't think people realise this, so we take on an apprentice and we put them through their training and then they have to go on and get employed somewhere else to get their deep-sea training, so we sort of keep our fingers crossed that the investment we've put up front, we get back further down the line. But we've baked those commitments in as KPIs and measures for us as a business that will do that, so every year we will do that and then we will seek to grow it. As well as that, if you look over the last five years, we have consistently grown our business and at the same time we have therefore grown the number of people that we recruit into our business. So, it's that relentless focus on doing it, so that's one of, I understand what you mean in terms of when people make commitments, that's one of the commitments I think we're probably more comfortable on delivering against and that's a great benefit. Thank you. Thank you for that. We're going to move on now to, I think, a more specific area and Jamie's going to lead on that, I think. Thank you. So, I'm going to move on to talk a little bit about the Guruk to Dunun ferry service contract, which is quite relevant in my region and I'm sure some other members will come in off the back some of my questions, but in light of the sort of lack of any information from the transport minister on where we're at with this, I wondered if maybe you could shed some further light. Could I ask very specifically if our Gull ferries has submitted a bid and we know there are four unnamed shortlist for that service and then I'll ask some more specifics about the route and the nature of the contract. So, on just on your specifics, have we submitted a bid? I think that's, what we did is we entered into the initial process, which was to qualify through the PQQ stage for the next round. So, we submitted a bid under the name of Karmic ferries Ltd into that process. Perhaps. Is everyone clear of how a bid process works? I think you could explain it, but again, if you could do it or Robbie, as briefly as possible. So, a bid process usually works with, you have an initial stage, it's called the different names, but usually a pre-qualification stage, which is when you take a whole range of people that want to bid into contract and you bring that down to a shortlist. So, that's the stage that we've been through, pre-qualification, and we bid for that under the name of Karmic ferries Ltd. The next stage would be then for the tenderer, in this case Transport Scotland, to issue what's called an invitation to tender, an ITT. It's on the back of the invitation to tender that the procurer would be inviting bids, and the shortlist of parties would then have a period to submit their bids into the process, and that might be anything from one month to three months, depending on the size of the contract. OK. That's helpful, Jeremy. One of the peculiarities of this specific contract is obviously there's a passenger service, but also a vehicle element to it. In the briefing notes, it says that bidders obviously are putting in a tender for the passenger service but are being encouraged to provide an unsubsidised vehicle carrying service. I think that's quite a loose term, so I wonder if you had any comments on the notion of the relationship between the subsidised passenger service and the viability of a commercially viable vehicle carrying service. I've had representation from both sides of the river from various community groups who are concerned about the nature of who will be awarded the contract and whether there will still be a vehicle service given that it's not able to be subsidised under state aid rules. I wonder if you had any comments or views on that. As of today, it's only a passenger service, so we're talking about the Guruk to Dunun service. Clearly, we've got the service down the road, which is a vehicle service, so the current Guruk to Dunun is a passenger only. My understanding is that the invitation to tender, and again we haven't seen that, so it's difficult to comment, but we open then for bidders to either bid on a passenger only or passenger and vehicle. The decisions that any bidder will have to go through is saying that the passenger bit will be subsidised, so we can be paid for running the passenger bit, but the vehicle service will have to stand at its own two feet and be profitable, so it cannot be subsidised or cross subsidised. The thought process that anyone has to go through is, can we put on a vehicle service and make that run profitably when there's a very competent operation down the road that is already running vehicle services? It's difficult to comment more until we see the shape of the invitation to tender. So, just to confirm for the record, you've submitted a bid for the passenger only element, and you're yet to establish whether you submit a vehicle to element? No, we're just coming back to what I was saying. We haven't submitted a bid yet. All we have done is pre-qualify. I remember to pre-qualify what a bidder demonstrates is that it's financially sound, that it has competence and capability, and it's on that basis that the procuring body then selects, in this case, four individuals or four companies that it thinks is best placed off of the service, so we haven't done anything more than pre-qualify. I think that one of my colleagues wants to ask about the specifics of the prerequisites of the tender. It's very brief then. It's basically just done the prerequisite for half-hourly services at certain peak times, and also the minimum 40 metre long vessels on that route to make it a robust service. Again, you haven't submitted a bid. I have more understanding of the situation. What are your views on those two parameters that are in the initial coming up in the tender process? Do you have any thoughts on whether that's achievable or doable? Anything's achievable or doable is how much you're prepared to pay for that. A 40 metre boat—I currently run a 67 metre boat back and forth there today—I think that if we're going just for the clarity of that, there is no bid yet because there's nothing to bid against. Once we see the shape of that, we will look and make a decision, but when you start talking about a 40 metre boat, you're walking into a £30 million procurement cost for a 40 metre boat. It's a big cost, and I think that's worth noting. If we see an invitation to tender that says, provide a 40 metre boat and provide a half-hourly service, we will calculate how much does that cost, and that's how we would put a bid together. I'm a Glasgow MSP and I use the ferries occasionally, but I'm not that familiar with them. It just puzzles me and I think would puzzle my constituents why we have a stand-alone, commercially viable, apparently, ferry service roughly between Gourac and Danone, and we're even thinking about subsidising another one. In the bus services in Glasgow, for example, if there's a commercial route, we cannot have a competing, subsidised route. You want me to say on that, John? Sorry? I run a business and if someone puts a contract there, I will bid for it. The decision as to whether that is done is not how it's to make. I accept that it's a policy question, yes. I suppose my question is—maybe you can't answer this either—but if I've got a pot of money here for a subsidy, should the first on the list be another, a second ferry effectively Gourac Danone, or are there some specifics can you explain to me about this service? Is yours more town centre to town centre and links to the railway better than the other one? Is that part of the issue? I'll be brief. So Gourac Danone, the passenger owner ferry, is a railhead into Gourac then on to Danone and is therefore town centre to town centre. If you go down to western ferries then it's link span to link span so therefore it's predominantly geared to driving traffic. That's how it's set up, so Gourac Danone is potentially set up as a railhead into a ten centre. Figures the passenger numbers compare at the moment between the two routes? I don't know western ferries because they predominantly drive vehicles between the two routes whereas we're carrying 300, 350,000 a year on foot traffic. I think we all very much take the point that it's a question that we'll have to raise with the minister when the opportunity arises. I think Stuart's got a question and then Rhaedon's got a question on the back row. It's a question that may be seen to be rhetorical. Given that the town centre to town centre sailing is about 50 per cent longer than the link span to link span sailing that's operated by the commercial operator, is it not fundamentally difficult to make a vehicle service commercially viable when the sailing, which is where a lot of the costs are going to come, is 50 per cent higher without particularly obvious benefits? When there used to be two vehicle sailings, the commercial operator got something like 85 per cent of the traffic anyway. Isn't it always going to be a very big commercial ask to make a vehicle service work centre to centre? I think that's a fair comment. I referred to earlier when the ITT comes out, we'll have to make an assessment as to first of all are we bidding for the passenger element and if we wanted to bid for the vehicle element, what are the commercial parameters around that and how would you make that work from a standing start of zero traffic? I feel a short answer to the short question from Stier. Rhaedda, you would like to be. The constituents in Dunin tell me what they want as town centre to town centre, what they want as a reliable service and a comfortable service. I think that's one of the issues that's been on going. It's not altogether reliable and even when it can sail, on many points, it's not very comfortable and doesn't feel particularly safe. I think that's why some of those things that we've been talking about may end up in a tender document. Would there be a better way of ensuring reliability and comfort other than saying a 40 metre long boat or it needs to carry cars as well, which obviously makes it a bigger boat if it can carry cars, but is there another way to address the concerns that maybe would be more cost effective? To be honest, I'm not sure there is. If we're brutally honest, we would never run an unsafe service. I think that the reality is that we're running two small boats on the Clyde and there's some challenging weather on the Clyde. The reality is also, and perhaps addressing slightly Stuart's point as well, there are speed restrictions on the Clyde, so that itself is a challenge. Unless, is it where you get a big heavy boat, which really, you know, the substantive increasing cost to move from, you know, something like the alley cat or the fly which we have on there, which you would be looking in the market between sort of five, perhaps an eight million, to a 40 metre plus boat, you know, you're walking into 25 to 30 million, it's a substantive step up. So I think there are things we can do around the timetable that we would do. There are things that we do on going around better managing the service, which we do. There are things that we are working on in terms of improving the facilities on the vessels that we do. You know, I think that with the best will in the world, we would bid better this time than we did perhaps last time and we would put improvements in that we perhaps should have or maybe should have done six years ago. So I think there is some room for improvement, but I think some of it's around the margins, and if you want to have a really significant improvement, it will be significantly, the cost will be significant. OK, thank you for that. The next question is on a slightly different subject. Gail, if you'd like to lead on that. Thanks, convener. Good morning. Hello again. I want to touch on the Scottish Ferry Services Plan, which runs from 2013 to 2022. The first part is specifically about the Clyde and Hebrides ferry services contract, which sets out a number of long-term developments. Additional sailings, continuation of improved winter services, et cetera, et cetera. I wondered if you could provide a progress update on the delivery of those requirements under the plan, please. In terms of on-going improvements, we have met a number of those around the services that we run into Barra, the services that we run into Auburn Creek Newer, Colonsie and the things that we are doing now and are an iterative part of that. Those timetable enhancements have been in part delivered, so we're part of the way through that. The way we're deploying the vessels is in line with that, and as the new tonnage comes on in the next two to five years, it will allow us to then further develop that. In terms of progress, we're on track. That's good to hear. It also outlines the schedule of harbour works, weems bay, tarber and guruk, and proposes replacing vessels, four of them by 2019 and six of them by 2025. How are you getting on with that? We're on track, so guruk has been, I'd say, 99 per cent done, as it were, because there's always lots of snagging that you end up with. Weems bay has been done and completed, and I'd encourage anyone who's not been there, given RETs in there. It's commutable from Glasgow, so weems bay has been done and we are on track as we'd hoped to be. What feedback from the public? We get mixed feedback, as you can imagine. One of the fundamentals is that we deliver a lifeline service, and for those communities that only have, as it were, the ferry, the moment I start closing infrastructure down, it creates challenges for them. I think that we managed guruk and weems bay very well, but I don't know if anyone's been to our offices in guruk, but from my office you can see when one of the bigger boats comes in, because we're usually on the small boat set of guruk. When we closed weems bay and we were bringing people from bute to guruk, we were the best one in the world, it's tough to walk up and down the gangplank with your shopping. We helped as much as we could, and the lift got her. If you talk to them now, what you get is very positive feedback. The interface has improved. It's still a bit better that we could do, but the interface has improved. The work was done to time, which is a benefit, but there is still more to do. It's pretty good, I think, is where I would say. Can I ask about the Lord of the Isles? Given that it had a period in dry dock, there was a thinning of the structure discovered and it's away again in timeframes. How was this not discovered when it was in for maintenance? My understanding was discovered before Christmas, but it ran until after the Christmas period. How crucial are those repairs if it was still able to run? I wish I got my technical director with me now. If I take some of the spots that people measured, has anyone been on the Lord of the Isles, or been on one of our, I don't know, Newcastle, I don't think you have. 5,000 tonne of metal and the damage was about that big. In terms of the severity of it, it had to be done, but it was not as it was. You could drive to the garage with a crack in your windscreen, but you wouldn't carry on doing the service, so there was that element to it. In terms of when vessels go into dry dock, they go in with a large work schedule of what we do and we monitor the work schedule. They come out of that and the challenge around it is that Lord of the Isles is a 30-plus-year-old vessel. It has gone through major surgery when it goes into dry dock because it is deep in invasive work. When it came out, we found that there were some more latent issues that we needed to look at. The next week is my understanding from yesterday. You can run with a fault and you manage the fault, because it takes quite a while for our ships to go in and get docked. I could put something in that is a minor piece of work that ties the vessel up for a week, because it has to go down to a year. A minor piece of work on one of our vessels is quite a major piece of work, so something like that you could not do while it sat in the port, so it had to go off. Does that make a long answer wrong? It is due to be replaced by 2025, is that it? I think that that would be a very good thing. You are not giving a commitment. That was a nice try and a good dodge from Martin. Do you want to follow up? The Maliag to Loch Boy Steel service, which is again in the winter timetable, is not as often as people would want, and there are issues about reliability. I visited the Maliag harbour and they were unaware of any issues with the harbour, so I am not quite sure where the reliability issues come from. Maliag and Loch Boy Steel are the two most difficult ports to take a vessel into. To anyone who wants to understand getting the Lord of the Isles into Maliag is one of the most difficult things to do. I think that there has to be a reality about when they say that. If you imagine trying to do a handbrake turn with a 90 metre vessel weighing 5,000 tonnes and handbrake turn it, that is not far short of what