 I welcome everyone to this, the sixth meeting of the Public Audit Committee in 2022. The first item for the committee's consideration is to agree to take agenda items 3 and 4 in private, are we all agreed? We are agreed, thank you. The main business that we have this morning is consideration of the Auditor General for Scotland's section 22 report on the 2021-22 audit of the Scottish Government consolidated accounts, along with his briefing on Scotland's public finances, challenges and risks. Can I welcome our witnesses this morning? It's almost exactly a year since we held this session and this time I'm pleased that all the witnesses are in the room with the committee. I'm very pleased to welcome the permanent secretary, John Paul Marks, alongside him is Colin Cook, the director of economic development, Alison Cumming, the director of budget and public spending and Jackie McAllister, who is the chief financial officer in the Scottish Government. Can I welcome you all to this morning's session? We've got a range of questions that we want to put to you, but before we get to those questions, permanent secretary, can I invite you to make a short opening statement? Good morning to the committee and thank you for your welcome. Thank you to Jackie, Alison and Colin for joining me today. I'd like to start thanking the Auditor General for his report and his assurance on the 2021-22 annual accounts. This was another unqualified opinion, but we're very committed to working with Audit Scotland and the committee to develop further. I'm sure that we'll cover in our session some areas and opportunities for us to do that together. We want to continue to ensure value for money, we want to ensure financial management and good control, and we want to continue to improve good governance, all focused on delivering better outcomes in Scotland. The operating context, as you know well, remains severely disrupted. The impact of the pandemic, tragic events in Ukraine and the inflationary shock have all severely impacted on the cost of living, on our budgets, on our economy and our public services. It's been a challenging year in that context and those risks are staying with us for the near term. The 2021-22 accounts before us today, just a couple of points from me, may be up front on the transition from that 2021-22 year into what was a Covid crisis, into our attempt to deliver a Covid recovery. In that year, that response included £5.7 billion of extra support in consequential funding, but that funding did not continue. Into 2022-23, we needed to deliver a fiscal consolidation but continued to deal with the Covid backlogs and that risk was compounded by the shock of further inflation. We've published some more evaluation on Covid spending, particularly around business support, which Colin can allude to and will continue to look to see what more we can do. In terms of balancing the budget, as you know, on Tuesday, Parliament voted the budget through for the next financial year, but through 2022-23, we worked really hard to ensure, of course, that we managed those backlogs, brought the budget into balance and sought to make further progress. Two emergency budget reviews were put in place with £1 billion of in-year adjustments to ensure that that could be done. In terms of our approach, as I said, value for money, good governance and a focus on delivery remains priority. We have a delivery executive. We meet every week focused on financial control, on risk and those prioritised outcomes that we're seeking to deliver. A corporate transformation programme that is really getting going around workforce management and control, which Audit Scotland allude to, around estates and systems transformation, and we are going to need to rebase our capital programme given the shock and impact of inflation. Finally, just a couple of points on progress on outcomes, because I share the committee's desire to see a real focus on performance reporting and improvement in outcomes. We have record high employment in Scotland, the lowest in activity level across the UK. Child poverty is lower than the UK average. We've got 1,400 fewer children in care compared to 2020, when the promise was launched. If I look at a system like criminal justice, crime is at its lowest levels. The prison population is 8 per cent lower than pre-pandemic, and our courts backlog is falling in a sustainable way. We have further criminal justice reform ahead. We need to accelerate public service reform to look across those systems and drive better outcomes in the months and years ahead. However, we have some very important strengths and capabilities in Scotland to build on, and that will be our focus as well. I just want to say thank you to partners across local government, NHS, private voluntary and public sectors for their support this year. It has been challenging but nonetheless their partnership, that collaboration, is absolutely essential for us to secure and deliver Scotland's national performance framework in the long term. My final point, if I may, is to pay tribute to the outgoing, longest-serving First Minister in Scotland and to thank the First Minister for her significant and enduring contribution to this country. We will be ready to support the new First Minister from March, keeping our feet firmly on the pedals to deliver better outcomes for Scotland. I'll stop there. I thank you very much indeed. I'm going to turn straight to questions and invite Willie Coffey to put a question to you. Thank you very much, convener. Good morning, permanent secretary and the rest of the team. I wonder if I could invite you to open up some comments, if I may, on the plans to replace the European Union structural funds. As you know, permanent secretary, this committee has been keen to try to understand if there is a role for the Scottish Parliament, the Scottish Parliament committees, Audit Scotland and so on, in the replacement and deployment of the funds on behalf of the people of Scotland. We know the terms shared prosperity, we know about community renewal and we know about levelling up. Could you offer the committee any guidance whatsoever or clarity on arrangements for scrutiny, transparency and audit of the funds in relation to the Scottish Parliament and the work that we do in here? As you say, the departure from the European Union has changed the way European structural funds work so that they have been replaced by levelling up funds. We've just gone through round two of the levelling up awards, which local government put together their business cases, submit them into deluck in the UK Government and then awards are made accordingly. Scottish ministers and their officials would obviously prefer that that money was devolved so that it could be subject to the full scrutiny that this committee would provide and that it could be coherent with things like the national strategy for economic transformation, which would be the preference for our ministers. In the absence of that being agreed by the UK Government, our intent is to continue to work with local government on their projects that have been successful in getting funded and to make sure that we're doing everything that we can in partnership with them to ensure that they deliver well. For example, if there can be some coherence with growth deals in parts of the country, then let's see if we can do that. I was in Glasgow the other day with the chief executive. We'd been out to Glasgow airport, we'd seen the Advanced Manufacturing Institute with their meeting with the chief executive talking about their levelling up bids and how we want to, of course, ensure that you get maximum bang for your buck. I think that we need to reflect carefully on as those projects get going, how can they be reported in a way that Parliament could, for example, scrutinise the value for money, the effectiveness, are they on track on time, and to be confident that that fund was working. Colin has done further work on this. Colin, if you want to add anything more on the scrutiny and audit of levelling up funds, anything else you could add? Sorry, Mr Coffey. I saw the exchange with the Auditor General in his evidence around this. Clearly, a UK Government fund is subject to UK Government auditing arrangements, but our ministers, as the permanent secretary has said, have been clear and consistent throughout that they believe that regional economic funding, future regional economic funding, should be devolved and should be delivered with and in partnership with the Scottish Government and UK Government where appropriate and other tiers of government within Scotland. That is a model that has worked extremely well for the city and region deals. It is a model that has worked. I think that everyone has benefit for the launch of the Green Freeports programme, so I think that we have a track record of demonstrating that we can work together. I know that our ministers are in discussions with the Secretary of State for Levelling Up and others about future arrangements. Are you seeing any semblance of agreement coming from our colleagues in the UK to recognise this Parliament's role in this process to date? It seems to me—certainly the convener at this committee—that we have tried our best to get some clarity on that, but there remains none. Are you getting any indication at all that we will have a formal role or otherwise, or will we be looking and glancing from the side as this major fund is dispersed and spent throughout Scotland for our communities? I am very happy to take away the challenge to go and meet Sue Gray, who is the permanent secretary of Levelling Up. I met her and the new first permanent secretary down there, Sarah Healy, a couple of weeks ago. There is a new leadership to the department to reinforce the importance of this point because, like you, I want to secure the very best value for money from that fund. I have seen some of the media coverage on how local government feels about the process. We would like the process to be empowered as close to the communities that it serves as possible. As Colin Saird said, our ministers have been very