 Ephone is the decision to take business items in private—items 4, 5 and 6. 4, 5, 6—I ask the committee to agree to take these items in private. I would like to move now to item 2, which is the section 23 report on the Common Agricultural Policy Futures programme and update. We will take evidence from Caroline Gardner, Auditor General for Scotland, Mark Taylor, Assistant Director, Gemma Dimond, Senior Manager and Morag Campside Project Manager. I welcome you all very warmly to the committee meeting this morning. The Auditor General for Scotland and Audit Scotland advised in advance of this session that they may be unable to respond fully to questions on the conflict of interest that is identified in the report regarding IT programme governance, as the matter is currently under police investigation. The AGS will be able to clarify what she can and can't say to the committee in her opening statement. I now invite the Auditor General for Scotland to make her opening statement before I open up to questions from members. I am very pleased to be back reporting to the committee in this new session. Obviously a lot has happened in the last week, and however events unfold, the committee's role in scrutinising the public finances will be even more important in this Parliament. Big changes are already under way with the Parliament's new financial powers, and they are sure to be high on the agenda for the Public Audit Committee and Audit Scotland in the months to come. I am looking forward to building on the excellent work carried out by the committee in the last session and continuing to support members in their role. The first report in front of you today looks at the progress that the Scottish Government has made with its common agricultural policy futures programme. This is my fourth update on the programme, and it covers progress up to April this year. Before I outline my findings, it might be useful to reflect briefly on the result of last week's EU referendum. I recognise that there may be implications for the programme, but it is too early to know what the impact might be. We will continue to keep a close eye on developments over the coming months, and we will consider carefully the implications for our audit work. These developments do not detract from the need for the Scottish Government to stay focused on making payments to farmers, crofters and rural businesses as quickly and effectively as possible, both to mitigate the impact on rural businesses and to learn lessons from how the futures programme has been managed to date. The programme's IT system is central to this, intended to process, validate and make payments to farmers. The system is in place and it is operating, but it has not worked as well as it needs to, and some parts of the system are still being developed and redesigned. I want to acknowledge at this stage the continuing commitment of Scottish Government staff to delivering the programme, which is truly commendable. I am concerned that this level of effort is not sustainable, though, and there is a real risk of burnout. Convener, I will briefly summarise the key points in the report. First of all, a number of milestones and ministerial targets for making payments to farmers have been missed. Farmers report that payment delays have affected their cash flow with a knock-on effect on the rural economy. The Scottish Government announced three loan schemes to get some money to farmers more quickly, paid from the Scottish Government budget, but in spite of that, some farmers had not received a payment by April 2016, when they would normally expect to have received a payment in December. I reported in April that the Scottish Government was unlikely to meet the June deadline and could incur financial penalties as a result. Since then, the EC has moved the deadline for payments from the end of June to 15 October this year. A later payment date puts back the immediate risk of financial penalties, but the underlying concerns about the programme remain. I highlight in my report that estimating the potential financial penalties is difficult and it is ultimately subject to assessment by EC auditors. This assessment is wider than the number of payments made by the deadline. It also includes the quality of the checks and other controls in place before payments were made. Our report highlights that there is a risk of disallowance arising from delays and also from the work arounds that the teams have put in place to enable them to make payments. Second, the complexity of the programme. There is no doubt that the external environment for this programme is challenging. The EC regulations are complex and they have been clarified and developed over the life of the programme. At the same time, decisions that the Government has made in discussion with the farming industry on how the cap is designed and delivered in Scotland have added to this complexity. Third, on decision making and governance, we identified some occasions when significant decisions were made out with the programme governance structures. The programme board was not given the opportunity to fulfil its role in offering advice and support to the programme sponsor. We also identified occasions when decisions took too long, affecting programme delivery. The IT team and the programme team didn't work well together, and basic information on delivery and timescales wasn't shared with those managing the programme. That led to a lack of trust between the two teams and affected delivery. Finally, convener, as you referred to, there was a significant conflict of interest that was not dealt with effectively. The delivery director, who was a contractor, was able to benefit financially from recruitment decisions. I should note for the record that a police investigation is under way. The Scottish Government put arrangements in place to ensure that decisions were not taken by a single individual, but the delivery director still had the opportunity to influence decisions as a senior member of the resources group. Overall, the programme won't deliver the full range of planned benefits, and the Government now aims only to deliver a system that complies with EC regulations without some of the planned enhancements. There's also a risk that the current programme budget will be exhausted before a cap compliance system is delivered. I don't expect the programme to deliver value for money. The report contains a number of recommendations, many of which I've made before in relation to the management of IT programmes. The Government, first of all, needs to get the IT system working more effectively, as I know it's committed to doing. It needs to complete a detailed assessment of the risk of financial penalties for all of the remaining elements to enable informed decisions about priorities and to manage the remaining budget. It also needs to ensure that appropriate governance arrangements are in place, together with plans for disaster recovery and knowledge transfer. I have with me the colleagues who have prepared the report on my behalf and the previous ones, and we're obviously happy to do our best to answer the committee's questions. Thank you very much indeed, Auditor General. I'm going to open up to members' questions now. Can members please indicate to me if they would like to ask a question on this topic? I'm going to start with Colin Beattie. I have a certain feeling of deja vu looking at this report. We've had several in the past on this particular issue. It seems to reflect the overall problems with IT procurement throughout the public sector, and it doesn't seem to be restricted to Scotland either, because we've seen fairly large problems with IT most recently. I think that with HMRC, it's likely that they wrote off £2 or £3 billion in their system down south. You're absolutely right that this is not a problem that's confined to the Scottish Government. We've also discussed previously the difficulties with skill shortages in the market and the difficulty for a public sector and competing with the private sector in buying in those skills that are available. We have a critical problem that is multiplied by what's happening outside as well. I noticed that on page 6, under the six bullet points, you've found common themes and weaknesses in the management of ICT programmes in the public sector. It's going to be very important when you produce that summary, presumably that will come forward to the committee. It certainly will, Mr Beattie. As you say, this is, by no means, the first report on serious problems with major IT systems that I've made, and we expect there to be more in future. We are looking at whether we can take the recommendations that we've made previously further in terms of making them more specific or more helpful and how we can add value in other ways. Gemma might want to say a little bit more about that and about how we bring it back to this committee. We're certainly keeping a very close eye on developments within the Scottish Government. Obviously, they appeared before the committee in the last session on the back of our update report on managing ICT contracts talking about the arrangements that they were starting to put in place to try and help with the skills issue, for example putting in a centralised digital transformation service, which would have that central hub of skilled people that could go out to central government bodies who couldn't get the skills themselves or help them to recruit. We're certainly keeping a very close eye on that. As Caroline said, we're also thinking ourselves about other ways where we can try and be helpful. We're looking at those common themes and trying to see if we can provide more detail on more specific questions, for example on potentially to board members, so questions that they can ask when they see programme papers for scrutiny and the kind of information that they might expect to receive. We're looking at different options to see where, as we keep on repeating the same recommendations, how can we break it down and make it more helpful and to try and help people to understand what the key issues are. Obviously, within this report there's things that we want to follow up, but I do think that, convener, maybe we need to look at the overall picture as well going forward. Perhaps, when the Auditor General's report comes forward, we can maybe have a thought about how to do that. It is a big issue. I don't know