 Good morning, and welcome to the fourth meeting of the Public Audit Committee. Can I ask all those present to either switch off their electronic devices or switch them to silent mode so that they do not affect the work of the committee this morning? Item 1, the committee is invited to agree to take items 4 and 5 in private. Item 4 is consideration of evidence received under item 2 on the supporting Scotland's economic growth report. Item 5 is consideration of evidence received under item 3 on the CAP futures report. Are members agreed that we take these items in private this morning? Item 2 is an evidence session on the Auditor General's report supporting Scotland's economic growth, the role of the Scottish Government and its economic development agencies. I would like to welcome to the meeting Fraser McKinley, director of performance audit and best value, Anthony Clark, assistant director, Gemma Diamond, senior manager and Jill Miller, audit manager of Audits Scotland. I invite Fraser McKinley to make his opening statement before I open up to questions from members. Thank you, convener, and good morning. Members, a brief opening statement from me, and then, as ever, we're very happy to try and answer your questions as best we can. I'm delighted to present to the committee today the Auditor General's report on supporting Scotland's economic growth. The report reviews the arrangements in place to support Scotland's economic growth. It focuses on the roles, particularly of Scottish Enterprise and Highlands and Islands Enterprise, which together have a specific remit to support economic growth across all of Scotland. The report provides an overview of the landscape in which Enterprise bodies operate and assesses how they support the development and delivery of the Scottish Government's economic strategy. Briefly, convener, I'll summarise the findings under two main headings. First of all, the wider arrangements and framework for supporting economic growth and then, more specifically, the role of the Enterprise bodies. Before I do that, convener, it's maybe worth just reflecting on the fact that a lot has happened since we published this report in July. Obviously, the Brexit result we knew about at the time of publication, but that's obviously more to the fore than it was when we did the audit work. Obviously, we have a new programme for government. I think that all those things make the recommendations in this report, if anything, even more important than they were when we did the report. The starting point for the audit was to look at the Government's economic strategy, as this is what determines the Enterprise bodies' plans and activities. The strategy, as you would expect, is a high-level document that sets out the Government's approach to help achieve its overall purpose of sustainable economic growth. The Government does not set out in its strategy or elsewhere, however, how its various economic policies and initiatives will be implemented. It's important that the Government is clear in how it's going to achieve its ambition of sustainable economic growth. In that sense, convener, the how is as important as the what. We absolutely recognise, though, that supporting economic growth is a complex area. It's not straightforward for many reasons. Firstly, there are a number of factors that influence the economy, many of which are outside the control of the public sector. The downturn worldwide in oil and gas, for example, which has affected, as you know better than I do, many communities across Scotland is one such example. We also found that there are a high number of organisations and partnerships involved in planning and delivering economic growth activities, and this can be confusing for businesses and other customers trying to access support. On that matter, we recommend that the Scottish Government and its partners clarify the roles and responsibilities of all the bodies involved and raise awareness of the activities and support available. As I said at the outset, convener, the context for supporting economic growth is continuously changing. Public sector economic strategies and interventions have to respond to and be appropriate for the economic climate, whether that be during a period of recession, growth or uncertainty. New financial powers for the Parliament and UK's exit for the European Union will undoubtedly influence how the Government takes forward economic growth in the future. Taking all of this into account, we recommend in the report that the Scottish Government strengthens its approach to developing, delivering and monitoring the strategy. This includes developing clear timescales and actions and setting out specific responsibilities for public sector bodies. Importantly, we recommend that it also reviews progress against those to ensure that the actions are effective and making a difference and that the strategy remains relevant and fit for purpose. Finally, convener, turning briefly to the enterprise bodies on the whole, we found that Scottish Enterprise and Highlands and Islands Enterprise are performing well. Their business plans and activities are based on a wide range of evidence, and each of the bodies has a good understanding of how to respond to opportunities and challenges in their respective areas. We found good examples of enterprise bodies working well with other partners to achieve a real difference, and their customers are largely satisfied with the support that they receive. As ever, convener, we identified some areas for improvement. Both bodies offer similar support, which is tailored to the needs of their customers' environment, but there are lots of different arrangements for delivering the support, and the rationale for those arrangements is not always clear. We found that there is scope to deliver some activities such as their support to the growth sectors more efficiently. While we found that the enterprise bodies are performing well against their individual performance measures, it is much more difficult to measure their contribution to the national outcomes. It is important that the Government better understands the contribution that the enterprise bodies are making individually and collectively to the economic strategy and economic growth targets more widely. Finally, you will know that the Scottish Government's skills and enterprise review is currently under way. We understand that that is now going to be taken forward in two phases, and we will look closely with interest as to the outcome of that. We have said in our report that we hope that that review does offer the opportunity to take forward some of the recommendations. As I said at the outset, I am very happy to take questions and to help the committee this morning. I am going to go to Liam Kerr for our first question on that. I have just a couple of questions at this stage, and then I will come back in later if there is time. You have mentioned throughout, first of all, that the full range of public sector support for businesses is not known, which creates a risk of duplication and inefficiency. Are you able to give us more detail on that and what, on a practical level, is being done to address that? Secondly, I am down-representing the north-east of Scotland, which is covered by Scottish Enterprise. The north-east covers areas that are tailored to the needs of the environment. The north-east particularly has some very big cities and areas that are more akin to the highlands. Can you comment on how Scottish Enterprise is addressing that, if indeed it is? Is it able to go forward, or is there a better way? Thank you, Mr Kerr. I will take the first one first and ask the team to come in. On the point that we make about the full range of support, I think that we recognise in the report that there is a lot of very good activity across both bodies and indeed other places. We do not touch so much on local government in here, but clearly that is an important part of the story, particularly through business gateway. I guess that our observation is that there is not anywhere that we could see or find where the totality of that support that is unoffered to businesses is captured. Therefore, we just do not really know collectively what support there is. There had been some work undertaken a while back, but that did not progress. We think that it would be helpful for Government and the Enterprise bodies in particular, working with other partners, to do a mapping exercise, if you like, to understand what is being made available. The extent to which there is scope to join up, or to assure ourselves that similar services are being delivered differently, is for a good reason, not just for historical reasons. In interviewing people, when we ask those kinds of questions, some of the responses say that it has always been done that way. For us, that is a good sign of checking that that still makes sense. team, do you want to add anything to that first point? I think as well that because there is so much different levels of support on offer, we did notice that they have tried to bring all those forms of support together onto the Scottish Government's new website, mygov.scot. Even the fact that there are over 600 funding streams, it is very difficult for one business to be able to navigate their way through that. I think that making sure that the Government thinks about it with the business in mind and what might the support might the business want, they do not necessarily know what the structure is and who to turn to, so trying to make it so that they can make their way through that process and find out the totality of what is on offer rather than who they should be turning to. The only other point, if I might say, is that we make clear in the report that economic development activity operates at a number of different levels, national, regional and local. In the report, we highlight the challenges and the opportunities of the introduction of things like city deals. It is obviously in places like Aberdeen. There is an issue that needs to be worked through in terms of the respective roles of the different parties in the city deal activity. I think that we are aware that the issues that are being considered by the Government in its review at the moment. The second question about the north-east and Scottish Enterprise in particular. I guess that the first thing to say is that we did not set out, nor is it our place to comment on the structure of the enterprise landscape in a sense. For us, that would include the geographical split. We highlight in some areas where there is overlap between the two bodies in some parts of the country. In terms of the north-east and Scottish Enterprise, our sense is that, as they do everywhere, they have a pretty well-established mechanism for trying to understand what the big issues are and where the high-growth sectors are and where the big opportunities are. I think that there is no doubt that, as we say in the report, the roles of Scottish Enterprise and Highlands and Islands Enterprise are different. They are similar in lots of ways but, in particular, high has the role around community development. I guess that that is something to reflect on for the more rural parts of the north-east and, for that matter, some more of the rural parts of lowland Scotland that we look after as well. There is a lot in the report to be positive about, so I welcome that. I am very mindful that there is a huge amount of public money being delivered to the five strategic partners, so it is £2.2 billion that we see in the report. I am quite taken by the fact that there is not an agreed definition on what we mean by economic development. We have the high-level goal, which is sustainable economic growth, but to what extent does that present a problem that there is no agreed definition of economic development activity? As we come across in the report, it is very difficult to get the full landscape of what support is out there and where exactly public money is going. I would be interested to hear what you think about that lack of clarity around definition. As auditors, you can appreciate that sometimes we seek clarity and simplicity, and we do genuinely understand that it is not a simple or straightforward landscape. I do not think that what we are recommending is that we spend forever coming up with a definition of what economic development is. Where it is important, though, is having a better understanding and a better agreed understanding of how much money is spent on that. For us in particular, we think that there is a gap between the overall strategy, which is sound, and in particular in relation to the enterprise agencies having a clear idea of what they are doing, but how do you make the connections between those two things? If we are spending £2.2 billion on the five agencies that the Government has said are key to economic growth, we can do more to better understand how that spend is contributing to the new economic strategy and the four I's that we talk about in the report. I think that it is important, but it is only important as a means to an end. I would not want to engage in a theoretical exercise to define what economic development is. It is for a purpose, and that purpose would be to understand how the money is being spent to ensure that we are making the most progress we can and getting best value for that £2.2 billion. I thought that it was a very good report, but something that sprung to mind was that the five agencies are £2.2 billion. If you look at the city deals, there seems to be an awful lot of emphasis, if I could use that word, where they are involved. Do you think that it would be a question of raising awareness of the fact that there are those five agencies available for places that are not part of the city deals? I am quite conscious that they are left by the wayside. My guess is that the people involved in the city deals and the region deals and the growth deals, because there are lots of different versions growing up. In fact, I noticed that there was some stuff in the paper today about the Ayrshire one and the Diageo plant in Kilmarnac and various things, so there is a huge amount happening. What is important is not so much the awareness, but understanding what the role of those five bodies is in the new world of city deals and region deals and those kinds of things, because, as the committee knows, there are very new things. The funding around city deals is complex. Glasgow is the most well-advanced, but there are lots of other variations coming through. As I mentioned, Ayrshire