 I welcome to the 30th meeting of the Public Order and Post Legislative Scrouchery Committee in 2017. I received apologies from Monica Lennon. I asked everybody in the gallery to switch off their electronic devices or at least switch them to silent mode so they don't interfere any more. Item 1 on the agenda is a decision on whether to take business in private. Do we agree to take item 3? Yes. Thank you very much. Item 2 is a major capital project, and we are now going to take evidence from the Scottish Government's latest major capital projects update, and I welcome to the committee this morning Peter Ricci, deputy chief executive and director of investments, and Kerry Alexander, investment programmes director, both from the Scottish Futures Trust, Eleanor Emberson, director of financial strategy, Helen Carter, infrastructure investments team leader, and Alan Morrison, capital accounting and policy manager, all from the Scottish Government, and finally, but by no means least, Robert McBride project manager, rail directorate of transport Scotland. I understand Eleanor will provide a brief opening statement. Thank you very much for inviting us today to give evidence on the latest major capital project update, which we provided in October, and which covers the six months ending in September 2017. We are absolutely committed to working with the committee and with Audit Scotland to make sure that the information that we provide is as helpful as possible. The current reporting format follows what was agreed by the previous committee and Audit Scotland and the Scottish Government, and for the latest report we have also taken on board three suggestions made by the Auditor General to include outline business case information or equivalent, the programme pipeline, as well as the major capital projects, and a summary stating how projects are financed. I note that you are interested in the very important contribution to the economy that the infrastructure plays, and the report contains information about economic impact, including jobs that are afforded through our investment. In addition, I am aware that the committee would like to see private sector leverage and net present values of revenue projects captured in the report. We have not been able to do that for this one due to timing, but we intend to work with Audit Scotland and committee clerks to provide additional information in the next report in a format that you would find helpful. You have introduced all the colleagues that I have with me today. I must mention that we have had a very unfortunate set of circumstances with transport colleagues. Three senior transport Scotland colleagues who have broad remits have all for various reasons been unwell, and Robert has very nobly stepped into the breach. His particular area of interest is rail, but obviously if you have questions about other transport projects we will do our best. We may, if there are detailed points, have to write to the committee to follow up. I think that is all I need to say, but I think that colleagues from Scottish Futures Trust have a couple of declarations of interest that they would like to make. Peter Eaky. Thank you very much. I should just let the committee be aware that I act as a director, a public interest director on Aberdeen Roads Ltd, which is the company that delivers the Aberdeen Western peripheral route project, and on one of the legacy non-profit disputing projects that have taken care health limited, which provides services at Murray Royal and at Stracathrow hospitals. I would also like to declare a similar and non-financial interest in Galliford tri equatics inverness limited, which is the entity that delivers the Inverness college project. With that, we perfectly understand when people become unwell, indeed some of our parliamentary colleagues have been struck down by something similar, so we thank Robert for stepping into the breach. I turn to members' questions and start with Colin Beattie. I would like to touch on rail, so it is good that Robert McBride is here. Let me kill one thing quickly, which has always been niggling at the back of my mind. I am assuming that, if HS2 does not extend to Scotland—it certainly does not appear at the moment—that we have no financial commitment to that and would not be putting any money into it. I do not believe so, but that is an area that I am not a specialist area of mine, but I cannot believe that we would be committed to funding on that. I would like to settle that niggling doubt at the back of my mind. Looking at rail projects in particular, there are a number of projects that are overrunning in terms of price. How are we dealing with that? How are we coping with those overruns? How are they going to be met? Are they impacting on other projects? They are still affordable. We are working with Network Rail to try to improve governance, but since the DEY report was published last year, we have introduced a stronger governance portfolio boards, which transport Scotland chair. We continue to press Network Rail for more transparency and stronger reporting. We are seeing a significant improvement in that the project controls that it is applying across the piece. You are saying that the overruns are going to be compensated for in other aspects of the project? In what respect, sorry. You have spent more on projects than you budgeted for. That money has got to come from somewhere. You are saying that you have improved on the management controls and all the rest of it. Does that mean that you are going to be able to compensate somewhere else in the budget for those overruns that have taken place already, or are they having to be absorbed elsewhere? They will be absorbed within what is classed as a headroom, which is the financial settlement for control period 5. It will not impact on other projects. On the overruns, why did they come around? Why weren't the controls in place already? Why do we have to be in a position where a budget significantly overruns? We are talking about the Edinburgh Glasgow rail improvements. We are talking about sitting down, laying all of a rail electrification. Why weren't they picked up earlier? Why wasn't that put under some sort of special control? You have touched on two specific projects there. On Edinburgh Glasgow, there have been significant lessons learned on the electrification of the engine. There are widely accepted issues that have come across around the governance and controls. I think that the procurement model has been proven not to be successful in the alliance. For railways for a long time now, why suddenly do we find that the procurement process is not up the scratch? The model that was used, the alliance model that was now re-entered into with the two contractors, was effectively a novel procurement model for railways in Scotland. Was this a new procurement model that was brought in? A certain thing in Scotland and for rail, yes. Who decided to bring that in? Network Rail. Network Rail? So they brought in a procurement process that failed and is costing money? I think that that is a component part of what the route causes. It is everything else where electrification schemes are experiencing cost increases across the UK. And does that come back to procurement? I am not qualified to say about what the detail is on other schemes, but I think that it is a contributing factor. Who is qualified to say that? I am sure that there are people with rail that have a greater interest and greater knowledge across the UK network that could feed back. My concern is that the bottom line is that for what you are saying, Network Rail brought in a procurement process that failed and was at least contributing towards cost overruns. Is that factual? That is a contributing factor, yes. What comeback do we have on Network Rail? There is now a public classified body, so I think that the comeback that we had previously through the regulatory environment has changed significantly. But what has been done with Network Rail? You are saying that they have changed the procurement process, is that right, as a result of this experience? The first stilling down Blaine Alley, the model was meant to be rolled out again, and they have moved away from that. They are entering into traditional contracts. But they have still got overrun? On SDA, there will be, yes. So it is not entirely the procurement process that is the issue? It is the electrification schemes in general, yes. So it is the procurement process? That is the electrification schemes. So Blanket, the electrification process, the procurement process for the electrification is at least a contributing factor to the overall overrun, not just a specific project? It is more the delivery of the electrification rather than the procurement process. The electrification schemes throughout the UK have all experienced the cost of overruns, so it is significant. Why? Is it so novel? It is not, absolutely not. Perhaps you might consult with people who do have that information and come back to us—sorry, I am sorry—and give us that information as to why those electrification programmes across the UK and specifically in Scotland are overrunning. I mean, you have given some information here but it is not. You have brought in new information now about the procurement process and so on, and I think it would be good to pursue that. Just briefly to move away from the railways. What