whether any administration has been very good at identifying the problems and dealing with those problems, but maybe there's something that we can learn from elsewhere. When the report comes forward, if you can helpfully suggest that there's been good practice elsewhere in the public sector managing the IT projects, maybe we can take that into view as well. However, I'm concerned about what you're saying in your report about lack of trust, blame culture, hindering effective progress, little accountability, ineffective challenge and oversight. We've heard this before. Why? We had reports previously, which were uncomfortable. Now this report seems to be the sort of nuclear option. How did it suddenly get to that point? I think that the team and I have reflected on this. Our view is that it didn't suddenly reach this point that the seeds of the problem were laid back in 2012 when the original business case was put together. At that point, there wasn't a recognition in the business case of the scale of the challenge that they were facing and of the particular challenge that came from not knowing all of the requirements from the EC at that stage. That was known, but it wasn't recorded in the business case and it wasn't built into the thinking about therefore how it needed to be planned and managed. There was also, as we say in the report, a significant delay in appointing the key senior people who needed to be there to develop the options, to procure the system, to put the groundwork in place. All of that meant that, when we reached the point where the system needed to be operating to accept applications and start processing payments, it was behind the scene and people were behind the pace and people were very much focused on solving the immediate problems. We think that the roots of that were right back at the beginning of the programme and, in a sense, that's a frustration that that's very often the case. It's the initial groundwork that's not done well enough that leads to late problems in terms of delivery and an impact on the people who rely on the system across Scotland. The previous public audit committee obviously received reports on that from yourself. Those seem to indicate that it was an uncomfortable situation, that it was a bit tight, that resources were being put in and that it should be okay. Now it's not. I think that people have been doing their absolute best to recover the situation. We know that people have been working very long hours and that extra resources have been brought in. You can see that in some of the exhibits in the graph in the number of contractors working on the programme. There's no doubt that people were doing their best to deliver it. At the same time, I think that pressure to make it right led to some of the other problems. Decisions being made out with the programme governance structures, the programme board, not being given its place to think through the other implications of decisions, for example, to make partial payments to farmers or to set up the loan schemes. All of those were done for very understandable reasons, but they all added to this sense of tension and pressure between the two teams, the lack of trust and the lack of focus on the bigger picture, as opposed to the immediate day-to-day decisions that were being taken. Apart from the fact that farmers haven't received their payments on time, there's also this question of disallowance. On page 10, paragraph 10, you mentioned that the Scottish Government has inquired about 69 million euros in disallowance over a period of 1 per cent of total cap payments. Is that in line with what other countries? I'll ask Mark to answer that question for you, Mr Beattie. I think that the existence of disallowance across other countries is not unusual. I think that the rates of disallowance across Europe have varied quite significantly. In relation to the previous disallowance, 51 million pounds, we quote, that was for a variety of factors that were related to the information that the Scottish Government had available about land farms and the individual fields and the features in the fields and some issues around the quality of the inspection process and wider control weaknesses about checks on eligibility. I think that the line to be drawn between that and the issue that we face at the moment is an indication that, when it comes to those sort of matters, those sort of matters that are also potentially evident in the current system, that the European Commission is quite robust in pursuing disallowance and challenging the Government to make sure that it has the controls that it expects to have in place. One of the things that we flagged in the report is that there is still a risk of disallowance, not just related to the deadlines around June and now October, but generally the way in which the system has operated and the robustness of the checking that it has been able to facilitate. What are the implications on page 12, part 3? What are the implications that the programme will end when the budget is fully used? Does that mean that, if it is not finished, we just stop? At the moment, the Government has made a commitment that it intends to deliver a cap-compliant programme within the existing £178 million budget. We think, as we have reported, that there is a risk that the budget will not be sufficient to deliver that full programme. I guess that it is then a decision for the Government about what it intends to do at that point. My expectation is that it will need to continue to invest in delivering at least a cap-compliant project, even if it decides not to take forward the other enhancements that are now outside the scope of the programme. That money would need to be found from elsewhere within the Scottish Government's budget. I would like to bring in a couple of other members. Do you have any further questions? I can come back to you if time allows. I will take Alex Neil. Can I just follow up on that last point to the Auditor General when you are saying that it might be required to finish the programme to bring money from other parts of the Scottish Government budget? What is your estimate—do you have an estimate at this stage—of potentially how much additional money from elsewhere are we talking about? We do not have an estimate of that, Mr Neil. At the moment, the Government's commitment is that it will deliver a cap-compliant system within the £178 million budget. If you look at paragraphs 38 to 40 on page 19 of the report, you will see that, at the time that I reported, there was £46.8 million worth of the budget remaining. Of that, £31 million was already committed to things that need to be in place, such as the land mapping system, to deliver a system that is compliant with the EU regulations. That leaves £15.7 million available for all the other things that are needed to get it, fully operating and operating in a way that is quicker and more effective, both for the staff involved and for farmers and their agents. My finding is that the £15.7 million is tight for that, given the rate of spend that is happening at the moment. I do not have an estimate of what else might be needed because it is the Government's plans that we are looking at at the moment, but I think that the risk that £15.7 million is not sufficient. What point will we be able to establish what additional money will we require from other budgets in order to complete the job? My estimate is that the £15.7 million will be exhausted by November at the existing rate of spend. Obviously, it is possible that the system may be complete and fully compliant before then. We are watching this closely through the audit process, the audit work that is going on. Mark is also the auditor of the Scottish Government's budget and will be able to give an update on progress when he reports on the Scottish Government's budget through me in September of this year. Hopefully, by September, we will have an idea of the order of magnitude of the additional money that might be required. I would hope so. The second point is that, in the light of last week's events, we are about to become involved in the up-to-two-year negotiation in terms of the UK leaving the EU. I know that it is early days, but this project could potentially be affected quite soon. If we leave the EU very clearly, the common agricultural policy—as it is—presumably will not apply to the UK. Are we going to spend all this extra money? Is it extra money that, in two years' time, we would need and will be entirely redundant? I think that that is a really difficult question for anybody to answer. Clearly, the outcome of the EU referendum casts a doubt across this stream of EU funding and other EU funding into Scotland and the rest of the UK. As you also say, nobody knows exactly what shape that might take or over what timescale. We know that, for at least the next two years, the UK will remain part of the European Union and, therefore, that funding will be available to Scotland in order to access that funding. The Government needs to have a system that is compliant with the EU requirements for paying it, so I think that there is no alternative but to complete the system. I imagine that the Government will be doing that with an eye to what it might need in a range of different scenarios in future for providing support to the rural economy, but it is a very difficult situation. I absolutely acknowledge that. Is it one that you will be keeping under constant review? Yes, like everybody else since Friday, we have been thinking within Audit Scotland about the implications of the referendum result for this and for the Scottish Public Finance, which is much more widely. We are working on a briefing on other sources of EU funding that come into Scotland because, obviously, this is a significant source, but by no means the only one. I am thinking through what that means for our audit work and how we support the Parliament in making decisions over the years ahead. Can I just come back to following up some of the answers that you gave to Colin on project management? Can I make a couple of observations? First of all, can I point out that our management of IT projects under successive Governments, both in London and in Edinburgh, has been problematic? I compare that as a former procurement minister to the very successful procurement projects that we have done most noticeably at the new Queensbury bridge, which is over £1 billion—more