Stirling would be another one. Tayside would be another coming through. I think that there is a job to figure out what, if any, role the strategic forum partners have in the city deal framework. I think that we need to do that quite quickly, because the city deal—I was going to call it a movement if that is not too grand a word—is gathering momentum and gathering pace. It is really important that we understand how they contribute to the overall strategy and therefore the role of the strategic forum partners. I really meant raising awareness in the sense of the areas that are not involved with the city deals. I am looking to get a little more value for those areas. I would be happy to share with the committee a wee bit of work that we did on city deals a while ago. It turns out that there really are not that many council leaders that are not involved in some kind of city deal. Obviously they are at very different stages of development, but there is absolutely a question that we raise about ensuring that there are not any parts of the country that are left behind as a result. I think that that is part of the same point to ensure that, for the likes of Scottish Enterprise and High, we have that specific job. If there are parts of the country that are not involved in regional growth deals or whatever you want to call them, then we understand why they have not got involved or is there a good reason for that and ensuring that there is good support in place. That point is important to make sure that the place that you are talking about is left behind. I suppose that the first comment that I will make about the report is one that I have made before that there is a lot of repetition in it and there must be a way to trim those reports back without having to continually repeat certain facts in it. Has the Scottish Government and Enterprise boards accepted your recommendations in the report? That is a question that the committee might want to ask, Mr Beattie. We go through a process, as you know, of factually clearing the report to ensure that the facts are in it are clear. We do not necessarily formally expect the Government to write to us to say whether they are accepting it or not. Clearly, we keep an eye on whether the recommendations are being implemented, but I know that in your last evidence session you asked that question of the chief executive of the NHS. That is helpful from our perspective to get that on the record. It is rarely a case of the Government saying yes or no. We agree with all of them because there is a lot in there and I think that it is entirely legitimate to have a discussion about the recommendations. That said, we have not had any kind of allergic reactions to them. They have not said that nobody has put their hands up in horror and said that we cannot possibly, so we are operating on the basis that we would expect the recommendations to be implemented. Maybe we could write to the Government on the enterprise boards and ask them if they have accepted the recommendations that have been made. I am looking at paragraph 41. First, you mentioned earlier on about Brexit and the EU. Clearly, that gives an indication that the EU is very important to us in terms of funding. Is this an area that you are going to be following up on? I do not mean Brexit. In total, because that is a rather big picture. On specific issues like this, where you have highlighted in your reports that it is an issue, are you going to keep those on your radar and follow through? Much so, Mr Beattie. It is a big focus of work at the moment. I will not bore you with the detail, but we have a team in place now in Audit Scotland reporting to a board, which we are now calling new financial powers in constitutional change. We had it anyway for new financial powers for Parliament, because that is obviously core business for us. With the decision around the EU, we have added that in as well. As you say, our focus primarily will be on the impact on the money and what has been coming in from the EU and what happens to that. Importantly, what the impact will be on public bodies and public services. I look at paragraph 79. You touched on the question of why things are done the way they are, why things are done jointly or on behalf of the other or separately. It seems to me that they do not know why. Other than the fact that it has always been that way, was there any other indication? There is a bit of a mix. There are some things that are clearer. In the preceding couple of paragraphs, particularly some of the newer things, Mr Beattie in 77 and 78, there has been a clear decision for one agency to lead on rather than the other. I think that there are some quite good reasons and sound rationale for others. It really is just the fact that this is how it has always been done. These organisations and various guises have been around for quite a long time and they have developed their own ways of working. I think that what we are saying is that there is a great opportunity with review that is currently on going to take stock of all of that and to make sense and to at least ensure ourselves that the way it is currently done makes sense. Our sense is that there probably is an opportunity to do things more efficiently, to join up in some places because while there are differences in the areas and the context in which they operate, there are also quite a lot of similarities. We would hope that, through the review, one of the outcomes that might come through is how we can join some of those things up more effectively. Clearly, there must be efficiencies in there to be achieved that they should be achieving. You would hope so, absolutely. Overall, the report is very positive. You commented that the Scottish Enterprise and HIE are performing well against their agreed performance measures. I am interested in paragraph 96, where you were saying that, although performance targets in each of the last five years have been exceeded, the Scottish Government has not challenged the Enterprise bodies to increase their annual targets. Does that mean that targets are too easily achievable? I think that this is probably one of the areas where auditors could be accused of just being a bit mean and never being pleased, Mr Beattie, because on one hand, if they hadn't been meeting their targets, I'm sure we would have had something to say about that, too. I think that all we're saying is that, in a world in which they have for quite a long time now been exceeding targets, we think that it's reasonable to ask the question, are you sure that those targets are challenging enough? That's really the point that we're trying to make in paragraph 96. I think that it's good practice to review your objectives and targets anyway, but if you're consistently exceeding them in some cases by some margin, then we think that it's reasonable to ask the question just to check that they are stretching enough and are challenging enough, given the scale of the challenge that we have ahead of us in terms of the economy. Various places in the report you've commented about difficulties in measuring economic activity and the achievements of the investment that's being made, and yet in paragraph 113 you're saying that Scottish Enterprise has a model to measure the overall impact of its activity. I think that the point that we're trying to make is that, individually, the bodies have quite good systems in place to do exactly that. I think that the point that we're trying to make is, again, that connection between what they're doing and the delivery of the economic strategy and, indeed, the delivery of the outcomes that are in the national performance framework. It's that bit of the system, if you like, that we think needs to be looked at. Absolutely. I think that when we looked at the enterprise agencies, they do a lot of evaluation, work in determining what's working, what's not working, how can they change what they do. Scottish Enterprise, in particular, have developed this model around about their impact, but what we couldn't do was, really, there's no way to assess their collective performance, so you can't. There's no way of looking at some common performance measures where you can look together in the Scottish Government and see what is being achieved by the two enterprise agencies. Again, there's a real kind of a supposed gap between the performance of the enterprise agencies and how that contribution goes towards the national performance framework. So what we're kind of recommending is that there's some steps in place so that you can more clearly see how the activity of the enterprise agencies contributes towards the outcomes in the national performance framework. There actually makes it a lot clearer to me, so, individually, we do know what their activity is and what they're contributing, so it's not as if we've got a blank space there, it's just how it feeds into the national figure. That's exactly, Mr Beattie, yeah. Okay. Gail, did you want to come in? Do you not have to? There was one question that I asked last time at the other committee, and it was about the renewables investment fund. We are gathering information on the renewables investment for you, what we have, and we will provide that to you in terms of what money was spent and what wasn't spent on that, so we are gathering information. That's fine, thanks. Monica. I had a final question that was just in relation to the Scottish Enterprise, and I'll take a look at paragraph 87. You haven't made any comments, so it might be that this performance is acceptable, but you talked about risk and investments, and I note that at a turn on investment had been made in 20 per cent of completed investments. I just wondered if you had a view on whether that represented good performance and good value for the public push and the right officer in the region of 39 million, which looks like a lot here, but perhaps you could maybe put that into simple context for us. Again, I'll kick off and then ask the team to come in on some detail. I think that the starting point for this is to remind ourselves that the whole point of having state enterprise agencies is that they get involved in risky things. Otherwise, you wouldn't have it, so you would always expect there to be a greater number of things that don't work in that area, because that's their job and they're intervening where the market isn't. In that sense, it's quite difficult to assess whether that's good, bad or indifferent, because they're operating in a risky environment. I'll ask the team if we have anything to add in terms of detail. Certainly what we wanted to look at was to make sure that the agencies had the processes in place to enable them to assess the levels of risk that they were entering into and that the governance arrangements had the right approvals in place so that they knew that they were entering into a riskier investment and that they had discussed the risk and the opportunities that they had. We had a phase that had board-level approval and that they were keeping an eye on that investment and what additional support was needed to make the best of that investment. That's what we saw in the enterprise agency, which has good governance and risk management processes in place that allow them to take sometimes risky decisions that they need to take but in a very well-managed environment. Alex Neil Can I draw out the difference between operational performance and impact? I think that the report gets mixed up between the two. It's using the phrasology interchangeably when it's not appropriate. Let me take the example that Scottish Enterprise and other enterprise agencies have assisted 11,200 businesses. If I assist a new start business to expand in an area, it's a printing work and one of the effects of that is simply to make people redundant in the other local business, which has already existed and has been running for 30 odd years, the net impact of my intervention is a lot less than what it would be if I just simply measured it by how much help I gave to the original business I'm helping. It seems to be that there isn't any indication in terms of impact, what the displacement impact is of the intervention, what the dead weight is, would it have happened anyway without the intervention of the enterprise agency, in which case why he was spending public money doing it? What was the added value of, say, account-managed companies? How much did they grow more than they would have done without the support of the God? It seems to me that we can't measure value for money until we know what the net added value of the intervention is. That's not performance per se. Performance is about throughput. The number of businesses assisted, the number of businesses account-managed, the number of inward investment projects, the value estimated of those projects, the number of jobs created. All of those are performance. Some of them are both performance and impact like jobs, but it would be net jobs that you'd be looking at, not the gross jobs. I don't think that comes out of that. At the end of the day, we're about measuring value for money, and the value for money isn't on the operational performance just, it has to be on the net impact. At a higher level, we're spending the guts of £400 million on enterprise support and related activity. If we looked at spending £100 million on transport infrastructure investment instead of enterprise support, would we get a far bigger bang for the buck? I think that what you're saying is that nobody's asking that question, let alone giving us an answer before budgets and targets are set. I've got two issues. One is the difference between operational performance and impact. It's impact that really matters. The second one is the opportunity cost of spending money in other ways that would boost economic growth more than what's happening. On your second point, Mr Neil, it might have been better if we just said what you just said, because I think that that's our point. When we talk about understanding how much you spent reviewing the impact, being clearer about milestones and measures, it is exactly that kind of discussion about how we know that spending nearly £400 million in this way on those things is good value and indeed better value than spending it in a different way in pursuit of the economic strategy and the outcome. I think that your point gets right to the heart of the difference between measuring inputs and outputs and outcomes, which I know is very jargony and it's easy for us to glaze over, but it is really important because the input and