about the city deals or city region deals that are coming up? Obviously, the Scottish Government is going to be putting money into that. Are those going to be coming forward in this report as well? We would report on city deals. Obviously, they are a significant investment, so there is a lot of money both locally and nationally going into city deals. I do not think that we have traditionally reported on them through this mechanism, because we report on a variety of ways, but if it is important to the committee, we can ensure that you get the information on city deals also. Can you suggest that, since it is a significant investment that is going into public funds and we have a responsibility to follow the public pound, perhaps we should see the information on that? There is no problem with providing information. It is merely where and how you want it. Perhaps the starting point is what information is available and in what format, and perhaps we can review that. As I said at the beginning, I am very happy to work with Audit Scotland and with the committee clerks on what is the best way of getting the right information to this committee on anything that is of interest. There is certainly an interest in the major capital projects, but some of those might be led by the local authority rather than ourselves. We will look at a way of finding a suitable way of reporting. I know that Bill Bowman wanted to come in, and so did Liam Kerr. Thank you. Just a quick question to Eleanor Emberson. Mr McBride mentioned overruns being met out of headroom, what I would call cushion or contingency. How much money do you have available to cover overruns? Mr McBride was referring to the very specific arrangements within rail funding. He referred to control period 5. There is a UK-wide set of financing arrangements around rail where Scottish Government contributes and UK Government contributes. Anything that we are doing would not be coming out of general Scottish Government funds. There is a very specific set of rail financing arrangements. I am afraid that I do not have in front of me the full financial breakdown of that, but, following up, we have undertaken already to follow up on Mr Beattie's questions. We can obviously provide some information about that if it is important to the committee. I think that it would be interesting, since you have raised the ability to fund it, that there is obviously some money there that may or may not be used. Maybe in doing that you can tell us how you deal with that yourself more generally. Deal with rail funding? No, just generally it overruns. Okay, yes. If you cannot do it now. I mean, it overruns on other things other than rail. Sorry, I just... I just generally, having raised the topic of headroom and overruns, that does not apply anywhere else? Of course it does. So you have something in your pocket available. The capital programme, as you know, is very substantial. So the direct capital funding from Scottish Government is well over three billion per year. There are all the other revenue funding arrangements. We are juggling that programme. We are managing it. So all projects have to manage, as you know, time cost quality. You would hope at the start of any project that the analysis has been done really well, the planning, we have built in appropriate contingency and headroom. It does not always turn out that way. Sometimes we get money released back from projects. Sometimes projects need additional funding. We manage that across the piece. We do not generally do it by putting a bit of money aside and not spending. We do it by active management of the projects that are under way. So you have some form of reporting on that? I think that you would see the reporting of changes in costs on projects that in the information we provide. To see how your juggling is doing. You will see how project costs have changed up and down over the period. So I think that that is us. Individual project? Yes. But then when you have to add them all up to see if you are in balance or out of balance? We have to be in balance. We have a capital borrowing power, but within the limits of that we do not have any room to spend more than is available in a given year. So we have to balance. It comes back to Colin Beattie's point. I do not want to put word in his math, but if one goes over what suffers then how do you deal with that? Generally speaking, things do not suffer because, as I say, some projects go up, some projects go down. You manage the profile of projects over years. This is a very large programme of work. The amounts of money that we are talking about going up and down are a small part of it, not the bulk of it. I am going to stick on rail, if you do not mind. Colin Beattie brought in HS2 in high speed 2. At page 71 we have a report about options to bring high speed rail in general to Scotland. It talks about options that have been completed for CP6 or CP7, which is up to about 2030, would that be right? CP6 is 2019 to 2024. 7 will be 24 to 30, is that right? 24 to 29. The update tells us that the options have been presented in October. Are you just able to give us an update on where we are on that? I would ask one of my colleagues from Transport Scotland to write to you on that. He was actually hoping to be here today, but he is dealing with a specific level of thought. I understand. Moving on, just staying in the same section, Mr McBride, if you would, there is reference to the Aberdeen to central belt rail improvements. I stay in Aberdeen and I remember the city deal being announced. At the time, there was quite a big fanfare made about dualling the track at Usun. Funding had apparently been made available for that. I have asked quite a few questions of various parties since, because this seems to have been kicked into the long grass, which is situated in a place called It Will Never Happen. I am just concerned because, in the update, there is reference to—this is page 73—separate development works for the 200 million Aberdeen to Usun Montreux project. That suggests to me that whatever improvements are made will stop prior to Usun. Are you able to comment on this at all? I am not, unfortunately. I apologise. After I set up the question at such length. Just for the sake of it, I wish I would come back on that. I would be very grateful because, genuinely, I am struggling to get some clarity on that. Perhaps you may not be able to ask—as part of the wider project of the Aberdeen to central belt, there is obviously this drive to reduce the journey time by 20 minutes and the reference group has now been set up, I understand. I met for the second time in October. First of all, what progress was there in October? Secondly, I see that there are two references to Network Rail not meeting the STPR objective of 20 minutes. Are you able to give us more detail on that, please? I am not, unfortunately. Can I just clarify, when I was touched at the start, I am working specifically at the moment on Egypt and Stirlingdon, Blay Nalala. If there is anything out there—if there is anything in the briefing et cetera that I can cover off, I certainly will. Unfortunately, I will come back and commit to responding and writing, if that is okay. Perhaps, convener, if we might have full details on the Aberdeen central belt—Absolutely. I think that you set up the questions very well, and I am sure that whoever is responsible will come back and writing to us. Can I just clarify? Is that just a general progress update on where things are and what came out of the October meeting? Yes, and specifically, that use on junction business or the dualling would be very useful. The clerks will be in touch if we are looking for further information to specify exactly what we are after. Okay, can I move on to Alex Neil? Thank you, convener. First of all, I refer to table 15 at the end of appendix A in the projects list. My view is that we cannot really get a proper view of the capital programme until there is some additional information that we need. I am not expecting this information just now, but I think that we need to know the value of projects that are being funded by the Public Works Loans Board. I think that we need a breakdown by the year of investment of the seven point—well, if you include five college seven point three billion. I think that it would be useful to get some trends and comparisons comparing year on year and also total spend as a percentage of GDP with other countries. I think that it would be useful to get a profile of the revenue spend to support the capital spend. I think that it would be useful if we could also, and this might need to come from another source, UK Government capital spend in Scotland, not that I expected to be much. The local authority capital spend or any other public sector capital spend not included in those figures. Most importantly, I think that, where it is available, the leverage of private sector investment and EU investment would be helpful as well. That is just a request for additional information. It is on Terry's copy of the list of projects that I am sure he will follow up to make sure that all that is followed up. With that information, it gives us a better all-around picture in terms of strategy as opposed to individual projects. Sorry, Eleanor. Did you— May I just say something before you—I am not sure that I quite got all of that down, but I will follow up. It