clear and consistent that they would prefer it to be devolved. However, on your point of, how can we now work together? I think that Green Freeports is a good example, as Colin Saird said, where we have joint governance, joint programme board. Could we not achieve the same on Levelling Up and then provide the committee with more regular updates, including the opportunity to scrutinise projects to be confident that they were delivering what their business case has said, achieving the benefits and that the funds were being optimised? I would like to see that as much transparency as possible. I am very happy to meet Sue, Sarah and report back and write to you. I think that that would be greatly appreciated, convener, if you have that meeting and share with us, if you can, the outcome of that, because we are very keen to pursue this. The only other thought that I have got is that the committee could invite the Secretary of State for Levelling Up, Michael Gove himself, to come and tell you how it is going. I think that he has been and may be coming again to the other. He can bring his permanent secretary with him. That is an option for us. That would be lovely. Thank you very much for your responses. Before we move off this point, could you help us to understand the Green Freeport projects of which there are two in Scotland? Are they going to be the subject of scrutiny and audit by the Auditor General for Scotland? I think that I need to double check precisely how we can do that. I would have no problem from my perspective enabling that. The way in which I understand the governance is that it is a UK programme for which the Scotland Freeport elements, the two ports that we have devolved funding for or are getting funding for—the £52 million. We have very good joint working to deliver that. If there is a mechanism that we can enable for Audit Scotland to be able to audit the £52 million for the two projects in Scotland, I would be totally comfortable with that, but I just need to understand the governance around that programme and the UK position to understand whether that is problematic at all. Just to reiterate from an official working level, we have collaborated really effectively with UK Government colleagues throughout in terms of preparing the prospectus, in terms of assessing the bids, in terms of the way in which we communicate and we are starting to plan and work on the roll-out of Green Freeports. We have done that together, we have shared responsibility, we have been open, and therefore I think that it is a very strong position. As the permanent secretary said, I think that we do need to just check the precise nature of the auditing arrangements given the relative contributions that the different Governments are making to this programme in Scotland, but I am sure that we can do that and carry on in that spirit. Okay, thank you. For us it is not just about the £50 million of money, it is also about the governance arrangements, the outcomes, it is about the whole way that that operates and whether there is any displacement effect, for example. I am going to bring in the deputy convener who has some questions to put to you. Thank you. Good morning. Good morning. Can you confirm the amount that was transferred to the Scotland reserve at the end of 2021-22? Tacky, could you just tick that for me? Of course, yes. In the provisional outturn statement that was presented to Parliament in the summer of 2022, we transferred £650 million in total, and that was a combination of resource, capital and financial transaction funding through the Scotland reserve. The final outturn for 2021-22 is still to be reported to Parliament. We hope that that will be imminent, but we have to wait for all the bodies that feed in to the Scotland reserve to complete their 2021-22 accounts and audit process, and they are still outstanding. Okay, thank you. Will that money be used to support the 2020-23 budget plans? Indeed, and the 2020-23 budget itself set out and included quite a significant proportion of the Scotland reserve within its budget statement, and the remainder, the additional carry-forward, has all been deployed and utilised within 2022-23. What plans do the Scottish Government have to increase transparency over the Scotland reserve? We are keen to continue to explore with Audit Scotland how we can increase transparency. We think that there is a good degree of transparency around the Scotland reserve. As I mentioned, we periodically report to Parliament the provisional outturn, the final outturn and the fiscal framework outturn. It includes a full reconciliation of the reserve, the funding that goes in and how that is drawn down. Within the consolidated accounts, we also refer and acknowledge in the performance report at the front of the accounts the difference between the consolidated accounts and the Scotland reserve, and they are not quite the same thing. However, we can look at how we disclose that information and how we can be more transparent in the narrative that is already there. We can also look at the information that we provide in the final outturn report to Parliament to again see how we can increase that transparency. I am aware that routinely the committee does not see that report. Again, that is something that I am sure we could look at providing. That would be excellent. Who in the Scottish Government agrees with ministers any funding for announcements? If the Scottish Government or the ministers are announcing money for a specific project, how does that come about? Who agrees that the amount is there and it is available? Compared to what I have seen before, we have a comprehensive Accountable Officer template process for all spending decisions. It would start within the portfolio, so if the Minister and Cabinet Secretary want to make an announcement, that would go through an Accountable Officer process to assure, for example, that it is proper, regular, that we have the legislation in place, that we have the budget and all the rest of it. It is for that director general, Accountable Officer, with the minister. If there was a level of contention with regard to that, for example, it might not be affordable within their existing budget, then those templates are signed off by Jackie and myself. Ultimately, the Deputy First Minister is finance secretary as well. That control process, through the last financial year, has been critical for us because of the level of risk. Audit Scotland is very fair in its challenge on this last November in its report, saying that the level of risk to whether the budget was going to balance was significant. That was the case. Being in control of the decisions and the spending is something that we have put a lot of effort into in the last year. I am thanking you specifically about the money that was offered for the teachers. 156 million were paid off to the teachers. It was broken down by 30 million for this financial year and 123 million for the financial year 2023-24. It is coming from the education and skills budget. At committee, Shirley-Anne Somerville had stated that she was still working through the details of where exactly the money is coming from. Would that not be set in stone before we make the announcement? That is huge implications for education and skills. There are two different budgets in play in that announcement. The 30-odd million that you refer to is in the 2022-23 accounts for which we had a provision and agreements through our AO process, agreed with the cabinet secretary, the Deputy First Minister, and that will be in the next set of annual reporting accounts. What the cabinet secretary is then alluding to was the second part of that pay offer, which was for 23-24. However, by the point at which that was being announced, which is a future spending commitment, the budget was only passed by Parliament on Tuesday. It is a commitment to a future liability on pay, which is affordable within the education budget, but it will be precisely for the cabinet secretary to balance a 23-24 budget based on the allocation that Parliament voted on Tuesday. So, when will it become transparent to us via the cuts of gaming education and skills? Well, it will become clear either through the scrutiny that the committee on education will provide or through future annual report and accounts and in future financial reporting. However, to be clear, we have budgeted for those pay deals, so we are not wanting to have consequential cuts to fund them. We are trying to achieve a balanced budget for next year. That is not easy, as I said, given the context and the fiscal position. Obviously, we have quite a lot of dependency on what will come out of the March UK budget in terms of any consequentials or not for the block grant. There is uncertainty, but that pay deal that was announced by ministers is funded in our budget. I do not know if Jackie Lamont wants to add anything more to that, but thanks. Just on the transparency point, the autumn budget revision and the spring budget revision will give full transparency on all budget movements that are agreed and actioned through the year. Again, looking at the track record, it is quite significant underspend. Most recently, the £2 billion underspend, what processes are in place or should be in place to make sure that, as Parliamentarians, we can scrutinise that and see what money has not been spent and why it has not been spent? You are right to draw out the scale of underspend in the 2021-22 accounts. We were just looking earlier at some of the big drivers of that. The student loans revaluation for the resource underspend for education was £600 million of that change. The business support, which, as I said, was very much driven by Covid consequentials, which were then discontinued, was another £180 million. Further underspends across heat and buildings were £250 million due to pandemic impacts and demand factors. I think that I would say with a high degree of confidence that we are not going to see that underspend in our 2022-23 accounts unless my two finance officers and I don't understand each other. As I say, we meet every