output measures are helpful and tell you so much, but what difference does it make? I think that what we say in the report is that that's the bit where we do think that it could be better, one of the recommendations that we make. Again, we could have worded this more clearly, probably, is to say whether the support to individual businesses or involvement in task forces continues to add value is kind of the point that we're trying to make. How do you know that the support that is being provided either to a sector or to an individual business is adding value? Final thing, I would say in the last gem, to come in, your question about what would have happened if we hadn't done this is a very difficult one to answer, to be fair. It is a very fair question, but in terms of constructing an evaluation framework that would allow you to answer that question meaningfully is quite tricky. There is always an element of this that, of course, it has to be based on good evidence and there has to be sound process, but at some point a judgment has to be made that this is a business worth backing as opposed to a different business. I think as well, both the enterprise agencies do a mixture of both, so they have their performance measures, which are sometimes the output measures, but they also do a lot of evaluation work, so they will look at specific interventions and will specifically consider that additionality, displacement and all those factors in that evaluation at a local level. A lot of that work actually does go on. Scottish Enterprise in particular publish all the evaluation work that they do on a separate website, so you can go in and see what work they have done. They do consider those issues. I think, as Fraser mentioned, it is that wider whole system impact. The enterprise agency can do that evaluation work, but it is more important for all the agencies that are involved to come together to look at that wider impact. Before I became an MSP, I was involved in designing for Scottish Enterprise and Highlands and Islands Enterprise evaluation systems based on treasury guidance and so on and so forth. The purpose of the evaluation methodology was to identify the contribution of Scottish Enterprise or Highlands and Islands Enterprise. As it was not to identify everybody's contribution, it was theirs. Why can't we gross up or use what they are doing as an indicator? To be fair, it is a robust indicator of what they believe the net added value of their intervention as an agency is. If they are all doing that, surely if it is net added value, okay, the system is not perfect, but if you added up the net estimated net added value, surely you begin to get a picture of the combined estimated added value of the agencies. Absolutely. I do not think that they are starting from a blank sheet of paper. There is a lot of good work that goes on and it is simply a case of joining that up so that you can see that the environment is very complex. We found a lot of very complicated partnership working arrangements on the ground, which do work, but it would need some consideration about how you just add things together, but certainly there is a basis of a system there which we think can be built upon to help a better measurement being placed for impact. Part of the challenge, Mr Neil, is that not all the agencies have as well developed models and ways of doing it at a Scottish Enterprise in Haidu, because that, in a sense, is their core job. One of the points that we are making here is that it comes back to the definitional point about economic development. The Scottish Funding Council does lots of things to do with universities and colleges, and that has a contribution to economic development, but it does not evaluate it in those specific terms that would allow you to add them up. Case for a central, within-government, essential evaluation unit that does all the evaluation, including Scottish enterprises, and gets consistency and robustness into the methodology right across the board. I think that what we are recommending is that the Government needs to think about how it does exactly that. Can I ask why Scottish Enterprise has not been measuring its contribution against the national performance framework to date? I will ask the team to come in, convener. I would not say that they do not do it at all. They make an attempt to connect what they are doing with the outcomes framework. I think that our challenge is that it is maybe not what is the word, specific or accurate or meaningful enough, and in particular the relationship between the new economic strategy that was published last year and the outcomes in the national performance framework. I think that there needs to be more rigor and a more specific attempt to do that, I guess, is the point that we are trying to make. Is that fair, team? The individual enterprise agencies do try and map their outcomes against the national performance framework, but that is very much from that kind of bottom level up. What we would like to see is that, when you go into the national performance framework against particular outcomes and indicators, you can see which public bodies are making a contribution to that and what kind of contribution they are making. If the indicator moves, you know which public bodies have had the most impact in making that indicator move, and that is what we are not seeing. The public bodies align themselves with the national performance framework and the outcomes, but it is very much that on the individual basis. We would like to see a more coherent picture of how they all join together for that. Colin asked about performance targets, and the report says that Scottish Enterprise exceeded performance targets. Who sets the performance targets? The enterprise agencies have a business plan each year where they set their priorities and performance targets, but it is very much done in agreement with the Scottish Government. The Scottish Government signs off that business plan at the end of the year when they agree with the priorities and they agree with the performance measures that have been set. The only external audit of their performance is Audit Scotland in this Parliament. There is no other external scrutiny of their performance. As we describe in some of the bits of the report, convener, there are elements of external input to individual bits of work and how they do it. That is really important. We were keen to do that piece of work. It has been a while since we have looked at the totality of the role of the enterprise bodies and how that contributes to the stated objectives and outcomes that the Government is trying to achieve. In a sense, our job is to bring to Parliament to help you to do the job that you need to do in terms of asking these kinds of questions of the whole system, if you like. There is no independent challenge or external input, but in terms of that whole system, that is what we are trying to do today. I visited developing the young workforce, which is the agency tasked with implementing the Wood commission, as you will know a couple of weeks ago that they are hubbing Dundee. They were telling me that they were undertaking a mapping exercise of all the economic support that was available. I read paragraph 36 on page 18 of your report. It says that Scottish Enterprise, HIE and councils attempted to identify the public sector support that was available for businesses to pinpoint duplication or gaps. They did not complete this exercise due to the complexity of all the bodies and initiatives involved. How can the developing the young workforce team of five in Dundee do a mapping exercise of public economic support when Scottish Enterprise itself cannot complete the task because it is too complex? It is a good question. First of all, we would be delighted to speak to the developing young workforce colleagues to see if there is anything that we have pulled together in this audit that would help with that piece of work. For that audience, that would be a really helpful and important piece of work to do. In a sense, it is a mirror image of the work that was attempted. It was a slightly odd thing for us that, given the whole point of that exercise, was to try to understand the complexity to say that it was all too complex and we did not finish it. That is why we have recommended that we think that there is a piece of work that needs to be done. I think that there certainly is. The whole developing the young workforce has not mentioned in this report. It is new, perhaps that is why, but I do not think that, correct me if I am wrong, that business gateways are mentioned here as well. I presume that is because it is being devolved down to local authorities now, but that is still part of the overall landscape. It sounds like Scottish Enterprise is struggling to come to terms with themselves. I want to ask another question on account management. I think that it says somewhere in your report that some account managed businesses said that they were not sure why they were even account managed anymore. Can you give us a bit more detail on that? The team will help me with the detail, convener, but account management is an interesting thing because it is simple. We talk in the report about needing to better figure out when you exit an account management relationship. We think that they have pretty good procedures and processes and evidence in place to identify the potential high growth businesses in the first place that would require to be account managed. At what point do those organisations able to stand on their own two feet and do not need account management anymore? It was interesting to us that some businesses said that they were not sure why they were still getting it. It was not clear to us whether there is a good reason for that or whether it is just because we are just keeping going. I think that there may be some industries in some parts of the world that are always so critical that you might want to continue, even if it appears to be well established in a big business. There might be others where you do have to think that our time and effort and money could be better used somewhere else. The key point for the report is to be clearer about how and when they exit the account management relationship. It would strike me that if there are businesses wondering why they are still account managed, that is a problem in terms of review and public spending. To go back to the point about performance and scrutiny, you allowed to Northern Ireland that they have quite a good way of assessing their agencies and the economic impact. Can you draw some comparisons? We were just as part of our exercise of looking at the Scottish Government's arrangements. We were looking to see what other organisations did. We came across the Northern Ireland example. We thought that good practice was that they clearly set out on their website how that strategy had been developed, what the evidence base was, what the stakeholder feedback was and how that had contributed to them developing that economic strategy. That was a highly-leveled document similar to the Scottish Government's. Underpinning that, the strategy was a detailed action plan, which set out clearly the roles and responsibilities of all the public bodies. As we have said, all public bodies in some way have a role to contribute to economic growth, but what the Northern Ireland example does is clearly set out who is responsible for what, when is that action going to take place, how it is going to measure it and then a year down the line, they will come back and review that action plan, have the individual bodies done what they were meant to do, what impact has it had and then overall what does that mean for the economic strategy as a whole? Do we need to evolve our economic strategy? We thought that that was a good practice. That was a good example of how to measure how well the economic strategy is being implemented. Is it one of your recommendations that we adopt a more similar or robust approach here in Scotland? We do not specifically recommend that they adopt that approach, but we do think that taking those elements of good practice is something that the Scottish Government should be considering. One last question. I refer you to case study 2. It is in the additional document. It is on the Dundee Central Waterfront project. You say in that that the economic impact assessment estimated that for every £1 invested by Scottish Enterprise, £16 would be generated for the Scottish economy. Can you tell me how that is calculated? Before any investment is made by Scottish Enterprise or Highlands and Islands Enterprise, they carry out an economic impact assessment looking at such things that we mentioned earlier, the additionality, the dead weight, the added value that they believe will take place if they do not make that investment. It is normally undertaken by Scottish Enterprise's in-house economic team, or it will get external consultants. We reviewed those economic assessments just to see what the impact was going to be. We did not audit those economic impact assessments because we were not economists. We were not in a position to be able to say that that was correct or incorrect, but we were checking to see that they had undertaken that exercise prior to making the investment. On the second page, it says that Dundee's productivity will rise to Scottish levels by 2020. How do they work out the evidence? I hope that it is absolutely true, but how do they work out how that is going to happen? I cannot give you a specific answer to that question, but it is one of the criteria that they assess when they are developing their investment decisions. We could probably provide you with further written information on that. Thank you all very much. Do any members have any further questions on the report? Your evidence has been very useful. Thank you very much indeed. We now move to item 3, which is our evidence session on the Auditor General for Scotland's report entitled Common Agricultural Policy Futures programme and update. I would like to welcome this morning Liz Ditchburn, director general economy, Jonathan Price, director for agriculture, food and rural communities, and Mike Nelson, director of digital from the Scottish Government. I understand that Liz Ditchburn would like to make an opening statement to the committee. Thank you convener for the opportunity to present evidence to the committee. At the outset, I would like to pay tribute to two groups of people. Firstly, the farmers and crofters who have had to cope with delays and