than five times—six times the cost of this particular IT project. In comparison, we have had very few problems with that massive engineering project, yet with a project that is a fifth or a sixth of the size, we get into all of those difficulties. So, have we not been lessons to learn about project management from non-IT projects, which were under the management directly of the Scottish Future Trust, for example, where the procurement and the project management have run much more smoothly, very often well under budget and certainly being finished on time and to the original spec, compared to the IT projects? Do we not need to have a broader canvas on how we manage future IT projects so that we do not end up in this mess in future? That would be my first question. My second question is, to the best of my knowledge, the problems in this programme were not highlighted to the Cabinet until something like October last year. Is there not something fundamentally wrong when the civil service and the project managers are not highlighting and flagging up difficulties the minute they arise in a project of this size? Should we not put some fairly urgent procedures in place to make sure that we do not have a repeat of that? If ministers had been aware, collectively, at a much earlier stage of the scale of the problem, then I think that that would have forced perhaps action at a much earlier stage, corrective action, than what actually happened. At the end of the day ministers have to carry, well, it should not be doing that, because at the end of the day ministers carry the can for other people's incompetence. I am going to ask Mark in a moment to pick up the second of your questions, Mr Neil. On the first, I think that it is a very good point and actually it replays some of the ground that we covered with your predecessors on this committee in the last session, where we had looked at another programme where it had been very difficult to attract the people of the right skills and the right seniority to manage a significant investment in IT. Actually, across Scotland there is a shortage of people with these skills. We did point to the parallel of the Scottish Futures Trust, where there has been an investment in building that expertise, bringing the right people together and doing it on a scale that can look across projects across Scotland. We can see an improvement in the way that those projects are being managed, both to cost and to time. I think that there was an intention on the part of the Scottish Government in setting up the new Government digital service to do exactly that. For us it is too early yet to see the impact of it, because as I say, this project started back in 2012 and I think that many of the seeds of the problem were actually sown then. It is something that we will be watching very closely, not least because there is the immediate cost of systems like this going over budget and not delivering what is intended. There is a much bigger dividend of the potential to transform public services by good use of digital, which will help with the financial pressures that we are facing ahead. I think that there is, as you say, a wider question of trusting Government that we need to get right in all of this. I will ask Mark to pick up the second question about the risk management of the project. Thank you, Auditor General. We highlighted in the report paragraph 2 on page 7 that the fact that this was a risky project was something that the Scottish Government within the Scottish Government officials had identified early on the risk register. In fact, it was in February 2013 when initially this was identified as a risk issue within the Scottish Government. As things have escalated, what is the appropriate point to bring ministers into that discussion? We have not looked in detail at the mechanics of how that worked and whether that was too soon or too early. A couple of points that we do highlight. One of the things that we are very mindful of in our work on the Scottish Government is how the risk management processes work. As we think about how those processes need to be developed in the new environment, whether it is Brexit or whether it is new financial powers coming to Scotland, one of the things that we will be very interested in is how those work more generally and the relationship between those processes and ministerial involvement. I hear what you are saying and acknowledge where we are with the budget that was estimated where you are with that budget and what is left with the spend of that budget. What just immediately came to my attention was the range of potential financial penalties. Obviously, we all agree that between £40 million and £125 million is significant and very material. What has been done to ensure that we are keeping that at the smaller end of penalties because it is a fit assumption that penalties will come into play? First of all, we have assessed the potential penalties. There is still a possibility that there may be no penalties, particularly with the extension of the payment deadline. I do not want to prejudge that. One of the recommendations that I have made in my report and I think that the most important one is the need for the Scottish Government to be stepping back and doing a really close assessment of which parts of the system are complying with the EU's requirements and which are not, and to use that information to prioritise the spending of the remaining budget that is available. They are trying to balance a whole range of things. I again recognise the difficulty and the complexity of that, but the range of potential penalties is wide. They are significant, particularly in this current climate, and prioritising the work to minimise the risk is the most important thing that needs to be done at this point while continuing to make payments to farmers. I am assuming that—who actually pays the penalties? I am assuming that it is the Government— So we come from the Scottish Government's overall budget. It is not being passed on. That is fine to farmers or anything. That is fine. Thank you. I will follow up on a couple of those points that Alison Harris made. Quite clearly, the emergency loans that have been made would not have been budgeted for. Quite clearly, it was not anticipated that there would be fines, so that must not have been budgeted for. Presumably, there is work being done to put a contingency in, if there are fines and at what level. Is there any indication of where that money is going to come from? The answer is different in looking at the loans from looking at the potential penalties. I will ask Mark to pick it up initially. I am happy to do so. In relation to the loans, what the Government was able to do was identify that there was scope to make advances to farmers with a view to getting death net money back from farmers once the actual payments have been made and then re-use that money, recycle that money within the current financial year for its original budgeted purposes. Essentially, that is from a pot called financial transactions, which are essentially loans from Government to private sector individuals and housing associations and bodies outside the public sector, with a view to those bodies repaying those amounts back to Government in the future. The risk that we highlight in the report is that that cannot happen as soon as it was planned to happen. Indeed, if the actual payments are made to farmers too late to enable that to happen quickly enough, there is a risk that those other loans are delayed. The Government has given us an assurance that it is working to make sure that it manages that within the same financial year. We highlight in the report that there are risks to that and it is contingent on the payment system being in place and that the final payment has been made to farmers to enable those loans to be recovered and recycled to its original intendant recipients. The first thing to say is that one of the key elements of the business case for the futures programme was to reduce the risk of penalties and disallowance in future. Mr Beattie referred to the £51 million under the previous programme that had been disallowed. The Government had a very clear aim to minimise that in the current programme for very obvious reasons. At the moment, I think that there is no provision for those penalties if they are indeed levied. I would expect that the Government is at the moment doing its own assessment of how likely penalties might be and what the range is and then looking at how they can be funded. I would stress that they have not yet been agreed or finalised in terms of the amount. They are still potential penalties. Just if I may follow up on that, in terms of the loans, I recollect that Fergus Ewing suggested that there might be interest payable on those loans by the farmers. Do we know if that is correct or not? If so, does that not seem a little harsh? I think that the detail of the confirmation about the Government's plans is best to come from Government around that. One thing that I would share is our understanding. Most recently, Mr Ewing has indicated that he is reviewing the need for those interest payments. I want to pick up on the issue around staffing. You said in your evidence that there is a real risk of burnout. On page 306037, that is addressed in the report. It has not come as an overnight surprise. There have been warning signals and I note the gateway reviews throughout 2015 highlighted some of those risks. It is evident that people are working very hard, but mistakes are being made and there is a real issue around quality. I wonder to what extent you are concerned that there is scope for further problems in that area. I note that there is a risk that staff may leave the programme before we get to the end. I also note that you are recommending in the report that the Scottish Government needs to put plans and processes in place immediately. That is a very clear statement, but I wonder how content you are that action is being taken as we speak and what might be a reasonable timescale around those transitional plans. I think that the first thing to say is that we all recognise that this is a very difficult position for the staff involved to be in. I heard Mr Ewing yesterday giving evidence to the Rural Economy, the Committee and recognising both the commitment and the efforts of the staff involved and the risk of errors being made and burnout