 Rwy'n fawr i'r ddwylliant ymdrae, Andrew White, ond rwy'n dwybodai'n ddigon i Shtupe Macmillan, wedi'u gwneud o'r ffordd oedd. Felly, rwy'n fawr i'n ddweud i edrydd ymdrae unrhyw ymdrae, ac mae'n dweud eich ddweud i edrydd ymdrae unrhyw i'r ddweud i edrydd ymdrae, ein Llyfrgell, ac mae'n ddweud i edrydd ymdrae unrhyw yn fawr yn gael iawn. The AGS reported and entitled the Scottish Government's Consolidated Accounts. I'd like to welcome Leslie Evans, the Permanent Secretary, and Moises, the chief probation officer. Allison Stafford, director-general of finance, Barbara Allison, director for people and Eileen Wright, deputy director of finance the Scottish Government. I understand Fomniadau iawn mewn gyfrail? I became Permanent Secretary on 1 July this year and as the Administration's most senior official, I'm also its principal accountable officer. As such, I exercise a function set out for that office by section 14 of the Public Finance and Accountability Scotland Act 2000. As the Act provides, I'm answerable to Parliament for the exercise of my functions as principal cymdeithasol. The committee has before it the consolidated accounts of the Scottish government for the financial year 2014-15. Those cover the full range of the Scottish government activities in that year. They deal with many complex and important issues likely to be of interest to the committee and, indeed, to the citizens and taxpayers of Scotland. Given that breadth, I have with me Alison Stafford, director general for finance, Aileen Wright, who is head of corporate reporting accountancy and governance, Barbara Allison, director for people communications and ministerial support in the Scottish government and, as requested by the committee, Ann Moise is here to, in her capacity as chief information officer. We will do our best to answer the questions that you have posed to us today if we will undertake to respond to you in writing. I thank you for that. Can I start questions by delegating the first questions to Sandra White? Thank you very much, convener, and good morning everyone. Excuse me if I squirm my eyes a bit. The light is very strong there, so I think that it is myself and Richard who are being most affected about it. I wanted to ask you first about the financial management and reporting, and you mentioned yourself that Ms Evans is about the fact that it is a full range of activities. Obviously, at the moment, there is no single set of accounts that shows the overall position of the devolved Scottish public sector as a whole. I just wanted to ask you a number of questions in that. Obviously, in the absence of consolidated accounts for the public sector, how the Scottish Government will demonstrate to taxpayers that decisions in their longer term implications are sustainable. Do you have any idea if you will eventually have consolidated accounts and a timescale for that? I think that our work is being undertaken at the moment on how we develop from what is already a strong and sound framework for managing financial accounts for the Scottish Government. I am keen that when doing that and in looking at how we develop our financial accounting, that we take account of the fact of what those accounts are for, that we have a set of accounts here that, by the Auditor General's own standards, are a good record of financial management and reporting, and that we would not want to compromise those or change that record in any way in the 10th consecutive year, as you know, by having unqualified accounts. What I do recognise is that there is an appetite, quite understandably, from Parliament and taxpayers as we increase our devolved powers and responsibilities for how our accounts link in with those of others who have a different set of accountabilities, namely local government, for example. The Deputy First Minister has asked our officials in the finance department and other parts of the Scottish Government to look at how we might develop our financial reporting, both in terms of how that takes account of future devolved powers and responsibilities, but how it also connects to the other parts of the infrastructure of reporting within Scotland, so that we can get an easily navigable and accessible account of how Scotland is operating, which takes account of the quality of our own accounts, the importance of not placing additional burdens on other parts who report their accounts, and taking account of the amount of detail that is already in our own accounts, representing the agencies and others such as Transport Scotland. We are sympathetic to the issue of how we might make a navigable and accessible set of accounts available to Scotland, but that would need to take account of the different component parts and the different functions that currently take place in the accounting system. Is there a timescale for the improvements that you might say? Obviously, we are looking at improvements in the information that comes forward, so it is easily accessible, but is there a timescale that you mentioned that the Deputy First Minister had already spoken about that? That is right, and we are undertaking work at the moment. What we would like to do in the first instance is to test some of our ideas out with Audit Scotland in the first instance, to see what we are proposing, and Alison Ailey may wish to come in on some of the detail of our process, but that we first of all look and see what would answer the legitimate question about how we get a good snapshot of how Scotland is doing without compromising some of the factors that I have mentioned earlier on, and then perhaps to share that with the Finance Committee or indeed this committee, to see what our proposals amount to and when they would come into play. I am happy to expand if that is helpful now. Obviously, we have already some new powers, and this is the first financial year in which we are seeing some devolved taxes being collected. There is already an expansion of the information that will be produced at the end of this year. Obviously, there are things that are in our budget, but also how those are accounted for through Revenue Scotland and our own accounts. We are also obviously very sensitive about the fact that there is a Scotland bill going through Westminster at the moment that will be underpinned by a fiscal framework, and the negotiations of that are actively taking place. There was a meeting earlier only this week to continue the active engagement and the progress on that. Obviously, it makes sense that we have that fiscal framework in place, as well. Therefore, I think that it is important that we use the next few months to see how that takes shape, to talk to, as we have said, Audit Scotland, but also the offer is there to work with the committee as to what information you would find helpful. Also, just recognising that, as you have rehearsed the taxpayers of Scotland, and some of us will already be getting our letters to assure ourselves that we are going to be taxpayers under the Scottish Bank of Income tax from next year, that there is that information that is available. The exact format of it is something that we need to work through. Our accounts at the moment, based on the consolidated accounts that account for how the budget has been spent in the year, are around 130 pages long, and it is based on a technical format that is laid down and that we comply with under international financial reporting standards. Working out what it is that goes beyond that, that is useful and accessible, I think, is part of the conversations that we would like to have, and we have some ideas that we would be happy to talk through. Just one final question. You mentioned the letters, obviously. I think that we have all had them and mentioned pension liabilities, as well. You are also very kindly said that you would share information with the Audit Committee. Is it beneficial to everyone as you go through the stages and the extra powers that the Audit Committee has kept up to date? What was happening with the consolidated information, or would that come through the Auditor General? I think that, for something that is this and it is in a new turf for the new powers that are coming in, there has been, as you know, with Revenue Scotland an update process that has happened both with the Finance Committee and the Parliament's Audit Committee, as well. I would be happy to work through with the convener and the clerk the best method of doing that. For some of the things around that we have been dealing with up to now, a workshop mode is something that might be quite accessible for that, so that we can have more of a dialogue and we can take on board your points. I am happy to use whatever mode feels best for the Committee overall. I was not going to come in on this, but I am very disappointed at the response. We have had the same Government in power for nine years. This is the Government that is looking towards an independent Scotland. If there is one thing that an independent Scotland needs, it is an independent Scotland balance sheet. How much is there revenue? How much is expenditure? We hear people out there talking about an eight million black hole, or a billion, and a six billion surplus. The response to Sandra White by the most senior official and the accountable officer that work is being undertaken at the moment actually finds that quite insulting after eight years. All of us have been through this referendum campaign. Everybody out there wants to know what the balance sheet is. To say that the auditor general is ecstatically happy about your account, I do not think that that is the case, but it is becoming increasingly important to understand the overall position of the devolved public sector. It is difficult for the Scottish Parliament taxpayers to get a full picture, nor readily accessible information about the pension liabilities. We do not audit Scotland report on pension liabilities. Some years ago, surely you go round all the different sectors and add them up, so for you to come along to this committee four months before my retirement, and I'm never going to see this balance sheet, but really for you to come along and say, we're testing ideas out, do you think that I should be content and happy with that? Because really for the position that you hold, and I say this personally and not on behalf of any of my colleagues, I do not think that it's good enough for you to respond to the auditor general's Scottish Government consolidated accounts by coming along here nine years after a nationalist government and to say, work is being undertaken at the moment, it's not good enough, but I would like to ask for your response to that. I recognise the interest that is growing, and indeed, as in the Alison staff. Be there for years. Indeed, but of course, we're in a moving picture here. We have increased our devolved powers since the 2012 act, and as Alison mentioned, we are going to be increasing our responsibilities further as a result of when the Scotland Bill goes through and becomes legislation as well. So I do recognise there is an appetite. We are in a moving picture. It is quite fluid. We are working and looking very carefully at what models might suit, but we also need to take account of the complex set of information that is already on the table here and the different accountabilities. I think that consolidated accounts, I would see it being slightly different from a full balance sheet as well. The consolidated accounts that we will need to bring together will need to bring together the different accountabilities that operate in Scotland at the moment for devolved powers. As we know, if we're looking at it as a complete balance sheet for Scotland, that would include spending by the UK Government as well and produce another dimension, an important one, but another dimension. So we need to make sure that we get whatever we produce is right. I can understand your impatience, Ms Scanlon, and that's why I was saying earlier on that the information that we will produce in the early part of 2016 will be tested not just with the Audit Scotland colleagues, but will be brought to the Finance Committee as well. We're determined to make sure—I was looking at a model a couple of days ago from the UK Government—about how we can make this navigable and accessible to people who will be paying their taxes to the Scottish Government as you rightly cite in the very near future. The devolution to Scotland is being discussed in the House of Lords today and it's continuing, and we're all aware of it. There will be powers being devolved to Scotland over the next decade. If you're going to sit here for the next decade and say, oh, it's a changing feast and we're being undertaken and we're testing ideas out, that is an excuse to kick into the long grass a clear outlook of the balance sheets and consolidated accounts in Scotland. If that's your excuse, there will be continual devolution. In other words, we're never going to see this. I think that you could be making some form of consolidated accounts that the Auditor General is asking for and to be making changes year on year as further devolution occurs. However, to make the excuse that we're in a changing world is what you're telling us, we're not going to get what the Auditor General is asking for for at least a decade. It's a point, I'm not doing a question, I don't think I'm going to get much more here. I just wanted to be able to say that I think I've given an undertaking that we will come back shortly in the early part of 2016 with some proposals around this. We will know more as well what the Scotland Act has produced perhaps by that time. The