week to go through our budget to squeeze every inch out of it. The process of the last year has been very challenging to balance the budget. We have quite rightly, as you would expect, sought to protect our cost of living package, so expanding the Scottish child payment, increasing its eligibility, trying to do everything that we can to mitigate the impact of the inflationary shock on households, and we created in-year more than £700 million of additional spending to afford public sector pay awards for 2022-23. That, in part, has enabled us to avoid, for example, to date industrial action across our health service. You are right that there are a set of factors that drove underspends in 2021-22. Many of those factors, like inflation in Ukraine, persisted, but I do not expect to see those underspends repeated. Jackie, do you want to say anything more on that? I think that one of the first points is that the £2 billion underspend does not represent a £2 billion underspend in spending power for the Scottish Government or indeed the Scottish Government and the bodies that are part of the consolidated accounts. Indeed, almost half of that underspend was non-cash valuation, technical accounting adjustments. I think that that is quite important to note that the accounts are a reflection not just of the spending year but of the assets and the liabilities and the provisions, and we have to re-value those each and every year and we need budget to do that. Quite a bit of the underspend, as the permanent secretary alluded to, was some very late changes in some of the index-linked assumptions that were driving a lot of the valuations for our provisions and our liabilities. It was after we had the spring budget revision and the last opportunity to change our budget assumptions in 2021-22. As we spoke about, the spending power is what is reflected to the Scotland reserve, and the provisional outturn for that was £650 million. We will be reporting a final outturn. We expect that to be closer to £700 million, but that is the spending power that we carried forward into the year. We included in the budget for 2022-23 more than half of that, and the rest, as I say, has been fully deployed within 2022-23. What plans do you have to be more proactive in publishing comprehensive Covid-19 spending information, and if that will make clear links between budgets, funding announcements and actual spending? I will ask Colin just to say a bit more about that, because the committee gave us that fair challenge last year, and we worked to publish a pretty significant evaluation, for example on business support grants and funding with regards to Covid spending. If there are particular additional areas, such as on the vaccination programme or PPE or whatever, we are happy to take that away. The final point for me is that there are two Covid inquiries under way. The UK won the Scottish one, and it will cover a range of scope, but we will also ensure that we submit all the evidence around the support that we tried to put in place to mitigate some of the impacts. Colin may be saying a bit more on the business support evaluation that we have published. We published that back in June 2022, and that is an evaluation of the outputs and the indicative outcomes of schemes up until summer 2021. We are continuing to work on that with our colleagues in the analytical service to refine and update that. It looks at spending an investment of around £3 billion, and it looks at things such as rates relief and schemes administered by local authorities and schemes administered by our enterprise agency. It looks at it first in terms of the emergency response that we put together between April 2020 and October 2020. Then, when we introduced the strategic business framework beyond that, October 2020 onwards, it looks at that element as well. We will update that. There is some really detailed information in there, and it is published on the Scottish Government's website. We have quite a lot of questions to get through, and I am anxious to press the accelerator just a little bit and invite Willie Coffey to come in. Willie Coffey, I will just be as brief as I can with his questions. Is it really to unite you to say something about the public sector consolidated accounts and the plans to produce those? Firstly, if you might explain what is the difference between those and the consolidated accounts that we are looking at just now, I know that there is an interface with the UK's whole-of-government account, and there are plans to produce those. Briefly, Parliamentary Secretary, can you explain for the benefit of the committee what that account is? You said it exactly right. Those accounts bring together everything that the Scottish Government funds and audits in terms of things such as NHS, social security, justice, etc. Stage 1 of the whole public sector accounts that we have made good progress on, thanks to the team that we have shared with Audit Scotland. That includes accounts with regard to the Parliament, executive public bodies and Audit Scotland themselves. That will show a broader scope of the spending, so you can see the whole. Stage 2, the challenge is the delays and the recovery plan that the Treasury has for whole-of-government accounts for the whole of the UK, which we need to draw on for the data for particularly local governments. Jackie and the team will work with the Treasury on that and with Audit Scotland for the next stage of that. Have we revised timetable for the final production of the draft? Do we know what the timetable is? As I understand it, it is saying that for 21-22 whole-of-government accounts from the UK, it is going to be almost two or three years time from now. It is going to unfortunately have a fair lag in it, which is quite frustrating in terms of utility. Jackie, do you want to say a bit more? Yes, absolutely. To be clear, when we spoke last year at committee, we articulated a staged approach to the public sector accounts. We have completed stage 1 for 2021 and we shared the draft with Audit Scotland, and we are lined up to do the same for 21-22. The issue becomes moving on to stage 2 and bringing in, as the cabinet secretary alluded, the other bodies such as local government. We are relying on the whole-of-government accounts process from the UK perspective. There is a recovery timeline in place for whole-of-government accounts, and that will drive when that information is available for us. Stage 1 has been completed for 2021, and it will be completed for 21-22. Again, that is something that the committee may be interested in having sight of. We would be very happy to share that. Last but not least, are the IT issues at HM Treasury being resolved? Do we have enough resource to put that all together in the tiniest, timely fashion? They have been resolved. The issue is that there is now the catch-up, if you like, and that is the timeline that Treasury has set out. We have the resources to approach this in the way that we presented, which is relying on the whole-of-government accounts process. Otherwise, we would need to consider what the implications and the resources would be to do otherwise. That is something that we would want to engage with Audit Scotland on. The reason why that is important is not least because, as we reminded you last year, when you just arrived into your post-permanate secretary, that this has been on-going since 2016. We were promised whole public sector consolidated accounts back in 2016. Here we are in 2023 and we are at stage 1. The Auditor General in his report, which we discussed in this morning, says that the continuing absence of a devolved public sector consolidated account means that it is difficult to assess the overall health of Scotland's public finances at a time of greatest need. There is quite an urgency. That is quite imperative. I wonder whether you would reflect on that after today's session, because I do not sense the urgency that we think is necessary to be applied to this so that we can get a full picture of what we own and what we owe, which is the expression that the Auditor General has used. I move on to another area. That is about capital borrowing. Back in 2018, the then chief financial officer—that was not you, Jackie McAllister—was one of your predecessors. Back then, the chief financial officer was able to provide a list of assets to the committee—those assets that attracted capital borrowing. Is the Scottish Government able to provide a list of underlying assets for which it uses capital borrowing for today? Do you want to say that? Yes, I am very happy to say that. Given that your predecessors set it up? Indeed. The first thing to say is that we do not set our capital borrowing policy on the basis of specific capital projects or programmes. We do so on the basis of the capital portfolio as a whole, and that is set out in the medium-term financial strategy document, which is publicly available. There is a significant amount of transparency around the capital portfolio and the programmes that sit in that. There is regular reporting to Parliament on those. I think that it is a six-monthly reporting of all the infrastructure and capital programmes that the Scottish Government is funding. There are very good reasons why we set our capital borrowing policy at a capital portfolio rather than an individual programme. There is lots of value for money reasons why we do that, but borrowing is less than 10 per cent of our overall capital funding. The capital funding is predominantly set by the UK Government and the Barnett funding, which can vary in year. It is really important that we have that flexibility in year as we move through the year to accelerate or decelerate our capital borrowing plans, depending on the funding factors and the spending. Even if we look at the last few years and the level of slippage that there has been in capital programmes, not just in the Scottish Government but in UK Government and other organisations, because of the pandemic and supply chain issues, how do we take an approach to borrow on a programme or a project basis? We could have borrowed too much