significant uncertainty with their 2015 payments. As government, we have not delivered the level of service that people should expect. The Cabinet Secretary for Rural Economy and Connectivity has already apologised for this, and I repeat that apology here. Secondly, I would like to recognise the many staff in the Scottish Government, both in area offices and in Edinburgh, who have worked tirelessly to try to recover this situation. The commitment and perseverance shown by staff is humbling. The Audit Scotland report, however, makes for very challenging reading. The findings are critical and the report makes important recommendations. The cabinet secretary confirmed earlier this month to Parliament that the Government has accepted the recommendations in full and has published its formal response to the report. I took up this post as director general on 1 May this year. From the start, the permanent secretary made it very clear that getting this programme back on track was critical. She asked me to look at it as an immediate and urgent priority, and it has remained my top priority throughout the summer. The Audit Scotland report covered progress up to April. I would like to lay out briefly here some of the most important developments since then. Many of these have their roots and actions taken in the first few months of this year, but others have been put in place more recently. We now have additional senior capability in the main contractor and in the Scottish Government, responsibility for IT delivery firmly back with the contractor, stronger commercial management of the contract in place, strengthened and rationalised governance arrangements, tracking and monitoring information on payments that enables us to triage and direct action where it is most needed, using dedicated teams, for example, to work on high value cases or groups of other cases. A central control room for key periods to prioritise, accelerate and coordinate actions across IT, business and finance processes, and a more flexible deployment of people so that we can move resource around, for example area office staff have come into the centre or supported other offices. So, what have all these other actions enabled in terms of progress since April? Highlights. The completion of the payments made under the 2015 national loan scheme, of which 94% has now been recovered, a significantly improved application window for 2016 applications with an increase in online applications from 65% to 76%. Almost £310 million worth of BPS, greening and young farmer payments made by the 30th of June deadline to ensure certainty for farming businesses a loan scheme for 2016 confirmed. Critically, savings made that reduce the monthly financial burn rate so that we are on track to achieving cap compliance for the £178 million programme budget. Whilst it's heartening to see this progress, there is absolutely no room for complacency. We estimate that around 209 applicants have still to receive a final 2015 instalment and 401 have still to receive a cap payment. Finalisation of every last 2015 payment must remain a priority. I want to turn now briefly in finishing to how this experience relates to the broader question of assurance for digital programmes. Mike Nielsen will want to say more about this later. The Auditor General said in June that the roots of this situation lie right back at the beginning. It's also clear that optimism bias has played a part as has challenges in getting sufficient skills and capability. Informed by this and by other experiences, both good and bad, and by best practice, the Scottish Government plans to introduce a strengthened assurance process. Critically, this would be mandatory, not advisory, and would establish a set of stop-go reviews carried out by independent experts. The Scottish Government will be live testing and refining this approach from now to the end of the year with a view to introducing it formally in the new year. I think a question you may want to ask is how an approach of this kind been in place at the start of Cap Futures could it have turned out differently. I believe it could and it is not too late for these new processes to add value to Cap Futures. We are currently planning an independent technical assurance review, the results of which will then inform a broader stop-go review under these new processes. I look forward to following up with more detail in answer to your questions. I am going to take the first question from Colin Beattie. My first question is how many staff have been fired or disciplined as a result of this. The Government has in effect suffered substantial losses. If this was in the private sector, there would certainly be severe repercussions. I hope that, in the public sector, the people concerned would not be placed in a position again where they were able to create such a disaster. As the Auditor General said in her evidence to the committee in June, it is absolutely clear that people have done their very best to address the problems that they saw and to take actions as they saw fit. As she also said, the challenges that lay a long way back in the past and in the history. My personal impression of coming new into this is that this is not failing for lack of effort, it is not failing for lack of commitment, it is not failing for lack of will. The overall impression of people not trying or not operating effectively is not the picture that I recognise. Indeed, both ministers and senior officials are ultimately responsible and that is the stance that we take in addressing these issues. The ministers were not down at the coal face handling the issues on a day-to-day basis. But they are ultimately responsible and accountable to Parliament as we are as officials. Of course they are, but there were people on the ground that were managing the project. As people in the centre in headquarters have worked tirelessly, they have tried everything possible to make sure that farmers get through to payments as quickly as possible. Not as firm a response as I would have hoped to. I would like to focus a little bit on the wider picture. There is one specific question that I wanted to ask in relation to the Auditor General's report, because the report itself is obviously a little bit historical now because it is some months ago. A lot has been done since, but it does not make good reading, as you yourself said. On paragraph 10, there is a mention here that disallowances amounted to 1 per cent of the total cap payments made in Scotland in 2006 and 2013. Is that in line with what other countries experience as well? Is it better or worse? My understanding is that it is around the middle of the pack, but I will ask Jonathan to say more about this and I know he has the detail. If we were to look at the 27 European Member States and look at the positioning there, Scotland's performance is around about in the middle. Essentially, it is 1 per cent, 1.1 per cent of the value paid out over that period that was subject to disallowance. If we look at the UK as a whole, the comparable figure is 3.6 per cent, which actually places the UK as a whole, which obviously includes Scotland, as the third-highest by percentage country in terms of disallowance compared to the total value paid out. You get some sense there of the range. I would like to ask a couple of questions covering a wider area. Clearly, what this project and other projects that the committee has looked at in the past have been the question of management of IT projects, often lack of skills, lack of ability to manage them. Have we resolved that problem? Are we going to find this problem going forward? How are you addressing skills shortages? Are we learning from other countries as to how better to do this? Let me say something briefly from my perspective as the Accountable Officer for this programme, but Mike Nielson wants to say more about the overall skills picture. It is important to recognise that we need skills in two different places critically to make this work. We need sufficient skills inside the Scottish Government to enable us to be intelligent clients of external expertise and advice. There is a lot of work in hand to improve that. We also are always going to expect and will want to continue to work with skilled contractors and expertise from outside government. Again, there have been challenges, for example, through the cap futures in terms of market availability and getting those skills at reasonable prices. We see in terms of the broader economic growth opportunities of Scotland a strong importance to increasing digital skills across the whole economy and the digitisation of many businesses. That is a big theme that sits across government as a whole. It does mean that the market is sometimes challenging for the public sector in accessing the skills that it wants. Mike Nielson, could you say a bit more about the plans in place? I think probably the two big issues that we will be addressing in terms of the overall picture will be the assurance framework and skills. If I focus for now on skills, I think we recognise that in Scotland as a whole there is a shortage of the relevant skills and that we face challenges too. We did, as you will be aware, set up the central government digital transformation service 15-16 months ago. The purpose of which was to try to ensure that the critical initial stages of programmes and projects that those leading those projects had the right support. That being done by a combination of bringing in permanent staff into the digital transformation service and drawing on contractors and others as appropriate and in line with the way the market operates. I think that we can say that there has been considerable interest and the services worked on 22 projects across a wide range of organisations from the Scottish Public Pensions Authority through to the forthcoming employability programmes. The Auditor General in her evidence earlier said that she considered this to be the right approach, but it is yet to be proven. The reality is that, while now, we can show that the activity in supporting a wide range of organisations, both in terms of establishing their programmes and also in resourcing them in terms of getting programme directors, technical architects, etc. Progress is being made there. The proof will be in the pudding of how these projects actually evolve over time. My understanding is that the skills shortages are fairly common at the moment. How are we competing against other countries to try and attract these skills in south of the border or continental Europe? At the level of Scotland, rather than the public sector, Skills Development Scotland has run a major campaign in Scotland, but it has also targeted a number of third countries, including Poland and Estonia, in order to try to draw people into the Scottish economy. That is a significant factor. The transformation service is using a wide range of routes for recruitment in order to get at those specialist skills. We have been quite successful in a number of areas. There are areas where it continues to be very difficult. Cyber is an example of an area where it does continue to be difficult. We have got a mix of something under 50% permanent staff, 50% contractors or fixed term appointments. That reflects the realities of the market, because some people will only come for periods of time. I think we would recognise this as a continuing issue. We are trying to ensure that within the framework of the UK Civil Service Pay and Recruitment we are able to offer attractive packages. You have not indicated the success rate of these efforts to bring people in from elsewhere. I do not have a percentage in my head. We have found that we can recruit technical architects, business analysts and programme managers. We are finding it harder with cyber and also in some cases senior programme directors. I think that it would be interesting to understand where the skills gaps are, where you are successful at filling them, where there are still gaps. Obviously, the Public Audit Committee looks across a wide range of projects and we have had some that have not been good and some that have been a bit better, but it will give us a better understanding nationally if we can see where these skills shortages are. We are about to run a skills survey in central government, which will help us to update the position. We have also got a piece of work with Skills Development Scotland, which is about the gaps across the economy as a whole in order that, at that level, the right action is taken. Do you think that a skills survey might have been helpful if that was done before? We did one in 2014, so this will be an update to that. Can I add another point, Mr Beattie? I think that while technical IT skills are definitely part of the challenge, equally important in projects like this is commercial skills, working effectively with contractors. There is no point in having a contractor if we are not effectively working with them to get the best out of that relationship and operational process skills. This programme is not just about IT, it is about all the processes. As you said, the interaction with farmers is understanding what good customer service should look and feel like. I think that there are operational skills as well, which we also need to make sure that we are continuing to build. For example, I am not sure that I might not have the detail, but commercial skills is another area where the Scottish Government is actively building its skill base. There are a lot of different issues that we want to explore. Alison wants to ask about the IT system as well, which is a big issue. Does anyone else want to come in on the IT system specifically? We will take a quick round of questions and try to keep them quick and brief. When I look at the IT system and what I have in front of me here, it is basically saying to me, if I am reading this correctly, that there are some cases that are far too complex for the IT system to process and pay out at the current time. I hear what everyone is saying about skills and so on, but this is a major, major expense. It is a huge IT system. Surely you look at the operational skills, I do not understand. While I am reading this and it is basically like being facetious, the computer says, no, is the bottom line. Why along the line has somebody not triggered somewhere what we maybe perhaps need is more of a human input here? Bacroom, take those cases, take it to a backroom and somehow get your IT system sorted to override where it is incapable of coping and start bringing on the