undertaking is to ensure that we have accessible and easily navigable information for taxpayers and for the Parliament and citizens of Scotland. I give that commitment now. That's not to say that it might not change again in the future as you say quite rightly, further powers may still be devolved in the next few years. I'm just wondering whether I could make a distinction from my own background between financial accounting and management accounting and recognise all the things that you are talking about and all the things that the Auditor General sees are things that I would describe as financial accounting in the sense that they have a set of rules and theory they add up to the nearest penny. They never actually do, of course. These are the kinds of accounts that you're talking about. As I've understood it, it would, like a set of consolidated accounts which are the merger of those kinds of accounts. I think that what I would be much more interested in, probably the general public would be more interested in, would be things that I'm going to describe as more like management accounts where it's not precise, but we do actually look at the debts that are held by local authorities. We might even look at the debts that are held by Scottish companies. We might look at all sorts of other flows in and out around Scotland. They are bound to be estimates. None of this is going to come down to the nearest penny signed off by an Auditor, but would there not be a value in having, this is perhaps economics rather than accounting, some general overall view which is close to a consolidated public account of where the debts are, the assets are, the income and the expenditure across Scotland, recognising that public sector is a part of that, a very big bit, but only a part of it, local authorities are a significant part along with the Scottish Government. I think there's merit in looking at that because I think the distinction you draw out between having a rules, the IFRS, the international financial reporting standards, basis for a combined consolidation across local government, central government and some other bodies that may be part of the Whitehall setup, does mean that you end up with very large numbers that have been aggregated together and a very technical basis on which they've been generated. You are then mixing up the accountabilities. Just to pick up the example that Scanlon raised around pensions, there is a really mixed arrangement that is how it's been defined, it's not by our design, but it has been through an evolution of different arrangements for supporting pension activities in Scotland. Some areas, local government for example, actually have to go out and invest the contributions that people make to be able to then sustain the pension payments as they are made. Other pensions, for example the health service and for teachers, then what you might describe in a rather colloquial phrase is pay as you go, they rely on the fact that there's incomes that come into the treasury each year that can actually then sustain the payments that go through and obviously some of the contributions that are collected are part of that. That's just to give you a for instance of the fact that there are different mechanisms here that have built up over time and using the financial accounts it pulls all that together but it actually blurs the accountabilities and those things. I actually think that this is why the offer is there about what are the things that people are really interested in where actually that sort of information would aid the knowledge that folks have, they understand where the taxes are going but also where the risks and opportunities lie in relation to that. So again that would be something I think would be able to come out in a way that people don't have to navigate through, I've said our accounts at the moment 130 pages, we did a consolidated one for Scotland, it would probably be getting on towards double that, that's not necessarily the most user friendly way of people seeing data and information. So I support what you're saying and I'm very happy to work with the committee on that. If I might convene, could I just make the point, I would have thought that a useful set of accounts on that basis, there will be rounded to the nearest half billion I suspect, would be on one side of a piece of paper. And then you'd be able to compare it year on year over a period as to where our assets were, where our liabilities were and whether or not Scotland was paying its way. And this is not a nationalist point, it's just a simple economics of Scotland. And you've mentioned the phrase economics, actually the economics part of the government has been producing the government expenditure and revenues for Scotland, actually pretty close very soon after there's devolution in the first place, so that's been there irrespective of which party has been the administration. So that has been a basis, it has had more of, it has a statistical basis rather than a financial accounting basis, so there has been some information there. But I actually think moving into the space that you described is something that can happen sooner. If we're talking about specific accounts and that actually needs a ministerial requirements around that, it's under a ministerial drive rather than necessarily something that could happen. And also it's about also the other parties that would be the providers of that information actually being willing to contribute. So these are the sorts of things that are important. Just one thing to add, obviously for any information we do pull together on the basis on which it is generated is really, really important. Notwithstanding what you're saying about going down to the last penny, but one of the key things, one of the things of the changes that we have been going through, we've been one of the first areas across the UK and Europe to actually move to international financial reporting standards. It often shocks people to know that Germany, which you might perceive as being financially advanced, are still on cash accounting. That predates me being in the government and predates my professional career as well. They're still using that methodology. So we haven't actually reached a point now, and the really good thing is that local government, for the first time in this current financial year that we're now in, is actually producing their information under IFRS. We actually started ours in 2007-08. Of course, 2007-08. So local government are now this year producing their accounts under IFRS. And just to give you, for instance, on the assets, when the Auditor General referred to this distinction of basis, then at that point in time, if you'd have used the asset valuation of roads that are a part of the asset base of local government, that would have been a figure of five billion. On the same basis for IFRS, that would have been 55 billion. So when you get those orders of magnitude different depending on the accounting basis, you can see why we need the platforms to be the same. And for the first time this year, local government will be on the same basis as central government. So that gives us even more the right conditions for working on these things. Pymont Secretary, can I raise the issue of performance with you in terms of providing performance information that can be attached to the consolidated accounts? Is that something that's included at the moment? It isn't at the moment. Although it's a useful signpost and we use the accounts as a signpost to other parts of the data and information that's available, including on performance. So what's the annual budget for the consolidated accounts? Well, the budget that we're talking about at the moment in terms of where the Scottish Government accounts is £33 billion. So £33 billion per annum. Yes. And we can provide performance information attached to that. And we've taken, what, 16 years to provide that? No, we do provide performance. We provide actually something which the Auditor General's report highlights as being particularly successful, which is the national performance framework. And we're undertaking some more work on that framework at the moment. So you provide interim information? Sorry? Do you provide interim, so six-monthly performance information? There is information, yes. The national performance framework is updated. This is live information on the website. Now, what is that detailed in the specific budgets? That gives you a connection between what the money is spent on and the outcome that we're seeking to achieve. Now, where I think we have got more work to do, and it's work that we're doing in the Government at the moment, is how we make the connections between the long-term outcomes that the national performance framework describes, and you'll be familiar with many of those, on what the milestones are between the spend that takes place and what the changes are that will create or produce those outcomes longer term. So we have some areas in the Government which we have developed already, which can give some interim milestones and which are published and made available, I'm thinking particularly in justice, but there are other areas as well, I think, in housing and regeneration, do this too, where they produce pieces of information which show how the milestones which will need to be exceeded and gone through to get to the longer-term outcomes, how we're doing on those. But the national performance framework itself shows on live time and on the website whether these trends are going up or down in terms of the outcomes. And it's a very important part of how we judge the long-term outcomes that we're investing over a number of years to achieve. Tell me which budget headings don't provide that information and why they don't, so if we can do it for justice and housing and regeneration, and there's other budgets that we don't do it for, so what's the reason for that? Well, all budgets are reflected in the national performance framework, but the specific example that I highlighted on the justice strategy is one that we are rolling out in our development and performance framework in the Scottish Government, and I've recently established a new committee within the Scottish Government, which we may have done. Why has it taken so long to do the other ones? What we've tried to do is to ensure that we know what the cause is. Can you tell me back then, so we've got justice, we've got housing regeneration, so we're doing fantastic. It was really moving on with that information, and we're really pleased with that progress that's been made, as is your opinion. Can you give me an example of where that information's not been provided over the last, because we've had 16 years to develop that, and why it's not been provided on those budget headings? The information that comes out in the national performance framework reflects— Yeah, but we can go back to the answer. Is live and good quality information, it is live, it is accessible, it's understandable? What we're doing is trying to move into a more detailed milestone. That's recently been developed. So, can we clarify then, let's put to the side the national framework at the moment, let's look at the milestones that we're referring to, which you have advised us that you're happy with. The progress has been made in justice and in housing regeneration. Can you give me an example of two budget headings where we don't provide that information? No, because we provide information on how our performance is going across the piece to Parliament on a regular basis. What we have done within the justice set of initiatives is to pull the whole justice system together, so those bits that we're responsible for and those that are further away from government, and look at what the collective impact is on making their outcome a reality. That's what has been innovative in the way that we have developed. That's relatively new. It's been very well received, not just by people who use a justice system, but further afield. Can I put it another way then? I've got education and I have justice, so when justice you've advised me that we have milestones there, these information is provided on an interim basis every six months. It's published regularly on the national performance framework. We're happy with the progress that's been made in that area, so let's look at education and compare it with education. Does education provide the exact same information? It does provide information. Yes, it provides comparable information. The difference is that what the justice strategy has brought to bear is to look at what the inputs are without getting too technical that would allow us to achieve those outcomes and track those, and that's done in a whole system approach. We are doing that and looking at that across the piece, which is why I've established, if I could just finish this point, it's why I've established specifically a fresh approach to our performance framework when I took up post and have asked Alison to head up how we roll out that more detailed information, but we are still reporting regularly through a range of sources to performance and on the website on how our performance... Let me just finally put it another way then. You have a five star approach to the information that you've provided in respect of justice and housing and regeneration, so what you're advising is that it could be three star for the other elements. I'm not saying that, convener. What I'm saying is that we have a five star national performance framework, which has been endorsed as such by the Auditor General's report. That is seen as innovative. In fact, other