too soon and effectively lost that flexibility as we have moved through the year. That is something that we think is the best value and it gives us the most flexibility to manage effectively the fiscal framework that we are operating within. Can you tell us a little bit more about the timescales that you work to for your borrowing? I think that the fiscal framework has got a default position of 10 years, but do you look at shorter periods than that and longer periods than that? How do you come to settle on that? Absolutely. There is a significant amount of modelling that goes in when we take the decisions about the value of capital borrowing and the tenure. That will be determined by a number of different factors, including the cost of borrowing. Indeed, we have seen a shift in the cost of borrowing, and that has influenced our decision making and our borrowing strategies. We will do that on an on-going basis, and all that information will feed into the advice towards the end of the year on the final amount of borrowing and the tenure. I suppose that reinforces the point about not locking in borrowing to particular programmes and assets, because we need to keep taking that portfolio approach to deliver the best value for the Scottish funds. I think that the fiscal framework is getting this right. For resource borrowing, the tenure is maximum five years for us to pay that back. As Jackie said, for us to be using borrowing for a particular project or announcement, as we were talking about earlier, that, from my perspective, is suboptimal. I am expecting an announcement or project to be funded and to have a budget line so that I can be confident that it is deliverable. If it is depending on borrowing for it, then, from my perspective, that is increasing costs, because, obviously, we have to pay the borrowing back. It is a flexibility in year for a short term, depending on movements, some of which we either cannot forecast or happen to us because of external factors. However, your point on tenure for resource five years and then capital, I think, repaid within 15 years. We have a long 10 to 15 years, so we have a longer window on the capital borrowing if we need to. The watchword for us here is about transparency. Whether we are looking at the reserve balance, which is not disclosed in the accounts, whether we are looking at the failure to produce significant progress on the whole of public sector consolidated accounts, or whether it is the extent to which there is transparency about capital borrowing. I think that the view of the committee and of the auditor general is that much more could be done to improve the levels of transparency. Again, I hope that you will perhaps reflect on that. Just to reiterate, we are really happy to meet Audit Scotland to think particularly on this point around borrowing. What more can we do to improve that understanding of how we are utilising it and transparency on the rationale? I think that later this year, in the terms of the medium-term fiscal strategy, Alison, we will seek to set out again the medium-term plan and be as transparent as we possibly can on capital allocations to projects, so that you can be very clear what is funded over what years to deliver what benefits. In the end, that is about accountability to Parliament. I know that it is. To be honest, transparency and scrutiny help to try and value for money. That is what I want to see. I am going to ask Craig Hawley to put some questions to you. Thank you, convener, and good morning, Mr Mars. If I should reflect on Covid-19 support payments and the issue of fraud, obviously, 2021-22 allocated £5.3 billion in funding to Covid-19 response activities. The estimate that we were working was probably a fraud and error that equated to 1 to 2 per cent of that. Are you in a position to say to the committee how much has been recovered through fraud and how much has been recovered through payments made in error during that financial year? I will say a bit more, but your assumption is the same as mine. As you say, an estimate of 1 to 2 per cent of fraud and error, which was, I think, 16 to 32 million range of loss. One of the reasons we were assured that that number was low was because the way in which those support mechanisms were delivered via local government using existing systems and existing data sets and through their processes and other public agencies, as well as local government. On recovery, Colin, I do not know if there is anything more we can say today. If we cannot, then we are very happy that we also followed up. The figure quoted in the accounts in relation to business support was £504,000 recovered as of July 2022. That is the most recent figure that we have published. We are continuing to work with our delivery partners in local government and others to monitor that, alongside work with Audit Scotland and others to really get underneath the skin. That is as far as we have got, but we are continuing to look at it. It is a figure that is in the public domain and we will continue to look at it. What more can you or other agencies do to accelerate that recovery? What are your plans to provide regular updates so that we can get assurance on what is a relatively small percentage of a very large sum? Obviously, we are talking about a significant amount of public money here. What plans have you got, both to speed the recovery and to ensure that there is greater transparency on the numbers? We continue to work on this with partners. We are always committed to transparency, so when those numbers become available, when we have verified them, we will publish them in due course within our accounts or out with that process if it is a more acceptable way of doing it. We will continue to do that. That would be a very good estimate. Do you have an idea of what percentage you think you might be able to recover? I am afraid that I cannot speculate on that. Colin Beattie, I am now going to invite Colin Beattie to put some questions to you. One of the key issues in connection with the budget is sustainability, especially in the present climate. The Scottish budget is really only allocated annually. We do not know for sure how much money we are going to get until well into the budgeting process. I witness the fact that, just earlier this week, the finance secretary was able to announce some small additional money coming from the UK. If we are looking at sustainability in the short and medium term, how do you factor that in? How do you have a sustainable budget with reliable allocations in support of those areas that need to be supported when you do not know how much money you are going to have and your entire allocations might be turned upside down? It is a great question, Mr Beattie. It is sadly the underlying challenge that we face. I have obviously just been doing this for a year now and I find it pretty deeply uncomfortable that those are the facts, but the bottom line is, as you say, and the Auditor General and I were reflecting on it the other day, that for an organisation, for a nation that is running a £50 billion budget, the flexibilities that we have to manage shocks and or, as you say, adjust for those in-year changes are limited, but we try and obviously then maximise them to the best of our ability. Jackie and the team do a brilliant job to try and monitor all the outturns as carefully as we can so that we know what we are spending and work very closely with Her Majesty's Treasury to give us a sense of what might be coming in the future, but, as we have seen over the past year, that can change pretty quickly, depending on events in Whitehall. We need to be able to respond to that and have those relationships in place and understand UK Government choices. As you say, the Deputy First Minister was able to do something with some additional supplementary income that we received for resource, which is welcome. Alison might say a bit more about that and Budget 2324, but we are in the process of a fiscal framework review. We would like to improve the flexibilities available to the Scottish Government and to this Parliament to be able to manage those risks, as you say, so that we could hedge for uncertainty more and smooth those disruptions. As an accountable officer, that would clearly make life feel a little bit more stable and in control. In the end, we have a level of risk that we take. Last year, we ended up finding ourselves with a significant risk in the summer as a function of the impact of the inflationary shock and war on Ukraine, which led us to two emergency budget in-year reviews and £1 billion of adjustments, but those adjustments all disrupt programmes and change what were agreed plans. That is not optimal. Clearly, I would prefer not to have to operate in that short-term way, so getting more flexibility would be helpful. Alison, do you have anything else to add to that? Thank you. I would return to your point about planning and how we seek to mitigate against those risks. The introduction of the medium-term financial strategy, which we publish annually, is key in helping us to identify those fiscal sustainability risks and identifying the tools and strategies that we can put in place to manage those. The Government published the resource spending review in May last year, and that set out our best planning assumptions at the time around the financial envelopes down to portfolio level and below. It also set out the actions and the workstreams that we are putting in place to support improved sustainability over the medium term, and we might come on to talk about some of those. The other element that I would point to is that we have a very helpful reference point through the Scottish Fiscal Commission's forecasting work. It is a forecast that is published alongside the budget, and it will be refreshed forecast alongside the medium term financial strategy. It looks at the economic outlook and it looks forward to its best forecast projections, looking at the OBR estimates for UK spending as to what the Scottish Government's extended spending envelopes could be. We respond to those in terms of how we