human element where maybe they would be able to process? I think you are right that there is an absolutely critical choice to be made about what kinds of cases can be effectively dealt with through the system and what will always require manual intervention. Getting that right so that you do not try and design a system for a complexity and level of variations on cases that just cannot be done easily in a system, but actually often what is currently happening, of course, is that we need both. We need both the system but we also need the human interaction. There are also cases which will always be more heavy in terms of the human intelligence and the interaction. I think you are raising absolutely the right questions. One of the things that I think we will want to look at in the technical assurance review is to look at whether we have that line drawn in the right place currently or whether there are some areas that we are trying to get the system to do that we might be better to almost unravel and take back out of the system and go into manual processes. The costs and benefits, you are raising the same point. There has to be a sufficiently high volume and a sufficient level of standardisation to make using a computer system worthwhile, otherwise it may actually be quicker, not an easier and cheaper, not to design the system to do something but to recognise that it will be done outside. Those are the lines that we want to reassess and check that they are in the right place. I just fail to understand why we are reassessing them after spending all of this money. To me that is something that should have been there earlier on in the process, that should have been identified far, far earlier and dealt with earlier, not so far down the line. The system is designed to both have manual processing of claims alongside automation. That is the way that it is designed, that is the way that it will always need to be. It is worth still, I think, always reviewing and checking. We can then go in hindsight, could we have done it differently perhaps, but that does not take away the responsibility for us to now look and assess and confirm whether we think that is in the right place or not. Tawrish Scott. Thank you very much, convener. Will the £178 system pay out next year? Will it pay basic payments, greenings and all the young farmer payments? Will it pay next year? Why have you announced a loan scheme then? We have been clear that we recognise that farming businesses absolutely need certainty, and while we can be clear that we expect the payments to be made from, I think, the cabinet secretary's latest statement on this from early in the new year. What is the early in the new year? I have heard that definition in civil service terms for the last three years on this programme. We have a plan that suggests when that will happen, but what we do not want to do is give commitments and promises that we cannot then keep, which is why we are saying that we know the window in which these payments will be made. We have much higher confidence in the system operating than we did last year, but recognising that what farmers need more than anything is certainty and cash flow ideally as soon as possible, that is why the decision has been made to put the loan scheme in place, and I think that is a really important step. The loan scheme will pay when? We are hoping that it will pay in November. Which computer will pay out the loans? It is a separate system that we built for the 2015 loan system. Who pays that cost? That is a different cost, a different budget. Let me check, but I think that is within the Scottish Government. Yes, we have the capability already to make those loans. The £178 million IT futures programme is not the computer that is going to pay out the loans? No, it is not. Which budget is that coming out of? That is coming out of the operational budget. How much does that cost? There is very little development work required to enable those payments to go out. But there will be a cost? There is a cost in staff time. There is a cost in processing these, but it is mostly opportunity cost in staff time. Is the £178 million the budget now? Yes. When the Auditor General reported in the spring that there was £15.7 million left, but she expected that to be exhausted by November, is that fear? No, the situation has moved on since then, so let me give you the latest position. The current situation is that we have been able, slightly earlier than the Auditor General's final report, but very much since then, through significant effort by both the Scottish Government and our main contractor to make savings that mitigate the risk identified by Audit Scotland. The monthly expenditure has reduced from £4.5 million to £3.6 million, although I will come back to a further point on that. Those underlying savings will be further added to by additional savings, which CGI is committed to taking under its own risk. Saving is a pretty moot word for your £178 million. The savings are made of two things primarily, reducing overtime, and there has been significant success in reducing the overtime rate. Overtime is not the right way to staff a programme over the long term, and also in exchanging more expensive staff within the standard day rates that we feel we should be paying. Those two things have made a huge difference. We also have savings from the procurement of one of the specific projects, which is the land parcel information system, which has come in cheaper than we originally projected. All of those savings— Wasn't that to be £31 million? The land mapping is £31 million, according to the Auditor General, right? The land parcel information system, I think the original estimate was—we can check, but I think the original estimate was £6 million, and it's now £3 million. Yes, it's 3.5 million. That must be a different— 3.5 million. All of those changes, all of those savings, take us to a situation where we now have out of the £178 million, we have £34 million left to spend, and our plan shows that that will deliver us to the elements of cap compliance, and that budget will last through to March 2017. There is a small—that will take us through to March 2017, with £3.5 million remaining, which is money that we need to hold for some specific projects, which are part of the business case, which are starting now, but which continue beyond March 2017. One of them is the land parcel information system. Another is a process called SACAMS, which is the scheme account customer management system. It's also another piece of functionality called Claims to Payment. Those things need to just go over the financial year boundary because that's the stage of development that they're in, and we have enough money to continue and finance those as well. The last question that I want to ask is on this. You're aware that no crofter or farmer anywhere in Scotland has received a letter or a notification saying how much they should have had and whether they can appeal that. When are they going to get that letter, and can you confirm they'll be able to appeal that on the basis of this utter mess that you've created? The first thing that I should say is that we absolutely regret that we have not been able to issue that full range of letters. We are having to prioritise, and I think rightly so, prioritise the payments, but we absolutely recognise that is not the situation that we wanted to be in, and we recognise that for farmers that is distressing and can cause confusion and concern. Because we are prioritising the payments and because the risk of disallowance through late penalties still remains important, we will not be sending out letters before 15 October. So that's going to be after the long period closes? No, so let me confirm your question around that people will not be disadvantaged in terms of their ability to appeal or review. The 60-day period for review, which exists, will be triggered from the date of the letter, not from the date of the payment, so no-one will have a shortened period through which they can review or challenge the information that they've been given. But people have got to apply for the loan by 12 October? That's for the 2016 loan. But if you're a business person, you have tax, and I know it's not easy to understand this, but if you're a businessman trying to run a tax business, tax and accounting, and you haven't been told how much you're going to get, and now you're expected to apply for a loan which your accountant's saying, wait a minute, you don't even know what you had and you don't know whether you can appeal that. You've got this the wrong way round. You're leaving people in the dark. Okay, so people know how much they've got because they see it coming into their bank accounts. But they don't know what it's for and they don't know whether they can appeal it. Absolutely, and that's where we completely agree. So they see how much they've got because they see that coming into their bank account. I completely agree with you that the letter is also important. We are not, but we have had to prioritise payments rather than letters. That's completely unacceptable. It is an area that we very much hope to be in a better place next year, but for now that is where we are. Thank you. Thank you. Monica Lennon. Thank you, convener. I know from the publication of the Audit Scotland report that the NFU Scotland has provided the assistance to a significant number of individuals who have yet to receive a balance payment for their 2015 claim and some who have received nothing at all. Others have talked about the complexity of the IT system and NFU Scotland and others have very fairly said that they know that areas of staff are working flat out. It looks like the staff can't do any more than they're already doing, but it just looks like the system is completely broken. So can the Scottish Government be confident that the CAT Futures programme will ever be capable of delivering the payments to an exceptional standard, not just for 2015 and 2016 but into the future? The first thing to say is that the experience on 2016 is, I am sure, is going to be very, very different from 2015, and we are starting to see the evidence of why we can be confident about that. So, if you think back to the 2015 process, the application, the period when farmers were trying to make applications was extremely challenging. Jonathan may want to say more, but we know that the system was not stable, farmers were not able to use it effectively and the time period through which that had to remain open was significant. The 2016 payment window, the application window, has gone very much better. We now have the first year under our belts of making payments through the IT system, the 2015 process. Of course, none of us wanted the challenges that we've seen in terms of getting those payments out as quickly as we would like, but the system is completing that cycle and puts us in a much better position for repeating that cycle next time round. I think we can be confident that the system is functioning, it is making payments and it will make those payments in 2016 and we will see significant improvements. But as I said in my opening statement, because we are asking ourselves exactly the same question that you are, is this the right system for us to build on into the future? Is this a system that has sufficient stability that we can continue to rely on it? That's why we are doing the independent technical assurance review, which will give us an independent view of the system at that point. Just to reflect back just a few things there, you will be making the next run of payments early in the new year and we can find upon that. That's the current plan. Right. You were just talking to Monica there about will it ever be fit for purpose, so I'm taking from you. Yes, this will be fit for purpose. We have a system which is functioning. What we have to ask ourselves, I think it comes back to the question that was Harris asked, which is we have a system which is functioning. Is it the optimum system that we want to take into the future or might we want to review whether some of the elements in it need to be handled in different ways? Those are the sorts of questions is the underlying architecture. So those are the sorts of questions we will use the review to look at. But yes, we have a system which is functioning. It's making 2015 payments. There's no reason to suppose it won't make 2016 payments. And there's no reason to suppose that it won't make them quicker because the functionality which we've had for 2015 is working. We have a set of things that we need to do for 2016, which are different. So I'm not going to hide that from you. There are a set of things that we still need to put in place in terms of functionality for 2016. They are scheduled in a series of what's called in the jargon drops, which are new areas of functionality which will be put in place between now and the end of the year. We have a firm commitment from the contractor around that process that they're putting in place. We again have a firm commitment from the contractor about the delivery dates for those for that functionality. So that's the basis on which we are confident that we will be using this system for the 2016 payments. Does that mean that we should not still step back and ask ourselves a question about the future? I don't think it does. I think we should ask that question. But haven't you just spent £178 million, then, on a system which you may not even go forward with? Exactly. So the review could conclude many things, might want to say a bit more about what reviews of this nature would do. The review could conclude that the system, as it is, is absolutely fine, and we should just continue as we are. The review may conclude that I'm just trying to describe the kinds of conclusions it could come up with. It could conclude that some aspects of it are extremely strong and robust and built well, and that other areas have challenges, and we should re-look at whether there are other options. But fundamentally we have... But they will cost more money, won't they? If we found those questions, we would address those questions by saying, what would the benefits be, what would the cost be, and would we be in a better position as a result of it? Just for the avoidance of doubt, when will the outstanding... I think you've mentioned roughly 600 payments outstanding for the current year. When will they be made? So we have... Let me just check my numbers, make sure I'm giving you consistent numbers. So we have 209 people who... 209 still