countries come to us regularly to find out how we go about producing that information. We've had visits from across Europe. I can give you some dates and times of those. I can write to you with the specifics. Have they said that they think that the system that you've got is... They are interested because I think that Scotland is unusual, if not unique, in producing this system that you'll be familiar with, which is working towards outcomes. In other words, the outcome that we seek to achieve will require a number of different portfolios and a number of different systems to make the change that we seek to make for the people of Scotland and to improve life for the people of Scotland. Within that, there is a very well trodden and well embedded machinery to show how we are working towards those outcomes. That is supplemented by reports to Parliament, published reports and by committees and pieces of scrutiny by the Auditor General and others. What we have changed in terms of the justice strategy example that I've given you is that we have used across a whole system an innovative approach to trying to get underneath the skin of why those causes and effects are making a difference in some parts and not in other parts of the justice system. We are really talking about paragraphs 44 and 45 of the Auditor General's report. There is scope to set out clearer plans on how outputs and outcomes will be improved in budget documents. Such an approach would help strengthen the parliamentary oversight of Government spending. I hear what you are saying that we are ahead of the rest and we are making progress and it is a work in progress. I understand that. We have been in progress, as Mary Scanlon said, since I sat in the Finance Committee back in 1999 and looked at the Oregon state budgets, which were very full. We wanted that as a model here. If you take health, for example, which is my particular interest, as you will know as it happens, we are almost entirely focused on targets, which are processed targets. Those are inputs, not outputs, and they are not outcomes. Although those targets were undoubtedly vital in driving up the performance in relation to what the patients received and how quickly they had access to the service, that has been very valuable. In terms of outcomes, we know nothing about it. When the convener asks you about outcomes related to budget and health, I have no sight of that hardly at all. The only field in which we have outcomes that show that there has been progress is cardiovascular disease. That is probably nothing to do with what we are spending in health. It is everything to do with what is going on in the community. It is happening across the world, no matter what is happening. I wonder if you could not give this committee, and it will not be when I am here either, like Mary Scanlon. I am retired. It would be nice to think, as our legacy, that we managed to get you to produce a report indicating what you are going to do over the next few years, starting with a report that you are going to give us in the spring of the development. Tell us in health how you are going to change the system so that we move from a system of targets to one of budgets related to outcomes. I understand entirely that health is a very good example of the need for outcomes because of the complexity of what contributes to the health of a community and an individual. You will know that better than most. Targets serve a purpose, but in themselves they will not produce an outcome. I absolutely agree. Where I am interested in trying to make the connection between the finances and the financial accounting and, indeed, some of the management accounting that was referred to earlier on, is to make the connection between the documentation that we have at the moment so that it makes sense on the cause and effect. Why I was emphasising the importance of the national performance framework in response to the convener's question here is because that still remains to us the most important element of how we track long-term changes, and the indicators within them give us a really clear understanding of what is making a difference to those outcomes. What we need to connect to that is the information that is still evolving and which I have given an undertaking to MISCAN and I will be coming back to in the early part of 2016 with proposals about how our version of consolidated accounts can relate most clearly to that national performance framework. I am absolutely clear because I go out and speak to people and they talk to me—believe you me—about the importance that they see about what they want to know of what Government is doing, how it is accountable, what a difference it is making to their own communities, what a difference it is making to their own services that they are taking. I do not underestimate the importance of us being accessible and a more open Government and giving undertakings to produce a way in which the accounts that were of particular purpose, predominantly financial, relate to performance information and how we can make those two connect and the connectivities between them improved. However, it will not change the fact that the national performance framework will still remain our gold standard of tracking to outcomes because that is why we—that is the decision that was taken a long time ago and one which I think is now embodied in the Community Empowerment Act. Incidentally, there is an opportunity when we look again at the first part of implementing the Community Empowerment Act about what information ministers want to publish and how they publish that. That aligns quite neatly with that, though that will be later on in the year. That does not stop us and it certainly does not stop me and Alison in her role as I have just appointed her to look at performance about where those two things connect to make a navigable and accessible statement of cause and effect to outcomes and tracking the milestones of progress between now and when we reach those. Some of the outcomes that we are talking about are not short-term. Some of them are very long-term. There are things in health that we have set up, which we have all agreed is a good thing. We know that the outcomes will not occur for 10 to 15 years, but being able to get an idea of the milestones along the way and how they are met and if they are not met as they were not on climate change, for example, how relevant is that? How far off track are we in terms of our budget in that field? Does that mean that we should be applying more money? The Finance Committee can save when they look at the budget. The Audit Committee has done its job, which it cannot do at the moment, saying that those outcomes are way off target and that it is serious or that it is not serious so that we can advise them to do so that they can do their job. I will make one more point, convener, in response to that. You are absolutely right. Many of those outcomes, most of them are long-term and many of them are very long-term. They are also very deep-rooted problems and they are not solved by one portfolio or one budget line. That is very clear. That is why we are in new territory. The other issue that we have had to put in place to get the national performance framework operational and live is to ensure that we can collect the kind of information that will inform those outcomes. Sometimes we have had to put in a couple of instances, I can think of, baselines and to collect that baseline data to know whether it is improving or not. That is the first point. The second point is that often the indicators that would allow us to know whether that outcome is getting near or not are also quite complicated. For example, I can think of dental health of children, which in itself gives you a snapshot of how a child's mouth looks. We know also from research and statistical analysis that it can give you some information about the wider state of care that that child is receiving, about issues around poverty and vulnerable children. We are ambitious for the national performance framework and, unapologetically so, we are clear that it requires us to have milestones and indicators, live information, some of those indicators have to be created, some of that baseline data has to be gathered. However, I do understand and appreciate that, in doing that, we have to also start to develop the connectivity with the finance accounts, not change the accounts other than what we have talked about in terms of consolidated options, but to see how they relate to each other for the people of Scotland but also for the Parliament. Over the past few years, we have looked at quite a number of ICT contracts, most of which have not gone particularly according to plan. There appear to be certain common factors in that. Perhaps the most recent NHS 24 issue is a good example. Here we have a situation where there are basic flaws in the contracts. You do not need to be a lawyer to read that contract and realise that it is not fit for purpose. The scoping of the project is inadequate. There is an over-reliance on vendor input, presumably reflecting the fact that the in-house skills are not there to be able to address that, and there are management issues around that. Obviously, we are where we are on the projects that have taken place. How are we going to address those simple, basic errors that are costing us so much money? Ann Moises might want to say something specifically about NHS 24 and the work that is being done to review that project. I am using that as an example. I understand that. We have been cognisant and have heard very clearly the messages that have come through Audit Scotland on this. We have had two reports on the nature of our ITC projects. It is an area that we have taken a lot of time and a lot of work over recently to try to change the way that we operate and to give a little bit more detail on that. However, the two areas that I would pick out—three that have been most important to improve and to reflect on the experience of some of our IT projects—incidentally, there are some that have gone quite well. I would happily give you some examples of that, but I know that that is not what you are wanting to hear about this morning. First of all, we need to look at the way that we construct and lead the teams that help us and support those senior responsible officers who are leading on complex IT transformation schemes. That is to do with the ICT assurance framework that has been put in place and the digital transformation service. Ann Moises can talk a little bit more detail about what those means. Basically, there are resources for senior responsible officers about what they need to know and how they need to get ready for projects—the kinds of assurances that they need to have. There is a source of advice and information and expertise. The second thing that we have done is to develop our own talent workstream. You mentioned skills. We are in an incredibly competitive market here in trying to attract people who can command very significant salaries in this area. It is a growing field. You will know that yourself. However, we have been successful in attracting talent into our own team. I think that we have just recruited another 19 posts of people who will be joining our team, some of whom I believe have taken pay cuts to come and work with the Scottish Government on this particular stream of work. We are going to be using them as part of our resource for the senior responsible officer advice and assurance that we are seeking and the support that we are giving them. The other issue is the wider issue to do with skills gaps and skills shortages across the piece. We can talk a little bit more about that later on, but I do not know if Ann wants to say something about the generic issues that we are pursuing just now. I can give you some examples of the successful projects that I would hate to feel have not been recorded in some way this morning. I absolutely acknowledge that projects fail for the same reasons over and over again. It is something that happens not just within Government, but across the industry as a whole. What we are doing is working very hard to try and help projects at the initiation stage to ensure that they have the right skills and resources available so that the projects and programmes get off to the best possible start. By using the assurance framework that we have introduced, we will very clearly signpost the common causes of system and project failure and to get the project team, the SRO and the accountable officer to look at those right at the very start and to tackle the causes of failure all the way through the projects and programmes. Some of the work that we have done has been within the past two years or so. We updated the ICT Assurance Framework earlier this year. Some of the large projects that have hit the headlines recently started quite a time before the new measures were introduced, but the way that we will know that we are actually making a difference is when we get the SROs, the accountable officers and the project leaders to engage with us at the very early stages. We have gone through your checklist and recognised that we have potentially problems here, here and here. How can you help? At that point, we will work with the office of the CIO and the new digital transformation service to try and embed skills that will not necessarily take them all the way through the projects but will help them to find the right resources, access the right skills. The digital transformation service, for example, is working with about five different central government organisations at the moment purely to