we do in Maliag. In terms of reliability in the winter, that is by far the two most difficult ports, and the fact that you are going in and out of those two is a real mariner's challenge. The second thing, perhaps for us as a company and one of the things that we need to be stronger going forward, and I am going to generalise this slightly, you do not know the issues. We spend an awful lot of money on birthing fees for people to keep updating their harbours for us so that we can make decisions for masters coming in based on very recent knowledge. One of the challenges that we face is that over a long time we have older ports and older infrastructure and we have perhaps not had everyone being on top of their ports as we need them to be and we need to be. In terms of where we are getting to with Lock Boys Del Maliag, now we have a summer service that gives masters more confidence and learning of going in and out of those ports. I believe that the winter service will now start to improve because there is a confidence piece that they have gone into it so many times. The second piece for that is that we are getting much better at making sure that ports in our harbours that we are going to are getting dredged and repaired properly so that the masters again can be confident when they go in that they are not going to scrape the bottom. Perhaps it is a bit worth sharing when you get challenged for anyone across the network. We operate on one metre clearance going into some of our ports and harbours, so the bottom is that far as it were off the boat. We come close, as it were, to grounding on a regular basis, so if that swell of the sea, because most people think that it is the wind that creates the problem for us, it is not just the wind, it is the sea swell and the sea state because when we go in we have so little clearance across the bottom of the boat. There is a mixture of things that we are doing that will improve for Mallyglock Boysdale over the next few years. One of the biggest things is the fact that we are doing the summer service now that then helps us for the winter service because we are getting better understanding of it. Listening to people's wishes and aspirations for more ferries in the winter as well. We always listen to them, whether we can afford them is a challenge for us. The second thing that I think is perhaps going to be a challenge that was made earlier. We run somewhere in the region of 5,000 empty sailings and part of the reason is that in the winter time the capacity in our vessels is colossal. Over a full year, we probably run about 30 per cent capacity over a full year. It is almost like saying that on the M25 it is not that busy at 2 o'clock in the morning and it is not, but in the winter our vessels run very rarely run full, very rarely run half full, so it is how we best manage that level of capacity. Where we can, we will. We have done that pretty frequently. Just a final question on the Mallyg armadale on the Carousc. Obviously that was a boat built for that run and we see more boats being built especially for journeys so that they fit with harbours, they fit with the requirement. It has been moved and as you can imagine the people in Mallyg and Skye are really unhappy about that. Last summer a lot of businesses lost money just because things like buses couldn't get across to Skye and given that it's probably the last place where you could take a bus over the sea to Skye, which is kind of what tourists want to do. It seems a bit perverse to be taking that off when it was built for that. When we get promised boats for routes, if they're going to be moved off to somewhere else that's really not going to improve the service. What comfort can you give to the folk in Skye and Mallyg that they're going to get their boat back? I can't give them comfort that they're going to get their boat back. I've been pretty clear. We're putting a two boat service on Mallyg armadale this year, which is the lock fine and the Lord of the Isles. I could go into a whole raft of discussion around it but what I would say is we have put substantive support into that route now, in terms of marketing, in terms of commercialism, in terms of help. The route was up year on year, so I think there's some real challenges around how we market that going forward. We have a limited number of vessels to deliver, a limited number of services and we have to manage the network as best we can. We are committed to supporting Mallyg armadale. We're meeting with them regularly and we're talking to them about some of the issues. Sky is a great tourist destination. I think that we have put a robust service in there for this year. We need people to get behind that service and support it as best they can, and we will support them as best we can. We have put the best service we can on that route currently. I'm very grateful for your very full answer. Sky is an area in which I have an interest in. I perhaps let you go longer than I should have done. We are quite tight for time, so I would urge everyone to keep the questions and the answers if I may, as short as possible. Gail has got a follow-up and we've got about four questions and a very limited timescale. If you can't answer it just now, I would appreciate written answer to the committee. On the back of the route that Rhoda was talking about, you operated a single vessel in 2015, three vessels in 2016 and a two vessel in 2017. What's the difference in operating costs in those three years? I'd have to come back to you on that. I would appreciate it if you could. I'm very happy for a written answer to the committee on that. John, if I may. I'm going to combine two questions here, but the whole question of co-ordinating your timetables with either rail or bus, I mean I think what Ardrossan and Largs would be rail and somewhere like Kenneth Craig would be bus. How does that work and other penalties for either side if you kind of miss each other? We work very hard on trying to make sure that we are co-ordinated and we spend a lot of time working with communities and trying to match up the rail and bus timelines with our services. Clearly, that's not always possible, but we try as hard as we can do. Do you expect the trains to fit in or vice versa or is it not as simple as that? I would say that it's not as simple as that. You don't need to go into all the details. We like it to be that. We clearly can't demand that rail matches our services, so it's a discussion and negotiation with other transport operators involving the communities. One of the commitments that we have made in our bid is to appoint a full-time transport integration manager and their full-time role will be to work with the other transport operators and communities to try and make sure that it's as best connected as it can be. The trains late and you wait for it? Is there a penalty for you? Potentially. Depends on how late and how long. The way in which our contract works is that we are penalised for where we fail to meet reliability targets. We don't sail, but we're also penalised for punctuality. Depending on which route, the shorter routes, it starts from five minutes and the longer routes it goes up to 20 minutes. There is a penalty regime if we sail late and that clearly has an impact if we're waiting. It also has an impact on other passengers, so it's not as easy to say just wait for the train because there may be other passengers impacted with further on-going transport connections. That's great, that's fine. The other area that I wanted to touch on was disability. Clearly you're running quite big ferries and quite small ferries. I was over on muck and egg not so long ago. It's great and the boat goes in but the wave still comes across and you can jump to avoid the water. Obviously if you're in a wheelchair you can't really do that. Where are we going with disabilities? Is there a limit in the smaller islands that you just can't go very much further? Yes and no, I suppose is the answer. We work very closely with different organisations to improve it but the reality is that the 35-year-old pieces of kit were built different times. So we incorporate it into new build when we can. I think the other thing that we find locally, if you've been on muck and egg, is that local islands and communities find their own way to deliver some of that and we work closely with them. But in terms of some of the islands that we go to and the nature of the infrastructure it will be very difficult to change it. It's probably worth adding that in our bid we have made a commitment to spend the significant amounts of money on improving those facilities and the vessels in the ports. We're running a quality impact assessments to try and see what we can do at a reasonable cost. We're running bigger boats in the bigger harbors, isn't it? It's the smaller boats in the smaller ports that we're doing. We're running these impact assessments, we're committed to spending some money so we're going to try and do what we can do to make that better. Can I just say that it would be quite useful to have an update on that when you've come to your decision? I think that the whole aspect of access is important. Richard Lyle's got the next question. Thank you. It's an experience to be on a ferry. At the end of the day, all the places that Roderon and John have mentioned, I would love to go. You see the films going down the water, as people used to say. How do you take the views of all the passengers you've got? How do you take the views of freight passengers, customers and how do you report on the actions of what people are saying? I think that it's a wonderful experience and I promise myself when I retire I'm going around Scotland and go to all these wonderful places on your ferries. How would you say to me as a customer or say to customers how you're going to improve the service? We do what you'd expect all transport operators to do. We run surveys, we run focus groups and we capture those experiences. I think that for anyone here who represents anywhere across the west coast, we'll know that our customers are not shy and coming forward and see it quite familial. We get a lot of feedback just locally anyway that people send in to us. We capture that, we turn it back out and we push that out to people as well. We attend regular ferry user groups and therefore we take feedback. It's not always just about timetables et cetera but it's about the experience and what can you do to improve it. We do standard benchmarking against other operators. When we say about other operators, not just other ferry operators, we look at who's good and who's the best in what they do. Do we go and look at what Virgin Atlantic are doing in planes and things like that? We capture that. We do all the bog standard things. Surveys, user groups, focus groups. We have much more community activity and engagement than I think most of their organisations do. I think perhaps going back to a point that Ronan was making, good and bad in terms of the wish list that people hit us with. We encounter that a great deal. What are your part of the community and do you like to blend in with the community? Where we can. Thank you. That concludes the questions that we had for you. In fact, there were a few more. Before I address those, if I may, Martin or Robbie, I don't know if you'd like to give a very brief closing statement if there's anything that we've missed that you'd like to bring to our attention. One thank you for being so gentle with us. We appreciate that. Two, just going to a point on timetables. There is a nuance for us in timetables. Don't forget that it's called the tide. One of our challenges comes if we hang about too long, we're not going to get out the harbour, which becomes a really interesting debate with the trained people. Third bit for me was just in terms of some of the things that you've asked us for. Will someone from the committees that were triggering it to us or do you want us to just take it away and we'll feed it in? I can absolutely clarify that. The clerks will write to you with a list of questions that we're expecting answers from, and if there'll be one or two questions that we've missed today just because of the timing that we may add on to it. The fourth thing. It's an open invitation. I have found in five years of running CalMacFeries it's a simple but complex business. Please don't be afraid, as it were, to phone and ask us. We are quite happy to share what we do and the information, and if it helps to generate a better understanding of it, he's more open than me, but we're a pretty open organisation, so please feel free to do that. Can I thank you both for coming and the committee will be engaging with you further during this session as we become clearer on things that the Government is doing. I also thank you for the invitation to spend time with you. I think that some committee members may slightly be worried about some of the hand-rake turns and the small clearances that you've got, and we may avoid those particular routes, but we would very much like to engage with you and thank you very much for the evidence that you've given us this morning, so thank you. I'm going to suspend the meeting now while we give the chance for the witnesses to change. The second item on the agenda is to take evidence from the Cabinet Secretary for the Rural Economy and Connectivity on the agricultural policy payments. This session is really to allow the Cabinet Secretary to update the committee following the evidence that he gave us in September 2016. The Cabinet Secretary is joined by Eleanor Mitchell, director of agriculture and rural communities, Eddie Turnbull, head of agriculture and rural communities information systems, and Annabelle Terpy, chief operating official for the rural payments at the Scottish Government. I welcome you all to the meeting. Cabinet Secretary, would you like to make an opening statement? If I may, before I ask you to do that, just remind you that we are very short of time because there are a lot of questions on a very important subject, so I urge everyone to be as brief as possible. Cabinet Secretary, thank you. Well, thank you. Good morning to yourself and everyone. Thank you for inviting me to the committee today to update you on CAP and also on the extremely important fishing negotiations and their outcome. Putting the 2015 CAP payments on a stronger footing and ensuring smoother delivery from the rural payments and services online payment system have been as members know my key priorities, and they remain so. That has been the case since inception of my role as Cabinet Secretary. As you know, convener, we are making strenuous efforts to put the CAP futures programme and the 16 payments on to a better footing. That was what I promised I would do at the outset and that is what we are doing. That has included reviewing staffing and team requirements and we have put in place a new governance staffing and I am pleased therefore to introduce the leaders of that new or nearly new team today. They are Eleanor Mitchell, the director of agriculture division who is the senior responsible owner of the SRO for the Futures programme. Annabelle Terpe, who is the chief operating officer for rural payments, and she leads on making sure that the payments are being made and that we have systems and processes in place so to do as well as ensuring CAP compliance. Eddie Tumble, who is the head of information services division responsible for the provision of IT services to the directorate. His role in the CAP futures programme is to make sure that we get the IT programme that we need to deliver the CAP payments. Convener, we have made a great deal of progress with the 15 payments since my last statement to Parliament in September. You have received a copy of the director general economy's letter to the public audit and post legislative scrutiny committee which provides a summary of recent progress. Since 8 December, an additional 1,658 payments have been made to customers. An increase in the total number of payments from 38,340 to 39,998. The value of payments made across pillar 1 and pillar 2 schemes has risen from 448 million to 455 million. For our basic payments, greening and young farmers schemes, the largest element of CAP funding, 99.7 per cent of estimated eligible claimants have now been paid with payments totaling £343 million. For beef and sheep schemes which make up the remaining elements of our pillar 1 funding, we have paid 99 per cent of eligible claimants with a value of £36 million. Creating a dedicated payments control room has played a large part in turning around our payments performance by enabling better co-ordination and quicker resolution of issues. For those awaiting payments, the national loan scheme that I established has provided much-needed support to businesses. The president of the National Farmers Union of Scotland, convener, welcomed the loan scheme, was going some considerable way to filling the gap