and so on. There clearly is not an easy answer to that while people are working so hard to get payments made on time and the appropriate controls and checks in place as well. First of all, I would say that the Government's recognition of that risk is an important first step. If people feel that their efforts are being recognised, it is easier to keep up that level of commitment for a period than it otherwise would be. I also think that the immediate short-term efforts going on must not get in the way of the importance of really having a plan for transferring knowledge from all the contractor staff who are currently still employed into the Scottish Government staff who will have to run the programme into the future, whether that is the long-term future or a period after the triggering of article 50. We still need to have a system that can do that. I think that that plan for transferring knowledge is very important. As I said, I take comfort from the fact that it is recognised at the highest levels in Government and that it is a challenge that all of us completely recognise from managing organisations ourselves. Do any other members have points that they want to—yes, Colin? Thank you, convener. I have a couple of things that I want to come in on. Originally, you referred to that other project, presumably NHS 24, and the issues around that. Within NHS 24, there was clear evidence of concealment of what the true situation was in terms of that contract, and that was very evident when that came out in your report. You have not mentioned anything about concealment here, and yet, as I, like Neil, mentioned, the Cabinet was not aware of it until, I think, it was in October 2015. Was there an element of concealment? Was there an element of we hope that it is going to be okay? Let us keep it quiet until it comes out? As Mark has said, the risk posed by the programme was included on the Scottish Government's risk register from its early days, so it was recognised as being risky at that point. My strong sense is that the governance problems around the project that I highlighted in the report with the programme board not being able to carry out its full role with difficulties in getting hold of information about delivery and about timescales and costs. The programme board decisions being made around it or decisions being delayed made it much more difficult for the checks and balances that you would expect to be in place to work effectively. For that clear picture of really how bad is this to be apparent to the programme sponsor and then on through the permanent secretary to ministers. I do not have any evidence of deliberate concealment, but I do think that those governance failings made it much more difficult. Gemma said earlier that we were looking at whether we can help through things like providing clear guidance to members of audit and risk committees about their role, about the questions that they should be asking, about the assurance that they should be seeking. I had a session with the Scottish Government's non-executive directors before the election, just as part of our regular contacts, and it is clear that they were asking the same questions themselves about what should they have known, how far that should this have been brought to their attention, and how far should they have been questioning what they were being told. I think that it is a really clear example of why these governance arrangements matter. They are not just a tick box exercise, they are the way in which people can understand what progress is being made, what the risks are, and what needs to be escalated in very good time. But there seems to be a serial issue that we do not learn from the last disaster. Here we are again here. We are looking at the people running this project in your page 27, paragraph 77, relying on the skills of the IT delivery partner and external advisers to succeed. How often have we heard that, almost every project that we have looked at? There is no doubt that these problems are still coming to light, and, as I touched on earlier, I am expecting to report on at least another one or two projects over the coming months. I think that the challenge for us and for Government is unpicking what our problems that are still current and what are things that are coming out of problems that were laid when those projects were started three or four years ago. My view is that, for this programme, the problems originated back in 2012 and 2013 when it was first set up. The Government has given to this committee a commitment that its new arrangements will make that much less likely to happen in future. It is too soon for me to say whether those new arrangements are having the effect that they are intended to have. I hope that they do, but I cannot give you that assurance yet. Can I just ask a very quick supplementary question? I appreciate the issue about the problem that was not escalated up, but we have director generals in the Scottish Government who are effectively the chief executives of their departments. Surely they should be monitoring personally or ensure that, on their behalf, a project of the science is being monitored, and, although, rightly, that should have been escalated up at much earlier stage, similarly, surely the then director general had not been doing their job properly and should have picked up that problem much earlier than it was when it did? You are absolutely right that there is a very clear system of accountability from the permanent secretary through the director generals and for outside bodies to the accountable officers for those bodies. I think that the challenge in this case seems to be whether the arrangements that were in place to give the director general the assurance that he needed that the programme was progressing as planned worked properly. I think that there is evidence that they did not work well because of the governance problems that were there. We have also seen across IT systems, across Government and further afield that strong sense of optimism bias that people hope that it will all turn out okay and they pile the resources in. You can see evidence of that here. Do you respect surely any director general worthy of the name and the salary? Should not be relying always on escalation, they themselves should be making sure proactively that a project of this size is going to plan. Clearly that did not happen, so it seems to me that the chiefs have something to answer for here as well as the people who are on the ground floor, as it were. Certainly accountable to Parliament for their use of public money, there is no question about it. I put a slight distinction between them seeking out evidence of progress and putting in place arrangements that give them the assurance that they require. They should be absolutely accountable for having a system in place that gives them accurate, reliable and fair information about progress, which is a basis for them to dig down when problems arise. That clearly did not happen in this case and they are accountable for that. It is the nature of the accountable officer role. Just in the answer to Monica Lennon earlier on, you talked about the contractor staff and knowledge transfer and that sort of thing. Do you know, has the Scottish Government done any analysis on how the split comes between employed individuals and contractor people and done any risk assessment based on that, particularly in relation to the inevitable cost overruns that a contractor will now seek to pass on? Certainly. We know that, on this programme, the majority of staff were contractor staff, so there is an exhibit in the report that shows the high number of contractors working on it. The contractors came through the main partner, CGI, but the report makes a distinction that for the calendar year of 2015, under the direction of the Scottish Government, the Scottish Government took accountability for IT delivery for that calendar year. Essentially, they were providing the direction to staff of how many staff they needed and what they wanted staff to do. They would simply ask CGI for those resources that they needed and CGI would provide the staff, but they would be working under the direction of the Scottish Government at that time. In terms of the actual risk assessment, in terms of that knowledge transfer and what knowledge needs to be done, I think that that forms part of the plan that the other general referred to earlier in identifying exactly who are the key staff with the key knowledge, what needs to be passed over, and when and when are the critical points for that of when people will leave. If we have a contractor providing services, that contractor will presumably have provided against an initial spec that is now likely to be exceeded. The contractor will not bear that cost without seeking to pass that cost on, will he not? The contract that was set up with the very start was not a fixed price contract, but it was one that would be developed as the EEC regulations became clearer, but the specifications would be developed and therefore the contract was made on that basis. As I referred to earlier, for a year of the programme 2015, the contract was not operating as it was intended. It was not operating as a partnership agreement, as the Scottish Government had taken accountability for IT delivery. You are absolutely right about the broader point, Mr Kerr. In Exhibit 10 of the report, we show the number of contractors who were being employed at the rate that was set in the original framework contract, those who were at discounted rates and those who were at rates above those set out in the framework, and very significant numbers were being paid at above the framework rates simply because within the style of contract that had been put together and the urgency of having a programme that is up and running, there was no alternative to having the staff available and market conditions shift from month to month as we go through. In many ways, it is not surprising to have a contract that is not a fixed price at the beginning of a large and complex programme like this. We have seen it elsewhere, but if you have a programme that is designed to flex as the requirements become clearer, you need to be very clear about how the changes will be managed. What we did not see was that evidence of a clear challenge about the number and type of staff being used and how much they were costing. Those are the