help them to resource and bring in the skills that they have now recognised that they need to take forward the programmes that they have under way. I will come back to skills in a second, because that is a very important aspect. What you are talking about here is trying to address the shortage of IT skills and so on. Coming back to the very basic part, the contract. That has nothing to do with IT skills. Firstly, it is sensible management to be able to read a contract and understand where there is gaps. Secondly, who do we use as lawyers? In my previous life when we had IT contracts, you spent a very great deal of money on lawyers to get every single line right, apart from having the expertise yourself to be able to look at a contract and realise that it is sensible. Why is that not happening? This is not the first time. On the specific contract areas, it slightly depends on which organisation we are talking about. Some organisations have in-house legal capacity, such as the Scottish Government, others go in-house legal capacity if they are not able to do a contract properly. There are legal colleagues in various organisations, but in some cases, in some of the ones that I have been directly involved with, we have gone out and hired independent legal counsel for people who are very practised in this particular area. For example, the swan contract, we had external legal advice, which was assured by our own internal legal people. It is possible to do that right. Contract management, which is a latter issue, is something else that we are working quite hard with procurement colleagues to increase an upskill. However, I take the point that you are talking at the point at which the contract is let, or before you sign on the dotted line, ensuring that it is viable and puts the buying organisation in a strong position. Clearly, that did not happen specifically in the NHS 24 site, but also in previous contracts that we have looked at as well. Frankly, IT is this highly specialised area. Those contracts are highly specialised contracts. Would it not be normal to assume that it would be rare for an organisation such as this to have the internal expertise for this, and would you not normally contract this out to expert lawyers that would ensure that we do not end up with cost overruns arising from the fact that we did not get the contract right? In some large and complex cases, yes, independent external lawyers would be used. In others, for example, some of the ones that I have been involved in recently, we have used Scottish procurement colleagues who have a lot of experience in contract letting and who do a very good job consistently. We go outside for NHS 24. It was a big contract. How do you define a big contract? Anything over £5 million, probably. We would look very hard at what was happening. Those are the ones that are gateway reviewed. Some below that particular financial sign-off are complex in that the components of them are novel or innovative, and something that was novel or innovative, you would probably want to get expert advice on. Some of the stuff that we will probably be doing in the future around cloud contracts, for example, is an area that we would absolutely seek expert advice on. On the particular NHS 24, I am afraid that I cannot comment on why they did not seek external legal advice, but I am more than happy because I know that the colleagues are reporting to you anyway on making sure that that particular issue is handled. I will touch briefly on the skills shortage, which we have already discussed. There is a generic skills shortage across the whole market worldwide. As I saw recently, reports have been exacerbated by companies and Governments hiring people because of the cyber attacks that they have been experiencing and they are sucking up any excess skills in the market. How are you going to compete against that? How are we protecting ourselves in terms of when we are constructing these projects? How are we protecting ourselves against cyber attacks? I will ask Ann to talk a bit about the work that we have in hand on cyber attacks. In terms of the skills process, we have a responsibility not just to grow our own talent but to look more widely across Scotland. My understanding is that the figure that is being cited at the moment in terms of the skills gap is about 11,000 jobs. We are working with Skills Development Scotland, who are looking at how they can develop and encourage more take-up of digital learning opportunities, not just in undergraduate and in school terms, and working closely with Education Scotland on that, too. The other area that has recently come on to the scene is the academy code plan, which is where we have around 34 students in a new digital-focused academy, specifically looking at digital skills. That is the first, I think, two years of the intake on that academy. We are aware of the fact that we have a responsibility more widely to be able to develop the skills for Scotland, as well as developing the talent in the way that I have described in attracting our own and developing our own teams. Can I just make one generic point about the generic question that you asked about ICT? They are incredibly challenging these projects. They are incredibly challenging and usually Government is wrestling with some of the most complex and biggest contracts in a very public way and being held accountable quite rightly to the public for how we spend the public purse on these big, complex, often transformational projects. We will be reporting back in the spring on our response to how we have implemented the recommendations that the Auditor General asked us in her two previous reports to consider and will be leading the team in coming back to me and probably to you on how we have fulfilled that. Some of the questions that you have asked will be part of that account. The Scottish Government Audit and Risk Committee, I have asked them to bring the issue of IT towards them as well and to have a discussion with them about what we are doing and what our efforts are here and where the areas are where we are particularly vulnerable and particularly open to difficulties and risks. It is on our risk register as well, on a regular basis. The third point is that I have said that I will report to ministers on how we are doing and developing on our ICT responsibilities and the projects, both small and described, and the bigger ones. At some point, we will probably talk about CAP, which is another example of not just ICT but other big changes in the way that we deliver funding to an important community in Scotland. Before I bring in Richard Simpson, can I take us back to the NHS 24 contract? I have just asked the permanent secretary if I was asking you to sign that contract for £75 million. I am sure that you would read through the entire document. I would want to be aware that the document was fit for purpose and you want assurances on that. You would want the document to be read through? I would want the assurance that the document was fit for purpose, absolutely. I am asking you a question. Would you expect it to have been read through? Would you have expected the whole document to be inspected? Is that a contract for £75 million? I would expect somebody to be responsible for ensuring that that document was right, fit for purpose and appropriate. In the example of NHS 24 and the evidence that we received last week, the document was not read through. No matter what measures that we take, whatever we talk about and what we have learned from this experience, surely it is a basic that we would expect contracts at that level of that expenditure to have been read through. If so many responsibilities are understood, you would expect those kinds of contracts to be read through, wouldn't you? I would expect the team in charge absolutely to be clear about what they were signing up to and that the document was fit for purpose, I agree. That is why I know that there is a report being undertaken at the moment into what went wrong in that preparation, including some of the information that you have already shared with you. We will be coming back to the Cabinet Secretary for Health and the Very New Future. Is there a possibility that similar experiences have happened with other contracts that have not been read through and have been signed for £75 million? Ann has given you an account of how we are trying to ensure that every opportunity for people to be trained, to be developed and to be aware of their responsibilities before signing any contract. The person who would sign the contract, as was confirmed last week, was the Accountable Officer, is that correct? It would be the Accountable Officer in NH24, yes. It is a basic responsibility of an Accountable Officer to at least ensure that the document has been read through. The auditor tells us that it has not been read through. It is the responsibility of the Accountable Officer to assure themselves that that document is fit for purpose, is correct and is appropriate for the contract that is being sought. If there are any other contracts where we can uncover that there has not been a basic read through of a document, you would be disappointed with the Accountable Officer. I would be disappointed if Accountable Officers were not assuring themselves of the fit for purpose nature of their contracts that they were letting. Anyone who found themselves in that position would not be fit to be an Accountable Officer anywhere else or any other contract. It is a very basic responsibility. It is a very important responsibility for an Accountable Officer, I agree, in letting any contracts. The measures that have been put in place would ensure that that never happens again. We do not expect a silver to come back to the committee. I can never say that I will never come back to the committee, and we will never have a disappointing or risky ICT contract. That would be a very foolish principle of Accountable Officer. That is absolutely fair, but I think that the basic issue of reading a document, I have signed loan agreements for much less than £75 million, and it says at the bottom of it, please read carefully because you are taking on a significant responsibility as a result of you signing that document. If I am an Accountable Officer and I sign a document that says that I am responsible for £75 million, the basic please read carefully should at least be in that document. Now, all I am asking you is, will we ensure that there is something basic that says please ensure that as an Accountable Officer, when you are signing for signs of significant responsibility, that you please read carefully should be the very basic, should it not? Therefore, we will not have anyone back at this committee. I would be surprised if that is not in the advice that Ann Moise is giving to her, the Accountable Officer, to be seen as possible. We should have been there before. However, you have made that point very clearly. We should have been there before, though. Somebody should have been advised, please read carefully. It says £75 million here, please read it. It is a lot of money. I am not demurring from that. The common sense, apart from anything else, would emphasise the importance of reading a document that one signs. If there is a private company that could have been bankrupt, is that not correct? We have got public money here, so we keep providing public money to prop up these situations. Is that unacceptable or not? What is unacceptable is that we do not do anything in the light of what we are learning and in the light of what we know is going wrong. That is why I am here today. Ann, I know, was invited particularly to talk about this because I know that it is an area of concern. It will continue to be a challenging area for Government for some of the reasons that we have raised not just to do with skills but because of the complexity of the number, but I am not demurring from the responsibility of accountable officers to ensure that we get fundamentals right. There are actually three separate issues. The one NHS 24, where the tender document was not transcribed to the contract, seems to me as the Government. Ann-Mas Moyer as the Government officer involved in this, I cannot believe that these were not cross-checked by somebody in Government, because the individual agencies do not have the skills to know if things are actually right or not. They know about their own area of work, but they do not know about the technical aspect. The fact that the Government is not cross-checking a tender document against a contract seems to me utterly astonishing. It has cost us tens of millions of pounds, but I assume that the convener has really dealt with that. The second area is when the procurement process does not produce the result in terms of, if I may call it, the clinical output. If we take in health the e-care programme, which costs us £56 million and is going to solve all our problems about a common assessment and a common recording process across social care and healthcare and £56 million later, we abandoned it completely and we still do not have a system in place. We have all sorts of small systems in place but not a common system. That is one where the outcomes that we wanted in terms of what this would do for us just did not occur. The procurement process was wrong, so I would like to know what your comment on that is. The other one is that there are two others. One is that when we develop, we have gone for not having a centralised system in health. I am glad that we did that because we avoided the problems that they have had in the UK with the expenditure and the massive health