approach the medium term financial strategy and the annual budget processes, and that can feed into the in-year management strategy also. The permanent secretary mentioned that the Treasury was engaged with the Treasury in discussions. Do they understand the risks that the Scottish Government has to take in its budget and the instability that it creates? That instability is not just at the national government level. It also permeates right down to local level because local government cannot be sure what they are going to get. I talked to many community groups that ask, please give us three years funding, tell us what we are going to get for the next three years. It cannot happen because local government does not necessarily know what it is going to have. National government does not necessarily know what it has. That is not really good government. It is not a good process. What is the Treasury saying? Do they have a solution to this? Do they have something that might support the Government better? I say that this is a former Treasury official, so I have to be fair to my colleagues that they absolutely understand the fiscal framework. I suspect that the teams are meeting what every week and all the time. Certainly, I am talking to my colleagues in Whitehall every week and we are seeking to optimise the existing devolution settlement as best we can to deliver the very best outcomes of our ministers, respective ministers. I agree with you that there is an opportunity in the fiscal framework review to improve the flexibility that is inbuilt to it. There is some flexibility, of course, and we have a certain level of certainty around what our expectations are for example of what we will plan for next year on tax revenues around social security outcomes, but particularly as we devolve more social security into Scotland because it sits in our resource budget, whereas in Whitehall it sits in annual managed expenditure where there are in-year fluctuations because unemployment is higher or more people claim a disability benefit, that is managed flexibly for us, that is managed through an in-year fixed budget. So, we have to then make end-year adjustment provisions for changes in social security spending and we have to make sure that we are being really precise in understanding take-up and eligibility. I am quite right to because we want to be in financial control of social security spending but, nonetheless, it adds risk. There is an opportunity in the fiscal framework review. I think that Treasury colleagues totally understand how it works and I hope that we will see ministers working together in the year ahead to see what more we can do to improve that flexibility. Annas, do you want to add anything else to that? No, I was very comprehensive. If there is nothing further, we can say at present about the fiscal framework review but we would certainly hope that we can address some of the concerns that we have around those flexibilities and going into those discussions with the experience of having operated the fiscal framework for the last few years. We can look at one or two of the issues around sustainability going forward. You published a briefing paper on Scottish Government's financial sustainability for 2022-23. How, in the light of that, is sustainability being managed? How has it developed? How has it moved on to be better managed than it has been in the past? We recognise that there are all sorts of issues coming in. For example, the Scottish Rate of Income tax, the estimates of how much we are getting from that have sometimes been fairly dramatically incorrect. How are you managing going forward in the sustainability position? Alison Johnstone will say a bit more as well on this. We have a director in RxJeka who is focused on a fiscal sustainability project. We are working with Audit Scotland on that and I am very happy to keep doing so. When I stand back and think about the long-term trends for Scotland, it is very important that, with the Scottish Fiscal Commission and the universities and others, we understand the underlying drivers of our economy. Labour market participation rates and ageing population are underlying growth rates. We are clear on what our forecast long-term tax revenues are, given decisions made and ministers' decisions in the latest budget to increase our taxation, which gives us additional revenues in the short and in the long term. Earnings assumptions, for example, are critical in the latest Scottish Fiscal Commission report and are very material in terms of the envelope for the 23-24 budget. The choices that we are making around pay, fair work and the performance of our labour market are all critical factors that are informing our understanding of Scotland's long term. We then have to understand those assumptions, work with the Scottish Fiscal Commission with Audit Scotland, make sure that they are prudent and then plan multi-year. I think that our medium-term fiscal strategy would seek to do exactly that, given our understanding of what our statutory commitments are, what our paydeals that are consolidated are and therefore what our long-term resource baseline is expected to be. That leaves headroom for discretion, where ministers then have choices. The more that is baseline consolidated and statutory, the less that is left for further choices, subject to how big the envelope is. I mentioned in my opening remarks about needing to rebase our capital programme, given the impacts of inflation. That is true for every Government around the world, given double-digit inflationary shocks that were not forecast in business cases before last year. That will be critical to long-term sustainability and understanding in this country. What projects can we deliver in a sustainable way in the future, given the envelope that is available to us? On tax performance, we would also flag that the fiscal framework creates incentives for Scotland to improve its relative economic performance. That is the element that the permanent secretary outlined about driving earnings growth, more higher value jobs, to grow our tax base and our tax revenues. That is certainly a significant factor for us here. The national strategy for economic transformation has programmes in it that are designed to do that. On how we look at fiscal sustainability, it is very much through the two lenses of the taxes that we can raise and how we can work the fiscal framework to our advantage in terms of how we improve that underlying economic performance to improve the net revenue position and how we can drive that maximum value from our spend, which relies in large part on prioritisation. However, there are three elements that I would draw attention to that we are looking at and being very thoughtful about how we get that balance and recognising that the fiscal outlook is challenging for the remainder of the resource spending review periods and beyond, and recognising that we need to drive out some of the expenditure that is currently in the system in order to manage those pressures that lie ahead. The Deputy First Minister reiterated in his stage 3 debate speeches that the Government will bring forward a pay strategy for 2023-24 before the end of this financial year. It is very careful considerations to weigh up there with the cost of living pressures facing public sector workforce but against the inflationary pressures and the funding challenges within our overall budgetary envelopes. The resource spending review, I would just flag some of the work streams there, a focus on digitalisation and improved digital methods of delivering public services to improve efficiency as well as the user experience for citizens. We have got the single Scottish estate programme looking at how we are using the public sector estate across the piece. We have our public procurement strategy for Scotland in April, which will look at how we are maximising value through procurement across the public sector. That leads into the final point on public service reform. That is absolutely imperative to securing a ffiscally sustainable future. That is partly about how we use resources more efficiently and recognising that, if services are person-centred and preventative, we can be reducing the failure demand and saving money on some of the interventions that we make in other parts of the system. The mention was made of headroom. From that I interpret keeping a margin within which, if there are fluctuations in funding and so on, we can remain within our balanced budget, which, as a Government, we have to do. To what extent is the amount of that headroom impacted by sustainability issues in relation to allocations of funding from the UK Government? Are we sitting here saying, okay, we've got this budget, but we're going to have to keep 5 per cent or whatever just in case there's a change in the course of the year, and only at the end of the year can we allocate that funding because we know we're keeping it? Are we in that sort of situation? I don't think we are, but Jackie will just make sure that I get this right. I think we are taking quite a risk-based approach, so it's not that we're holding money back because it might be taken off us. It's that, if anything, we're taking a level of risk for which we're planning something might change. Over the years, and obviously the 21-22 accounts that are here, there was significant in-year consequential funding, and as you said, Mr Beattie, particularly when it arrives late in the financial year, it feels like a windfall, but it's quite difficult to actually use it in an optimal way. That's not quite fair, for example, for local government, where we're able to, as you say, as the Deputy First Minister could, we're able to allocate money and people can use reserves to smooth it over multi-years, and local government can do that. We programme in a level of risk, but we don't hold money back to mitigate that risk. That's the bit that creates a level of anxiety in terms of managing that risk down through the year. Jackie, do you want to say anything more on that? Absolutely. If you look over the recent history, there has