to go who have been paid something, and 401 who still have to receive a payment. Now it's important to say that as an estimate, because of course, while there are still eligibility questions and processing, those numbers could change, but those are our current estimates. We aim to complete all of those by the middle of October. We recognise that's important for farmers. It's also important to fully avoid late payment penalties. We are currently working through... There's several categories within that, and Jonathan might want to say a little bit more. Some of the categories, for example, some of them are cross-border cases, which are, by their nature, tend to take a bit more time, and sometimes we're reliant on getting information from other paying authorities. There are private contract clause where people are transferring entitlements, which also require an extra way of dealing with them, and there are some inspection cases. We are looking at those different groups. We believe that we have fixes in place, or processes that we need to put in place that will enable those specific groups to be processed by the middle of October. There could be... There is always a challenge with some particularly challenging or difficult cases, or where information is not available. There is a possibility that some of those could go beyond that deadline, but we're confident that the majority certainly would be paid by the middle of October. Jonathan, do you want to say a bit more about the kinds of cases and the kinds of actions we're taking? Yes, I mean, I can just take us through the plan that we have between now and the middle of October. As Liz has said, we've got... The first cases that we expect to begin to be paying in a batch are these private contract clause cases. We would hope to be able to begin to start making those payments from today because there was some more IT functionality put in place overnight. Now, prior to coming to this committee, I haven't had an update on that, but we expect that we've got more IT functionality that will enable those private contract clause cases to begin being paid. If it's not this week, then it should be next week. The inspection cases that Liz referred to are ones that are affected by the private contract clause, and we should start paying those next week. On the cross-border cases, we'd expect to start paying those from the end of next week, beginning of the week after. That puts us in a good place to get the vast majority of those cases and of the financial value that remains outstanding, completed by 15 October. One further thing. You mentioned late payment penalties in there. Are you able to just elaborate on that? As I'm sure you're aware, because you've seen the report, the system with the European funds is that there are two kinds of disallowance, two kinds of penalties. There are financial penalties for late payment and there is disallowance through other means. The financial penalty risk, which was raised very strongly within the Audit Scotland report, has been largely mitigated for two reasons. One is the progress that we've been able to make in making payments over this period across the summer. Secondly, the waiver that was put in place by the European Commission to take away, to not, in effect, to not use payments during the 30th of June to 15 October. So we're still in a penalty-free period. The absolutely critical thing we need to do is to get as many payments, and ideally all, out before 15 October. If there are a small number of payments that go over that deadline and there may be a small number across the UK, then this comes back to really the final numbers with the UK. It's not Scotland alone that is responsible for this. It's not a separate ring fence of penalty, if you see what I mean. It's a penalty that applies at the whole level of the UK. So we will need to wait for the final figures to come in from all the UK paying authorities to understand whether that risk is zero or whether there is a small risk of some penalty. But the numbers that the Audit Scotland report raised, which are extremely large, are no longer of concern. Gil Ross. Thanks, convener. It says here in the summary that the Government started this five-year programme to improve the business process in IT systems in 2012. So this has been on-going since then. So I would like to know when the IT system itself was procured. Why was it not picked up until it started going through the process? As we know, a lot of people in our agricultural sector had to suffer as a result. It also says on page 16 that software to process and validate applications was still being developed when the application period closed. Why was that not all in place and functioning before any of the applications were even started? Is that still in the process of being developed? You have already said that there is an on-going review into the software. When are the delivery dates for functionality? When is the end date for this review? Again, just to reiterate, what was different from previous years? You say that you are waiting for a lot of information about different applications and stuff like that, but cat payments, this has been on-going for years. Is the information changed? Are we looking for more information? Is the system, how is it different than it was previously? Let me start, but I think that Jonathan will also want to come in. I think that there are a few important principles and pieces of information to establish. One is that this cap, the European Commission, when it negotiates and agrees the common agricultural policy, sits in a period of years. This cap, we are now in the first year of the new cap, the cap that runs from 2014 to 2020, is the terminology, isn't it? This is a different cap. It operates in different ways from the previous scheme. That's a set of policy changes and choices that are made by European Commission and Member States as they design these new processes. This is a new way of operating agricultural subsidies than the previous way. That's the first thing to say. The second thing to say is that one of the biggest challenges that this programme faced in the design, and I think it's an interesting learning that Mike and others, as they look at other kinds of projects, will be very much taking into account, is that we were in a situation where we were trying to specify and design the system before those European regulations for the 2014 to 2020 period had been finalised and agreed. We were, in effect, trying to design, not knowing exactly what would come out of it. That, as you can imagine, is an extremely challenging situation. As this process, but of course, procurements take a long time, design systems take a long time to develop, and therefore, the design and that work had to start in some shape or form at a point at which the information to make those decisions wasn't complete. That's just the nature of the beast. The second thing is that because this is a devolved area in terms of agriculture policy, Scotland also made some choices in terms of policy decisions that says you start with the core European regulations and then you have some flexibility to amend, adjust, decide how you want to design your scheme for the particular area that you're sitting in. So there's a process running alongside. So Europe is trying to finalise a set of regulations and alongside that is a process of Scotland deciding how to apply those regulations here and where to change them, where to make, to use the flexibilities that were allowed. So we have a situation which is a new common agriculture policy in terms of this programme and a significant uncertainty in terms of what the final system would look like. I think that's fundamentally why so much of the functionality and so much of the work was so close up to the system needing to operate. But maybe let me turn to Jonathan. I suppose the other final thing I wanted to say just by way of information, is that some of the information that we require is specific information about particular farms on particular dates, so it's not information that's the same as... The case is always going to be new information because you're actually finding out what's happening on that farm at that time in that year. So there's always information which will need to be new every year and that's the nature of the application. Yeah, thanks. I'm interested in what you're saying about Scotland deciding to do things a little differently. Who was it that made that decision? Was it someone in the Scottish Government that made that decision? Was it alongside... It's ultimately ministers. And is there anything that's happening in other European countries that is good practice that we can learn from? In terms of... In terms of how they administer their cap? In terms of systems, the IT aspects. Yes. I don't have information on that but Jonathan, I don't know whether you want to say anything about that. Certainly, there were very different decisions taken across all parts of the UK in how we implemented the common agriculture policy in this new more complex form. It's very clear to me now that the decisions that were taken in the middle of June... Sorry, in the middle of 2014, I think it was June, brought in enormously more complexity than we imagined. We knew that we were at the behest of the industry in order to try and fit the policy to Scotland circumstances. We tried to accommodate the industry's requests. We were aware that there was... We had concerns about complexity. We discussed all of that. But at the end of the day, we still went for three payment regions. At the request of the industry? Yes. The complexity consequences that came out of that were even more extreme than we had anticipated. If we look at other parts of the UK, then the Welsh have used a single region, the Northern Irish have used a single region. In England, they actually went through their troubles with the common agriculture policy back in 2006-2007, because that was when they moved to a regionalised model. So their pain was then... They still had some pain this time round. That was the most significant difference in terms of looking across the different paying agencies. The other difficulty that we faced was the fact that our previous IT infrastructure wasn't capable of being able to support the new more complex cap. So I think relatively uniquely, we were building not just a new cap policy, we were building the entire infrastructure, an IT infrastructure for that at the same time. Liam Kerr? Just a supplemental point on that, because surely the entire Europe was having to do exactly the same process. They were having to adapt to a new system, and while I appreciate what you say about other countries having problems, I'm not aware of any countries having problems such as this, particularly, for example, Ireland. So why weren't we taking best practice, best learning from other countries to make this right? I think there are two... Jonathan, again, might want to say more about the process that happened at the time where, first of all, France has had much, much more severe problems than we have, so France is at an extreme, which makes Scotland's problems look small. I think there's a really interesting question that you raise, which is whether Europe ought to be thinking about, and indeed there are some areas where Europe does procure single systems that can then operate across the whole... all countries, and there is increasing collaboration on some single systems and single solutions that can work across the piece. I think that's a really important question to continue to ask when you find yourselves in those kinds of multilateral settings, whether one solution can work and can contain sufficient flexibility for all or not, but that's not the situation that Europe has gone down for this particular set of things, and different countries' systems and processes do look very different, so I think that's why it's been challenging in this case to have a single system. I would also say that the future, because we need to be thinking about this set of problems, but we also need to be thinking about what's the kind of future we want to move to. There is real potential to move to more... the use of more remote sensing technology so that we don't have to have some of the processes that we currently do, so there are some real technological potential solutions for the medium term that we ought to continue to keep thinking about, and of course, rationalisation with other member states is also an interesting one. Edward... Sorry, yes, do you want to add to that? I mean, what I'd really add is that we... But, you know, there would have been simpler options available to us, and we've seen that in other countries. We did consider the redistributive model that Wales have looked at as an alternative to the three regions, but I'd say in the end, we came down on the side of the industry that wanted this particular arrangement, and the industry's not unhappy with the policy, there will obviously understand and be very unhappy with the delivery of that policy, particularly the implementation through the IT. Bear in mind that it's not just the IT that becomes complex, it is also the processing tasks that have to be carried out by all the area office staff. Edward Mountain. Camila, thank you very much for allowing me to take part in this today, and thank you for allowing me to join your committee. I would like to say in return that if anyone would like to come to the Rural Economy Committee, they're most welcome, and they will be accorded the same curses that you've given me. So, thank you. Before I go any further, I'd just like to declare an interest that I am a member of a farm partnership. We've heard a lot today about the excellent and extra work that the staff would be putting in the area offices, the forward-facing staff that have had to deal with the problems that farmers have had to face on the ground. What I haven't been able to get to the bottom of, nor has the committee that I'm part of, is the extra costs for these staff. How much overtime have they put in? What does it cost the Government? How many extra staff have been taken on? And relating to that, could you also give an estimate to the cost of the farmers for only getting 80% of their payment in the early part of this year, and estimate the cost to the economy? Because those are real costs that somebody has to bear. And especially in relation to this project, which has been faltering since September last year as far as the staff in the area offices are concerned. Thank