in the rural economy. The facts show that 16,357 businesses received over £145 million to provide cover for the 2015 payment scheme. A large number of those have now received substantive payment. Turning to 216 CAP payments, my overriding concern is ensuring that rural businesses are farmers and crofters, receive the 16 payments as soon as possible, and we continue to support and grow the rural economy. As at 23 January this year, 13,172 businesses have been paid over £271 million in loans until the 216 payments are made. Following the successful delivery of the majority of 2016 loan payments, I decided to close the loan scheme to general applications on 20 January. A small number of top-up loans are continuing to be processed for businesses that have recently had a transfer of entitlements confirmed. Our loans team are working proactively with those businesses to ensure that any additional support is processed promptly. Delivery confidence is improving and our attention is now firmly focused on meeting our commitment to complete processing of 216 pillar 1 payments by the end of June 2017, which is within the EU's prescribed payment period. I would like to draw the committee's attention to a consequential factor around the recovery of loans. As I recognise, this is an area of understandable interest by members of the Public Audit Committee. By recovering loans, primarily through offsetting against the grant due, we have taken the decision initially to schedule recovery of such loans. It is necessary to recognise that expenditure on loans added risks to the Scottish Government's budget. In practice, there should be no material detriment to anyone as all applications should be handled within the overall payment window. Turning to the software side of things, we have received assurances from our contractor, CGI, that the IT system functionality for 2016 will be delivered early in 2017. I am convener with Steve Thorne, a CGI UK president on 15 December and on 12 January to make clear the seriousness of the situation. He has now personally overseen the introduction of key contingency steps to deliver the IT. I am sure that members will want to get more detail about this, which I will not go into now, and Annabelle Terpy will be able to do that. We are much clearer about the risks around delivery of new IT functionality and how those should be addressed. The more robust testing methods that have been introduced pre-launch means that the system is much more reliable and better meets the working practices of area offices and HQ staff, as well as our customers at the first time of asking. My officials are continuing to work closely with the IT contractor and we are monitoring the situation. There is also a continued focus and delivery and support for farmers by our area offices and here in Edinburgh, and I am being kept fully in the picture. It is worth reminding ourselves why we are here and why we decided to build bespoke software. We were responding to clear asks of the rural sector convener who clearly wanted three, not one region. We also faced a significantly reformed, delayed and complex regulatory requirement regime from Europe. The business case to try and automate some of this was strong then and it remains strong now. A compliant CAP IT system will provide value for money. I am seeing progress but there remain significant programme and technical risks which I remain absolutely focused on. I am seized of the on-going challenges as we approach our key deadlines but notwithstanding these challenges I expect the programme to deliver the necessary components for CAP compliance within its £178 million budget. The original decision to develop a bespoke IT system was sound. The cost of the futures programme which has helped to deliver our online payment system represents around 4 per cent of the £4.45 billion of CAP funds due to be delivered to Scottish farmers under the new CAP regime by 2020. Because of the complexity of the new CAP attempting to deliver it without a bespoke IT system would have resulted in significant EU penalties. Our benefits analysis demonstrates that developing a CAP compliance system will avoid potentially £276 million of financial penalties up to 2021 and 2022. To deliver compliance within the budget we have proactively improved quality and driven down costs by negotiating a number of improvements and changes to the contract with the main supplier. Again, we are happy to answer questions about that if members so wish. On lessons learned, convener, there have been a number of interrelated factors which have led to issues we have experienced with CAP futures. We have implemented the recommendations of a number of audits and reviews to improve the situation. This is not characteristic of IT projects in the Scottish public sector. There are examples of good practice including the Scottish electronic tax system sets, the building planning business transformation programme and the Scottish wide area network sworn public services programme. It is important to explain that we are applying lessons from other projects and lessons from CAP are being fed back into other public sector IT projects. The Scottish Government has recently introduced new assurances processes which provide a more robust and interventionist approach. On staff involvement my officials are working hard, very hard indeed to get the payments out. I am in daily contact with my senior officials as we drive forward delivery of the CAP futures programme and to ensure support is provided to rural businesses and I have visited many of the RPID offices. Staff on the ground have a key role and their feedback is crucial. I will cut out some of this because I can see that you are becoming somewhat impatient perhaps not unreasonably so but there is really a lot of work that we are doing and I think it was reasonable to point some of that out but just to come to a conclusion I hope that I have provided assurance that the work that we are undertaking is having a positive impact on the completion of the 215 payments and on putting 216 payments on a better footing. Thank you. Cabinet Secretary, thank you. I do not think that I am becoming impatient. I noticed that there is quite a lot of committee members who have a lot of questions on this subject and we are always grateful for your full answers and I would like to be able to get those on the specific questions. Just before we go into it I would like to clarify I think that Peter would like to make a declaration just of his farming interests and there was one or two others so Peter, would you like to just make that? Absolutely, I declare an interest in a farming business back home. Stuart. I have a registered agricultural holding of three acres from which I derive no income. I would like to declare an interest that I am a partner in a farming partnership. The first question is coming from Peter. Thank you, convener. Good morning, Cabinet Secretary. Sadly, we are still awaiting two 2015 payments and I thank you for the updated information that we have had but it is good to see that 99 per cent of the pillar 1 payments have been made but there are still substantial monies outstanding in pillar 2 payments. The biggest one being LFASS monies and some 2,400 farmers still awaiting payments and £17.5 million outstanding. That is no money that is seriously late and we need an explanation as to why this process has taken so long. Thank you for that comment and I am pleased that you recognise particularly as a farmer that is not good enough and I accept that and the LFASS payments is perhaps the most significant area where we have yet to complete the two 15 figures. Let me just state the figures in the round if I may and then perhaps I can pass to officials to provide a little bit more detail as this is extremely important to me. First of all, the estimated number eligible for less favoured area support are 11,380. The number of payments 7,532 46.7 million % 79% The number of businesses still to be paid 2,408 making a total unpaid of 18.8 million Of that I understand that the substantial proportion of that has in effect already been paid by the loan system and let me just explain the LFASS claimants were entitled to claim loans on their payments on a risk assessment basis that loan was assessed up to 100%. I think a broad rough average for the purposes of this discussion and I appreciate an average is talking about a cohort and any individual case is very serious but on average I think the loan amounted to around 80% of the total so the point I'm making is that yes they are not fully completed but in the round most of those entitled to LFASS will have received a loan and the average amount of that loan amounts to around about 80%. I'm just saying that not in any way to excuse the fact that we haven't completed the job but to put it in context and perhaps I could bring Annabelle Couturpe in a moment and I would say and this is a case that I know from speaking to Richard Lochhead there is always a tale of cases that are not paid within the recognised time limits there always is in cap on both sides of the border unfortunately and sadly the tale is far more bushy this year than it was in previous years Annabelle Just to add a bit more detail on to the figures of the 2,400 payments that are still outstanding where people will receive payment i.e. the loan is not the total of the money they will receive Cabinet Secretary referred to 17.4 million of that 13.6 million has been paid out in loans and will be recovered against the payment which leaves £3.8 million still to go to farmers You will complete this process when are all these payments going to be made fully? So the delay in payments is mainly relating to common grazing provision and that is going to be addressed in the release, next release of functionality which we are looking at will be in place by the end of the first week of February so I would expect payment after that I would like to update the committee when we have more certainty about that date because I know that it is not helpful if we give a date and then we do not keep to it that is what is holding up the payments Can I ask the other significant part that is missing is the LMO payments that you seem to be struggling with them as well what is the explanation for them being so we are not 70 odd per cent of them only paid as well So we are now at 77 per cent and we have got 471 outstanding which is at 0.5 million again we are doing our utmost to process and I believe that some of these are subject to the same release of functionality I cannot give you precise figures about how many of those are being done but we are steadily decreasing them, I can write and inform the committee in slower time if that would be appropriate The IT system still cannot handle these cases that is the problem, that is where we are The release of the next release of functionality will aid, yes, that is correct Okay Can I just ask two questions as a follow up on that Can you confirm to me that everyone regarding their 2015 payments have had an explanatory letter explaining exactly what the payment is for because I am still hearing people that haven't got those Could you explain to me where we are on that please So on letters payment letters went out for BPS Greening and Young Farmer the reductions and exclusions letter which explains exactly what makes up that payment letter has not gone out yet again that is dependent on the release of functionality and I am sorry to say that I think that that will be I do not think that it is realistic to say that that will be before the middle of March I know that is deeply unacceptable but that is what I believe again I am trying to be realistic about this and make sure that we are giving deadlines that we can keep to I think that the problem is that people are completing tax returns and they have no idea in some cases exactly where the money is coming from and as far as budgeting into the future because they don't know what has been added to, subtracted from and where the payment is where they are going to be in forthcoming years which I think is deeply acceptable for people who are trying to run businesses and I wondered if you would agree that these letters are becoming more and more vital in every day that passes to they arrive I would absolutely agree I think that letters letters is something that we've mentioned before and again was picked up in Papilsund and in the DGs appearance in September Elinor did you want to come in? That is that although the effort is continuing of course to make sure that we can get letters out to people and I understand the importance of everyone understanding not just the amounts of money that they've received but also the reductions in exclusion so that they can come to a view in whether the payment is correct and I do understand that however anyone who has logged into the system anyone who can access the system can go in, look online and they can see the amounts of money there so for accounting purposes for bank purposes, for tax purposes and for that amount of money anyone who is struggling to do that at any time can contact a local office and they will help them with that Stuart, you want to I just wanted to in relation to tax returns which the convener raised there is of course a box on your tax return where you can say that some of the figures represent estimates rather than final figures I just wondered if you'd had any indication from HMRC or otherwise that they are alert to the particular issues that there might be in this area for people engaged in farming and are taking a responsible attitude to what might be figures that are estimates rather than final figures As I've said the information is available to people who have logged on to the system they can find out the actual amounts of money the piece of information that is missing is the reductions in exclusions and that will be contained in the letters just let me press you I just want to know that HMRC are not going to be pursuing people who have a clearly demonstrated gap in the information that they might be able to provide that relates to the exclusions to which you are referring and of course you are not responsible for the HMRC and I am not suggesting otherwise I would come back to the point that the amount of money that individuals have had is available for them to know contact with HMRC A follow-up, just if I may, Gail and then I'm going to come to Richard if I may I'll go along in a minute to talk about disallowance in EU penalties but just on this particular aspect of sending out letters does the fact that we haven't sent out letters does that incur any EU penalties at all? No Okay, thanks Richard The question has never been asked so bear with me We've got quite a number of schemes basic payments, greening, young farmer beef and cheap scheme rural priority scheme land managers option scheme less variable area support scheme Why do we have so many schemes and who basically made us have all these schemes? Abolet Secretary While he's just gathering his thoughts I will slightly delay Mr Coffin I'm used at the question because I think it is in a sense a perfectly pertinent one particularly perhaps for those who are not versed in all the acronyms and all the different schemes that perhaps may look a bit perplexing to the outsider and sometimes is perplexing to many of the insiders but let me try and answer that plainly the purpose of these schemes are to provide support financial support to our farmers and these schemes have largely been influenced by EU policy used to be of course that the system was based upon production and that perhaps gained unpopularity because of the food mountains and therefore the system was changed in the behest of the EU in around about 2003 and countries member states rather were given three options of ways in which they could introduce the new land-based payment scheme that has in turn led to I think a proliferation of schemes and it's fair to say that these schemes have been devised by governments working with representatives of the farming and crofting sectors notably the NFU principally the NFU S in Scotland obviously and we work very closely with them and still do and that's right and proper the situation at the moment is that we must allocate 4 million hectares worth of new payment entitlements around 400,000 fields in three payment regions for over 18,000 farmers each field I understand is on average the size of several football pitches and each field needs to be mapped in a certain way with a number of compass points taken in order to establish the exact location of every single boundary that work which is required by the system and it must be a digital system a digitalised map is required that system is proven to be immensely complex with the benefit of hindsight convener perhaps all of those involved including representatives of farmers and governments might have traded off a bit of complexity for simplicity in terms