been a trend in terms of in-year funding changes, particularly during the pandemic. It was exceptionally large, but there have been increases in funding, particularly on resource in recent years. We certainly don't anticipate those, but we work closely with Treasury colleagues throughout the year to understand what's happening in the UK Government space. Of course, our funding is driven by UK Government spending, generally speaking. The Deputy First Minister has been quite transparent through the emergency budget review and, indeed, through the various different stages of the 23-24 budget process that the Scottish Government has been managing down at pressure. The Permanent Secretary spoke earlier about the drivers of some of that pressure, the cost of the pay deals and the inflationary increases. We have a number of levers that we would use in-year, including the emergency budget review, but we are looking at other areas of our spend that we would go to if there were changes in our funding arrangements. Indeed, this year alone, we received negative capital consequentials from Treasury, not in significant amount of money. We had to look at our capital plans and at our borrowing plans, coming back to the point that we spoke about earlier. We have to use all of those flexibilities to manage those adjustments, which can go up or down. Coming back to headroom, what sort of percentage of the Scottish budget would be held back or fall under the term headroom that you are keeping there as a margin? When I used the word headroom, I was trying to mean that, when we are talking about long-term sustainability and doing the forecasts, we can start with what are the statutory commitments or liabilities that are baked in? That gives you your statutory baseline, so that would be things like pay and pensions, for example. You can reduce those things, but not easily in the short term. It is more about controlling rather than reducing the statutory baseline clearly. We have a commitment to no compulsory redundancies, for example, and all the rest of it. We are able to forecast the statutory baseline, and then we are able to see what the headroom is that remains. That is the pot, if you like, for which there are choices. That is a choice that is allocative, subject to prioritisation, and is what the budget process is all about. Ministers, parliaments, stakeholders and partners will all have their view. That is the choices that the ministers are offered advice on. However, the more that is statutory and baselined and consolidated, the less that is available to put into other programmes, as Alison was alluding to, where we want to address the underlying causes of fiscal sustainability. We want to drive down, for example, levels of inactivity, support more people into work, reduce health inequality, reduce child poverty, reduce homelessness. Those are all the things that we want to do, but they are all programmes that have costs, so there is only a limit of how much we can invest in them, and that is the headroom over and above what is statutory liability. You talked about risk and that the Government accepts and manages risk when setting the budget. Clearly, the risk is that you might overspend, you might get a reduction in the year of your funding and all those things. Is there a risk matrix as such? Who makes that decision on whether the risk is acceptable? In terms of the budget, ultimately, the decision is made by the Deputy First Minister with Cabinet. The Deputy First Minister will agree collective agreement on the budget package, obviously with the First Minister and then with Cabinet. I will provide assurance on that based on advice from my budget team and two finance officer, and the Deputy First Minister will seek that assurance as well. I also looked at that from my accountable officers for each of the portfolios. For example, in the recent weeks, I have met accountable officers for net zero across transport, communities, health, education and justice to review their 23-24 budget allocations, review their programmes, review what are statutory commitments and then review the choices that remain for them to balance their budgets. Ultimately, it is for them and their ministers to provide advice and to deliver those balanced budgets if they can. That is what we seek to achieve in terms of collective accountability and, of course, Parliament votes on that budget accordingly. However, last year, the planning assumption was that the public sector would pay of 2 per cent in the resource spending review. We are clearly off that now, given inflation and given quite reasonable ministerial choices that we have made to seek to deliver fair but affordable pay awards, protect sustainable public services and try to prevent the disruption of industrial action. Of course, we want to do that, and we work closely with our trade unions and ministers in constant dialogue to try to secure that. However, that was an in-year adjustment due to an external shock, which was a significant change in the plans, and that required us to deliver the two emergency budget reviews and the billion pound in-year adjustment. Do you have anything more on that? As opposed to managing risk. To give you some assurance, this is a risk that is actively managed in-year through the year with the executive team. We agree with Cabinet at the start of the year that the flight path for want of a better expression and the milestones within the year. A really good example of that active management is the emergency budget review, because it was clear that we were not on track to meet that particular milestone and therefore had to take corrective action and identify further savings. It is something that is very actively managed through the year. As the cabinet secretary has said, there is a significant portfolio of spending a lot of those programmes can be demand led. We expect volatility when we set the budgets at the start of the year and we provide forecasts through the year. We expect them to shift. Some will go up and some will go down. Part of the active in-year management is understanding those movements and calibrating the risk and taking the decisions at the right time through the year. As I said, 2022-23 is a good example of that. We have two or three more critical areas that we want to cover before the session ends. One of those is public sector reform, which Alison Cumming alluded to a few minutes ago. We know that following the resource spending review last May-June time, there was an outline of public sector reform priorities set forward by the Government, which spoke about new approaches to public services, such as the development of the national care service, reforms to public sector capacity and pay, efficiencies for the public sector, including further use of shared services and efficiencies in the management of the public sector estate and reforms to Scotland's 129 public bodies. The question that we have is what progress have you made with that agenda? As Alison alluded to earlier, it will be critical to long-term fiscal sustainability in Scotland, but there are also a lot of opportunities around improving outcomes and delivering better value for money for the taxpayer. I will take a state as one of the examples that you referenced across the Scottish Government. We have put in place an estate programme. We have a number of buildings where leases are coming to an end, which we will be leaving in the next couple of years, as we right-size our footprints. If I take workforce, overall, if I look at permanent and contracted resource across the Scottish Government, we are forecast overall to be marginally smaller than we were when I appeared before you this time last year. We have put in place significant workforce controls across the Scottish Government to seek to ultimately control pay bills by controlling headcounts. Across workforce, we want to make sure that we are living the public sector reform principles that we are in the resource spending review, and that our sponsor teams are working with our sponsor bodies to enable them to do the same. Obviously, their budget allocations are, I am afraid, challenging because of the fiscal sustainability point that we made. Colin Beattie, for example, can say a bit about some of the examples of the bodies that he is working with, where we are seeking to do more online, deliver digital services, enable that channel shift so that citizens can get a better service, less cost control workforce, a right-size estate, and, as Anasin alluded to, drive better value for money out of, for example, public sector procurements. If I could just take an example, though, of looking at this the other day with the new Crown agent with regard to our end-to-end criminal justice system. Police Scotland has obviously, in the past few years, gone through a significant transformation as they came together as a single national service, driving out efficiency, and, as I say, we have seen good delivery in terms of what the chief constable has been able to achieve in terms of investigative crime prevention, work in the community and keeping crime low. If I go into our court service, they are doing some really great stuff with digital transformation and the use of evidence. That is enabling us to speed up the process for trials and is enabling us to bring down our courts backlog and we hope to get back to pre-pandemic levels in this Parliament. We are trying to use innovation, we are trying to join up systems across the criminal justice system so that we can see the prison population fall crime low, bring the court backlog down, reduce the cost to the taxpayer of that overall system and deliver better outcomes overall. That sort of system transformation is exactly ultimately what we need to do across other systems so that we can reduce the cost of the public sector in relative terms, but also improve outcomes in the years ahead. Okay. Do you accept the critique of the Auditor General in his briefing on public finances, where he says that the pace and scale of reform required across the public sector needs to increase? That is what he