you. Thank you, Mr Martin. I'm going to ask Jonathan to talk to the overtime and stuffing costs questions because I think we have some information. We've got some detailed information, although I'm conscious also that Mr Ewing gave evidence to the REC committee last week. And indeed, we've had this week a letter from the clerks setting out the information that we will write to you about. But to give you an overall impression of the overtime costs, in 2015-16, the area office staff overtime amounted to £348,000. So that covers, obviously, some of this processing year. In the previous two years, the overtime ranged from £184,000 to £210,000. So it's common for the area offices to work overtime. It's because they're used to working overtime at the peak periods, then there was a good response from them when we asked for more effort over this period. But you'll see that the difference between the two is of the order of £150,000 of additional overtime in the area offices if we compare this year with the previous years under the old system. Sorry, if I may. But, as I say, we will be writing to you with more specific details on the overtime part. Is it my understanding that approximately 70 extra staff were taken on to assist as well? In the area offices. Just in the area offices? Just in the area offices. I don't have the figure, I'm afraid, for the total number of staff, because I'm conscious that 70 may well be the right figure, but the staff would have been brought on on a temporary basis, and I'm not sure that we ever got as high all of the time, or peaking of that. Again, if I may, we will be writing to you in the REC committee with this information. I think that it's just the question of where that money comes from. It comes out of the bill of payments budget, i.e. the budget that supports the administration of all of the arped staff. Mr Mountain, Alex Neil. A couple of quick questions. At this stage, what is your global estimate of the net additional cost to the public parts of this fiasco? We are, as I explained earlier, on track to deliver the cap compliance within the £178 million budget, so there should be no additional cost there. The other questions that you're raising around the ways in which we have had to flex priorities, so I think that there is no new money to spend on this. If we have to increase staffing in one area, we will be removing that from other areas, so it's always about flexing our resource to meet the needs. That's where we need a detailed account. This is a public audit committee, so if you're shifting staff from one resource to deal with this, then we need to know what are the implications of that. Are other services going to suffer, which would suggest that they are going to suffer if staff are going to be moving around from an existing service to provide additional resource for this. We need a comprehensive statement on both the staff costs and all the other costs that were mentioned by Mr Mountain, because clearly we're the public audit committee and that's what our job is to look at. That's number one, so when can we get that? Do you want to add anything? What I was going to point out was that throughout the process and the development of the new cap, there was a clear acknowledgement at the European level that the administrative costs and I'm leaving aside the IT and the costs of building the new IT infrastructure because we had to do that anyway to some extent. But the actual additional complexity of the cap would lead to at least 15 per cent additional administration costs in the paying agencies. That was the view of the European Court of Auditors in a report that they produced, I forget the year, but it was something like 2012-2013. I think what we need is a detailed, very detailed account of each line item where there's an additional cost of what that cost is, how long does that cost exist, which financial years were the cost met in, because at the moment we've had so many figures all over the place that I think what we need is in one piece of paper a list of all the additional costs, why they were required, if it was additional staff, it's still an additional cost, where did the staff come from, which services were they providing previously. We need a much more detailed account of this rather than bits and pieces, because bits and pieces were getting at the moment, I think we need a comprehensive statement on the cost. Second point, can I just follow up earlier on Colin Beattie's point? You quite rightly said, Mr Stitchburn, that ultimately responsibility and rest with ministers and the relevant cabinet secretary is no longer in post, but the one word you didn't mention in your reply was competence. You mentioned about people's willingness to work and all the rest of it, and I'm not referring to people in the area offices, I'm referring to the senior management in the civil service of the rural affairs department, who is taking responsibility for this fiasco, how many heads have rolled, how many people have been promoted despite their incompetence, who is taking responsibility in the civil service for this? Well, I am, as the current director general, clearly responsible for the original fiasco. So who's responsible for the fiasco? What's happening? I would challenge that your question around competence, I genuinely don't think this is about saying individual X has been incompetent, individual Y has not. There is no single point of failure in this programme. This programme has had challenges over a long period of time. We can see the roots of that. The auditor general herself says that the roots of this lie a long time ago and also herself says that people have worked extremely hard to put it back on track. So I think this is not a programme where you can see cleanly there was a single point of failure if only that person had done their job differently or it would all have been okay. There were complexities in the environment. The things we've talked about before in terms of the moving, the absence of a clear set of regulations at the beginning of this process, all of these things are complexities which the programme has tried its very best to deal with. People have done the very best they can with the things they had available to do that with at the time. By the point I'm making, at the end of the day in any organisation indeed the director of rural affairs from 2012 onwards whoever held those positions had overall direct managerial responsibility for this. It's been a total failure. So why hasn't there been a price to pay for that failure? Of course you can only take that kind of action if you can demonstrate clearly where that failing was and why that person was negligent in their duty. That is not our analysis of the situation. I think that people in Scotland would find it amazing that nobody has been disciplined, nobody has been sacked in the civil service as a result of that, quite frankly. The cost of the public pass is obviously very substantial indeed whatever the final figure is and the fact that no heads have rolled in the civil service is quite frankly unbelievable. In any other organisation if this had been the health service when I was health secretary the disagreeable role of having to dispose of the services of a chief executive and a board chairman because of the fact that they've all gone wrong in their watch but it seems in the civil service nobody takes the ultimate responsibility. We can only take actions as you described where the evidence supports that. That is not my understanding of the situation and I come back again to say we will see what information we can provide in terms of the kind of costs within the operations budgets but if the £178 million which is the business case approved figure delivers the programme then I consider that programme to be delivered within that budget. As a member of the committee and I think from other reactions certainly disagree with what you're saying I think the civil service also has to take a share of responsibility at the end of the day the people at the top at the end of the day are responsible for managing these projects and it sends out completely the wrong message that every other walk of life people in those positions take responsibility when there is gross failure and the only organisation in Scotland that seems to be exempt from that is the senior civil service. I repeat again we are of course absolutely responsible as senior leaders for the delivery of the areas for which we are responsible but we can only you only take action if that is what the evidence tells you and it's not that we sit within a series of proper human resource procedures which mean that you can only take those actions if that is the evidence you have. That's a circumfri answer which is extremely unsatisfactory. Can I just finalise? It is the answer. We maybe need to take it up with a permanent secretary because it's a civil service matter. The final point is this clearly since all of this happened in the Brexit vote and it seems to me irrespective of how long the Brexit process takes very clearly there will be the option because agriculture is a devolved responsibility for Scotland or this Parliament to look again at how best we can support our farming communities and it seems to me that we should not be spending unnecessarily money on equipment that might only have a lifetime of three or four or five years. So can I ask if any thought has been given to the implications of the Brexit decision and process for how we go forward? I mean clearly one would imagine there will be a fundamental review of policy on how we support the farming community once that responsibility is devolved to this Parliament which it must be after the Brexit talks are completed. Obviously we don't want to be spending a lot of money if we're not going to get a return over a long period of time. So thank you very much for that question and of course we are indeed looking at those issues. The first thing to say is that it was extremely welcome that we now have the UK guarantee of at least the pillar one cap through all the way to 2020 so the completion of the 2014 to 2020 period and at least some of pillar two. There are, I'm sure you're aware, some monies which have not yet been guaranteed but we still have and within this cap through to 2020 around £4 billion that's a total of £4 billion, around £4 billion pounds worth. So the business case was done on the basis of a system that would manage and administer that £4 billion and that is still a sensible decision to have taken. We need a system to do that. As you rightly say there is significant uncertainty there are many options that we don't know how they will all play out yet and there is an important debate to be had about what is the right way and what is the way in the future that we would like as a country to support the farming industry and I think that's a debate which I'm sure Mr Mountain's committee as well will be very much engaging in and it's a debate that we would hope to have with the farming industry and with others who have interests in the rural economy and indeed in the economy generally. So there is indeed a very important set of questions but we do have a level of certainty around the immediate period. Alison Harris Just really to come back on one final point earlier you said that you've identified £34 million of, I know the word is not quite accurate, but savings I take No sorry, the 34 million is out of the £178 budget we have £34 million left to spend between now and March. Yes because you've highlighted because we've made some savings. That's what I was saying so of that 34 million and the £178 million you can categorically tell us as a committee today 100% that the system will be cap compliant before that budget runs out. Yes That is what our current plans are telling us. I will be very foolish if I sat here and gave you an utter unconditional guarantee because between now and March some things may happen that mean that budget is under more pressure some things may mean that that budget is under less pressure but our current plans which have been stress tested and which have a firm commitment could supplier behind it tell us yes that budget will take us all the way through to March and will deliver us a cap compliant system. So what happens if that budget runs out? If we so we'll be monitoring this absolutely closely so we have a strong commercial management arrangement in place now so our commercial manager is sitting down with the contractor on a very very I mean they're actually sitting in the same room so they're working very very closely together looking at how they can increase savings or deal with any unforeseen circumstances all the time on an extremely dynamic and reactive basis that monitoring will go on the programme board and the executive steering committee will take receipt of the information that comes out of that if we see anything heading in the wrong direction then we will at that point say what are our options can we make more savings can we do other actions that bring that back on track but the process that's which is no rocket science but just needs to be done and needs to be done well which is very close monitoring very close commercial management of the contract and taking any things quickly if we see them moving off track but we still have possibility of the budget running out but not on current plans we do not our current plans which are robust plans of course there's always an unforeseen life is always unforeseen absolutely but in as far as I can say here I'm standing here before you saying our stress tested plans in which I have confidence will deliver that budget all the way through to cap compliance Tavish Scott First I should have apologised I should have done the Edward Mountain bit there and thank you very much for coming I think I probably like Colin Beattie thought I still was on the committee and you should be grateful I haven't called you Paul Martin today I'm grateful for that Let me ask one final question that is about the Audit Scotland report because their recommendations from me to the government included develop and test a disaster recovery solution have you done that? Let me just make sure I haven't got this in my head but yes we are I thought you'd recognise the phrase disaster recovery solution So the situation is this and this is the information which we gave in our published response is all IT recovery provision in the event of a major incident which is specified to deliver no more than 72 hours loss of service and no more than 