of administration and it is a pointer in the future and I don't know whether members have any appetite for looking at future of farm payments I certainly do because it seems to me that if the UK Government's intentions are to come out of Europe in March 19 then there only are two more years of the CAP and I have no idea what's going to replace the CAP neither does Liz Truss I notice a statement she made recently but it would be a pointer in the future to recognise that there's perhaps a trade-off about avoiding having a system that is so complex to administer that we end up having to devise a system of IT and Annabelle I would like Annabelle I hope she'll have the chance to explain exactly what we've been doing over the last weeks and what she has been leading in a very vigorous and determined fashion I assure you to implement one of the most complex IT systems Annabelle with the point that numerous different at the end of the day yes the Government has a party of blame but does the NFQ also have a party of blame because of the fact that they've prompted the Government to do all these things I'm not interested in blame I'm interested in responsibility I think it's a reasonable point for me to make without getting pys or anything I think it's a fair statement of fact nor would I I have been quite open and transparent about that in fact I don't actually think convener that any minister has been subjected to so much scrutiny over an issue for so prolonged a period and I don't object to that, that is your job fine and I don't think that there's any cabinet secretary that's been more transparent about the issues facing him or gone into more detail about these issues and rightly so but I do think that there's a responsibility for all of us who have a duty to perhaps devise a different system to bear in mind that we must recognise that the issue of how that system is administered is almost as important as the content and the substance of the system itself and I don't make that point in any way as a plea and mitigation but rather a pointer to the future because I don't know about you but I'm starting to think more and more about what are we going to do in future should Brexit go ahead and particularly March 2019 there's only two years left of CEP when are we going to start looking at that rather than I'm quite happy to go over all the manutii there was more I wanted to say about the rural priorities payments just to put things in context cabinet secretary I must ask you to stop there because we are as a committee going to be looking at agriculture post 2020 and we are proposing to do it everyone welcomes a thought process that makes it simpler by the very fact that the arpid budget has gone up from 34 million in 2014-15 to 62 million in 17-18 indicates that we haven't got a simpler system and therefore we'll do it and we will need to look at it in the future and I absolutely believe the committee has an appetite for looking at that and I thank Richard for his question and would like to move on if I may cabinet secretary to Gail Ross who has a question on a slightly different subject thank you convener I think that cabinet secretary this is probably the one that certainly being involved in both committees, the public audit and this committee that we have scrutinised most and quite rightly so and we do thank you for your transparency and that of the government and the disallowance for the late 2015 payments and Elinor Mitchell you remember that you told the public audit committee that when asked about disallowance for late payments that the worst case scenario estimate was about 5 million euros can you maybe just explain to this committee if that estimate related to late payments for just pillar 1 or if it was pillar 1 and pillar 2 and if it was just for pillar 1 do we have any estimates for pillar 2? We only are penalised in relation to pillar 1 payments so the estimate of up to 5 million euros is only in relation to pillar 1 payments and that estimate hasn't changed because we are still in regular contact with other parts of the UK of the other rule payment agencies to finalise all the figures okay Have you made any other estimates of potential disallowance for any other infringement of EU cap rules and just for information wise how are other parts of the UK getting on with their administration? So on the first part in terms of other disallowances it would be premature for us to do so at the moment we are in the process of the audit processes have just started we have had two European audits so far and we've got European Court of Auditors audit starting so until there's a process of negotiation that goes on between these kind of audit processes we're informed of findings, we negotiate we discuss with them, we come to an agreement so until we are clearer about what they have found we wouldn't make an estimate of disallowance in relation to anything that they have come up with and other parts of the UK Parts of the UK for the reasons that the cabinet secretary has outlined Scotland finds itself in a more complex situation in terms of what the system we are trying to process and the payments we are trying to make so it's fair to say that Scotland has found it difficult to make payments for cap 2015 however we are not the only part of the UK who benefited from the extension of the penalty free period and none of the parts of the UK have finalised the numbers yet so we're still working on agreeing a position Do we have a timescale for these European audits? We do, we have a schedule of audits we do, which we can share We are doing that as a question but if you want to ask it very briefly Eleanor, I'm very happy if you want to ask that briefly on the timescale Yes certainly, so the first beef 2016 audit was in April, it completed in June there was a desk audit on the national reserve also in June and the next one we're expecting is a land-based measure starting in October and in relation to the European Court of Audits we had the first audit called the DAS audit in November sorry, that was in relation to 2015 the 2016 was in June and the introduction of BPS was in October and we're expecting the next one in March on greening The next question is on errors and overpayments, Peter We've just seen we've got a paper through late last night since you identified that since the last committee appearance there have been further errors in making payments and we see there's another 15 duplicate payment errors have been identified with a total value of £490,000 you know and it just seems to be there's a never-ending shocking catalogue of errors in making these payments and I just make the comment that this standard of operation is totally unsatisfactory something must be seriously wrong here you say that it's just a staffing issue that a human error issue but surely to goodness we need to get this right and to be paying double payments again another issue here was 15 people paid double amounts of money back totally unsatisfactory situation something just sorry it came out in Peter's question those are duplicate errors that are separate to the ones that we've got disclosed on the 24th of November so is that right so those are a different set of errors sorry who's that question so yes there's a new errors that were discovered for 15 businesses the as I've outlined at the Papels Committee some of the measures we've put in place in order to try and get to the bottom of these error payments and I should say in relation to this this error was actually made quite some time ago but it's only recently discovered what's unique about this payment and why it wasn't found out by some of the checks we've done before was in relation to the payments being made in euros rather than sterling when we make a payment in euros we have to extract information from the locally held system bank details and then we make the payment through the Scottish Government normal processing system so in relation to those 15 businesses the first time we tried to make those payments on the 24th of October there was no European bank detail information we therefore went into the system added it back in and the payments were subsequently made although we were emailed to be informed that those payments had been made we didn't use that information to update our master spreadsheet which we held locally so the payments were made again at the next payment run on the 23rd of December so again it was another human error it was made within the loans team however the difference was it was a euro payment rather than a sterling payment and we then hadn't picked that up since then we have made some changes to our processing to make sure that this error yet again that kind of error doesn't happen again we have taken all end to end processing for all euro payments back into the one team where a shared mailbox is used therefore the point of a single being reliant on a single member of staff to make an action has been taken away we have introduced a checklist approach to payment processing in advance of all payments of course we continue to implement the recommendations from the previous internal audit work that has been done on various teams on the use of spreadsheets and of course there is a training exercise in place on the use of spreadsheets that all staff who are involved in them are going through could I just add a couple of general points that it is in the nature of the human species that we are fallible and in terms of managing a group of people who are doing their best to get payments out to farmers we should remember a number of things one, the people in the orbit offices are absolutely determined to get these payments out number two, we have talked about the audit system no payment can be made under the EU rules until it has been fully checked and validated the penalties for making errors are substantial the consequences for farmers of making errors are disproportionate in terms of the burdens I know that some of the staff who made errors felt absolutely hellish about it now there's two things I can do either I can beat them around the head in which case they'll just be demoralised and feel worse or I can say as I did you did a great job in getting the loan scheme out and the big picture is they got the loan scheme out at a time where the payment was received earlier than ever before at a time when I understand and I'm not a farmer but I understand many farmers do the financial planning just before the year end in the dark nights when there's not much that can be done perhaps in the farm and therefore that was a calculated decision and the staff the point here is the staff bust a gut to get that loan scheme out to around 13,000 people £272 million and I think yes errors are made we'll always make errors errors were made in previous years and my goodness me read chapter 12 of the book Blunders of Governments called Farmers' Fleece to read about the errors were made in our counterparts down south so I'm afraid that we will never see an avoidance of errors but the best way to get the job done is to encourage and thank the staff not an endless repetition of blame ascription and going over and over errors which are very quickly in most cases corrected and sorted out in all cases as I think you would agree so that's the approach I take it's up to each of us to decide how we conduct ourselves and how we seek to proceed but spare a thought for the staff who are doing their best under huge pressure to get the job done well I thank them for that can I thank the cabinet secretary for that and can I just actually make an observation and where we share common ground is that the penalties that farmers have to face if they make a mistake are disproportionate and farmers find it very difficult and I know from filling in forms how difficult it is sometimes not to make a mistake you double check it and therefore it's always nice to hear that the cabinet secretary is aware of that and will bear that in mind when he sees the mistakes from the department. Can I just ask the 5 million euros that we've heard from Eleanor maybe before by the European Union where is that allowed for in the budget and what contingency for the payment to that has been made? Two things I would say in that one is there is a 1 to 2 per cent disilliance every year and provision is made within Scottish Government accounts for that in relation to the potential risk of 5 million euros this year I can't tell you specifically where that provision is made but I can write to the committee on that point or just having just looking at the budget to know where that 5 million euros will be put Stuart Just a technical accounting question related to that are you treating it as a liability or a contingent liability because of course if it's the former you have to make financial cover if it's the latter you don't I will include that point in the update I provide to the committee The next question if we may move on is to do with the cap futures programme and I noticed Annabelle wanted to come in on this so this may be your moment The question I should have perhaps signalled earlier but Eleanor is all over this case she's talked about penalty of 5 million that's 5 million too many but just let's recap a little bit about what it looked like when this report from Audit Scotland was published Auditor General's report when it was published today it was appointed so it certainly concentrated the mind that I can assure you and the auditor said a range of financial penalties is possible with the potential range between 40 million pounds and 125 million pounds so we were looking then over the edge of a cliff quite frankly because that sort of penalty is hugely substantial and has been devastating in a financial sense so it's not that we are proud of the fact that there is a 5 million facing a 5 million penalty that's not good but it's certainly a far improved position than the position that we faced on the day when I took this job Thank you cabinet secretary so if I may move on to the cap futures question In May 2016 Audit Scotland said that the total cost of the cap futures programme would be 178 million and just so I've got this right I believe that's risen from 102 million in 2012 128 million in 2014 to 178 million in 2015 Interestingly I note also that we've been told that Audit Scotland in their May briefing said that Audit Scotland will never deliver value for money so if the programme is going to be about 178 million including 51.6 million of projected cost in 2016 the draft budget for 2017 includes 42.2 million for cap compliance improvements could you explain to me what that 42.2 million actually is for or the committees I'll hand over to Eddie on this particular point I just want to say to the committee that the cap futures programme will close as planned on the 31st of March 2017 and the funding for that programme will be 178 million because of the difference in the financial years and the work that's being done we are going to take some of the work some of the money from the 178 into next year but the overall cost of the programme will be fixed at 178 million in terms of what the 42.2 million and other estimates in there will provide I'll hand over to Eddie to pick up on the detail of that I guess just to set the context of this the initial build in 2015 created the platform created the foundation which gave us a cap compliant system in one that would minimise the risk of disallowance and penalty so I think you're all familiar with that we created what we'd called the minimal viable product so that was the foundation there were certain things that had to be set up there in this year we've added new functionality to that within that 178 total that we spoke about there are three features of that that were in that design that were carrying over into the next year that's the accounting element of it it's the land parcel information system element of it and it acclaims to payment functionality in that as well so that amounts to roughly about 6.7 million we estimate so that was 6.7 million that was in our budget this year that in effect we need in next year's budget so that's the first call on that element so of the remainder about 23.5 million is for further IT development which is about maintaining the solution that we've got so we haven't just built something we've got something that we need to maintain and we still have to add functionality to that for example any amendments we need to do for the SAF 2017 processes we've identified the types of amendment that we require and hence what we have is an estimate of the value of that to add that functionality throughout the year and then what we have from left in that the 12 million in effect is around the transition of the futures programme back into the core business particularly of the area that I now manage and we have a number of legacy IT systems that are still there that are costly that run in a different environment from what we've invested in in the futures