was saying just a couple of months ago. Do you accept that? I accept that we need to—I think that over the long term we have a physical sustainability risk, and I think that if we are going to mitigate that risk, the progress needs to accelerate an increase. I think that I probably do accept it. The only reason I am slightly sounding a bit, KG, is that it has been a relentless, very hard year. Do I think that everybody is working flat out to try and manage the really disruptive and severe impact of double-digit inflation on budgets? I think that they are. I have the privilege of visiting a lot of local councils very regularly. There is some incredible work going on to balance budgets, to transform and deliver better services. The same is true of our health boards, the same is true in our prison service. I think that our public bodies are responding, of course, to the impact of what they are seeing in their budget in terms of real-term impacts of inflation and having to afford their own pay awards. Of course, we need to continue to build momentum on transformation. I look at a public body like Scottish Water, where you can see a significant reduction in baseline costs and a significant improvement in outcomes. I am interested in focusing on the role models and talking about what good looks like and encouraging others to follow their example. I think that we have some wonderful examples in Scotland that we should be proud of, but I agree that we need to accelerate if we are going to fulfil our full potential in the years ahead. I do not think that I was suggesting that people are not working hard, Permanent Secretary. I think that what I was suggesting was, are we prioritising? Is the strategy right? Is the leadership there? Again, for many of us, we remember the Christie commission, which had a full-scale agenda for reform and early intervention and doing things differently and investing at the right time in order to have the most effective outcomes. Much of that remains underutilised. Again, to quote the Auditor General, he has spoken variously about the implementation gap, so there are these stated aims that are very worthy, but what is going on out there on the ground is the question that we are bound to ask. We are short of time, so I am going to go to Craig Hoy. Obviously, in March 2022, the Scottish Government published its business investment framework, outlining the principles for investments and decisions that the Scottish Government might take in the private sector. If you could bring us up to speed as to whether the Scottish Government has used the framework in practice as of yet. As you said, we published it, as promised, at the last committee. In March, we are a bit like the point that we were just making around transformation and building capability to ensure that we are able to manage our strategic private investments in an optimal way to secure best value for money. Colin, with thanks, has bought that unit together on strategic assets. In terms of the capabilities that the framework talks about around bringing expert capability to bear, whether that be commercial, legal or financial, then yes, we have been doing that in the last year, bringing in experts to help to provide scrutiny on things like productivity in one of our private assets. Delivery plans in terms of understanding and baselining our understanding of budgets in those assets and also helping to understand and reflect on future options, subject to scenarios that might occur. The capabilities are being used and we are building them all the time. Colin, anything that you would like to add to that? What I would say, and the permanent secretary referenced it, is that we have introduced and developed a new division within the Scottish Government to lead on those matters. The principles that are inherent in that framework, the need for a clear policy rationale behind any decisions, the need for a strong comprehensive business case for investment, are being applied every time we consider an investment in a business. That includes the ones that we have a current relationship with, for example Ferguson, Marine Port Glasgow and the like. What I am unable to tell you about—I know that you had a discussion with the Auditor General about that—is that there is no case over the past six or nine months where we have looked at potential investment in a business and applied the framework and decided not to do it. What I would say is that there are a range of other organisations within the public sector, not least our enterprise agencies, who are day in, day out working with businesses and will be making those judgments about the degree of public sector support that we can offer. Those may be in different forms, including things such as grants and support with training and other things like that. I correct the assuming that it has not yet been used in relation to a particular investment decision. There is no investment decision that has, in an isolated way, come into the team that leads on those things, has gone through the process of the framework and has decided not to go ahead. However, the principles under which we operate are being used day in, day out on every decision that we make. Those would flow through into the way in which our enterprise agencies and others operate. Obviously, the Auditor General has looked at this and made a number of recommendations as to how the framework could be strengthened. What plans have you got to respond to that, particularly in relation to strengthening the link between risk tolerance and risk appetite for investment within the Scottish Government? We are very happy to do that work. I would like to continue to develop this capability. I suspect that some of the learning from the past would suggest that that is wise for us all, and it will take us forward with increased confidence. Risk tolerance is a good capability to develop there, making sure that, from my perspective, if we are going to be taking those types of decisions in the future, we have the legal, commercial and financial scrutiny, very robust with the transparency of scrutiny to be confident that it is optimal for the taxpayer in what are often very distressed asset situations. I met the Audit Scotland team this week to put that plan together to do that work, and I would be happy to say a bit more on that. I am sure that the Auditor General would agree with me that the collaboration between Audit Scotland and the Government is very strong. As the cabinet secretary said, we met earlier this week. We are continually looking for areas in which we can refine and improve that business investment framework. It is in both our interests and all our interests that we get decisions right, and we have a clear rationale for making any decisions. You will note from our meeting on 19 January that we have a significant interest in the financial interventions in the Prestwick airport and the Lochaber aluminium smelter, in addition to our on-going inquiries in relation to Ferguson Marine. Looking to Lochaber smelter, how is the Scottish Government managing the heightened financial risk there, given the reported issues facing the Liberty Group? After we talked about this last year, I really appreciated spending the day at Lochaber with the team. I do want to start by paying real tribute to the team there. I thought they were fabulous, doing an incredible job. I really appreciated the time with the engineering team, seeing the hydro operation, its scale, its impact and the opportunity that presents. We think that Lochaber's business performance continues to be robust and resilient and is improving. It is operating profitably. Of course, it has succeeded in increasing employment for William. Around 200 people directly employed and a significant supply chain of hundreds of associated jobs, of course. There has been no financial loss or public expenditure incurred. We are hopeful that the development of the billet plant, the £94 million plan to obtain planning permission for construction, could still commence this year. As you know, there is significant security in terms of the land and the estate. Meeting the estate manager there last year, there is clearly huge potential to diversify that and to generate future revenue. On the wider point with regard to GFG, the team is in close contact. We cannot really say much more, given the commercial sensitivity to all of that, but we monitor it very carefully. Colin might say a bit more on the security aspect, but we do think that Lochaber is making progress. As we said last year, it is worth always recalling that there has been no call on Scottish Government guarantee and GFG Alliance has made all their payments to bond holders that they were anticipated to make. In that sense, it is a position that we would like to see and we would want to continue. We maintain a very close, on-going working relationship with them, particularly with the local management around the smelter. They give us good access to an understanding of how those businesses are performing, and they have been performing very well recently, largely due to external factors around power prices and the like, and we will continue to do so. I am aware, as you are alluding to, that there have been some issues around the auditing of their accounts. Obviously, it is a matter for them, the selection of auditors, but we would hope and I understand that they are close to selecting an auditor for the future, and we would hope to get back to that kind of relationship. Do you have a timescale, as of yet, for the recovery of the investment in Prestwick Airport? A timetable for the potential return of Prestwick Airport to the private sector? There is no timetable for returning that asset to the private sector. We remain open, and we have conducted OJU processes in the past. We continue to discuss that. I have to say again in respect of Prestwick Airport, and I was able to visit it a few weeks ago. We have a very strong management team in place, a very strong board in place, and the business itself is performing extremely well and is profitable. I think that that