will be in the report, I am sure. Exactly. I will follow up afterwards to make sure that we got all the points. A few things to say. You noted yourself that we would not hold the information on UK Government investment. We also, for obvious reasons, would not hold the information on local Government investment beyond that which we are involved in. I think that we would have to reflect on what is the best way of getting that information in front of the committee. I am sorry to interrupt, but I am thinking, for example, of capital spend and housing. I presume in here—I know in here—that the Scottish Government's element of the capital investment, but, typically, for social housing, that is about a third of the total cost. Housing associations and councils usually borrow the rest, so that would come under leverage, but some of it will also be direct investment from balances by housing associations or from the housing revenue account by councils. In other words, what I am saying is that this is not anything like the total picture for public sector investment in Scotland, and I think that it would be useful to get a rounded figure, especially housing, because that is such a huge figure. I absolutely recognise the need to understand in the round public sector investment. There are a couple of points in that. As I say, we would have some work to do to figure out how we get all of that information in a sensible format. We will take that away and see what can be done. There is something about leverage and what we regard as leverage, and whether the Scottish Government is putting in investment to release local government investment as leverage, or whether it is Scottish Government investment to release private sector investment. I think that Peter was going to say something about leverage. I understand the point that you are making about overall levels of investment. To me, there is the ability to deliver additional investment, for example, through the MPD and hub DBFM projects, where there is private sector investment in our infrastructure that is paid back, as we know, over time through public budgets. That gives additional investment at present. There are also areas, as you have suggested, where there is leverage of public sector investment, bringing in other forms of investment that the Government does not eventually have to pay for. Housing is a good example of that, where the rents from occupiers eventually repay that debt, or the additional investment there, that leverage. Another example of that is in tax incremental financing and the growth accelerator, where, for example, across those schemes, there has been overall around about £100 million of public sector investment has gone into those schemes, which has drawn in, and you see this, for example, in Edinburgh St James, and catalyzed around about £1 billion of private sector investment in the property in the area. I would call that a very clear example of leverage, where our public investment has catalyzed and leveraged in that private sector investment. There is a whole range of spectrum of different sorts of that. It is quite hard for us to think where the line might fall as to what it is useful to report in this particular format in this setting, because drawing the lines between those different classes of investment is quite a difficult thing to do, so we will have to give some thought on how to do that. That is just a total picture. Can I ask a very specific question about housing investment? About a third of the £3 billion over five years commitment on housing, about a third of that is through programmes such as help to buy programmes. Is, for example, the Scottish Government's funding of shared equity with the shared equity that the Scottish Government puts into a house be counted as part of the capital spend of the Government or is it country's revenue spend? The help to buy scheme in Scotland has been funded through this very particular kind of allocation that we have received from Treasury, which they call financial transactions, which is money that the Government can invest but has to go out with Government, but general Government is out with central or local Government. It is in the form of loans and it has to be repaid, so help to buy is funded from that tranche of funding rather than a more general revenue funding. Given the importance of financial transactions, I think that it would be useful if we got a regular as part of this extended report, an overall picture of financial transactions, because obviously we have put a number of layers of financial transactions, and I think that that is investment, it is still investment, it is funded a different way, but it is still investment. I think that would be helpful, but specifically on shared equity outside the help to buy scheme that is funded through financial transactions, the shared equity investment is that counted as capital spend? The Treasury score of the financial transactions as capital spend and they count it within the Scottish Government capital budget. We obviously try to keep it as slightly separate, it is still capital but we recognise it as a separate stream because we can only use it in certain ways. There is shared equity that is not funded through financial transactions, which well predates financial transactions. If the Scottish Government puts 40 grand shared equity into a new house, is that counted as a capital investment? Before we got financial transactions, the shared equity schemes that you are referring to were funded by traditional capital. However, because we now have financial transactions, we are able to fund the non-help to buy shared equity schemes using financial transactions, so any future schemes and current and future schemes on shared equity are funded from financial transactions rather than capital. The open market shared equity scheme is part of the affordable housing programme, so that over 3 billion figure includes an element of financial transactions for the open market shared equity schemes, which are classed as affordable housing. When you add all of this additional stuff up, it is well over 8 billion total capital spend, is it not? Housing is 3 billion. A lot of that will be included in the Dell, but the financial transactions will not be included in Dell. The financial transaction is already in there, so could we get a breakdown of the Dell figure between financial transactions, which is money that needs to be repaid to the UK Treasury? I mean, with Dell, presumably, there are at least three elements. One is straightforward capital spend in traditional method, where there is a capital budget that we spend at number one. Number two, there is a capital spend that is funded through our borrowing powers through the Public Works Loans Board. At number three, there are financial transactions. There may be other bits and pieces, but those would be three subheadings of the capital Dell. Is that right? On the capital Dell, we would not distinguish between what programmes are funded from the block grant for capital Dell and borrowing powers, because it is all scored in Treasury terms as capital Dell, so it would really be two. We would have capital Dell and financial transactions as the two subcategories for scoring purposes. It is important from the point of view that, if it is funded through borrowing, then it hits the 5 per cent. It is a contributor to the 5 per cent limit of repayment, whereas, if it is funded from the capital grant element, it is not. To get a total picture of investment, it would be useful to have that breakdown. Of course, at an aggregate level, we have that. In fact, we show it in the draft budget document every year that we have reflected in the accounts, so we have all those numbers in the public domain. What Helen is talking about is funding of a given individual project, so we do not decide that that project is funded from borrowing and that project is funded from the capital grant. It is a pool of money. We separate out financial transactions in the budget documentation and the accounts for you to see. That information is in the public domain already. It is easy for us to see. We are identifying the sources of the funding, which are NPD or before that PFI or it could be the other, but we do not identify financial transactions as a source of funding. It is all subsumed into capital Dell. It would be useful if we saw that information and it would be clear about what is coming in and what is going out, and where the money is coming in, how is it coming in and how does it go back out again. I am happy to do that. I could just pick up one other point that has been referenced to the Public Works loan board. That funds local authority borrowing, where the Scottish Government borrows it technically through the national loans fund, or that we have the power under the 2016 act on the fiscal framework to borrow from other sources. That would be helpful. I am not asking for that this morning, obviously. I do not think that reading the vote would be very helpful to the committee. Can I ask just a couple of other questions? First of all, the use of framework contracts. I have to say that when I was Cabinet Secretary for Infrastructure, I was not convinced about framework contracts in terms of the economic impact in Scotland. When I look at the number of large procurement projects that are going to businesses outwith