programme and it's my plan and the directorate's plan to move these over so that we don't have two things that we have to maintain Annabelle, did you want to come in at that stage or? Yes, there's also a certain amount of money which is we are planning to fund the transition of the cap futures programme back to the Scottish Government and that will be across both information services division and ARPID and also it will fund a mixture of temporary and permanent staff so these will be the staff who at the beginning will be undertaking land review visits digitising maps so quite intense technical work that needs to happen Is a mixture of IT and it's a mixture of new duties in effect that the area office staff will have to understand PD, you wanted to follow up on the futures programme No I mean, I think we've had a fair answer on that one Can I just clarify I'm sorry, after all that lengthy thing is Audit Scotland wrong when they say it's not going to give value for money or it is going to give value for money I'm sorry, I'm unclear who I should be believing My understanding was the Audit Scotland report I don't have it in front of me today talked about the system we deliver CAP compliance and CAP compliance being the avoidance of penalties to a greater or lesser degree than we would normally seek to do I believe the £170 million will deliver us a system that allows us to avoid penalties to a greater or lesser extent than we have in every other year So in May 2017 when they report again they'll say it is good value for money I think I would hope that they would report that the £170 million we have invested it gives us a system that allows us to process CAP payments in a way that maximises our opportunity to avoid penalties So it is good value for money So it allows us to avoid penalties which as the cabinet secretary said would have been catastrophic Mike, I think that you've got the next question I want to focus on the loan scheme and some very helpful information that's been provided to us last night but I'm more concerned with the information that hasn't been provided so I want to drill down on some of this please In 2015 £455 million was given out to our farm businesses throughout Scotland in support but the loan scheme for 2016 has only given out £271 million so from my figures I've had to work this out there are £184 million from the previous year £184 million that has not gone into our rural economy it just hasn't gone there and I wondered whether you confirm whether that is correct At the same time the second part of that question really is you said loan payments were made to 13,172 farmers but I believe again we're not given the figures but it's something like 18,000 farm businesses there are and therefore what I need to find out and I'm sure the committee would benefit from this are we saying correct me if I'm wrong that over 25% of farm businesses have neither received any payment or any loan payment so a quarter of our farm businesses have received nothing so those are the two elements that I'd like some clarity on please Passing for the detail to Annabelle I think Mr Rumbles makes a perfectly reasonable point we will provide all the data if we haven't already done so then we will happily supplement whatever data we require to make sure the committees have all the facts there's no doubt about that I mean can I just say in principle that the desire in the loan scheme for which I've been responsible which I've already talked about in detail and I won't repeat the previous comment was to urge all farmers to take advantage of the national payment and we took reasonable steps to do so through publication of that in the general and specialist press and I think that there was a fairly widespread awareness of that within the farming community and we didn't stop there we didn't just do it once but at several times our aim was that anyone who wanted to take the payment could we also explained that although it's described alone perhaps it's also described as a national payment there's no interest in the very unusual event where there's an overpayment in total after the claim has been assessed and then there needs to be a recoupment and then that recoupment is not paid within the allocated time so we took some time to encourage the take up of loans to reiterate that and reiterate that and I think that was broadly communicated effectively but we found out as Mr Rumble says broadly speaking about 13,000 of about 19, 18, 19,000 titled to cap the loan so we didn't just stop there and this is new information I think to the committee because I don't think I've been at the committee since this occurred I myself asked the very same question quite early on you know how's it going, how many loans what is the take up rate and it was lower than I thought it might be and we therefore asked the senior officials to do a survey and analysis a phone round and I'll ask Annabel to give a bit more detail but the result of that survey was that many, many farmers for a variety of different reasons and Annabel gave more details decided that they didn't want to take up the loan it could have been that the financial circumstances didn't require it but they chose not to do so that may seem to be a strange decision but on the other hand it's entirely up to each individual that the Government provides but that is substantially the common sense explanation but I know that more detail requires to be given so Annabel you can provide that on your first point this was the national basic payment support scheme so it wasn't looking at pillar 1 and pillar 2 it was just looking at pillar 1 so you are correct what we did was we looked at what the 2016 entitlements were likely to be so we had we were offering loans with the lowest level of risk to Scottish Government and therefore public money and we as you will know did the 80% in case there are changes and a cap of 150,000 euros which we felt was fair so the latest figures we have are that all but 88 have been offered a loan and the 88 who have not been offered a loan that's because we are still working through transfers of entitlement and they do not have a letter of comfort we are prioritising these as a matter of case so we will of course get in touch with them when we can make sure that we can pay alone My question hasn't been addressed yet my first part of the question was I want to know whether this is correct 455 million was put into the rural economy last year and in the 2016 payments you are saying 271 million has been put into the rural economy this year for whatever reason for reasons why it's gone in or hasn't gone in I want that really trying to get at the facts so 184 million from what I've divided in these two figures I'm asking really is that correct that 184 million has not gone into the rural economy Yes because the loan that we paid is not from the 455 it's from the pillar 1 element I wanted to check that that was correct My second part of the question was drilling down on the figures that's all I'm doing am I right in saying on behalf of the committee that more than 25% of Scottish farm businesses have received nothing in other words no farm payment from their entitlements all the loan that has been offered to them is that correct am I correct in making that assumption That is right that they have not taken up the offer of a loan absolutely with the exception of the 88 where we are working through to make sure that we can offer them a loan with appropriate levels of risk to the Scottish Government that is absolutely correct I just think personally and if I make a comment from that I think that's devastating for a rural economy on the basis that normally in the husband being the case normally variations but normally ever since devolution this money has been paid out for December I know there's a June backstop but normally it goes out in December at the moment of this committee looking at the interests of the rural economy in Scotland that there's a fantastic amount of money £184 million that has not been out there If I may come in that of course that the pillar 2 schemes where to my understanding never paid at that point in the cycle so just as a clarification majority of the money has always been out there because that's the 80% I thank you for your comments so my understanding is absolutely correct thank you I just want to be clear what are farms because I imagine not every farm is entitled to any payment I believe for example there's a snail farm on one of the islands which I don't think is likely to receive any so when we talk about the number of farms are we including farms that actually would not in any event be entitled to payments so it's just those who are entitled to payments we've offered loans on the basis of the I'm talking about the generality of the numbers when we talk about farms we're talking about farms that would expect to receive a payment that's all I wanted, no you've got a a brief follow-up a very important part you said that 88 farmers hadn't received the offer of a loan because of difficulties with transfers of entitlements now transfers of entitlements have caused huge problems all the way through their scheme and I this is one of the biggest issues that I get letters on on a regular basis transfers of entitlements seem to have been one of the biggest problems and I wonder where you are with that issue because I still get lots of letters that are at the wits end because we kind of get transfers of entitlements done why is that proven so difficult I would like to write back in that in slower time if that is acceptable because I don't want to give incorrect information okay thank you we're going to move to the 2016 payments and Brad has got a specific question on that I think now just ask a quick supplementary the loan applications are closing in previous evidence we had been told there was a deadline for getting your application into guaranteed payment but now it seems to be that if you haven't applied by the 20th you will get no loan and you can't go back on that even if your payment becomes late or even later and I thought there was always going to be a backstop that if you changed your mind you could apply for the loan we have taken the decision that we need to focus resources as you can imagine on processing 2016 we have asked area offices to contact everybody who has spoken to them about a loan but has not taken one up to let them know that they should get in touch and I think this has been sort of as in the communications around the loan we have said if MD is experiencing hardship they should of course get in touch with us about that so to general applications we feel that September to January is actually quite a long time frame we've worked hard with partners to make sure that the information is out there but we are retaining that level of flexibility so that if there are people who have specifically questioned about loans they are being contacted and of course we would urge MD who is experiencing hardship to get in touch if they have not already got a loan so if their payment is delayed and they experience hardship they can come back and make a case to access the loan programme into the future and specifically those entitlement cases I think for the reasons Mr Chapman identified won't be penalised for the fact that they didn't have entitlement to apply for the loan and they didn't have such entitlement at the date of the opening of the loan scheme at the beginning of November so that's why we've made that decision in respect of entitlement cases so each of those 88 cases will be contacted to make sure that they are aware that because of the lateness in processing or determining their entitlement application through transfers that they will be entitled to a loan in other words it would be wrong to have penalised them simply because of our lateness I think that's a principle that we applied but we did of course urge everybody to apply for the loan back in October and to do so at the beginning of November to apply quickly to get the money out and the NFU of course worked pretty closely with us and my understanding is that that was something that they were satisfied with making a positive difference in most cases Can I ask if any of the payments due for 2016 have been made and no loan payments have been made in lieu of them, but any of the proper payments have been made? Not started yet When would you think that those payments would start being made? We're currently waiting and the latest there's one final functionality drop we need to put in place and we're currently working very closely with our contractors to make sure that we're doing absolutely everything we can to get that in as quickly as we can As the cabinet secretary said at the start we're not going to promise dates that we can't meet we are over scheduled in terms of the predicted date of getting that release drop and we're working with them on a daily basis to get the drop in as quickly as we can And once that happens how quickly will payments be made? Once we've got the drop of functionality it will be a matter of weeks Would it be helpful if Annabelle Tupe or Mr Turnbull explained what this process involves because it is something that is absolutely crucial and key and if it would help the committee some kind of explanation from Annabelle perhaps and Eddie might help the committee to understand how we're dealing with drop six? Yes, it would be very helpful Can I go first? Can I I'm sorry I'm conscious of time, so a brief and succinct answer very much Absolutely The focus has been on improving the quality I know that the system in the past has not been reliable so our focus over the last few releases of the system has been absolutely on making sure that it works if we can first time so that's the point to note so we have worked with our partner CGI, the delivery technology delivery partner to really get a detailed programme over the this phase that on a day by day basis we can track the number of errors or potential defects that are in the system that is being developed so we're monitoring that on a day by day basis which wasn't the case prior to that what we're also doing in this window then looking at the nature of each of these faults and understanding how those impact on the payments what particular payments will they impact on how can we ensure that we fix those first if those have whatever priority in terms of size of payment or whatever so it's a joint exercise here where we are really pushing the contractor to deliver as Mr Ewing said a number of meetings with the senior UK lead for the contractor to absolutely emphasise the importance of meeting our deadline on this and I won't go into the detail of the quality process that we've got but I'm happy to share that with you in writing if you so desire Annabelle From the release of functionality in November area offices have been processing and processing very hard the 2016 claims looking at priority errors and data errors so that we've got the right information in that the staff has completed as much as it can be with the new functionality coming in in February as per current timetable they will then move on to the next stage of processing which is we've got the information it's about assessing there will be a number of claims that go through in our what we say without touching the sides so they don't require any manual input whatsoever and they will go to payment they will go to a ready to pay status area office staff will pick up others they are expert truly expert in signing their staff so the more experience go to the more complicated whether there is more judgment they will work with headquarters on all their technical regulatory questions that need to be addressed so they will be doing all that work planning and we're doing that work planning we will be going down to a daily basis at the point when the technology comes in so that we make sure that area offices are completely supported in that they're supporting each other and we're taking sensible scheduling decisions to allow as many claims to be processed as quickly as possible once at the start of any staff process once we have the ready to pay pot there is a period of about two and a half weeks when our finance colleagues have to do their checks to make sure that the right amount is being done that's absolute right to make sure that payments are compliant with all the regulation so at the point so to answer your question at the point when drop six comes in for those claims that go straight to payment there will be a gap of about two and a half weeks because that's the necessary checks that finance have to do so that is the order but we're working extremely hard on making sure that we're very on top of work planning that we are thinking about the tasks that have to be done and that we are making sure that we're monitoring because there's a lot of priority to get this work done we're making sure that we're monitoring all the other work that