sorts of governance problems that we set out in the report. Alison Harris, can I come back to something that I picked up when Mark Taylor was speaking about the loans? Is there any indication of the level of loans that have been issued to those farmers? From that, what has been done to assess the risk? I understand that the payments were made to the farmers to help them with the loans because they did not get their payments, but if they do not get paid at the end of the day, what happens to those loans? Where has that been brought into things? Do we have an idea of how much that could be? No, if they do not repay, what if they do not get the money? We have a summary of the loans that have been made in paragraph 51 on page 20 through to 53 on 21. I think that the main thrust of that is 52. That is the position at the end of April 2016 that 5,119 loans were made to individual farmers and crofters, and those were worth around £91 million at that point. The Government would be best placed to give you an update from them. What happens from there is that the expectation is that individual farmers are paid at some point, and at the point at which they are paid, they are able to repay those loans. That is based on an expectation that they will be, because 91 million is quite a substantial sum. 91 million, we are hoping, will be paid, and the loans will be refunded to the Government or repaid to the Government. At the point at which individual farmers are able to receive a payment equivalent to their loan, the expectation is that those loans will be repaid from that payment. What provision has been put in case of farmers not making the loan repayments? We highlight in the report that there are risks to the Government. I have potentially calculated one year. One of the things that is worth highlighting is that we are auditing the accounts of the Scottish Government for the year-ended 31 of March 2016. Those questions are very much the questions that we are exploring with the Government about how they account for their expenditure during the year and the balances, the loan balances and other balances that they have at the end of the year. How is more thinking of the farmers accounts, what might happen to them in the longer run if they are not here a year or two years from now? I am going to pick up on a couple of issues. I want to take you back to something that we talked about right at the start. I think that the Auditor General admitted that problems with IT projects in response to Mr Beattie are not confined to Scotland. Obviously, those cap payments need to be made right across the European Union in all member states. All member states have very different requirements in terms of their rural economy. Has there been any learning that you have come across from the IT systems in other member states and how that is done in other member states that could have perhaps been learned for or has the Scottish Government already been looking to other member states to learn lessons from there? One of the challenges with that is that although all member states are entitled to apply for funding under the common agricultural policy, they are not all starting in the same place. For example, members might recall significant problems in England with the rural payments agency under the last cap programme, which caused problems to the rural economy there. At that point, Scotland's payments proceeded much more smoothly. This time around, it looks as though payments in England are going more smoothly and Scotland is having more problems. My hunch is that one of the reasons for that is that England did some of the difficult things then around land mapping and having much more of the process digitised for the last programme than Scotland now does for the new programme. Having said that, there are also differences in the schemes that have been agreed. In Scotland, after discussions with farmers and the Scottish Government, they agreed to additional schemes for sheep and beef, for example. In Scotland, they also added a third category for land payments, all of which are designed to reflect Scottish circumstances but also to make the system more complex. There is a limit to how much learning there can be between member states. Mark is closer to this than I am and might be able to give you a sense of exactly how that learning has played out in practice. I think that all I can do is emphasise the point about different contexts in different places and very much how much that influences the extent to which experiences can be shared. The other little detail that's probably worth sharing is that one of the things that the Scottish Government considered was using a system that was in operation in a number of other countries as not quite an off-the-shelf option but as an alternative option to building their own system from scratch. Ultimately, they ruled that out. We highlighted some delays around decisions around what we call the contingency option in the report. The decision that they took emphasises that very much the context is different in different places, both in terms of the detail and the way in which the overall principles of the schemes are implemented in individual bodies and what their starting point is. The second point that I'd like to pick up on is that we rehearsed a bit this morning, but it's about escalation, responsibility and accountability. It was Alex Neil who said that this issue didn't come before the Scottish Cabinet until just last October 2015. Mark Taylor in one of his responses said that it was on the risk register with the Scottish Government in February 2013, which is quite a long time ago now. At what point are ministers brought into this? We talked this morning about Alex Neil talking about the director general having to be responsible for this. I'm not under any illusion that the previous Cabinet Secretary, Richard Lochhead, spent a lot of time with farmers in Scotland over the past few years and was well aware of the issues with the system. In terms of accountability, if this was on the risk register with the Scottish Government, should there not have been much earlier ministerial involvement in asking for briefings and updates on how the project was progressing? There's no question that ministers are responsible for setting policy and civil servants deliver that policy on their behalf. Government is a big and complex thing with a whole range of policy priorities to be delivered across the whole programme for government. Mark Taylor said that, at an early stage, it was identified that this programme was complex, had significant risks associated with it both in terms of the costs and the impact on farmers and the rural economy, and it was included on the Scottish Government's risk register for that reason. One of the things that we as auditors look at in any body that we audit is how well those risk management arrangements are working. It's not enough just to capture the risk and then carry on with business as usual. There has to be another step that says how do we know what's really happening here. The way in which any accountable officer aims to exercise that accountability is by having a system in place whereby people know what they're responsible for, those people within the organisation are monitoring good, robust, reliable and fair balanced information about costs and progress and where the risks currently are and understand when they should be escalating those to their manager, to the director general, to the permanent secretary and to ministers. Our view on this one is that because the governance arrangements didn't work as they were planned to, because decisions were being taken outside the programme board, because some decisions were being delayed, because of those tensions between the programme team and the IT team with information not being passed on properly, those arrangements didn't work as well as they needed to. I think that's the area that would be worth the committee exploring with Governments at an appropriate point. It's certainly, as Gemma has said, something where we're thinking how can we help people to apply them better in complex situations like this, particularly around the role of the non-executive directors who feel they weren't necessarily in a position to understand what progress was being made and where they should be applying the challenge that's at the heart of their role. Is there anything that you two want to add to that, Gemma? I think that the one bit of detail that I would add is that it would be wrong to characterise this project as one where things were going wrong locally and nobody at the top knew what was happening within Government, within the civil service and that there was awareness and that's illustrated by the inclusion of it on the strategic risk register of the organisation. There was awareness and there was an escalation process that made it clear that there were issues here emerging. Caroline has talked before about optimism bias. I think that that was one of the reasons that raising an issue and raising a risk and saying there's a problem here and we're dealing with it and this is how we're dealing with it. Inevitably people are open to the suggestion that it's able to be fixed. The other thing I'd add here is that one of the things that was evident throughout this project, the Auditor General's touched on how the project was constructed at the start, but the other thing that was evident throughout is that the priority, the pressure within the project was to get payments made to farmers and we understand why that was. There was a tension between that and making sure that the systems were in place, making sure that teams worked well together and making sure that the approach was sustainable in the longer term. We highlighted a number of places throughout the report as to what the effects of that were. We're not suggesting for a moment that it's not important to get payments out to farmers, of course it is, but that pressure on the team and that pressure on the organisation throughout made it very difficult to get out of the here and now to raise their heads and get on to the and how is this going to move forward in the future. Given the experience that Mr Beattie referred to with other public sector IT projects such as NHS 24, was £50 million too low an estimate of how much the project was going to cost? That was the original Scottish Government estimate. With