Scotland, and the same is true at local authority level, I wonder if we did not have those large framework contracts if we would have greater economic benefit if we had a different system. I am not asking you to answer that. Yes or no, what I am asking you is, has there been any independent assessment evaluation of the different methods of procurement, not in terms of just obtaining value for money in the narrow accountancy sense, but in terms of the economic and social benefits to the Scottish economy with the different methods? I am not convinced that framework contracts maximise economic and social benefit. You are quite right that this is not my area of expertise, but I know that my colleagues in procurement have done an awful lot of work on that particular point. You will be very aware of the European procurement rules, the framework in which we operate and the fact that we cannot. We have to have an open competition for public procurement, but there has been a lot of work done around social benefit and trying to make sure that there are better opportunities for small and medium-end SMEs to be involved in all Government contracts. I am aware that, although I know that frameworks can be problematic and sometimes there is at least a perception that that means that only larger companies wind up on the framework, there are obviously issues about subcontracting and supply chains and how smaller companies can be brought through. If you run individual procurements for every individual thing, that does not automatically benefit every small company either, because there is a vast amount of paperwork associated with competing in a procurement. Those are some general points, my colleagues who deal with procurement and the round would have more to say about it. Peter, is there anything you wanted to add from the safety experience? I would say that there is frameworks and frameworks. There is a time and a place for lots of different sorts of procurement across Scotland for different scales of projects and different programmes of work. When we do projects at a programme level, as you see through the hub programme, for example, which is not a framework, but it is a long-term arrangement, that brings us the ability across a whole range of different projects to take a view of the economic impact and what is going on across what would be smaller projects that would not be reported, for example, at this level in their own right. We can tell you from the hub programme, where we do take that programme level view, that of the prime value, so the actual construction cost of the projects done in that programme that would have been completed or reported on to date, over 78% of the value of that work has gone to Scottish SMEs. That will be principally through subcontracts, because in the construction industry, as you know, there are lots of layers of companies doing the work, 78% by value. That is over a billion pounds of work that has gone to Scottish SMEs through that programme of activity. There are some framework agreements that have been procured more at a UK national level, which Scottish public authorities have access to. There have been some procurement guidance that authorities should be careful of using some of those frameworks and think really carefully about what is right for any individual project. As you say, when there is a very broad procurement done that gives authorities the ability to select a framework partner that has not got a local interest in the original procurement, there can be difficulties whether that reflects the local circumstances and whether it reflects the best practice that we want to see in Scotland, for example, on engaging SMEs on the training and apprenticeships that come through these contracts and the form of contracts that we want to use. There is a time and a place for everything. We need to be careful about the UK national procured framework arrangements, but it is possible to bring the benefits to smaller authorities who perhaps do not have the skills and capacity to run, as Eleanor has said, a whole series of individual procurements. We can do that at some scale and still bring the benefits of local engagement in the supply chain. There is a time and a place for everything, but we need to be careful, I agree. If we are coming out of the single market, because those rules are part of the single market rules, basically a lot of the procurement rules, it does present an opportunity for us to have a fundamental look at procurement rules post Brexit and an opportunity maybe to improve the economic and social benefits from procurement. I think that this is an area that no doubt the auditor general and certainly this committee should be looking at in more depth, convener. My final point is—and this is really to pita. I think that irrespective of whether you agree or disagree in relation to hub financing and whether that is an improvement on what has gone before and so on, and there are people on both sides of that particular fence. I think that the frustration that is shared by both sides is sometimes the lack of sufficient transparency with the hubs and their operations. Is the Scottish Future Trust going to look at and the Scottish Government improving the transparency of hub activity? I speak as somebody who has traditionally been a supporter of hub projects because they have produced a lot of good projects in Scotland. I think that there is an issue around whether there is a better way to do it now with the additional powers that we have, but that is a separate matter. In the short term, the transparency issue is one that a apparent lack of sufficient transparency causes problems for policy makers and people in the economic sphere in academia and in this Parliament in terms of trying to get the information needed to decide how much value for money we are getting from hub projects. I think that we are at the interest in hubs and, as I said before, that is one of the effects of delivering projects through a large programme arrangement as hub is. We report through a quarterly updated project dashboard across the hub programme on over 200 individual projects, their value, their programme and the dates associated with them. Those projects have an average value of around about £12 million, which would not fall under the £20 million limit that this committee tends to look at if they were done as individual projects, but because they are done as part of that programme arrangement, we get the additional transparency of those projects to this committee. We report at a programme level on the jobs and the community benefits. I have already talked about the SME engagement for the projects because we feel that it is most helpful across a programme to look at those elements at a programme level. The values and timescales that we report at a project level and the community benefits, again, we publish quarterly on our dashboard at a programme level. As for some of the individual contracts in the hub programme, people have been particularly interested in design build, finance and maintain contracts. The vast majority of that contract documentation is, according to the standard form that Scottish Futures Trust wrote, is available from the time of contract award. It is not commercially sensitive information, so it can be released immediately. There are elements of the contract documentation, in particular some of the financing costs, which are deemed to be commercially sensitive for a period, which is much shorter than the period it was under previous arrangements, and that is the completion of construction plus additional two years. That is a standard term in our standard contract documentation. We have thought really carefully about the balance of the public interest and the commercial confidentiality in releasing that information. It has been the subject of information commission and decision during this year, which I have held that that was a reasonable period to maintain that particular element of confidentiality. We have been in discussion about releasing some averages on the cost of capital, which has been in particular interest to people. Across the hub and NPD programmes, the average cost of senior debt is 4.09%, and the average all-in weighted cost of capital is 4.74%, so just under 4.75% for the overall cost of capital. We are able to talk about averages, but for that reasonably short period of time, we do not talk about the specifics because it is commercially confidential to those parties. We feel that there is quite a good level of transparency. I know that there has been some discussion about hub companies themselves replying to freedom of information requests. They are not covered by the FOI legislation. All of the public authorities that they work for, and indeed SFT, are covered by FOI legislation. We have been very happy to answer questions sent to us in relation to the hub programme, as I am sure public authorities are. The hub companies have a duty to cooperate with any request made by a participant to help the participant to answer an FOI question, and we are not aware of any hub company ever failing to cooperate with a public authority who are bound by FOI in answering a question. Across the programme overall, we feel that there is a good level of transparency, but if there are individual points that people want to raise with us, we are very happy to respond to