should be done as well because the reality is that staff are under pressure and that requires a lot of attention to make sure that we don't accidentally drop balls can I add one point just to round that up and it's just you've heard from the media and Annabelle on these points I know it's not ideal to come in front of a committee at a time when we should we would be expecting to start making payments and not be able to give you a date what gives me confidence in the process going forward is the daily, weekly and monthly regular schedule of both organisation and governance that we now have in place which means that for example when Eddie was telling you about the errors that are coming through the system for the first time that there is an agreed process in place which tree-assages the errors it looks at them as being critical for payment or not critical for payment so that our attention is absolutely focused on what needs to be done by the right people at the right time Annabelle has daily meetings with staff and contractors to make sure that the absolute focus is on the critical path to delivery so that we are turning all our attention to making sure that we can start making payments to the farming community as quickly as we possibly can and I am confident that we are doing everything we can to get that as quickly as we can not that bit there and if I may go to Richard you've got a question on technical stock take Thank you, you actually technically answered some of the questions that I'm going to ask but December one of the officials from the Scottish Government told the public audit post ledge scrutiny committee we're undertaking reviews in the technical nature and the agricultural food rural communities future programme and that process will start shortly then another official said technical stock take review to look at the IT system as it is now in stress test that under several headings for the gaps what information can you give us about the technical stock take review you've commissioned and what will it seek to achieve and when will it report Eddie Turnbull is handling this Keep this very brief and give you some assurance I see this as a vitally important piece of work and the solution that we've got in place to meet the needs of the rural community it's important for me why because I'm now going to have ownership of that you know as the programme comes to an end it is mine so I want to make sure that what I am managing is built and meets the need so the process is underway we have an independent contractor now in place they have been given all the technical documentation that they need they've been given access to the system to look below the bonnet if that's the way to put and poke about in there and understand how it is built they've undertaken a good number of interviews with key folk in the programme technical folk within the programme I should say the contractor has been very open in terms of letting the independent reviewer come in we will have a report by the end of January so we're really talking next week I'll have an initial view from that and there's provision for a deeper dive into any areas where we think there are fundamental flaws in what has been produced Richard would you like to follow that up or are you happy with that? Basically you're going to have a report by the end of January will we get a copy of it or is that confidential? There will be some elements of it that will be confidential because there will be some elements that will be commercial and there will be some elements that can compromise the security so the report will be developed in a way that the key recommendations are absolutely shareable but the detail of how we might have to fix it will not be I hope that's okay Fixed it? Is it going to stay fixed? I think what I should would come back is that we need to do to fix it if we need to fix it that I think is the next stage and then we can see where that takes us Everybody's money will be sailing out to the next time they're due to get money I would say in that as Eddie highlighted earlier so cap 2015 was the building of the base system 16 has been adding on functionality to get to a point where we've got things to do from 17 onwards so Cair and Maintenance system will still be annual updates we need to do every year Undoubtedly cap 17 we will still be catching up on all the work that we've still been doing in 15 and 16 so my best estimate is realistically by cap 18 we're probably in a better place in terms of running on a normal cycle the other thing I would add to what Eddie's talked about in terms of the technical stocktake review is we shouldn't forget headquarter staff and area office staff to work with the family community to make sure that they are ready and able to do the processing of the payments at the right time so in addition to the technical review I commissioned a delivery internal review to make sure that we were doing absolutely everything we possibly could at the right time and the right sequence to give us the best chance of being able to act as soon as we got the IT in place that came back with some recommendations some good ideas for what we might do and where Annabelle is taking that forward I'm going to leave that there if I may because we still have quite a few questions to go I'm going to ask John for the next question please Right, thank you convener Audit got mentioned briefly before so I just wanted to touch on that If I'm understanding it correctly Audit Scotland are quite involved in the detail and then they report to the national audit office for the whole of the UK if that's correct Now we did mention disallowance before but my understanding is if Audit Scotland were not happy with aspects of what they saw then there are other issues like can the Scottish Government continue to be a paying agency reimbursement of funds to the back to the EU and so on Have we any concerns around that area? You're correct Audit Scotland is asked to provide some assurance to the national audit office and to others in relation to the auditing that's going on Clearly it wouldn't be right for me to report to the committee about the on-going discussions we have with Audit Scotland about recent audits and what they have found or what they haven't found There is a fairly lengthy process where they would present us with some initial findings and we would agree whether what we think they have found is accurate and correct and we haven't finalised that process yet It would be premature for me to comment whether or not they have found anything of concern or not This happens quite quickly because they are reporting in mid-Febru it was suggested There is a deadline of the end of February because of the nature of the delays we experienced before we've written to the commission and asked for a delegation to extend that deadline We haven't heard back from them yet We are waiting to hear There will be something new that will happen either the derogation or fairly soon and you could report back to the committee then Mike, did you want to follow that? European Audits We know the European Commission and the European Court of Auditors also examine the Scottish Government's performance directly carrying out farm inspections that the most frequent issues under these audits are the over declaration of land areas of cross compliance ear tagging failures etc My question really is can you tell the committee about the direct European Commission audit process and the European Court of Audit audit process for CAP in Scotland Once you've enlightened us about that have any irregularities being highlighted by these processes? As I mentioned before we have had a number of audits to date in terms of EU and in terms of the European Court of Auditors and we can share the schedule of the audits with the committee if that would be helpful It really is too early to say at this point whether or not there is any areas of concern that they've come up with As I say, there is a process of where they would write to us they would give us an initial assessment of what they've found to discuss with them the nature of what has come up As you can imagine as the cabinet secretary has already highlighted this is a very complex set of regulations often the individuals who come, particularly when it's a European audit the individuals that come pick on individual cases the regulations are open to a number of interpretations so in the past there have been occasions where they have interpreted in a particular way and found fault in what we have done after a discussion and further explanation of why we have implanted things in a different way they have come to a different view so I think it would be premature at this stage for me to discuss whether or not what the findings of any particular audit are because they are subject to discussion and further agreement When will you be in a position to do that? Well, not for some time we wouldn't expect to have the first so for example on the beef audit which took place in April 2016 we're having the bilateral on the 9th of February so that's coming up but after the bilateral there will be a further process of emailing between the two organisations to come to an agreement as to what the final position is so these things take some time It's fair to say that the Audit Scotland report when it's available in May that the committee will need to look at quite carefully to build a picture for the future Jamie, I think there's a question and it builds on something that the cabinet secretary mentioned earlier so Jamie Indeed it does I think first of all it's worth commenting and no one else has said this that whilst it's our job as the committee to hold the government to count and indeed the cabinet secretary I think we should acknowledge the hard work on getting those payments through I wanted to put that on record and thank the staff for that work My question relates to previous comments on the complexities of the subsidy system that we have in Scotland and the UK and indeed that relationship that it has with Europe and I hope the cabinet secretary will answer the question in the spirit in which I'm asking it and that's that given that it's a very complex funding mechanism that involves Scottish Government, Scottish Government and at the moment the EU what provisions or thought is taking place within the Scottish Government at the moment in terms of a post-Brexit scenario in Scotland in a sense that if we have the ability to reinvent a currently complex system I would hope that the members of the Scottish Government are having initial thoughts at the very least on what a future payment system might look like or indeed a future subsidy system might look like in Scotland and that's not a politically motivated question it's a genuine opportunity for the cabinet secretary to share his views on it Well it's a perfectly fair question I appreciate your remarks about the staff and I'm sure all members of the committee would say the same express the same sentiments We have carried out a great deal of work looking ahead on a post-Brexit This work is predicated with the caveat that no one is sure exactly what's going to happen and I think that's a matter of fact but we have held a variety of stakeholder sessions for example myself and Ms Cunningham I've held numerous summits on various aspects of the rural economy as I think I've explained in the rural funding debate last week and just last Monday we held an event specifically on food and drink and agriculture looking forward and I think there's a mixture of apprehension and a sense of opportunity sort of admingled if you like depending upon perhaps the views of the people to whom you speak but there's a great deal of work that we've been doing in order to discuss with senior people particularly in the industry and I think there's an appetite to discuss it so we've held a number of stakeholder sessions I've met with Andrea Leadsam and George Eustis we of course do I think and this was debated last week convener we do need clarity about the funding we need to devise policies for what would happen post-Brexit yes and we believe that I think we can do that better in Scotland and I hope that that the outcome of Brexit is but without reasonable clarity as to what the funding is of course it's impossible to come up with any scheme there are an end I do seek to engage positive with UK ministers I think I've made this point in the chamber and I had a meeting in this room actually with Andrea Leadsam back in October and November and it was fairly a cordial there was a clear agreement convener I should say this but there was a clear agreement that Andrea Leadsam and my counterparts from the Welsh and Northern Irish administrations were to have met tomorrow that agreement was fixed up to have that meeting the agreement to have that meeting was fixed up several weeks ago it was unilaterally cancelled which we found myself and Roseanna Cunningham both of whom were due to travel to London tomorrow really disappointing because we've prepared a paper setting out details of the position in Scotland with relevant information for our colleagues in DEFRA and in the other DA so it's really disappointing and frankly not particularly respectful that a meeting between several supposedly being treated as equals was cancelled unilaterally by one but nonetheless one puts these things aside and seeks clarity about this but I would just make this point that given that there are only if Brexit goes ahead in 2019 in April 2019 we are only just over two years away and what I gather is from the hints and leaks that have come out from the Oxford conference earlier in the year that there's to be a green paper a green paper is a high level document if there is to be a plan for 2019-20 for that financial year then the amount of time available to devise such a plan is very small indeed and if one links that to the fact that as was said by many members in debate in forestry yesterday it's an incredibly long term industry and that farmers themselves as I understand it and Mr Chapman and convener you will know this better than me but you have to plan not just one year ahead but two years ahead is that it's really not a political point that we are already behind the curve in respect of working together with the UK Government in a plan and until there is clarity about replacing about the amount of funding that's available and obviously our task now since the motion that was passed by substantial majority last week our task is to seek a fair funding solution I think that that was the terminology used in the resolution you know we really are running out of time and there's a related question which was perhaps what Mr Greene is asking for you know are we to use this IT system that's been devised at an enormous expense well it would be pretty crazy not to I mean we've got this IT system we've got a digitised map which of course is always being updated because boundaries are always being changed but we've got this facility but we don't know whether there is any plan to continue with basic payments for example what DEFRA want is the subject of a lot of speculation in the press but hard information which is what I can only go on as the cabinet secretary has not just been in short supply there hasn't actually been any so you know I'm very keen to answer the question I think in the spirit in which it was intended namely not a political partisan way but just to make a plea to my colleague Andrea Ledzim you know please come to Scotland please tell us what your plan is please tell us whether the clear undertaking without a shadow of a doubt that George Eustis made that the existing level of funding at 2 billion would be maintained and please share with us what your thoughts are about a good plan for rural Scotland and rural Britain and we are ready to work with you and let's have that meeting which you cancelled last week and let's get round the table with something on the table and discuss it in a constructive fashion thank you cabinet secretary Mike I think you want to come in and that will be the last question before I have a question I do thank you for coming and the minister referred to the motion in debate last week and I was very pleased that on my amendment the minister accepted the amendment in fact every MSP from across the chamber voted for it at decision time but the effect of my and I know it's only a week but the effect of my amendment was to sit and an expert group be set up to advise the minister from all the stakeholders that are relevant to this process and I was wondering if he could, I know it's only a week but I was wondering whether he has any idea when that might take place when that might happen we have already appointed for rural champions and I made that announcement I think last week and these are all very well respected figures having an expertise so we are already consulting and advising a group of people but not in the specific form that