programme of £12 billion, much of which was wasted, so there was massive waste. However, if we take the health service, we have a situation because we have chosen to allow those individual boards who have no expertise or little expertise or certainly grossly insufficient expertise to develop their own systems. We have a system in Scotland at the moment where a patient in Inverness's records cannot be read by an expert in Glasgow, even though their treatment is there. There is no in-connectivity between all the boards in Scotland in terms of their portal system. If I am a doctor sitting in Edinburgh and I have someone visiting me who is registered with a patient in Inverness, they cannot go on and look at laboratory results, because the Sky programme is not in-connected. Those programmes were set up eight or nine years ago and are still not interconnected. The health committee was promised in 2011 that this would be sorted and it is not sorted. There is a question of the safety by having devolved systems that we seem to have gone for is great in terms of the cost side, because those portal systems all individually work, but they are not connected up, so the system does not deliver for the individual clinician. I can tell you that a clinician sitting today who is going in and out of individual portals that are reported to me as being connected and it takes them six or seven minutes to switch out of one and into the other. When you have only got 20 minutes to see a patient, seven minutes to switch portals to get that information up is totally unacceptable. I am angry about that. The final one is the fact that the procurement of off-the-shelf programmes is something that is entirely appropriate. Those are often highly tested systems and there may be other jurisdictions with other systems. However, when you get a system like the track care contract, where for nearly 24 hours in Glasgow, which was the lead authority that bought track care first, the system goes down for a routine maintenance. If I was a bank, I would have been fined by the fiscal authorities millions of pounds for what they did to my customers. However, in health, we have the system that is fundamental to the management of patients, allowed to go down because of procurement for an upgrade that goes down. There is no continuity, there is no double running that allows the system to continue for the clinicians while it is being upgraded on a second set of servers to be maintained. Those are the three instances that I would like replies to. I can take the procurement expertise in the first instance. I am not sure that we will have enough detailed information to be able to answer your very detailed questions, which are entirely legitimate, I might add, on the approach to ICT in health. If not, I will undertake personally to respond to you on those. In terms of the procurement, we recognised some time ago the absolute fundamental importance of having an expertise in procurement and a growing expertise in commerciality as well, something that the Government has struggled with in the past and something that we are still working on now. However, we now have a director of procurement and commercial who sits on the information system board and advises Anne and the projects that we are talking about, particularly the smaller ones, which are less likely to have access to this kind of information. He and his team are immersed in commercial knowledge and in information. That is a growing expertise. It is not complete, but it has been very important to us as we have looked increasingly at either buying kits off the shelf or looking at the specification. The specification is the thing that will make or break whether the procurement works or not, as well as the legions of regulations and legislation around what we can and cannot do in good procurement, including going to the European market and so on. We have not a finished product but a very good director of procurement and commercial information and a good team in there who are supporting us and improving our approach to how we grow ICT capacity and our preparedness for the kind of contracts that you have mentioned. As far as health is concerned, I understand entirely the benefit of having small local, but the unacceptability of those talking to each other. It is not just in health where we have found some instances of that, though I appreciate that that is where it impacts most on the customer service and on patients, of course. What I undertake to do is write to you on where we are with that and our intentions, particularly the point that you make about inadequacy of the off-the-shelf project that you referred to, but also what our plans are to ensure that we can get better connectivity. It is not just in health and it is a history and one that I have had experience in a previous role of where systems do not speak to each other. The question is, do you buy a system that completely blankets all of those smalls, as they have done in other parts of the United Kingdom, or do you try to get some connectivity between those systems and how costly is that? Often the systems are quite old, so the difficulty is that you are replacing and spending a lot of money on a connectivity which will become outdated because digital processing skills and development are so rapid. I absolutely understand your frustration and, not least, the biggest issue here is not just what happens with the contracts but their impact on the public and people who expect services to answer their needs. I undertake to write to you on that if that is acceptable. Conveniently, the sevens got to the point that I wanted to ask you about. We have already agreed that the things that you are dealing with are extremely complicated. Many of the things that you are now working with are old, and therefore they reach a point where you think that you need to be replacing them anyway. If I am right in believing that every system that you are putting in now has a lifespan and there is a risk that those lifespans are getting shorter simply because things are getting overtaken, surely there is an even bigger problem in terms of skills and management because what you are trying to do now is less than you will need to do in the future just to maintain what you have currently got. Never mind to develop the new systems that you might want in other areas where you are not currently even automated if I can use that phrase. Has anybody given any thought to the actual skills management and, indeed, the whole management of that project in the longer term as it gets more complicated and there are more systems out there, please? Indeed, in fact, I would say that we are looking very carefully—I am leading a piece of work at the moment as I instigated when I came in at looking at what we need in the way of skills management and capability over the next five years in Scottish Government, not just in the important area of ICT, which is the area that you are focusing in on. It is not unique to that. We need to think about whether we have got the civil service, the structure and the governance approaches to enable us to cope with the knowns and the unknowns of the next five years. Anne might like to talk a bit about what we have in place already to try and, as you say, future proof some of our skills challenges. If I might interrupt but I would be interested to hear, can I suggest that even five years might not be long enough? Hopefully you are talking about programmes that are there for 10 or 15 rather than five. Absolutely. I am talking about five years in terms of five years of the Government as opposed to a longer term horizon scanning process. You are quite right. If I could possibly pick up two points related to your question, one about the kind of built-in obsolescence of some software that you buy just now. One of the things that we are looking at very closely in procurement is when you buy something new, you plan for its replacement almost immediately. It is not just about the contract to deliver what you have got, it is about how you get out of that contract at the end, how you ensure that the data and the knowledge that has gone into that system can be properly transferred into something new, assuming that is what is going to happen. There is a procurement and contract element around that that we are tackling on the skills and the talent that we are going to need in the future. The skills analysis work that we did across Scotland looked not just at the current skills gaps, in other words what do we need now. It asked organisations what they thought their future skills requirements would be and the work that we are doing in the skills investment plan and code plan are attempting to tackle some of those things. The one that was consistent, which is a gap now and will be perceived as being a gap in the future, is around cyber, where people are very conscious of the dangers of cyber attack and security. The work that we are doing around cyber will take some time to come through. It is working with colleges and industry to create courses and transferable skills. People who perhaps work in the industry at the moment but are in an area that is downsizing or not being required can re-skill in the areas that are up and coming and that we absolutely know that we are going to need more of in the future. I hesitate to mention common agricultural payments, particularly at this stage. I thought that that might come up. I just wanted to mention that the IT system that is designed for that, which is only one element of the challenge, has been designed specifically to last longer than the programme for more than seven years. We are already thinking about what might need to replace that on the basis that you are talking about. Good morning. I partially answered what I was about to ask, but one of the things that I have noticed and quite a lot of what seems to have been apparent in many of the procurement processes as we have gone through reports over the past number of months is that when it comes to the contract and taking it forward and seeing what the outcomes are, there has been some doubt in my mind on some of them that there has been a bit of a clarity of purpose or where do you want to be with this and you have the initial contract, perhaps even the tender, and then you get to the situation where you think that that is not perhaps what we wanted and there has been changes within the contract. How clear are we that the management at the initial stages and the advice that is given to those who are managing and giving advice about those contracts are clear in their own mind as to what the purpose of the contract is? That is a good point. I know that Ann will share with you some of the work that is being done by the teams that we mentioned with the senior responsible officers and the accountable officers. I think that the only thing that I would say is that it goes back to the point that I was making earlier on that the specification of what is required is crucial and a very crucial part of the very early stages of procurement. Sometimes that changes and that is the other issue. We will come on to CAP, but that was an example where we were working very hard on getting the IT for CAP and what we thought was being required for CAP right, but it changed. It changed quite significantly and it changed as a result of both what the industry wanted but more particularly what the EU decided they wanted to specify and some of the changes around their regulations. Being able to specify something that is flexible enough to enable some of those customer-focused or other kinds of changes is a real challenge and that is part of getting the specification right in the first instance. Ann, if you want to say anything about what we are doing at the moment to train and support people in that role? The specification is the key to everything because the specification leads to the contract. If you know exactly what it is that you want to procure and you know that you are going to need exactly the same thing for the next three years, you can go out and buy it. Very seldom does life stay still for that length of time, particularly around ICT programmes and projects. Part of the change in approach to how we actually do some of this is to be more agile, which is to recognise that change will be constant. To set up contracts that do have a degree of flexibility and you go into assuming that there will be change, but crucially that the change to the contract is effectively managed and that the Government organisation who wishes the change and the supplier who is delivering that change are really clear about exactly what is involved—the degree of flexibility. The worst kind of contract is one where every three weeks you are attempting to change it. It adds cost, it adds complexity, so it is getting the balance right between agility, flexibility and some degree of certainty around the costs from a buying perspective. If I can absolutely specify what I need, I can negotiate the suppliers down, I can get a fixed cost, I can hold them to that. If I do not know what I need, I have to be considerably more flexible, but the key is managing change effectively. Assuming that that is the case, obviously every time there is a change there is a financial consequence. We have had a fair history of seeing particularly ICT contracts, the costings going really through the roof. Even allowing for what you have said there is the understanding of how we can drag those costs down, how we can actually manage them and how we can recognise them particularly through the audit function and let alone the actual management