those. Let me just ask you one question before we move on. It is around about the 5% borrowing rule because my understanding that only applies to the Scottish Government. It does not apply to health boards or local authorities, particularly local authorities, who may themselves be borrowing to build major capital projects. Is that correct? We are talking about the rule that the Scottish Government has chosen for itself, which will keep its cost of borrowing below 5%. Where health boards are being core funded from the Scottish Government, then I think that they are within scope. How long could we pick that up? Yes, health boards themselves cannot borrow, but if there were any projects funded through NPD, PFI or for health boards, they would be factored into the 5%, but local authorities are not. We do not therefore know the overall level of public sector indebtedness. It was the point that Alex Neil made. Surely the whole of Scotland accounts that are due soon, I hope, will be able to tell us that. Either Peter or I could say something about this. Local authorities obviously have their own caps on borrowing and they will report on the position in their own accounts. You are right that we do not have it yet in one single place, but that will come. The unitary charge payments for the PFI and the hub and NPD schemes. That information is reported within their own annual accounts. You will find that there is a range across boards as to how many schemes they have of that nature. Places such as Lothian and Lanarkshire have some big PFI's, whereas some of the smaller boards will be pretty minimal. That information is certainly reported through their annual accounts, but within the overall Scottish Government the 5% that that would feed into that figure. I suppose what I am looking for is a figure that tells me over time the overall level of public indebtedness. It will be our children that have to repay the debts that we incur now. It would be very useful to know what that total figure is. When are we likely to see that? I am afraid that I do not have a time scale immediately, but we will follow up with you. I understand that it is of interest and we will follow up as soon as we can to let you know when that would be. None of us know for sure. I think that the Government committed to do the preparatory work in this financial year coming and the whole of public sector accounts coming next year. Yes, that is right. I am sure that they are coming. I could not answer your specific point about timing. I think that the sooner the better. Can I move on to Willie Coffey? I wonder if I could come back to one of the issues that Alex Neil was raising, but I hope that I will ask a few simpler questions because I did not follow the explanations. The paper that we have in front of us explains that our capital budget is about £3 billion a year, but it also says that under the Scotland Act, the Scottish Government can borrow only up to £450 million a year. It also says that we have not used that money to fund any capital investment, other than to support some of our major projects. My question is, where does that £450 million restriction come from? Is it some kind of financial guideline on it or is it a political decision? Is there scope to review or change it that would ultimately allow us to enhance the capital programme? It is a restriction from HM Treasury. It comes from the fiscal framework that was agreed between the Scottish Government and the UK Government following on from Scotland Act 2016. We would not have scope to change it unilaterally. It would need to be a negotiation between the Governments. Is there any discussion about whether it is very value or some kind of flexibility? Is there any commitment to review it over the coming years? There is a commitment to review the whole fiscal framework. I think that it is 2021. I will double check that. I think that it was five years on. I am sure that we would want to review borrowing limits and all other aspects at that point. You will appreciate that there was significant negotiation to reach the fiscal framework level that we are at at the moment. I think that we are unlikely to be able to seek significant changes ahead of the review point. I am asking this to explore any ways in which we can enhance the capital programme and deliver more economic impact for Scotland. I am interested in routes that might lead us in that direction. One of them must surely be the Scottish National Investment Bank, which is mentioned in the paper. It was just to get a feel about where we are with that and how that will impact on the capital programme. As you know, the First Minister made an announcement in programme for government this in September of this year. There is a programme of work being led by Benny Higgins of Tesco Bank, which is due to report in February of next year with an implementation plan for the national investment bank. I would expect that to be an implementation plan at peace because we would want to get the full benefit of having a national investment bank as quickly as possible. The detail will emerge in February when we see the outcome of that implementation work. Can you share any details at all at the moment? Will there be an element of borrowing in there to provide resource for that from a variety of sources? Where is its funding going to come from? The expectation would be that the Scottish Government would put in some money to capitalise the bank and then it would leverage in other money to be able to provide a programme of investment, but the detail of what that would look like cannot come until we have seen the report of the implementation plan from Benny Higgins. Do you wish to add anything, Peter? You are involved. I think that it is just worth saying that a bank will only ever provide financing, which has to be repaid over time. We know that there are various means of doing that, whether it be the Government's borrowing powers, whether it be the NPD, DBFM programmes, or potentially in the future, the national investment bank, but all of that finance has to be repaid eventually from generally two sources, either from general government budgets in the future, from revenue budgets in the future, or from user charges of the people that use the infrastructure that is financed. If you are looking at the bank, for example, potentially being a player in financing energy infrastructure, then energy infrastructure is paid for by energy consumers through their user charges for gas and electricity and so on and so forth. That would be an ability to raise finance that is not eventually paid for by government budgets. If the bank, for example, was to finance a new road or a hospital, that is fundamentally a Government asset that would have to be repaid at some point in time from government budgets. There are some options as to which areas the bank plays in, but if you are thinking about whether it can deliver a great deal of additionality in the ability to capital invest in the schools, roads and hospitals that we all want to see built, that is at least as much constrained by our ability to repay that in the future. We have talked about the 5 per cent cap and other constraints like that, as it is the ability to raise finance to start with. Is there any connection between that initiative and the restrictive £450 million borrowing limit for capital that we have? There is bound to be a connection between the two. If one was increased or reviewed or enhanced, it would increase the powers of the SNIB to invest in the economy. The cap would cover borrowing by Scottish Government or by entities that are under control by Scottish Government that are publicly classified. If the Scottish National Investment Bank in the form that is recommended in the end in February falls to be classified to the public sector, then its capitalisation would fall within that borrowing powers limit and with financial transactions and other sorts of budgets, it would have to be within that. If a bank is classified to the private sector, then it has its own borrowing powers, but in that case it cannot be controlled by the Government. A publicly controlled Scottish National Investment Bank would be constrained by the same caps that we have discussed yet. I wonder if I could ask about a particular project in the report to convener the digital superfast programme. I think that it is going particularly well. We have about 780,000 premises covered by 95 per cent by the end of this month, but I wanted to focus a little bit on the R100, which is the commitment to 100 per cent. It is the only Government in the UK that has that commitment. That is going to be the hardest, but the last 5 per cent is always the hardest to do, but there is not a lot of detail in the report to tell us in and about schedule. We know that the schedule is 2021, but there is not a lot of detail in there, and that is potentially quite an expensive part of the procurement because it is the most difficult to reach areas of Scotland. Can you give us any other information about that, where we are with it and how we are getting on? We are expecting the procurement for that to start by the end of this month. Other information about it may emerge in the Scottish Government's draft budget publication on 14 December. I do not think that there is anything more that I can tell you at this stage, unfortunately. As you know, members are