we have agreed to do following our discussions, amicable discussions last week, followed by our support of Mr Rumble's amendment but I expect fairly soon to revert to to make an announcement in respect of that but we haven't put a time skill on it yet but we have been, as I'm sure many members, perhaps all members of the Scottish Parliament have been doing we have been in almost continuous discussions with leaders of each section in Quality Meet Scotland with Jim McLaren with Sybil and George in the sheep sector with leaders in the forestry sector in order to work together to find a way forward building on the tremendous success in so many areas of farming and of rural life and to build on that success is something that I'm sure we all wish to do but whilst answering, if we possibly can the question is about labour about free movement of labour the continued ability to have a workforce in forestry, farming, food processing fish processing about access to the markets which we've taken for granted which now is an ever more increasing worry if I may just leave it there so all these things I think are matters where until we get some more clarity it's pretty difficult if not impossible to come up with the plan that I'm sure all of us would wish to see Thank you cabinet secretary there are two questions outstanding that members have wanted to ask but I'm mindful of the time and I'm mindful that we need to go on to fishery one of them relates to new entrance and there's one from Stuart that I'd like to submit in writing to the cabinet secretary post the meeting and ask that he would be able to respond to those as a matter of urgency before I ask him if there's anything that he'd like to say in conclusion I'd like to pick up on two comments that he's made if I may one is about the fact and the importance of planning and the second one is about the importance of hard information and in light of those two things which he considers important and I know that farmers consider important can I ask if the 2017 payments will be made in December as they have been made in the past ie December this year are you talking about next year's payments? I'm talking about the 2017 payments of which the forms will be submitted this May and they will be paid in December as they have always been done in the past except for the two strange years that we've had. I can answer in this way that the first task that we are doing is to complete the 15 payments and get the 16 payments on the proper footing and I'm very conscious convener and I have to answer this question in my own way that many many farmers what they found particularly irksome was that previously promises were made about when payments would be in their bank accounts and those promises in some cases were not kept I couldn't count the number of farmers with whom I've had a general discussion who made that point and I think it's a point very well made so I'm not going to over promise and deliver but what I can say and I think what farmers want to hear from this and I don't think I've made this absolutely clear so I think it's important I do make it clear is that I am confident that this year we will see the substantial majority receiving their pillar one payments within the allotted timescale as prescribed by the EU the allotted timescale which expires on the 30th of June and that is something I wanted to make clear and of course as Eleanor Mitchell has clearly laid out in 215 we had a number of problems we have solved a number of these problems going forward we've paid out 99.7% of pillar one payments and therefore I would expect that building on that success the performance in 2017 will be better but there are various reasons in relation to inspections I'm happy to write to the committee about that and other matters why the previous practice prior to the new cap system being introduced is simply more complex now than it was before but I'm very happy convener to write you on that although I don't know if Eleanor Mitchell would want to add to that Before Eleanor comes in I've made a particular point if I may is not looking back at the past because I think that you were given a difficult situation to deal with and I accept that and I echo the comments that committee members have made about the hard working front line people who are trying to deliver for payments what I'm specifically asking is whether we will be in a position to go back to December 2017 for the payment that's due the answer you've given is that it will be paid up to the timescale of June my problem is that I've absolutely seen in writing I believe that there will be no loan scheme for 2017 so what I'm trying to identify is whether farmers will have to make their own arrangements on the basis that they cannot guarantee in getting the money that would normally be paid in December 2017 till June and that's my question when will it come, what do farmers need to do I'm not going to over promise and deliver so I've said that I'm confident that this year we will see the substantial majority receiving their pillar 1 payment within the prescribed time namely by 30 June and I expect improved performance in the subsequent year and as to decisions financial decisions taken about the year after that that is something that I can certainly come back to you on if you wish me to do so and I'm happy to provide more detail about why under the new system that we have which was brought in by the CAP there are practical problems preventing the previous practice of payments being made in December month being replicated under the new system I'm very happy to write you on that because I don't want to provide an off the cuff or simple simplistic solution I want to avoid that that's what farmers expect of you but I will come back if you wish with more detail on that because I appreciate the clock is against us here although I think Ellen Mitchell is straining at the leash to add something which perhaps I've inadvertently omitted to mention It was just really to add clarity to the complexity of the system the regulations we're working with and also just reflect and the decisions that we're making that layered with the geography and topography of Scotland mean that the inspections that the staff are doing the digitising of maps of the work that they need to do on an annual basis in relation to inspections means that the work is it would be incredibly difficult to get all the inspection work done by the end of the year by the end of December for the staff's 2017 and because, as the cabinet secretary said the inspections make very clear that all the checks must be done before the payment is made we would be in danger of disallowance if we were to make payments in advance of that and I thank you as well for that answer and I'm assuming that because the cap futures programme will be delivered and working on time by that stage that the extra staff that have been taken on to deal with the problems with that would have been put forward to inspections and therefore farmers could have hoped but I will leave it at that to the cabinet secretary's answer on that and cabinet secretary, is there anything you'd like to say briefly in closing before I close the meeting to allow us to readjust your team for the fisheries section No, I think that I've covered it Thank you cabinet secretary I'd like to suspend the meeting while we reorganise for the next session Ladies and gentlemen the third item on the agenda is the update from the cabinet secretary on his participation in EU, agriculture and fisheries councils Mr Ewing is now joined by Alan Gibb who is the acting deputy director of fisheries at the Scottish Government Cabinet secretary would you like to make a brief opening statement Cymru, every autumn the government participates in a suite of international negotiations to agree fishing quotas for the Scottish fishing fleet in the coming year our negotiating approach continues to place key emphasis on behaving as responsible fishing nation respecting scientific advice and driving towards sustainable fishing levels for all stocks to protect this future resource for future generations at the same time we need to balance this with the socioeconomic impacts and the risk of choke problems that would be created under the landing obligation by excessively sharp cuts in quota this was the third December council at which fishing opportunities were set under the rules of the reformed common fisheries policy which aims to have all stocks fished at levels by 2020 at the latest the overall package included at the December council was very positive indeed there are increases in the catching opportunities for 16 out of 23 key Scottish stocks worth an extra £47 million potentially to the industry in 2017 in the North Sea notable outcomes included increases of 17% for cod 17% for whiting 53% for saith 20% for munkfish and 46% of prawns each of those hugely important to sectors of fishermen particular reference should be made the outcomes for North Sea cod and whiting due to this Government's direct involvement in the EU Norway talks we were able to turn around the difficult advice for these stocks into more reasonable outcomes that still fully respect the science and continues to move them forward to sustainable fishing levels but provide a bit more time for the industry to adjust to the phasing of these stocks into the landing obligation in 2017 on the west coast important outcomes were saith 59% increases Hague 9% Rockwell Harwick 45% and a rollover for whiting for the pelagic sector there were increases for mackerel 14% 73% for blue whiting at Lantoscandian herring 104% renewal of the EU will continue to provide the Scottish white fish fleet with important access to around 2 million of additional opportunities in Faroes waters thanks to the pressure from the Scottish Government the level of Faroes access to EU waters to fish for mackerel was brought back to the negotiating table for the first time in three years alongside these stocks specific outcomes we have also made other significant political gains this year at the EU level we have secured a new flexibility arrangement that allows Scottish vessels to fish up to 10% of their quota for west of Scotland haddock in the North Sea this will reduce both operating costs and the risk of choke for the Scottish fleet at home we have for the first time secured agreement from the UK to top slice the UK Arctic cod quota purchased primarily with Scottish blue whiting in the quota swaps process at EU Norway the UK pool of swap currency to bring in additional North Sea quota where there are risks of choke under the landing obligation this is an extremely welcome development however both we and the UK Government still consider that a better balance could have been struck in the agreement with Norway in particular with regard to securing increased quota for the EU of important North Sea stocks alongside the international negotiations officials have held a series of meetings with industry representatives about the implications of Scotland possibly no longer being part of the common fisheries policy we are working very closely and constructively together to ensure that we fully understand all the issues and what is required to get the best possible outcome for the fishing sector I've also called on the UK Government to give the fishing industry a guarantee that it will not access to UK waters as part of negotiations on exit from the EU in conclusion convener it is clear that the autumn negotiations are a complex and unpredictable process with no certainty or guarantees however I was very pleased that with my involvement and that of my officials and I may say that it's an exaggeration to state that our officials are highly respected across all the EU and very often are de facto taking the lead in these negotiations that myself and my officials in this Government have delivered the strongest possible package of outcomes for the industry in 2017, thank you cabinet secretary the first question is from Mari Evans thank you cabinet secretary and for the update on the meeting that was essentially going to be my first question more about the outcome so I'm glad to hear that it was such a positive meeting and that so many positive gains were made but I would also like to ask given the information that you've just given us do you think that that will have a big boost to the fishing industry in Scotland and what do you think the impact in terms of employment will be? I think that the outcome was a very good one that the industry is mostly doing well although of course it's hugely disparate but it's mostly doing well when Alan Gibb and I visited in the week beginning of the week before the fisheries negotiations we visited the Peterhead market and we were told by workforce there that the amount of fish at the market was the highest ever just to straw in the wind perhaps but an indication that the industry is doing well so to deliver 47 million of extra quota was a real tribute to the hard work which is done throughout the year by Alan and his team in getting a tremendous result for Scotland but at the same time the problems of the landing obligation particularly of the choked species are very serious and needed so we will come on to that but I do think that the outcome of the negotiations was very good and don't take it from me one of the leaders of the fishing industry that was present at the talks said after their conclusion just after their conclusion that there isn't there isn't a better served industry than Scotland in any of the EU nations so far as working with the industry and representing their interests was concerned so that was fairly positive The next question is Peter I would like to ask a question on the UK concordat on fisheries management you know this is an agreement between the UK administrations now there seems to be some conflict here the I just want to wonder where we are what status the concordat is at given that there is consultation on going in England and there's none there would appear to be no consultation going on in Scotland and we hear that the English fishermen are concerned that there's some 1500 tonnes of English quota taken out of the humberside area and given to to Scotland I just I don't understand what's going on here can we get some clarity on what the concordat is give it a moment but this concordat this is an agreement between the UK fisheries administrations it's not legislation it doesn't establish legal obligations but it is a concordat the members will be familiar with them because there are various the new concordat provides for enhanced controls over transfers of fishing vessels between UK countries and for greater devolve control over shares of UK quota and once these powers are established but only once these powers have been established the Scottish Government will put in place new rules that allow FQA units to move from a Scottish to non Scottish licence only when a Scottish vessel moves to operate permanently in another part of the UK now we did publish actually a consultation on the quota allocation in 214 and of course the quota allocation is the substantial issue that falls to be determined after and only after the concordat is finalised we had effectively agreed that the concordat the terms of the concordat some considerable time ago therefore we did not think it was necessary for the UK Government to enter into that consultation because we did not consider there was any purpose in doing so it was something that had been agreed however its finalisation I think it's fair to say was delayed by the UK Government because of the fact that there was the referendum and I think they may have referred also to the Scottish parliamentary elections after those were over mid-year we sought to have the matter finalised and it was then that the UK Government said that they thought the consultation was necessary it wasn't necessary however we are very keen to get on with making the announcing formally the decisions in relation to fixed quota allocation system because these are essential for further investment in the industry that's effectively one of the consequences of this perhaps Mr Gibb might want to add to that in relation to the 1,500 tonnes issues specifically and generally anything else Alan yes cabinet secretary's been very comprehensive around the concordat just to say that this is a revision so the first concordat none of the administration's actually consulted this is a new choice by England and deaf officials minister used us to carry out a consultation that's fine that's within their gift that concludes at the end of February and we'll take it from there we don't expect any change the concordat's been agreed at ministerial and official level so we'll take that from there and it allows greater control and it allows the certainty that cabinet secretary needs over Scotland's quota shares would be unacceptable for the cabinet secretary to make a decision or make a recommendation