hindsight, clearly it was and hindsight is a wonderful thing. I think that what's very difficult to untangle is how much of the current projected cost of £178 million has arisen because of the delays and problems that have been encountered along the way. Mark touched a moment ago on one of the things that we say in the report that the original decision about the route to take back in 2012 took too long. At that point there were other options, like buying an almost off-the-shelf system that's used by other EU member states, there was the option to design and build their own system, other options were available, but the time taken to make that decision meant that effectively the only decision left on the table at the point that the decision was made was the one to design and build their own system. I don't have a crystal ball that lets me say what it would have cost had they chosen one of the other options, but some of those options were ruled out just because of the time taken. There's no doubt in my mind that the £178 million cost is at least in part because of the delays in making those early decisions and getting the right skills in place and the consequences of that over the last four years. One final question. You've referred a couple of times, Auditor General, to the skills shortage. Is this something that you've identified in the other IT projects and can you give us a flavour of the extent of the IT skills shortage in Scotland? Yes. I think that there are two dimensions to this. First of all, you're absolutely right, it's something that we have referred to both in other reports on IT systems that have failed and Mr Beattie referred to NHS 24. There have been some other smaller scale ones. I would say that there are two dimensions to it. First of all across Scotland we don't have the number of highly skilled IT professionals that we do, not just for the public sector, but for private businesses and the wider economy. That's a recognised priority within the Government's economic strategy that needs to be taken forward. Secondly and very specifically within public sector projects, one of the recurring problems that we've seen is a failure to get the really good commercial and programme skills in place right at the beginning that let the Government, or NHS 24 or another public body, manage the project very tightly themselves rather than being held hostage by very skilled private companies who specialise in negotiating contracts and delivering. It's why we think that the Government's commitment to developing a very highly skilled Government digital service is the right way forward to do that once for Scotland and to be able to invest in getting the really highest level skills there for all public bodies to use. It is too early for us to say whether that commitment is actually having the intended benefits in practice. I thank you very much indeed to all of you for your evidence today. I'm now going to suspend for a couple of minutes while Audit Scotland witnesses swap over for the next item. Item 3 on the committee's agenda is the Auditor General for Scotland report on changing models of health and social care. The Auditor General is staying with us for this item. I also welcome from Audit Scotland Carol Calder, Gillian Matthew and Anthony Clark, assistant director. As before, I invite the Auditor General for Scotland to make her opening statement before I open up to questions from members. This report on changing models of health and social care assesses how NHS boards, councils and partnerships are transforming the services that they deliver to meet the changing needs of the population. It also considers some of the challenges to delivering the Scottish Government's 2020 vision of enabling everyone to live longer, healthier lives at home or in a homely setting by 2020, and the actions required to address those challenges. In this report, we've taken a strong focus on supporting learning and improvement by providing examples of the kinds of services that are being developed and the kinds of things that need to be done to make that transformation and increase the pace of change. It's obviously vitally important that people are able to receive effective care when they need it at home or in a homely setting if possible. It's also important that people have a say in the care that they receive. The Government's 2020 vision aims to do this, but the shift to new models of care is not happening fast enough to meet the growing need, and the new models of care that are in place are generally small scale and not widespread. The committee will know that health and social care services are facing increasing pressures from an ageing population and a tightening financial position. We've reported on this previously. In this report, we provide more detail about some of those pressures, including the growing pressures in general practice and increasing emergency admissions to hospital, particularly for people aged 85 and over. Those pressures on health and social care services are likely to continue to increase over the next 15 years and more. For example, if the population increases as predicted and services continue to be delivered in the same way, our analysis suggests that by 2030, compared to 2013, there could be an extra 1.9 million GP appointments and 1.5 million practice nurse appointments, an extra 20,000 home care clients and 12,000 more long-stay care home residents, an 87,000 more emergency admissions to hospital with an extra 1.1 million additional bed days. It's clear that our existing services can't continue as they are, and health and social care services will need to be delivered differently to cope with those increasing pressures. I want to be very clear that new approaches to health and care are being developed in parts of Scotland. We've summarised these and exhibited six on pages 20 and 21 of the report, and we've given more detail on particular examples in a supplement to the report that you should have. Those emerging models are generally designed to prevent admissions to hospital or to get people home from hospital more quickly. For example, NHS Tayside is providing enhanced community care to elderly people who are at risk of admission to hospital, and GP practices in Govan are trying out new approaches to patient care in one of the most deprived areas of Scotland. Several partnership areas are making good use of data to understand the needs of their local population and how services are currently being used. Good examples include Perthinkin Ross, Western Bartonshire and East Lothian. Those partnerships are using that information to look at how services can be provided more effectively and closer to people's homes. At the same time, ISD Scotland is developing a database of linked health and social care data, and its analysts are working in each partnership area to provide expertise and advice. However, I think that more needs to be done to make the transformational change required. NHS boards and councils will need to work with the new integration authorities to develop and adopt innovative ways of working that are quite different from traditional services, and that will involve making difficult decisions about changing, reducing or cutting some services in order to invest in others. It will also require a significant shift in how all of us across Scotland access, use and receive our services. The Government needs to provide stronger leadership in making that change by developing a clear framework to guide local development and consolidating evidence of what works. It could also do more to help to remove some of the barriers facing NHS boards and councils, by identifying longer-term funding to allow bodies to develop sustainable new care, and by identifying a mechanism for shifting resources from hospital to community services. Convener, as always, my colleagues and I are here to answer the committee's questions. I open up to questions. I will now take Monica Lennon first. I draw committee's attention to my entry in the register of members' interests as an elected member at South Lanarkshire Council. I want to address one of the points in the report and the focus on short-term funding and the impact that that is having on service delivery. We see an increasing use of reliance on the private sector to help to meet targets, and it is clear that that is not demonstrating value for money. Is that a trend that you see continuing, and if not, if that is not inevitable, what steps needs to be taken to reduce that reliance on the private sector? It is a very good question and there is a lot in there. If you will forgive me, I will just pull back a little bit. In my reports over the past three or four years, I have highlighted the focus on targets that you refer to. It has clearly had some real benefits in bringing down the times that people wait for elective care, for admissions to A&E and other things that matter to all of us. At the same time, they have tended to drive attention towards what is happening in acute hospitals, rather than what is happening in the health and care system as a whole. There is a real risk that they can make it more difficult to develop the sorts of systems that would prevent people from being admitted to hospital by providing some of the care that they need at home or much closer to their homes. I have recommended on a number of occasions that that focus on targets should be reviewed. I am delighted to see that the Cabinet Secretary has announced a review of them quite recently. As part of that wider view of what the system needs to do, I think that the targets themselves need to be seen as part of a system rather than in isolation. The other part of the recommendation that I make that you referred to is for longer term financial planning and longer term streams of funding. At the moment, it is not clear that the Government knows that the shift that it wants to see can be achieved within the funding that is available for the NHS and for care services over the life of this Parliament. It is clear that there has been additional investment made and I set out the figures in the report that the Government has in the past been committed to protecting spending on the health service, but we do not know that that is enough to make this shift. There is both a need to model what the costs of a new model of care would look like and to make sure that the funding that is in place is there for