always interested in when things are going to be done, and it is particularly difficult to pin down sometimes when those programmes are going to roll into your particular area. It will be the same with this, but at any point in this between now and 2021, will we be able to see the roll-out by location and where the installations are going to take place, or how is it going to work? The procurement would have to be concluded to have a full plan before you would understand in what order anyone would be tackling. As you say, the last part is the hardest part. Part of the procurement process would be teasing out who has the best offer in terms of doing that at best value to public purse. The full plan would only emerge once the procurement process is concluded, I would expect. Forgive me for going on, but constituents—I share this with my other colleagues here—are always asking what year of the four years ahead am I likely to be done? That is a perfectly reasonable question to ask, but will we, at any stage, be able to answer that for constituents? If I say what I am in 2017, 2018, 2019, 2020 or 2021, will we be able to tell constituents when they will be? Once procurement is concluded, once the contract is let, there will be a plan. I imagine that it would be possible at that stage to say something about the order in which actions would be taken over the four years. Did you say that that would be again? I do not know exactly when the procurement will conclude. It will not be a straightforward procurement if it is starting in December. It will take some time, so I would not expect that until well through next year. Yes, I think that it is called a year for the procurement process to take place. By saying that, next year, we will know the whole implementation and roll-out plan and schedule by location. I do not know that. I do not know that that is the case. I think that I am saying that I would not expect to know it before that. I would assume that we would know it sometime soon after that. I can ask my colleague who deals with broadband to give me some more information about that for the committee if that would be helpful. I realise that I am pressing you for information that you probably do not have. I am afraid so. That is information that the constituents will not have. I think that they are entitled to have it and to be given that information as soon as they can. We absolutely understand the point, and we will take that back. Can I go back to borrowing for a minute? My recollection is that you used borrowing to fund the gap in projects caused by ESA 10, which, as you will understand, is the reclassification of projects. That also caused you to change the profile of hub projects for the future so that there is less public sector involvement and, therefore, potentially more private sector involvement. I wonder whether you could remind us of what the costs of borrowing were as a result of ESA 10 changes. For the NPD projects that we had to use in our borrowing powers, we agreed with the HM Treasury that it would be notional borrowing, because we did not actually have to borrow money, but we had to score it against our borrowing powers. In 2015-16, it was £283 million and £333 million in 2017-18. That was quite a substantial amount. That is the notional borrowing, and there will also be an impact in 2017-18, but it is not part of the notional borrowing. It is part of its impact on our capital budgets. Are you in a position to tell us how much that is likely to be? I can... Sorry, it was £234 million. That is simply the legacy of the four projects that were reclassified because of ESA 10. £234 million, which I am assuming counts against our £450 million a year limit. It does. Can I just clarify the notional borrowing, the £333 million that I said? That was what went against notional borrowing, but that was our limit in terms of borrowing in 2016-17. However, what we had to score for the NPD projects was actually £398 million, so there was an additional element over and above the borrowing figure. If it was £398 million, where did the balance of £65 million come from? That was factored into our deal programme. Again, it was budget cover that was provided, not cash requirement, but it was factored into the capital budget in 2016-17. However, budget cover requirement would have meant that that money could not be used elsewhere. Is that a fair comment? It could be described as an opportunity lost. Yes, I know that that is fair. Let me focus on that. I appreciate that you cannot say anything about this budget coming. I just want to ask a more general point because you have hundreds of millions of pounds in pipeline projects coming forward. Is your expectation that the Scottish Government will use its borrowing powers to fund some of those projects? I think that ministers have made clear that they would want to maximise investment, so we will see the position in the draft budget. My expectation is that there will be use of borrowing in future years. Any borrowing that is on legacy projects because of ESA 10 again is an opportunity lost for this coming year to invest, so some of the pipeline projects will not proceed in the time that you anticipated. In this coming year, I do not tell them. Is there any any notional borrowing in this coming year? There is no notional borrowing. There is actual borrowing in the coming year. 234 million. In 1718, but not in 1819 in the future years. Sorry, next year is a future. We have not reached that financial year yet, so that is the future for me. We are already borrowing in actual cash, not even notional cash, 234 million. That means that the £450 million level is reduced by that amount already. I am again looking at opportunity costs for the pipeline of projects that are there. Are you going to have to re-profile any projects? We do not have to re-profile any projects because that was factored in for the 1718 budget at the time, so no projects were stopped to make way for that. It was all factored into the requirements at the time of setting the draft budget last year. I accept that new projects were stopped because some have been delayed. The start dates or outline business case pushed back because we saw that with hub projects at the time of ESA 10. I could list a whole number of them that were delayed because of that. It is likely that that could have happened in this case. Do you want to follow up on the hub ones, Peter? The convener is aware that some of the DBFM projects that had to be put on hold whilst we reconfigured the structure of the hub programme to allow those to go ahead under the new rules. Those projects have now all gone ahead. I think you are making reference to other capital projects outside of the programme. As you know, we have an infrastructure investment plan and the pipeline. We do not have a programme with the detail of timing absolutely nailed down across multiple years, so we are flexing in order to accommodate the unfortunate classification change that came through. However, we still have the pipeline and the projects are going ahead. I do not call it a delay, but I call it flexing. That would be okay. Interesting. Bill Bowman. Is re-profiling the same as juggling? Just to understand. You have a programme of work. You have budgets available. We make the project fit within the budget available over the piece. We are trying to make sure that we are always making the very best use of the public money available. I was going to ask about the Scottish National Investment Bank. Just to build on what Willie Coffey had already asked, Elin Emerson had said that, effectively, the bank could produce funds that you could spend and spend. Peter Rickey said that it is all within the same limitation. Does the Scottish National Investment Bank make any difference to Government capital spending? I described that under different potential formulations, different rules would apply to it, but the work has not yet been done to work out. The recommendations have not been made by the group to say exactly what form the National Investment Bank will take. I was trying to describe options. I cannot tell you what form the National Investment Bank will take because those recommendations have not come forward just yet. You will have more money to spend or you do not want to have more money to spend? We will be feeding into the work that is being done on the National Investment Bank. The aim is, obviously, to get maximum value out of the bank. There are choices about whether it sits as a public body or whether it sits as a private body and what nature of public body there may have to be discussion with Treasury about how it does or does not fit within existing Treasury rules if it were to be a public body. I cannot answer the question until we get to a position where we understand what the nature of the body is to be. The other thing that Peter Eakie said was that at the end of the day it could be the poor consumer again that pays for these projects. Is that likely to be the case with Government projects? I was trying to describe a situation where financing is the process of raising money to initially pay for something and the funding of it is how it is paid for over time. Elements of our infrastructure are funded from Government budgets from general taxation, roads, hospitals, schools. Elements of our infrastructure and general communications infrastructure