of it. Without going into the practical difficulties of a contract that could have clauses in it that could reduce the amount of information that could come out, shall we say, but we really need to know how we can keep a hold of that within the audit function that we are obviously dealing with. One thing is at the very start of your programme or project to recognise that there are likely to be changes to set up the contract in such a way that you and the supplier are very clear how the work to deliver those changes will be costed and on what basis and throughout the life of the contract is that going to be a consistent basis. Things like increase of costs of living, all those sorts of things. If you get that nailed at the start, it does not mean that change will not happen, but you will have a much higher degree of certainty about how you can manage and control the costs of those changes. The other thing is specifying the changes really in a degree of detail and negotiating with the supplier about exactly how you are going to deliver those and challenging the supplier. Can I just ask a couple of brief questions before coming to my substantive question on carp? The first one convener is to Ann Moises and you did, I think, say that the digital transformation service, the government source of advice and expertise, you are working with five organisations at the moment. Can you tell us which five organisations you are working with? They are actually about to start working with the futures programme who are suffering some losses on their teams at the moment, so that is one of them. They are working with the National Records of Scotland on recruitment, they are working with Scottish Courts, Scottish Enterprise and the Care Inspectorate. So they are not working with NHS 24 or the CAP Futures programme? They are working with the CAP Futures programme on potential recruitment for particular organisations. You said that you have listed five, so there is more than five. Oh, there is more than five. The CAP was yesterday. Your response to Richard Simpson was five. Can you tell me if the CAP payments in Northern Ireland, England and Wales are facing the same problems as in Scotland or are they being paid out at the due time? You will be aware that the deadline for payments is June, and my understanding is that all the countries in the UK will be subscribing to that deadline, but on the specifics of your point, Wales and Northern Ireland are counting their region as one region, so that is different to the way that we are operating. We are operating under our CAPs programme, a description that gives us three regions, three payment regions and three livestock schemes. That was in response to requests from the industry themselves that we configure it in that way. I was only asking if they are paying it on time and if they are having problems with expenditure and IT. My understanding is that they are paying it in two parts, like we are in Wales, but in one part with the DEFRA English, and they are still intending to get theirs out before the June payments in the same way that we are. So they are paying on time and are they on budget? I cannot tell you on that score. I can find out for you in terms of the information that is available to us. My third very short question, Ms Evans, you have made quite a few of your comments, has been about the shortage of IT specialists and skills management, skills shortages etc. Given that an IT specialist, the first exam that they would do would be a national 4 and 5. How many additional pupils sat national 4 and 5 in IT in mid June this year in order to address your skills shortage? That is the start of learning IT. I do not have that information with me at the moment, but I can make sure that it gets to you. You do not need it to get to me because I can tell you. Anyone going on to do an HNC, an HND, a degree, a postgrad, anyone looking at cybercrime or ICT at anyone of Scottish Scotland's universities or colleges, it is fair to say that they would start with a national 4 and 5. There were 29,000 fewer pupils this year sat national 4 and 5. If you are in charge of skills shortages and you are the most senior official in Scotland, and you are looking at the shortage of IT specialists and telling us that they are taking cuts and pay to come and work for the Scottish Government, I would expect you to have an eye at least on our schools, our further education colleges and our universities to make sure that we are growing people for the security of jobs in the future. Well, I can tell you, 29,000 fewer people did that. My next question, convener, is what was the original estimated cost of the common agricultural policy future programme? I would need to consult with colleagues on that. The cost at the moment is £178 million, which is about 4 per cent of the £4 billion funding that will be distributed as a result of the CAP. Well, I know that it is forecast to be £178 million, but I am finding difficulty about what was the original forecast because capital spending in 2014-15 was £50 million, 32 million more than budgeted. For last year, it was budgeted for £28 million, and it came in at 50. It has gone from 28, but I do not know if that is just in one year. Would someone around the table have the original estimate, having read the contract? The convener asked you seven times if it was appropriate to read through a contract. I am now talking about £178 million contract, more than twice NHS 24. That is into insignificance now compared with this one. However, if that contract had been read, surely you would have known what the original estimate was. As you will be aware, there are contracts being let all the time within the Scottish Government, and the Accountable Officer for each of those contracts will be responsible for ensuring that those contracts are correct at the time of signature, taking into account some of the points that were raised in the earlier questioning about how items, circumstances, regulations and other contextual aspects, can change. The point that I would make is that we know that the changes that took place in the way that the Common Agricultural Payments project has moved, including some of those that were beyond our control but not entirely, means that this is not just an IT project, but an IT project that we know has cost much more than was intended. However, a huge change to the way that we administer payments for an important sector of Scotland community. I am not trying to pretend that moving from a very early stage of estimate of the kind that you have described to where we are now of 178 is a success story, it is not. You and other committees in Parliament have had a lot of information and some representations from the Accountable Officer and the Senior Responsible Officer for that project, and I do not think that in any case they have described that as being the way that we would have anticipated that it has turned out. What we are doing now is focusing on making sure that the project is effective, that we distribute the funding to farming communities within the timescale that has been stipulated by the EU. That is, from 1 December to June in 2016, we are due to start making payments shortly and we have a plan for how those will be executed over the next few months. We have learnt from this project, it is big, it is complex, and we had a lot of very late information, as I described earlier on, from a range of sources, including the way in which the industry wanted to change the regions and the way that EU regulations added scope and complexity to the system. They also delayed it because we had to undergo quite rightly farm inspections to ensure that the checks and balances were in place before we triggered payments. There is a whole range of not just IT-related complexities around this project that have added to the difficulty. I am not trying to pretend that it has been perfect or that it is an ideal example of managing that project, but we are focused now, as I think Graham Dixon explained to the committee and other parliamentary forum on getting it right for the farming community. It is far from perfect and it is not just any old IT account that you are learning from. I have been on the committee for nearly five years and the previous auditor general raised issues about the registers of Scotland and Crown Office, prosecution services, et cetera. We were told then that the Government was setting up a support system and everything was going to be all right. The point is, Ms Evans, that in the auditor general's 2014-15 audit of the Scottish Government's consolidated accounts, does not list a whole load of IT systems. It only lists one. I would have thought, as the most senior official of the Government in Scotland, that I am looking at a cost of £178 million. I know that it is £32 million over budget for last year. I am absolutely amazed that you did not do a wee bit of homework and come along to the Public Audit Committee cross-party of the Scottish Parliament to say that this was the original cost. We had various changes and whoever's fault that was. We are old enough, wise enough and ugly enough to accept that, but we do not even know what the original cost was. I am not really satisfied with your answers, because we heard the same answers five years ago before you even came into post. I put on the record the auditor general's comments that the programme has carried a significant level of risk from the outset. Risks will remain until full implementation and beyond. I absolutely agree with that. It is a risk, because the project is so complex, because it has got so many aspects to it, because it has had delays, it has had changes. We were talking earlier on about specification and how difficult it is to ensure that the specification of a contract is flexible and pliable enough to be able to respond to changes very late on in the nature of the purpose that it is intended for. That is a really good example of that. Again, I am not here trying to make excuses. Everybody has said that, before you and the auditor general agree, this is a high-risk project. Our focus now is to ensure that the payment plan that we have to ensure that farmers receive payments between 1 December and June. As the Cabinet Secretary described earlier on in the week, that is our entire focus at the moment. That and working with the community and ensuring that we are giving them the best support and information that we can. I would like to ask for the written information that you have been unable to provide to us today. I think that the Audit Committee of the Parliament would be failing in our duty if we were not to look at the original forecasts and all of the reasons that have led to the increased spend here. My final question is—I think that I will change my final question—where does all the extra millions come from? We are always told that there is not enough money for this, not enough money for that. 178 million—I do not know how much—is over budget. I think that it is 78 per cent or 80 per cent. Where does all the extra millions come from? When we are so short of money in Scotland and people in the Highlands cannot get home care, where do you get all the extra millions for your IT projects? My colleagues Alison and perhaps Aileen will want to talk about the overall management of the budget, but I can say as principal or countable officer that we are responsible for ensuring that where there is an overspend within the budgets, we have to make that up within the overall budget of the Scottish Government. There are not additional extra millions. That is an economy, but there is an opportunity cost. You cannot spend money twice. If you spend it there, it has to come from somewhere else. Where does it come from? We are making tough decisions all the time during the accounting year and across accounting years as well. One of the reasons why we ensure that the money that we manage is underneath the cap of what we are allowed to carry forward so that we do not lose a penny in terms of what is dedicated and spent on services, but you will know yourself that if the money is finite—which it is—we have to make hard decisions across portfolios, not just within them, about where we spend our money and how we make up for difficulties in one area and pressures in another. That is often where we will end up making a decision to delay or to increase funding in one area, knowing that we will have to reduce spending in another, either within the year or in subsequent years. John Swinney, when any of us in the opposition parties and we all do it, we want to spend more on X. John Swinney and every finance secretary before him quite rightly said to us, well, where are you taking that money from? You have far more insight into the budget. You know what you are spending. There are hundreds of millions of pounds above the forecast expenditure here today, and you cannot tell me where it is coming from. I am saying that this is my responsibility and, indeed, the governance and assurance framework that operates within the Scottish Government, which is extensive and transparent, to ensure that we are taking decisions and appropriate decisions, often with ministerial involvement, about where we change directions of financial spend. If there was a difference between not making cap work and making cap work, that would be a very strong argument for us to move money to ensure that cap operates and that farmers receive the payments to which they are due between December and June of next year. Thank you, convener. Just a quick question for the panel in connection with ICT. How many of the panel have been