long enough to let local services ride across Scotland plan for what is happening. We have seen an additional £30 million worth of funding announced for this year in the budget. We have seen over a four-year period quite recently a £300 million change fund, but my reporting on that change fund has been that it is often used for quite small-scale and time-limited projects that have an impact locally but do not shift the whole system. It is that bigger picture of system-wide planning and longer-term financial planning that I think is needed to really transform services. I also note that seeing the case studies is quite useful to see that there is some good practice out there already, but my attention is drawn to the fact that some councils and NHS boards are finding it very difficult to agree on budgets for the new integration authorities. We have to look at that in the context of real-term reductions in both NHS and council budgets. To what extent do you feel that that is making it difficult for councils and NHS boards to reach agreement? Do you see any examples across the country where they are making more progress than others? There is no doubt in my mind that it is harder to set up new ways of delivering services, which is what integration authorities are intended to do at a time when budgets are under pressure rather than when they are growing, and that will be more difficult. We reported on the new integration authorities' progress with setting them up back in December of this year and found then that there was some real risk to their ability to deliver what they were expected to do. We are carrying out some more work now that is looking at progress now that they are formally up and running as at 1 April, and Anthony might be able to give us a bit more information about what we know about that without pre-empting the follow-up reporting that we will be doing. We are at the relatively early stages of planning the next phase of our audit work on health and social care integration, but we will be assessing how well the governance arrangements are leading to shifts in services. When we reported last time, we were very focused on how well the integration authorities are putting in place the structures and processes that they need to plan together, the focus that we are looking forward to is actually making a difference. We know that there have been delays in agreeing budgets in some health and social care partnerships, but that is not universal across Scotland. Some places have been able to agree their budgets relatively easily. I think that it really depends, to an extent, on the quality of the relationships that they have in place that they have developed over time. Last point for now. I also note in the report that, at this stage, there is still a lack of evidence in terms of impact and outcomes for CNAF users, which is really the most important aspect of all that. What improvements do you feel need to be made in terms of local accountability and scrutiny? I note in the report that it is very difficult to carry out extensive cost benefit analysis because there appears to be a lack of local cost information. What steps are being taken to address that and what more can the Scottish Government do in that regard? I think that that is one of the big recommendations from the report, which is that the Government, for reasons that I entirely understand, is encouraging local areas to find their own solutions. Every population, every community is different. The services that are currently in place differ from place to place. The skills and experience that professional staff and community groups are bringing are different. That is absolutely not about a cookie-cutter approach where we try and do the same thing right across Scotland. Equally, there is a real risk at the approach that lets a thousand flowers bloom, that people are trying different things in different parts of Scotland without the support and guidance that we are asking for here. Some things work, some things don't. We never really know what made the difference, what was it that made the ones that were successful work in practice, what went wrong with the ones that didn't. We are certainly not seeing the overall shift to services that we need to. If I can draw your attention briefly to Exhibit 8 on page 27, we show the amount that is spent on acute hospitals against the amount that is spent on community and social care services over the four years between 2010 and 2014, when the 2020 vision was first launched. There is really no shift over that time at all. That is a stark reminder for all the good work that is going on. We are still very heavily reliant on acute services, and we are not getting that shift happening locally. What we would like to see—we have a checklist in the report that the team will be able to point me towards—is that, as people are setting up their projects, much better support has been saying, how will we measure whether that is working, how will we learn from that, how can we spread that across our area and across Scotland, so that that investment is really having the biggest possible payoff that it can. We think that that is the counterbalance to the Government's focus on outcomes. The outcomes approach is very widely celebrated, not just in Scotland but further afield, but alongside the outcomes, you need to have a plan, and you need to know what progress is being made. We think that that is a bit that is missing at a local level, but the Government can be helping to push forward. It is Exhibit 9 on page 30, I think, for the record. It sets out what we think should be in place when people are planning and delivering their local services. I think that I detect a subtle change in the way that the report came forward. I welcome the fact that there is a focus on success stories and on alternative models that are being attempted up and down the country. I think that that is really helpful as an indicator that people are experimenting with the new models and possibly might get some transfer of good practice there. I think that that is really positive. We are always delighted to be called subtle. It is not our usual image. We are trying here genuinely to be helpful to fill that gap by using our insight across Scotland to look at what is working and what is needed to make that much more widespread. I am just looking at page 8, paragraph 5. I am looking at how you gathered the evidence here. We have talked previously, ad nauseam in the committee, about the problems with the figures that are being produced nationally and the fact that, while the situation is improving, it is a big beast to start to get accurate information from in order that we can use that usefully going forward. You gathered evidence by analysing national and local information, which helped to identify pressures in the system. You carried out projection analysis, you conducted desk-based research and you worked closely with one partnership area. Sounds a bit narrow. I will ask Gillian to talk you through how we did this work. I can see that list might look narrow. In many ways, reflecting that slightly different approach that you focused on, that was a much more outward-looking piece of work than many we have done in the past, because we did want to get that grassroots perspective. Gillian, do you want to give a flavour of that? Just to say a bit more about the approach, we obviously liaised quite closely with colleagues across the Government in different strands around primary care, secondary care, improvement side of things. We were drawn on the knowledge that was already there and the examples that they were aware of. As part of when we started the audit, we wrote out to all the boards and councils across Scotland to ask what kind of things were going on there, what kind of things were doing, what kind of things could you help to point us to any good practice that you wanted to share. We did not go to every area in Scotland and we did not look at every different types of models that were going on, but we tried to get a really good range of what was going on, but we were really pushing across various networks through ISD as well because they are doing a lot of close work with different boards around helping them to understand their data and what is going on around services. We were really putting the feelers out quite widely to try to find out where there was good practice. We were struggling to find a lot of the widespread practice, but we were trying to draw on, as Carline said, the different examples to try to demonstrate the different types of things that were going on and to highlight where some of the challenges are and the types of things that different bodies are doing to overcome those to try to be helpful around the different approaches that can be taken. As our general said, it just seems to be a bit narrow on the surface when you look at that. Looking at the overall report, it is very similar to the previous reports that we have progress being made but not fast enough and not all at the same pace. One theme that I get through this is in connection with the question of leadership, both at local level and at a national level. Obviously, the Scottish Government has kind of left a lot of it locally to suit local needs, so it will develop along the broad guidelines and along the broad path that everybody is following. It will develop what is necessary locally. You seem to be indicating here from the fact that you want the Scottish Government to provide more leadership in various areas that perhaps a more centralised approach would be more effective, which is not the way that it has been done, but is that really what you are trying to get across? I would not use the word centralised at all, Mr Beattie. As I said in response to Ms Lennon's question, I think that what we are not looking for is a cookie-cutter approach that pretends that each part of Scotland is the same and the same model of care will work there. That is obviously not the case. I think that we have two concerns. One, the vision is very clear and it has been in place since 2011. Progress towards it is very slow. I pointed Ms Lennon towards the exhibit that shows that the balance of spend between hospital care and community and social care services really has not shifted over the four years after 2011. There is a lot of support activity happening. We list the joint improvement team, the quest team