and energy infrastructure are paid for by user charges. I was not trying to suggest any change in that mix. I was simply suggesting that when you raise finance it is repaid from a different route depending on what you are raising finance for. If we do not know, it sounds like it is another bank rather than something different. We do not have a Scottish National Investment Bank at the moment, so it would be something different. We are waiting for recommendations about what exactly its focus should be. There are many choices that you could make about what kind of body it should be, what its main focus of investment should be. That will all come in February, and we will follow up from there. However, it will be something different. I think that the potential choice here is a trade-off. If it is a private institution, then the borrowing limits do not apply, but potentially the interest rates could be higher. Is that correct, as an assumption? I do not think that it would automatically follow that if it is a private body, the interest rates would be higher. I think that it is more a question about how the bank is fit within the landscape, how it is to be accountable to ministers and, indeed, to this Parliament, how far it is a private body, how far it is a public body. Yes, there are considerations about how it fits within the rules that we operate with Treasury, and there may have to be some discussion about what kind of body we want it to be and how it would fit with those rules. Presumably, to some extent, using the experience and model on similar kinds of banks in Germany, Scandinavia and so on, because, obviously, they have been highly successful. Indeed, we would want to follow all that experience. Some of the things that I am describing are the particular complications of devolution, rather than setting up a bank when you are doing that at an independent state level. It is screwed by Treasury rules. You are wording that right. Bill Bowman, do you have any further questions? The other aspect would be the opportunity cost of how much this bank is going to cost to run. Do we have any indication of that? Not at this stage, because that, obviously, is again down to choices of what it is going to choose to do. I wonder whether I could pursue further some value for money issues at the risk of losing people in this. I want to talk to you about senior debt and subordinate debt. Senior debt interest rates have been reported at, I think that you said, 4.09 per cent, Peter Rickey. I am glad that I was listening. That is when the underlying liborate is 0.5 per cent. In the past, senior debt interest rates have been between 6.8 per cent to 8.3 per cent, but the liborate was over 5 per cent, 10 times higher. Do you think that 4.09 per cent is value for money, given that interest rates are so low currently? That is an interest rate that spans over the deals that have been closed across the programme to date. The liborates have moved around, as you would expect, over that period. There is always going to be a difference between the underlying risk-free interest rate and the rate that a project finance lender will give you for an individual project at a point in time. We believe that 4.09 per cent, which is broadly akin to the pooled rate of PWRB borrowing that local authorities use, has been measured over a very different period of time. It is below the rate of government borrowing for a similar period of 20-year gilts for the 10 years previous to the programme. Overall, that provides a good cost of finance for doing infrastructure investment at this point in time and represents value for money. You do not think that it could be any lower? We have not been able to get any lower rates, although we always try to get the best deals possible. Can I ask you about subordinate debt rates? My understanding is that the average is 10 to 11 per cent. I would be keen to know that you gave us an all-in borrowing cost, which is very welcome. That is the first time that we have had that figure of 4.9 per cent. However, how much does subordinate debt in percentage terms rate to that overall borrowing cost? The figure that I gave for all-in-weighted cost of capital is 4.74 per cent. The average cost of genio debt, you are right, is in between 10 per cent and 11 per cent, around about 10.8 per cent overall on average across the hub and MPD programmes. I was asking, did your 4.7 per cent include, as an all-in borrowing cost, the cost of subordinate debt? Yes. We have a senior debt average at 4.09 per cent, a junior debt average at 10.8 per cent, which leads to an all-in weighted cost of capital at 4.74 per cent. I got that. What I am asking you is what percentage of subordinate debt is there in that total debt figure that you have given me? Around about 90 per cent of senior debt and 10 per cent of junior debt. 10 per cent of junior debt makes up that total figure, yet it has gone up by about one percentage point when you average it. What is happening is that 10 per cent of the debt is accounting for a 25 per cent increase in your average total cost. Is that right? I do not quite follow that mathematics, but the senior debt rate is 4.09, so 4.1 per cent let us say. When you average it overall it is 4.75 per cent, so there is a 0.65 per cent difference between the senior debt rate and the all-in cost. That is the impact of around about 10 per cent of junior debt. I suppose what I am driving at is the cost of subordinate debt is greater, and that is demonstrated by your all-in borrowing cost, because the amount of subordinate debt, not the interest rate, but the amount of subordinate debt of that total cake is 10 per cent, yet it is factored in quite a substantial increase to the overall percentage of borrowing. These are highly geared projects, and around about 90 per cent of the debt that we have in the projects is the cheaper and lower-risk form of senior debt, and to improve the value for money overall there is always an attempt to minimise the amount of risk capital or junior debt, subordinate debt in there, which is the more expensive, higher-risk form of debt, which I have said is averaged across the programme at around 10.8 per cent. Okay. Let me ask something further. We have evidence emerging that some people who own subordinate debt, if I can describe it in those terms, are selling that debt on in secondary markets because there is an excessive margin of profit to be made. They are able to do this. What we have is the bizarre situation where somebody might be borrowing and deciding whilst they are making their borrowing repayments that the value of their debt should be sold on. Not only are they selling it on to somebody else, but they are still having to make those borrowing payments alongside it. Is that not gaming the system? Are you not concerned about the excessive margins of profit that would invite this to happen? There is a secondary market in the private sector in this junior debt or the investments in projects. What tends to happen is that primary investors and developers will take the risk around the construction phase, where those projects are at a particularly high risk, and indeed the bidding stage, where they may or may not win the projects and have to invest sums of money to become the provider, if you like. Once that construction phase is over, then this investment in many cases has been sold on to pension funds and other institutional investors who are very keen to hold that investment for a long period of time, 25 years, which is the average length, because that matches their liabilities over the period. What that allows the primary investors to do, if you take that construction risk, is to recycle their capital and do more projects and invest in future projects. As the risk reduces over time, there are investors who see that risk differently and will effectively pay more for that investment because they will accept a lower interest rate over time now that the risk has reduced. Okay, so that there is a market there that some, for example, local authorities are generating the debt because they want to invest in important capital projects in their area. They are then spotting that there is a wizard wheeze to be had in selling that debt on, making a profit out of it but still playing their borrowing charges. Does that make sense in terms of, I mean, I'm turning to Eleanor here, in terms of kind of public sector accounting practice? Are you talking about the public sector selling on shares of the subordinated debt? Well, we hold an element of that debt on behalf of the public sector and we in SFT, in our investment subsidiary SFTI, hold that and have absolutely no intention of selling any of that. We're very keen on the role that investment gives us in the governance of the project companies and are clear in our annual accounts which are published every year of our intention to hold that debt until maturity. So reports in local council finance agenda papers are entirely speculative and wrong? I couldn't tell you about all reports in any local authority council agenda papers. I can. Okay, okay. Liam Kerr. Thank you, convener. I'd like to just focus on a couple of specifics in the report. First of all, at page 60 of the report, which is the appendix showing the progress in projects development, we have two references to prisons for want of better, which show on the national facility for women