directly involved in the negotiation of ICT contracts, and how many have been directly involved in scoping IT projects? Three. Quite a long time ago, and the ICT world has moved on since then, but I have been involved in procurement and specification. And that's three that have been involved directly in the contract negotiation and in the scoping of the project. Mine was in the scoping and specification of the contract in local government. Thank you very much, convener. I wonder if I could move on to European structural funds, which the Auditor General mentions in her report. I suppose that I could be concerned that it would appear that all four funds have either been interrupted or suspended, but I think that what really concerns me—although you might want to comment on that—what really concerns me is in paragraphs 55 and 56, the Auditor highlighted a number of concerns, including the robustness of information being retained and the control weaknesses identified. I just hold the information that I put on my tax return for six years. Why is it difficult to hold on to the information that is required on European structural funds for the period for it to be audited? Well, that is one of the conversations that we are having with a number of organisations, the 18 that have had most errors cited in terms of the kinds of information that they have retained in response to receiving these funds. They vary. Sometimes it is not so much about the retention of information, but it is the nature of information. For example, one of the most common errors that we are finding and which are being revealed through the audit process, which is pretty stringent, is the issue to do with timesheets. Some organisations have members of staff who work part-time on an ESF project, but the rest of their time is on-core or some other kind of project. That information, the regulation state and the audit practice states, needs to be really carefully, very carefully and pretty minutely detailed. Sometimes that is done, sometimes it is done and not found at the time of the audit, sometimes it has not been done. There is a correlation with keeping information, keeping accurate information, but it is keeping the information that is required as part of the regulations and criteria for receiving funding. If I might, that is one of the reasons and some of the work that we have been doing very closely. I have met two of the chief executive of the organisation or spoken to them recently about that. We are using the information from those past cases to inform how the next tranche of funding is applied. We are doing away with that opportunity or the requirement to look at pieces of paper around staff time and timesheets, simplifying the process considerably, putting a lot more effort and testing of the capacity of the organisations who are going to be in receipt of the next tranche of funding. We have learned a lot from the current, but we are still working with the organisations who have been in receipt of funding to drive down the error rate and to find those pieces of paper. Misuse is unlikely, but mislaid seems to be more of the issue. Yes, okay. I take your point that it is more likely that people have not got the information to back up that they have done the right thing than that they have actually, on wholesale anyway, misappropriated funds. Am I allowed to sit here and be surprised that on earth, how long have we had the European Union? How long have we had structural funds? How long have we had bits of paper called timesheets? I mean, why is not this absolutely basic to those who receive funding that they understand that this information needs to be there? We have certainly made it crystal clear. In fact, over the past few months, earlier on in the year, the former Permanent Secretary and the Deputy First Minister wrote to all those 18 organisations that had the highest level of errors of the kind that you are specifying to say to them why is this happening and what are you doing to address it. To be fair, some of them have made real progress with some of their efforts to find those pieces of paper and identify where that information was recorded. I think in particular of Scottish Enterprise who set up a task course very rapidly and who have driven down the number of errors that have been cited because they have managed to identify the kind of data and information that was being sought. However, that is why simplifying the process and ensuring that there is a rigorous upfront testing of the capacity and an understanding within the organisations of what is required to comply with what our significant amounts of public funding and for which they will be held to account quite rightly. Do you really believe that message is getting through? I can sit where you are and say what you have just said and I also understand your frustration that some of the organisations around you do not do some of the things that you just asked them to do, but is not this absolutely basic? You will not get paid unless you comply with the rules on identifying where it has come from. Every accountant in the sense has known that forever. If I cannot produce my timesheet, I cannot. Sorry, I filled in timesheets once. Why is this difficult? I have talked to, as I said, a couple of the people who have been responsible for organisations or who are part of the process of giving money to the organisations. One of them was as mystified as you are as to why the money that had been received by the organisation had not been seen as having strings attached to it in terms of the governance and assurance that was required with that. The others that I have heard about and have one or two, as I said, I have spoken to, is more the case of making sure that they keep tracks administratively on the information in a rigorous and effective manner. I think that which is quite fundamental but that is and quite simple. That has been where they have found difficulties and that has been, I would say, in the example of the Scottish Enterprise, for example, relatively quick and easy to put some of that right. So there is information there. It was not produced at the time that the audit happened. Where is it now? It is here. But yes, it is. It is our role and my role to ensure that we are making it very clear to those who are in receipt of this funding and continue to do so, the kinds of measures that are required to ensure that this funding is accountable and that there is a track on the public pound. Grantade funding generally and criteria is very important in this respect. And where it comes to EU, it is very finite and very specific. We will keep making that message. I will keep saying that message and so will others who are responsible for these projects. I guess it is only when you stop paying people that they realise that they have to do things right. I suspect that is not always an option that you have. Well indeed, there is money being clawed back and withheld on some of the projects and that has an immediate effect of course of bringing to people's attention the importance of this. But the danger is that some of the very, very good projects are in some very important parts of the country in terms of doing really important work. And what we do not want to do is disrupt the end receiver and all of that. And the people who are enjoying and making good use of the services and opportunities that are being provided through the ESF. Richard Simpson? Can we move on to ONS? On the ONS issue of ESA 10, I understand that that has now been the system proposed by the Scottish Government to maintain the new contracts, the NDP contracts, under the private sector. Has been now approved by ONS and that is satisfactory. We are going to be able to move ahead with projects. So the Deputy First Minister announced, I think, quite recently at the end of November, the projects, the hub projects, which had been given an ONS status and they are live now, that is my understanding. The proposal by the Government to have 60 per cent private funding, 20 per cent charitable funding and 20 per cent public funding, is, I gather, the new mechanism by which these projects will be kept in the private sector. First of all, is that correct? This is around the governance arrangements for the oversight and delivery of those projects. The balance is such that there is the interjection of the charity arrangement that actually enables this to still be seen as not government and therefore the additionality that these projects bring can still continue. I understand that. It is a mechanism when it was previously 60-40 and that was regarded as being satisfactory in terms of being not a public project. I am concerned about the charity and I would like to hear in terms of our discussion today, what is that charity, where is the money coming from, who is going to be running it, how is it going to be independent, is it going to be entirely run by the private sector and just a little bit more information about that charity. Some of the detail around that will be best provided by the Scottish Futures Trust, but the charity itself will, by its very nature, be separate from government. That is the whole reason why there is a charity there that will enable that. However, it is being set up obviously with terms that are worked through with the charity regulator and specifying the nature of that charity. That will be the key point where that is securing what is needed to be seen as delivering the projects. However, this is an area where I could probably save the committee quite a lot of time and just send an actual report through at the very nature of the charity. The convener, rather than spending more time on it just now, I am just still concerned that we are still putting public money into this charity. This charity is not going to be wholly independent. Who is going to point them? There are lots of detail in there that I would really like to see going forward because we are still retaining a PFI, PPP and NDP. They are all the same but slightly different. However, it is all a public-private partnership, and it is getting the mechanism for that, correct, in the new rather more complex rules that will now be established to satisfy O&S that I am interested in. That is right. On the specifics of the hub model, which is the one that I am talking to you about in terms of the restart of the investment programme that we have been very keen to see, the important thing is to understand that there are a number of different safeguards and arrangements around this. I have been talking to you about the governance arrangements, which is that division of different players that are involved, including the charity now, but there is still always a contract. That contract also gives the safeguards, so there is almost a double way of doing this. It is through the people that are involved in oversight, but it is also through the contract arrangements. If it is helpful for you to see both parts of the issue so that you can get the assurance that you need, I think that that will give you a more complete picture on it. Given the new structure, are there any direct implications for the Scottish budget? Secondly, given the delays that have taken place while we have been waiting for the O&S to make its mind up, the existing capital projects, are there any cost implications for them? Obviously, the announcement was made on 26 November. SFT is engaging on a project by project basis with each of those that have now got the re-energised opportunity to proceed. That analysis will be prepared and will be for ministers to work through what the implications of that are. Clearly, everyone wants to see those up and running as soon as possible. The other thing that has taken into account in the actual timing and delivery of the schemes, particularly when they are the schools, is how that fits with the educational year. That information is being worked up. If that will be helpful for the committee to see, then again we can send that through. The new structure, going forward, will it have an on-going cost? Is there any cost implication there at all? I realise that each of the individual projects may have to be re-evaluated and there could or could not be costs attached to that. I presume that that will come out shortly. There is a distinction between the delivery cost of individual projects, which will be reassessed by the fact that we are working on a slightly different time frame than before. However, the model enables us to still have the additionality, and it will not count as part of our capital programme. That is not a hindrance to the investment programme overall, which is good to see. I thank the cabinet secretary and the team for the time this morning, and I am sure that we can follow up on the commitments that we were given earlier. I move to agenda item number 3, which is consideration of responses from the Scottish Government and Westminster Public Accounts Committee on the Scottish Government's major capital projects 2015 progress update. Collegers may be aware that the Infrastructure and Capital Investment Committee expects to look at the issue of potential impact of ONS decision on major capital projects as part of its draft budget scrutiny. I welcome comments from colleagues. What further action they would propose is taken. I have the option to note the report. Is that great? It is important for us to know, as a Nordic committee, what the additional costs have been of this delay by the ONS, because it has been the ONS that has held us up for a considerable period of time, and it has meant that the Scottish budget, which is still at this point a limited