1 hour loss of transaction data for all the systems on the new futures platform So there is a disaster recovery solution in place? For all of the systems on the new futures platform the first failover test of that system is planned for November and the regular cycle testing will follow after that The only caveat that I wish to put on all of that is that for the time being the business continues to rely on a land parcel information system based on old infrastructure which will not support modern recovery systems so we are exposed to a level of risk in a sense for this interim period but the full future system is indeed compliant with the kind of disaster recovery processes that you would expect to have in place Johnathan did you want to say something about that? The only thing I'd add is that the land parcel information system is a backup of the data So we're not saying that It's called paper, isn't it? No, in this case it's 400,000 records on that the land database digital records on that land parcel information system So it's perfectly possible to recover all that data if there were a problem with the infrastructure it's just that it wouldn't be done in the 72 hours that is recorded on the modern infrastructure Thank you I'd just like to come back in with my earlier question I was trying to get some comfort from yourselves that we could be confident looking to the future but I feel having heard the evidence today whilst people have been very frank and open is still not a convincing response I think Neil's characterisation is a fiasco is probably a fair one So a couple of questions like to what colleagues have managed to tease out talked about the increase in staff around about 70 perhaps at any given time we might get more information on that but it strikes me if people are being brought in on a temporary basis to come into a very complex environment that they're not really getting a lot of time to understand what's going on, is there any training involved so I'd like to have you hear more about that and then what impact does that have on other parts of the business that people are being brought in from other departments or they've been brought in as contractors what induction process has been undertaken and I think someone mentioned there about stress testing what about the stress that the staff on the ground are experiencing because we're hearing a lot about in the area office and I really wouldn't like to be in their shoes when it sounds like they're working right around the clock and there's obviously a lot of public interest so what is it like for the staff and are we seeing people go off sick as they're supporting place to ensure that their physical and mental health is not affected by this and really just to come back to my original point about confidence and going forward there's been a lot of questions today about the system and on the one hand we're hearing that there's checks and balances in place there's risk controls and we're talking about disaster recovery management and all of that but on the other hand when we're asked to pinpoint failings and what's going wrong where are the fault lines we're hearing that there isn't really any evidence on that so then it's not been possible to pinpoint so I guess what I want to finally ask is this fiasco disaster that we're talking about today is it wholly down to IT error? Is it an element of human error? Can we get some honesty around that because it's very very difficult for us to leave here today feeling confident if we're still not getting clear answers about why things have gone wrong and why they're continuing to go wrong? Maybe I'll ask Jonathan to talk about the staff welfare issues extremely important and very much on our minds but let me maybe just come back to this first question and I think it so obviously I'm coming in fairly new into this situation and I'm looking at what has a programme that has a very long history I think it is clear that there is no single point where you could say if we had only done this differently if that person had only done that differently it's a very complex and cumulative set of problems which have compounded themselves but which, as the Auditor General said, date right back to the beginning and the nature of those cumulative failures is that you find yourself locked in to a position where you seem to have very few options and you have a situation where farmers must get their money, we must make those payments so it's very hard for people at each point that people are trying to take decisions faced with this really challenging situation which is that farmers must have their money and we just try and do everything we can in that situation but you're already, by then, the die is almost already cast and you're already locked into a restricted set of solutions. The really important thing about the work that Mike is leading in terms of the new digital assurance processes and why these should mean that this should not happen again is that those processes enable you to step back from that and they force you to really look again at is that really your only option if you, did we really understand the costs and the implications of the complexity that we chose as a policy basis, if we had been able to say at that time, do you know what really this set of choices you're making makes the whole system pretty undeliverable would we then have made a different decision I think those are the questions we don't know but the process that we're putting in place will enable us to have those different conversations going into the future so I think it is complex and cumulative series of failures but enabling people to step right back from that and enabling an independent view to come in and say a lot of this is about correcting optimism bias, optimism bias is very very deep in this I think You're addressing that in very generic terms about systems and options and stepping back the difficulty for someone in my position who doesn't really understand this sector is that you're not really able to pinpoint and get to the heart of what went wrong so I'm not convinced that that lessons can be learned if we're just going to be in very broad brush terms about the system I mean lots and lots of lessons have already been learned and are feeding into the way we think about other lessons so I think, so for example one of the lessons that we've learned is that and it comes back to the exchange earlier is that we must be realistic and we must build contingency and this seems simple when you say it but we must be utterly realistic and absolutely disciplined about putting contingency into our plans so that we do not fall prey to optimism bias and say we think we can make payments or we hope to make payments in month X well we do not have underneath that a plan which has been sufficiently challenged sufficiently stress tested has sufficient contingency in it to give us that certainty and the hard learned lesson it should be in people's minds when they find themselves in that situation in the future tempted to say oh well actually if this and this and this worked then maybe we could just do it to say no we will not do that we will step back and say we cannot make that commitment because we cannot have sufficient certainty around delivering it and I think that is one of the most important lessons that we can learn in terms of making sure that we are always competent but Jonathan can I ask you to talk about what is extremely important? Yes indeed so understandably because it is a professional discipline for the agricultural staff in the area offices we have a training and induction program for them in practice where we have reinforced the area office staff we did it by bringing people back sometimes from retirement or redeploying them from other parts of the Scottish Government into that is no longer involved in agriculture and we did quite a lot of that in the course of this year but as I say we also have quite a lot of turnover in the area office staff simply because they move in and out of agriculture in the wider industry so we do as I say have a good induction program that they go through in terms of of the pressures on the staff in the area offices that has been that has been high it's probably been it's just as high in the centre in terms of those pressures but if we look at the statistics that we get through human resources management information we can't discern any increased levels of sickness absence or absence levels related specifically to stress there's nothing in that management information and I've looked very closely at it because I'm so concerned about the staff welfare we can't see anything in there that is significantly out of line with other parts of the Scottish Government so there's always differences in different areas across the piece there's nothing sort of flashing red at us in the management information but certainly in terms of my experience my contact with individuals I know how hard they've been working I know the long hours they've been working I know the stress that they're facing Mr Stitchburn you want to add something can you make it quite brief please sorry I will try I just wanted to add to that around the area offices they're having to have the conversations with farmers who are rightly concerned about when payments might be made when I've talked to people in the area offices and asked them that same question one of the things they do say that's made it more manageable for them is their work has peaks and troughs across the year so there are particularly intense periods for example when certain processes or when inspections are taking place and there are lower intense periods so I think that has helped them to deliver them throughout that That doesn't check out with the Audit Scotland report from May 2016 just as a point of information Do you want to tell the panel what the report says? Just at page 36 it was just saying that the staff have been working hard and there is a risk of burnout they've been working at a very high pace for the past 18 months which suggests a degree of consistency rather than the peaks and troughs alluded to The area, as Jonathan said headquarters and the IT related work and some of the central work is the area where you don't have those peaks and troughs it's absolutely intense the whole way there is a high risk of burnout in that What's been done to Amelia rate that? I think Jonathan was Have you done staff survey? There is a staff survey which takes place every year it's about to happen again so we will have an interesting and new data point the staff survey takes place annually from 3 October to 31 this year Additionally, the contractor has also done some staff survey with their own staff of their own and that shows significantly increasing morale over the last few months On the staff issue, does anyone want to probe any further? Gail, did you want to come in on another question? Just something really quick Alan Bowie, the president of NFUS has been quoted saying that Audit Scotland is questioned whether the CAP Futures programme will ever be fit for purpose Do you think that what we've heard here today will give the industry confidence going forward? I've already answered that question directly but will the industry have confidence? We're in very close contact with the NFUS the teams and myself and the cabinet secretary and other officials and a lot of contact we stay very much trying to understand from them I think it's also important that we hear from farmers outside of the mechanisms of just the NFUS the NFUS is an absolutely important stakeholder but I think it's also good to hear a whole range of diverse voices that sit not separate from the NFUS because they don't represent all their culture I think one of the things that I'm keen that we do more of is really deepen the engagement with the industry recognising the NFUS is an absolutely critical part of that but I would like to see us being able to engage with more people direct as well and not always through intermediaries Colin Beattie Thank you In response to Monica Lennon's inquiry about an example of a lesson learned it was stated that perhaps one issue would be about providing contingency having a contingency plan of some sort that is basic management I mean, in a different world I used to have an IT division reporting to me contingency is at the top of the list if the managers do not understand about contingency then they're not fit for purpose it's basic I agree it's basic but it's also what happens when you are trying to get payments out of the door you're trying to meet deadlines to get a suboptimal choices No, good managers don't this is basic Good managers who feel they have no option but to squeeze all of that I think sometimes they do find themselves in a situation thinking that they have no option was the pressure from senior level pressure from the well the whole external environment of course everyone in this whole enterprise is determined to get payments to farmers at the time which we would want to pay them that's the pressure that people put themselves under but at what level were corners being cut on things like contingencies in order to achieve that which simply builds up problems and of course the other challenge which is the Audit Scotland report and we're not hiding from these challenges this is what the Audit Scotland report tells us that you have a problem here you put a workaround in place to solve that in the short term and it creates an impact six months down the line that's the cycle that we need to get off that's the cycle that I am determined to break so that we build contingency back in we stop doing short term things that have further impacts down without planning for how we're going to address those and we get all of this onto a proper footing which means that when we say something is going to happen it will indeed happen it's not something I can turn the tap on you know from one day to the next it's a long slow grind of putting in place the appropriate protocols processes, our contractor is doing that with their own staff, we're doing that too and it will improve and it will take us to the point where we need to be but manifestly that is not the history otherwise we would not be here in this committee having this discussion I have to say that on that particular one example it's not a very satisfactory response thank you any further questions from members can I thank you all very much indeed for your evidence session today I now move the committee into private session as previously agreed