offenders, the total cost of the project has increased by 13.5 million due to additional requirements and we then see the Inverness justice centre. The project appears to have required an extra 6.5 million of funding, which surprised me because that's nearly £20 million extra required on two projects. Are you able to give us any detail on what's going on there? I can't give you any information about the women offender facility. My understanding on the Inverness justice centre is that it's not a cost overrun of the project but merely looking at what's funded from where amongst partners to make sure that the whole thing could be. I think that there was an expectation that some partner bodies, all public sector bodies, would pull money and instead we have put the 6.5 million through directly to make this project go ahead, so I don't think that's a cost overrun. My best understanding, I can't tell you about the women offenders facility, I'm afraid. Would you mind providing clarity afterwards? On the women offenders facility, 13.5 million of additional requirements that wasn't scoped or appears to have been unscoped at the procurement stage seems like an awful lot to be missed, so I would appreciate some clarity on that. On the Inverness justice centre, if you wouldn't mind and I appreciate that you may want to write on that as well, but it says quite clearly that additional funding of 6.5 million has been received, which of course begs the question, received from whom? From the Scottish Government, which then leads on to it was presuming not budgeted for by the Scottish Government at the point of procurement. I think that it was not at the earlier plan stage, but that was reviewed and agreed before they went ahead, which procurement is my understanding. I was going to say that the additional 6.5 million would be factored into the budget process. The project is not yet complete, so it would be something that we would take into consideration when we are setting future budgets. Perhaps the wording that it has received would not receive it in advance of it needing it. It is a budgetary issue. It is received confirmation that the budget will increase. I think that that is probably better in terminology. The second thing that I want to look at is the following page of that appendix, or the previous page, page 59, the V&A in Dundee, which I see very frequently and it looks fantastic. It appears to have a cost of £45 million. The first question, which is just a point of clarity for me, in Annex A, page 21, and Annex A being, as I understand it, how projects are being funded. Page 21 appears to suggest that the cost of the project is about £80 million. I am clearly misreading something, but could you help me with the discrepancy, please? The £45 million was the initial cost at Outland Business Case. The way that those reports work is that we are now providing the OBC information and the latest information, as it is September, compared to what we provided in February. Previous iterations of the report would have indicated that that cost of £45 million had increased and the overall cost of the project is £80 million, which is recorded in the project pipeline. The whole £80 million is not Scottish Government-funded, though it is a council-led project. That is actually my next question. The cost of the V&A is now, give or take, £80 million. When it was £45 million, I understood that £25 million was coming from Government, which suggests that £20 million is coming from Dundee City Council. Now that it is £80 million, is that still the same split? Is it roughly £40 million from Government, £40 million from Dundee, or how is that broken down? I would need to come back to you with the precise breakdown, but the further element from Scottish Government or part of that is coming through the Dundee growth accelerator project, which is a mechanism where, when outcomes are met, funding will flow to the council. I need to confirm the precise amount that is coming through that mechanism. When it is built, I see the timeline for opening in June 2018. Once it opens in 2018, my understanding from the report is that that is the building, the operation of it is then handed over to Dundee Design Limited, which, going forward, will run the V&A, will provide the product. I am just curious how long is that contract with Design Dundee? Is that self-funding, or is there some kind of contribution from the public purse, or does Design Dundee kick back to the public purse? What happens if Design Dundee does not fulfil that contract? I think that we would have to come back in one of the specifics of that. My understanding is that Design Dundee is an arms-length organisation affiliated to Dundee City Council, but we will come back and clarify. I have a couple of other little bits and pieces. Can I start with the Aberdein Western peripheral route? It is a question that I asked when we were in private session at the economy committee. Let me ask it again, because I do not think that I have had an answer. The cost to complete assessment was reported in the newspapers as being delayed. That, of course, is the process that looks at time to complete and cost overruns and is essential to keeping on top of a project. My understanding that it was meant to take place in October, but it did not do so. Has it taken place now? I am not the best of my knowledge. My understanding is that those things are absolutely essential in capital projects, particularly big ones such as the Aberdein Western peripheral route. There was some suggestion that it was delayed because of the difficulties that were experienced by Galliford, Tri and Carillion, in which they both reported significant losses and the fall in their share price. The suggestion was that it was delayed to help them. Is there any truth to that? I am sorry, but I am not aware that there is any truth to that. The key thing for us is that the road is still scheduled to open for traffic in winter 2017-18. Obviously, we will be staying on top of the financial aspects. We share your desire to have the road complete and functioning well and on time. You can understand the concern if two of the three major contractors are reporting those kinds of difficulties. We want the contract to finish. I asked that in private session previously. I have now asked it on the record. I would be grateful if somebody would write to me with that information. One final thing. Alex Neil certainly has read most of the report that we commissioned from the Cuthbert, but he missed one thing. Aside from the Scottish supply chain that he covered, I am curious to know that, in terms of tier 1 and tier 3 contractors, are they covered by the Scottish Government's procurement guidance? The tier 1 and tier 3, so the hub companies are not specifically covered by the Scottish Government's procurement guidance, because that is about procurement by public authorities. However, they are covered by the terms of the original procurement that selected them as partners, and they select supply chain members to deliver for the local economy as much as they can. As I have said previously, 78% of the prime costs of those projects are delivered by Scottish SME companies, and we report on our dashboard on the amount of training, jobs and other important community benefits that come out of the hub programme. I do not want to put words into your mouth, but what you are saying to me is that the Scottish Government has excluded HUB from its own procurement guidance. The hubs were procured by the participants at the outset of that programme, and the guidance that was in place at the time of that procurement was used in procuring those hub companies. Let me get down to brass taxi, because the Government and Parliament care about things such as the use of blacklisting companies, the payment of the living wage and all those things. Are you telling me that you do not monitor that among tier 1 and tier 3 contractors? Do we have any idea whether they are paying the living wage or whether they are engaged in blacklisting, all of that? I could not tell you through all of the subcontract chains of all of those entities about the living wage, for example. None of that is monitored? There is monitoring at the level of the key performance indicators of the hub companies that are published every year. The key performance indicators contain a range of information on community benefits, on the achievement of programme and financial targets, but the key performance indicators are the things that we monitor across the hub programme. That is a very helpful way of telling me what you do not monitor. I will not find reference to whether a company is blacklisting or has in the past. I will not find reference to payment of the living wage. The reason why I am pursuing that is that the substantial sums of public money have made their intentions clear about what they want, but that does not seem to be happening in practice. Is that a fair comment? We can look into the comments that you made, but I have already said what we do look at, which is a range of key performance indicators across all those projects and programmes. Thank you very much. Any further questions from any other members? No. On that basis, I thank our witnesses for attending this morning and for subjecting yourself to some quite grilling questioning on behalf of my colleagues. We now move into private session.