budget, has been a cost imposed on us by Westminster. We should be seeking some additional consequentials for the additional costs involved. I move to agenda item number 4, which is our section 23 report at Scotland's colleges 2015. As well as the formal responses that we received from the Scottish Government, the Scottish Funding Council and the Audit Scotland, we have also received correspondence from the University of Highlands and Islands and Glasgow-Kelvin College, which has previously been circulated to members and has been published on our website. Dr Foxley is a constant critic at this committee, including when we were looking at NHS Highland. I think that he has read something that I said. I reflected the figures accurately from the Audit Scotland report that 4 per cent of students in the Highlands and Islands come from deprived areas, but, unfortunately, Dr Foxley only tends to read the justification for his comments in the letter. Even Colin Beattie, who is my colleague on the education committee, will agree that I am constantly raising the fact that the Scottish index for multiple deprivation might work very efficiently in urban areas where there are areas of deprivation, but in the Highlands and Islands you can have the poorest child in the village sitting alongside children of millionaires, etc. That is the way of life in the Highlands and Islands. I was pointing out that people attending further education in the Highlands and Islands, the figure is much greater than 4 per cent, but there is not a designated area because of the sparsity of population. I have never missed an opportunity to say that the Scottish index for multiple deprivation may accurately reflect urban areas, but it does not accurately reflect poverty and deprivation in very remote communities. I do not think that it is worthy of a reply, but it is unfortunate that he has not looked at the further work that I have been doing, even including raising it at stage 2 of the education bill yesterday, where we are looking at attainment. That is all that I have to say. Probably we are at the point where we should note the responses that we have got. There is a limited ability for us to take this much further at this time. I think that the overall question of the colleges probably has to come back, but that is something for our legacy document, I do not know. Are we dealing with the correspondence from Paul Johnson? It can deal with any. I am interested in the… I am interested in clarifying for a record that we have received the report and in response to the report, that is some of the feedback that we have got from Ferry, so that any correspondence is… Thanks for that clarification, convener. As a recent member of the committee, I want to just make sure that I am on the right spot. I am interested in the student support budget, which is at a record high of £105 million in Paul Johnson's letter to us in Bursary's childcare and discretionary funds. Has the committee received a breakdown of that as to which is maintenance payments and loans? Do we know that, because I would be really interested to know… No. I do not think that we have that, but if it is a wish to request the committee that we take that forward, I am sure that we can. That would be good. The other thing is that, when dealing with the letter from the Scottish funding council, I find that very confusing. First of all, with regard to the merger savings, I really have no clearer than I was. I have no idea what those are, what they are intended to be. Again, I may have missed it not being on the committee when this process started, but the 50-something million of annual savings that is supposed to come in from 2015-16. It seems to me that the letter from the Scottish funding council, if I read it correctly and I may not because I found it a very extraordinary letter, seems to confuse efficiency savings, which is something that every public institution has to undertake with the merger savings, which are different. I am also very unclear as to what the regional costs are involved. If you take the area that we have been looking at in detail of the merged motherwell Cumbernauld Bridge College into the North Lanarkshire College, South Lanarkshire has stayed out of that, so there is still a regional structure above it. When we talk about 50 million savings, how much are the additional costs of the regional structures? I am just unclear about that as well. I cannot see that in the letter. That is something else that I would write. I think that noting in that respect is something that needs to be a little bit more than noting. I would say that the committee, I would feel that the committee would recommend that the committee should say that it is not yet satisfied that it has seen precisely what is happening. I suppose that the EIS report recently which reviewed staff in terms of the expectations about the merger and the positive things that have come out of it seems to have been negated by the EIS survey, so I am pretty unhappy about that process. I have to say that it is one that we all agreed that it was necessary to have improved efficiency and less overlap, but I am really unhappy about the information that the audit committee is being provided with. I am just wondering whether we are going to be able to pursue very much realistically in the remaining time that we have, but I do note that the Auditor General says that she will be providing an annual report on Scotland's colleges next year. In other words, it is the annual report, and it might well be that the best practical thing to do is to leave it to our successor committee to look at the next phase, which undoubtedly will go back to the same issues. I will make a couple of points just before we conclude on how we take it forward. Firstly, it seems perfectly reasonable for the committee to seek further information from the Government on what was a recognised decision in terms of college mergers, and the savings would come about as a result of that. I do not think that we would have pursued the mergers if it was not for the fact that the proposed sum that we would be saving would be £50 million. That was the amount that was highlighted, and that is why there was a significant cross-party agreement that we should proceed with that. However, I would hope that when considering that and providing all the necessary information to the Government for that informed decision to be taken, the figures of £50 million were pretty robust. The question that we are asking here today, which we are quite right to ask, is whether those figures are as robust as they should be at this stage. I think that it would be helpful for us to seek the information from the Government and from other agencies to provide information to be clear on how robust the figures are, because I must admit that, after reading the response from the Scottish Funding Council, I am no further convinced than there was when Tavish Scott raised the question of the Scottish Funding Council and we took evidence on that. It will not be unhelpful for us to seek whatever information that the Government has at its disposal or the SFC that it can provide to us, because I would be astonished if it were pursuing that and had not been aware of some significant information that provides more detail than what has been provided here. On another point that was raised, I will draw members' attention to the correspondence that we received from Alan Sherry, the principal of Kelvin College in respect of the compulsory redundancies at Glasgow Kelvin College. It is important to recognise that the concerns that have been raised by Alan Sherry is that the term that was used of compulsory redundancies is one that is not accurate and felt that it was not accurate for us to refer to that in the report. I must admit that I have reflected on this and I am content that the wording of the report is actually correct. Reflects in the fact that redundancies did take place at the college, albeit in the footnote of the document that was provided back down to that in that private contractor who was responsible for the catering contract was in place and it was the contractor who carried out the compulsory redundancies, but it has to be recognised that the background to that is that I understand that the employees were too paid as part of the previous contract that had taken place at Stoll College. I am satisfied that the compulsory redundancies have taken place and I am also satisfied that there was an exchange with the education cabinet secretary, Angela Constance, with a number of members around the table. That exchange confirmed that she also opposed the compulsory redundancies that had been proposed at the college and asked for the Government's policy to be implemented, but recognised that it was not in the gift of the Government to ensure that that policy was implemented, it was up to the college to take those decisions. I must admit that I am satisfied that we have accurately reflected it in the report, but I do understand that the college may have its own opinion on that and are quite entitled to that. We will note that and ensure that it is already provided for public record the response that it received from Alan Cherry. How do we proceed, colleagues? I have no problem with asking for more information. I am conscious about, like Nigel, the timing that we have left to look at those things. I am also looking at the SFC letter that says that there will be a post-merger evaluation for each individual member in autumn 2016, because it says that all those are scheduled up to July 2016, so clearly autumn is when we will actually get the hard figures and when, no matter what anybody says, we will see what was achieved. I do not think that that should stop us asking about the £50 million annual savings that were promised, because that was the reason that all of us supported it and voted for it. However, there is a second issue that I think that we should keep on the agenda. It was not just £50 million savings every year. We were actually promised that the quality of education and training would be enhanced. As far as I am good, I know that we are the Audit Committee, but I do not think that we should lose sight of that, because that was another reason why we thought that the larger colleges, larger expertise, economies of scale and more specialised that we did expect, and I believe that we are promised enhanced quality of education and training. I have been a substitute in popping in and out, but I have looked at this as well. My concerns lie with the Scottish Funding Council, having read the letter and looked at the table of colleges, mergers, payouts and so on. I do not know whether you can ask questions on that. As a follow-up, rather than closing it, I think that the Audit Committee should be looking at the Scottish Funding Council in the next round. We have the option to note the report. I am not really getting the feeling that that is the majority of the committee's view. The other option is to write for further information from the Government. I think that there has been some feedback that the £50 million figure, which has been a theme that has occurred throughout the committee's evidence sessions, on a number of occasions, has been a lack of clarity on the figure that we all want to achieve, but we just want to see how that is going to be achieved. We just have to make it clear at the Scottish Funding Council that we want to see more clear and concise information surrounding that so that we can be satisfied at the direction of travel that is going to achieve those savings. I think that what would be a poor reflection of the committee is that, if we arrived in autumn and we did not reach the figure and we had it in some way highlighted that that was an issue, the members think that we should write on that basis. You have got that absolutely right. It is the direction of travel. The SFC letter says that you will not know that you have got to the station until you have got this year's accounts to add up, but it is the direction of travel and they must have some work-in-progress numbers. It would be good to see what they can provide us with. As we know, the accounts, when we have seen from evidence that we have taken some of the archaeology, including Co-bridge, sometimes they are not quite coming forward as quickly as they should be and there is some information that has maybe not been as robust as it should be, so we have to be clear that even an interim position, which I would be surprised if the Scottish Funding Council was not at least carrying out some kind of assessment of what the current position is in respect to the savings, I would be surprised if the Government was not putting pressure on the Scottish Funding Council to advise on that, because the Government will want to ensure that the £50 million that is saved is redistributed and done is brought forward for the benefit of the students. The whole idea was that we made the savings so that we could then reinvest in the college estate and the other aspects of the student experience, so it would be reasonable for the Government, at least to have the same appetite as we do, to be able to clarify exactly where we are. I think that just to say that they did merge in 2013, which is about going into 2016, so we should have annual accounts that should not be that difficult to look at what savings have been realised. Is that helpful, colleagues? I think that we should move on the basis of the written information. Thank you, colleagues. As previously agreed, we have moved to agenda item number five, which we have agreed to hold in private.