or take forward a proposal saying and delivering economic growth for the Scottish fishing industry therefore for somebody else in the UK to undermine that decision so he needs that certainty before going forward that's primarily his purpose secondly the issue of the 1,500 tonnes is a completely separate issue this relates from a national fishmen's federation organisation news release just before Christmas it just got picked up in January it demonstrates that they weren't particularly happy with the decisions that came I won't make any judgment on whether they should be happy or otherwise but the 1,500 tonnes is a result of a top slice that the cabinet secretary indicated in our opinion that results from a well evidenced extremely well evidenced in a logical case that that should not go to that one company it should be kept centrally to appease and help with potential choke species under the landing obligation to do and for Scotland to get some benefit why should Scotland get some benefit in the EU-Norway negotiations primarily first and foremost Scotland is the second largest contributor out of all member states not the UK, Scotland out of all member states to that agreement and the R2Cod that comes into the European Union is primarily purchased by Blue Whiting for the UK Scotland holds 99.3% of the entire Blue Whiting quota so you could say Scottish Blue Whiting purchases R2Cod not one single kilogram of R2Cod goes to a Scottish fisherman every single fish goes down to England that's why it was right that we tried to redress the balance and that's what we did and this was something that was the subject of discussions between myself and George Eustace I think on two or three occasions prior to the December negotiations there was an infra UK issue where the Scottish fisherman involved felt that they had frankly had a very unfair deal where fish that they believe should have been able to be fished by Scottish fishermen were being top-sliced and applied to a company in England so I think it far from complaining about it this actually was a success story for the Scottish industry and I was very pleased and I have to say this I want to be reasonable I was pleased that Mr Eustace did this deal I worked with him very hard to try to get the deal for Scotland and eventually he was persuaded that it was the right thing to do so I should state that for the record but I can assure members that there aren't any fishermen complaining about this deal in Scotland Just as a follow-up on those 1500 tonnes is that specified or is it just a tonnage of fish in general or how is it? No it's 1500 tonnes of actual cod what we'll do we in Scotland we don't because it all went to the single company we don't fish it so what we'll do alongside in partnership with the UK is suggested the supporter of the UK minister what we'll do is we'll then look at swap that 1500 tonnes with other European countries to try and bring in who do fish that to bring in fish that will benefit Scotland and the wider UK fleets focused on choke species so for example Norsi cod, Haddock saith monkfish perhaps would be target species Thank you Next question is Rhaida It's been touched on previous statements but the landing obligation and what progress is being made to allow this to work properly and with reference to choke species and the like? Well of course the landing obligation is a policy that was brought in in order to tackle the problem which I think most if not all of us found to be pretty repellent which was the practice of discard of fish being thrown over the dead fish being thrown over the side rather than landed and then used I think that's perhaps one of the aspects of EU or consequences of EU policy which I think caused most concern amongst the wider public not just fishing communities because it seems everybody to be a waste so the landing obligation is a well intentioned policy designed to tackle that including fishermen support that the problem is of course that the way in which it is implemented causes a risk of choke and choke refers to to those species which can prevent the full prosecution of quota for one species due to the risk of catching another species as quota has been exhausted so if you run out of quota for haddock and cod and you are fishing for other species not by catch of haddock and cod then that can stop your prosecution of your main fishing effort and of course the consequences can be potentially catastrophic because if you can't go out and fish then you've got to tie up and cease operating I mean it's a bit like asking March's and Spencer's to shut their short premises in February it's not much more complicated than that and therefore the issue about the landing obligation is the way in which it is sought to be implemented by the EU commission there's lots of things I could say about it but to cut to the chase it seemed to me from attending the November council and listening to the commission's response to just about all the member states who took part in that particular council ministers debate and all who to a greater or less extent expressed concern about the consequences of the implementation of choke species as planned that the big problem is inflexibility and that the time period in which this is sought to be implemented is perhaps not practicable and yet the commission did not appear willing to extend the timescale there's much good work which has been going on and we've alluded to some of the work which we have done to address that already the Arctic Cod deal which has enabled quota swaps to take place will relieve pressure on some quota species in the North Sea which is good allowing quota to be transferred between the west and the north is another method day minimis exemptions are another method carry forward of quota is another method there are a plethora I mean I have other devices here or tools, policy tools but I would say that the conclusion that I've kind of reached subject to discussing with the industry is that the problem with the policy is that it was just being introduced too quickly and too inflexibly and the consequences of that lack of flexibility or speed could be extremely serious for those involved however the results and the outcome of the negotiations this year perhaps allayed some of the concerns that exist but I know that in the likes of Shetland Fishermen for example extremely exercised about this as Tavish Scott has reminded us from time to time so I don't know if Mr Gibb wants to, Alan if you want to add anything to that just very briefly I think the outcome of these negotiations just included help going forward we have taken a transitional approach on what's known as the Big Bang so everything coming in on day one in January 2019 and for example a big increases in safe will be helpful as that comes under the landing obligation in the North Sea and potentially elsewhere we'll see what the regional groups have to say on that and which Scotland as well as the UK has a full seat on that groups that I attend I would just reiterate that there are probably answers to every single potential choke species and there aren't as many choke species we would imagine it's the inflexibility of the system and the timescales of the cabinet secretary saying some of the answers just simply are not particularly attractive and I won't say whether they're attractive to us or other member states, it could mean changing things that have been fixed in statute for several decades such as relative stability I don't think that that could be done in a year or a few months and that lies the challenge and the most important thing significant development was the reference that the cabinet secretary made that member states and the UK and Scotland recognise that and actually raised the issue above the regional groups which are dealt with by officials like myself to the council of ministers arena where it properly can be discussed and the complexity is recognised although the commission seemed to take more note than that I mean that, it's a bit strange that in years past that it was fine to throw this over the side dead but yet you can't land it without penalty and it seems that it's kind of cart before the horse we should have had policies in place that would deal with people actually deliberately going and fishing those choke species but to allow them to be landed and used and it seems like everyone signed up to the policy but the policy was taken in without actually looking at the implications of how you're going to implement it is there enough time and can you get more, do you think there will be more time to allow the policy initiatives that deal with those issues to be implemented before we or are we in a place where we should be really worried about this that's a fair comment I have to say so I think this is a consequence of the co-decision process where you have the council and the European Parliament working together there was a very very strong public demand to primarily deal with the waste issue in the food element as opposed to necessarily science although obviously the two will go hand in hand as reflected to me by commission officials this was viewed upon as yes we know we don't have the answer but there is four years surely we'll have the answer before it all comes in now that has proven to be highly optimistic and unrealistic but that was a view taken at the time and I think it's now we're getting to the point where people are going to have to deflect it won't be for me to suggest whether there should be a delay or whether the commission or the European Parliament would condone anything whether there should be some adjustments but they will certainly have to deflect that the time available to deal with some horrendously complicated issues doesn't appear to have been enough I think the final question is with Stuart Thank you, convener and let me just start by very much welcoming the cabinet secretary's remark in his opening statement that he's seeking to make sure we don't trade away to access to UK waters at the point where we leave the CFP that's exactly the commitment that we want to hear I may say Mr Gibb of course has just said in relation to some of this some things can't be done in a year or a few months but if the timetable of the UK Government has is where 25 months away from leaving the CFP so there is a certain degree of urgency I want to just perhaps pick on that issue of access there now the UK Prime Minister eight days ago said her objective is for a proposed free trade agreement between Britain and the European Union I don't think anybody in the Parliament is likely to object to that as an objective but she then went on and said EU leaders will seriously tell German exporters, French farmers Spanish fishermen etc that they want to make them poorer and that's a very worrying indication if not confirmation that the interests of fishing in Spain seems to be on our list of things in which he's interested but she said nothing about the interests of fishing in the UK and in particular in Scotland so my question therefore is how are discussions on that issue proceeding are we able to get the point across that the fishermen in Scotland and I suspect in the rest of the UK are looking to the new fishing opportunities as a key way of underpinning the long term future of their industry and therefore it's vitally important what happens in the next 25 months indeed rather early to answer what have I done I have of course met with Andrew Leadsom and George Eustace and George Eustace on many occasions and I've said before I have a good working relationship with Mr Eustace whom I respect a clever individual no doubt about that and I have specifically asked I think at every formal meeting the question very simply can you please give a guarantee that in the course of the wider negotiations on Brexit that you will not trade away rights to permanent access to Scotland and the UK's waters I have not got an answer to that question yet and I do think that this is a question that will not go away it's not a politician's question that is of only relevance to the chattering classes convener this is something that our fishermen feel to their bones very strongly about our fishermen most of whom will probably have voted for Brexit see enormous opportunities to phrase that Bertie Armstrong uses and they see that because they envisage that they will have the ability to fish for the fish in our waters in the UK waters that's very simple and if those fish are to be traded away on a permanent basis then that will frankly be something that will cause a lot of anger because at the moment that's not happening and the whole point of Brexit as far as fishermen concerned is to be able to fish for all the fish not just the relatively modest proportion that they fish of the stocks in our water so I have specifically asked Andrew Ledzim and George Eustace on several occasions answer there comes none the answers that I do get are of course there's always negotiations member states yes there are but these are annual negotiations to do with quota swaps and fixing of TACs as we've just described these are not the permanent trading away of access there's a very clear distinction between the two and I'm not going to launch into a political tirade about this all I will say is this is a very serious issue it will not go away I will continue to press the question and until we get an answer to the question we can't actually go about the serious task of devising a fisheries policy that would operate in these islands so it's a question I'm pleased to have had the opportunity to answer and I do hope that perhaps one day George Eustace may have the opportunity himself to answer the question using his words rather than mine and that would be a good thing Are you suggesting that it would be useful to the general proposition of taking this forward and probably in relation to agricultural issues as well which we've been discussing in relation to coming out of the common agricultural policy that Andrea Leadson and George Eustace should appear in front of this committee to see if we achieve success where thus far your success is still being deferred It's really for the committee to decide what it does and who asks but I think in the interests of a good dialogue and I was being exhorted by some of your members of your party to get round the table with the UK Government on which we planned weeks ago was cancelled at which we would have done that Equally I can turn the point and say well let's have a dialogue with parliamentarians as well and I would be surprised if they wouldn't relish the opportunity but it is a matter I think for Parliament it's not a matter for Government as to who is invited to a committee as I'm sure you would agree For that I'm sure and we'll cast that net wide Is there any final comment that you would like to make on this before I close this item on the agenda? Well I'm very pleased that we've had this the first opportunity I think to discuss the interests of fishing and as members will know it's a highly complex and really important topic so I'd just like to say that I welcome the opportunity to have this initial discussion today and I hope that the committee although it has many responsibilities and topics to cover it will come back to the importance of fishing because it's a absolutely vital part of our rural economy and society and it's right that we will continue to give it a lot of attention and discussion particularly to come up with perhaps our own fisheries policy here Cabinet Secretary, can I thank you for providing two updates this morning to the committee and can I thank you Alan for attending the committee and giving the information that you did and Cabinet Secretary, of course you're right we'll be looking at fisheries during the course of the year but thank you for your time this morning I'd like to very briefly suspend the meeting to allow the Cabinet Secretary and Mr Gibb to depart Ladies and gentlemen, the fourth item on the agenda is the consideration of the SEED Miscellaneous Amendment Scotland Regulations 2016 this instrument is subject to a negative procedure the committee will now consider any issues that it wishes to raise in reporting to the Parliament on these instruments members should note that no motions to annull have been received in relation to these instruments there have also been no representations to the committee on these instruments are there any comments that the committee would like to make is the committee therefore agreed that it does not wish to make any recommendation in regard to the this instrument that concludes this committee's business today I would remind you at the next meeting on 1 February the committee expects to take evidence from the Minister of Transport and the Islands on rail services in Scotland it also expects to hold its first evidence session on the Scottish Government's draft climate change plan I would ask committee members to stay present