is a really strong position in which to try and recover that. We have discussed this with Mr Coffey in the past. I think that the presence of a strong and robust asset at Prestwick Airport is starting to pay dividends for the rest of Ayrshire, and we have seen that in things such as the Mangata announcement recently. Are you in a position to make a full value for money assessment of the intervention in the airport? We continue to assess the value for money of that investment. I think that the understanding of what value for money represents is one that is a lot wider than the specifics of just the airport. However, as I said, we are in a position with that asset, where it is trading profitably, where I am sure that we will, at in due course, be able to find people who would wish to take that back into private ownership. I look at the success that it has had with ground-based operations, the success that it has had at re-attracting Ryanair flights back to Marse and elsewhere, and I think that we are in a good position with that asset. Just in relation to Ferguson Marine, we see that the vessels are still under way, the constructions are under way. Have you or are you making provision for any additional cash calls from the yard, separate to those that are to fund the construction of the vessels? We are currently, as you know, the latest projections around the vessels were set out to the insect committee in September. We are currently completing our due diligence on that, and we have employed external advisers to help us on that, and we will be coming to conclusions on that shortly. We are also in discussions with the yard about the level of investment or the plans that they have in order to continue to improve the productivity of that facility and give it a long-term, sustainable future. That is a separate set of discussions, but it is one that we are actively involved in, and we will take decisions in due course on that. I am afraid that you cannot get away with mentioning Prestwick Airport, but that Willie Coffin wishes to come in with a question, so I am going to invite Willie to put his question. Thanks very much for allowing me in there, convener. I am just on press week when my colleague Craig Hoy mentioned there. The issue did come up in discussion about how we determine value for money. For me, it is perfectly clear the impact on the earth for economy, the investment by Mangata, Ryanair's developments, not only in more flights, but more maintenance jobs, spirits announcement this week of more recruitment. That, to me, shows the value for money investment. Is it incumbent on the Government to say something about that formally? We do hear and it has to be said that some members in the Parliament say that Prestwick is a waste of money and that Prestwick should have been closed. I think that it is important, convener, that the Government or its agencies say something to counter that, because the people of Ayrshire certainly do not think that. They are very proud of the airport and they want to see it grow and develop. We share that view and we work with partners, particularly the local council. The aerospace and the space programme within the Ayrshire growth deal is a critical element of the economic development priorities of the region. The presence of Prestwick, the ability to attract investment, like the one that is being made by Mangata, is an absolute testament to that kind of approach. You work with a local region, you allow regional priorities to be represented in terms of economic development priorities and you find a way of working in partnership to support that. It is a really good example of regional economic development in practice. Just to add, Mr Coffey, I am happy to take away the thought of is there a sort of impartial value for money evaluation that in time could be done, as you say, to reflect on the journey that Prestwick has been on, the economic benefits, the jobs, the supply chain and what that has meant for the area, because certainly when I visited I thought the chair again very ambitious for the airport, diversifying the growth plan, good team and like Colin, we are hopeful that it will continue to make further progress, but very happy to have a think about is there a sort of case study evaluation on value for money that we could do in time to confirm what we think the overall sort of growth benefits are. Just a couple of quick final questions points from me. One is going back to the GFG Alliance deal. You seem to suggest that there was no cost to the public person, everything was fine, but if I look at the report of the Auditor General, he points out that £13.5 million of Scottish Government loans have been written off during 2019-20, 2020-21. So there has been some debt right off there and if I look at the provision for the guarantee arrangement, the provision for that is costed or valued at £114 million, and I accept that that's less than it was when you sat before us last year, but it still is 300% greater than it was two years ago. So there are things going on there and you will I'm sure have seen the Auditor General's comments about the volatility of the situation and how things can unravel quickly. So could you perhaps just give us your views on that? Well, you know, the volatility is something that needs to be managed and it is why the security is essential. So as you say, we need to be confident that the security covers the liability. I think that is still our financial judgment, but, like you say, that relationship with GFG, with the asset team, Alacabara, is key, so it continues to invest, to grow, to build revenue, and we can continue to assure and protect the risks to the taxpayer. I share your point that this has a level of risk to it, which is why we have a level of security attached to the asset. But it is a higher than normal level of risk, isn't it, when the supply chain banker of this organisation went into administration, where the Serious Fraud Office is investigating this company because of concerns about fraud and money laundering. The auditors that they had quite unusually resigned, the finance director walked. This is not just another company, this is a company that has been under some considerable scrutiny from parliamentary committees, this one included, because there are some real grave concerns about the business model that it operates on. Which is totally why, going back to the conversation on the business investment framework, we need to learn from these experiences and things like risk tolerance and financial impact assessments need to become core to that in framework going forward. But meantime, we need to manage the Alacabara risks as best we can, and ultimately hope to secure and support that asset to a sustainable future and a value for money outcome. I share your points around the risks, they are real. Colin, anything? No, again, we are conscious of the developments, the wider issues facing GFG Alliance, we are conscious of them, we are monitoring them, we are talking to the business all the time. As the permanent secretary said, I think that the securities that we have over the Alacabara assets are sufficient to cover the liabilities that we have, but we are not blind to the risks and we are continuing to work with the business to understand and respond to them. Did you have conversations with them about the fact that their accounts were not going to be audited? We were aware of that position, as I say, it is not for us, we do not own the business at Alacabara, we are not the selector of the auditor, but they did make us aware of that. My final question is just about sponsorship arrangements, which is something that this committee has taken a very keen interest in, and we have dealt over the years with some good and bad examples of sponsorship arrangements. There was a review carried out in 2021, which provided for, I think, 14 recommendations, and the permanent secretary undertook that those 14 recommendations would be implemented, I think, by the end of December 2022. As we meet on 23 February 2023, have you met your ambition of implementing all those 14 recommendations? We have, and I am really grateful to the team. I have a lovely letter here from the DG for communities, who is often the chief executive of Public Health Scotland. Next month, we wish Paul Johnston well in his next role, but Paul led the strategic sponsorship implementation. We have met all 14 recommendations. I think that he updated the public audit committee on 6 October with regard to that. Quite rightly, the committee said, well, that is not the end of the journey, is it? That is the end of the beginning, if you like. We have done the review. We think that we have the recommendations in place, but now it is about establishing best practice. Perhaps there is a point that comes out of the whole conversation today. It is about building capability. Good chairs, good non-execs, good chief execs, challenging, stripping out optimism, managing risk, developing good strategies, good plans, transforming to reduce cost and improve outcomes. It is all about building capability. That is what we are trying to do in the Scottish Government, is what I am trying to coach my sponsor teams to do, and it is what we want our public bodies to all be doing as well. As you say, there will be a few for which there are some bumpy roads ahead, but there are also some wonderful role models doing some incredible things. We will be using the learning and the experience of the review to continue to make further progress. On that positive note, can I draw this morning's evidence session to a close? I thank our witnesses, permanent secretary, Colin Cook, Jackie McAllister and Alison for coming for your input. There are some areas that we did not quite get to because of the time, but we might follow those areas up in writing to you if that is okay. You have undertaken to look at some of the issues that we have raised in the session and come back to us. I thank you very much for your time and your contribution. I am now going to call the public part of this morning's committee meeting to a close.