and the work that I esteed as some of the others in the report, but it feels to us that that is quite uncoordinated and it is hard for local services to get good information about what is being tried elsewhere and what it is that makes a successful change programme work. What we are looking for is something that takes a vision and then provides a framework for local partnerships and local services to know what the vision looks like in practice, helps them to work through what it looks like in their areas, helps them to do the financial modelling and the financial planning. It might be useful to draw an analogy with what we have seen in relation to the Government's priority on educational attainment quite recently, where we saw the Deputy First Minister yesterday announcing a plan for taking that very clear outcomes focus on attainment, but a plan for how Education Scotland and the SQA will work with schools and local authorities to move people in that direction, using different approaches in different areas, but still a clear plan for what will happen. I think that we are talking about something similar here, not micromanagement or centralised control, but clear and more aligned support between the outcome and the plans locally. On page 14, paragraph 20, you are talking about quite a big gap in information here. How good is the information that the Government and local authorities are working on in relation to that? Is it robust, or are the real gaps that are causing them problems, delays and issues? The gap that you refer to on page 14 is specifically about a lack of information about GPs and primary care, and I will ask Gillian to expand on that in the moment. We have reported to the committee in previous sessions that, in Scotland, we have got extremely good information about hospitals and acute care, probably among the best in the world. We have got much less information about what is happening in communities, and given the clear focus of the 2020 vision on people's homes and homely settings, that is a really important gap. Do you want to build on that? Around primary care general practice data, I pointed out that there is a big gap there that caused some problems in trying to look at the scale of the issue around that area and the demand for general practice services, but we pulled together various bits of information in Exhibit 5, which is the infographic around the pressures around general practice. There is other information there that we can draw on, but it is not all the information that we would like to see and that would be helpful locally for boards and partnerships to use. This is an example. Are there other areas in which there are big gaps, or are general mentions, about local information perhaps not being as robust as information from hospitals, which has obviously been well honed over the past few years? Do we still have major gaps in information locally that are causing problems with this integration? I think that the gap around GPs and primary care is probably the most significant, partly because information that was collected until about 2012 is not now collected. There are plans for new information, but it is not fully in place yet. Partly because, under the new clinical strategy, GPs and primary care are seen as being at the heart of making this shift. We know that there are pressures on general practice that we set out in the report, but we do not currently have good information about how many GPs there are, how many hours they work, how that matches to the needs of the population. Some really quite basic stuff that would let you invest in GPs in the right way and get the new GPs contract negotiated in ways that lets GPs play the role that they are expected to play in the new clinical strategy. First of all, thank you for the report, which I found very clear and accessible. Just because we were on the point of GPs, you did mention that the pressure is likely to increase over the next 15 years. By 2030, I think that you said that there were an extra 1.9 million GP appointments and that strategy is all about preventing admissions to hospital, or at least in major part. Obviously, what we have here is a very people-intensive industry, and you gave a clear infographic on GP pressures. You talk about at page 37. Really where I am going with this is what is going to be done about the shortage in GPs. Particularly at page 37, you talk about 2.5 million being allocated to explore the issues. Do I take from that that the work of recruitment and retention is not on-going yet? We are still at the stage of exploring what the problem is. Not quite. GPs are an unusual part of the public service workforce, because almost all of them are independent contractors. They are contracted to NHS boards to provide general medical services. That means that the Government of the Health Service is not in a position to plan the workforce and recruit them in quite the way that it can for hospital doctors, nurses and so on. As you say, we have got an exhibit in the report that aims to show the pressures on the GP workforce, and it is very clear that those pressures are significant and are getting worse, partly because of demographic changes, with GPs expressing concern about the workload at the same time as we are seeing an increase in women GPs and men GPs looking for a better work-life balance around it. The Government would be better placed to answer your question about how the 2.5 million is being used. I think that they would also say that the bigger contribution to resolving that problem is the new GP contract that is being negotiated at the moment, which will review fundamentally the terms on which GPs are providing general medical services, the ways that they work and the ways that they are paid for that. The hope is that that we will both improve recruitment and retention and enable them to play a really central part in the new clinical strategy. Do you want to add anything to that, Gillian? Just on that, the new GP contract, do you anticipate or do you see evidence that other jurisdictions have had difficulties with GP contracts? Do you see anything in the pipeline that gives cause for concern? I auditors are not in the business of speculating, as you would expect. We are keeping a close eye on both the Government's policy commitments and the progress that is being made. At this point, I think that it is too soon to say what outcome will be achieved, but it is something that will keep our audit work focused on over the period up to the agreement of the contract and then as it comes into effect in the years at the end of the decade. The only other thing that I found your report interesting is that, particularly at page 19, you talked about the new care models being introduced and you said that there was a lack of evidence about impact, implementation costs, efficiency gains or cash savings or outcomes. At page 28, it talks about a lack of a clear framework of how the Government expects the NHS boards and councils to achieve the areas for action, and there are no clear measures of success. On the previous page, we talked about the Scottish Government and out plans to go to a new national conversation on the future of healthcare in Scotland. I take from that that the Government almost seems to be saying to people, to organisations on the ground, that here is the intention, but we are not going to tell you what success looks like or how to achieve it. Now, we are going back into a national conversation on what is going to happen. Is that a fair summary? I do not think that it is quite the conclusion that we have drawn in looking at this area. I think that the starting point is that there is a very clear vision for 2020, which is, as we say in the report, widely accepted and recognised as being the right way forward. We have a Government that has taken an outcomes approach to its overall set of priorities, which again is recognised as being an effective way of focusing on what is most important rather than on short-term measures or inputs and outputs. Given the scale of the challenge here, both in terms of the growing population and the needs that we all have as we get older and the financial pressures that are in place on public services, there is a need for something between that vision and what individual partnerships health boards councils are doing on the ground. I think that I said in response to Mr Neil's question earlier that we have seen a shift very recently in relation to education with a national delivery plan between the outcome and what schools and local authorities are doing. My sense is that we need something similar in relation to the health and social care vision, not to micromanager or centrally control it, but to give people more support in thinking through how they go about deciding what is best in their area, how they do the long-term financial planning and how they measure whether they are moving in the right direction. Alex Neil. First of all, since it is less than two years since I was the Cabinet Secretary for Health and Well-being, I have declared that interest. First of all, I will pick up the point that Monica Lennon made. For example, in South Lanarkshire, it is a very good example of what is happening elsewhere. Progress is being slowed by, if I can put it like this, haggling between the health board and the council about the budgets for the partnerships. That is going on right across the country and defeats the purpose, one of the major purposes, of having the partnerships in the first place. Is it not time for us to consider, at a national level, that instead of having the health side of funding of the partnerships coming through the current route that is Scottish Government to health board through negotiation to the partnership and the social care budget going Government to local government settlement to social care part of each local authorities budget to negotiation with the partnership? Will it not now make more sense to help to deal with some of the problems that you have identified for the Scottish Government to directly allocate a health and social care budget to each partnership? Then the residue on the health side goes to the health boards and the rest of the local government settlement, excluding social care, goes to local authorities, but for the Government to allocate a health and social care budget to each partnership directly? The legislation governing my role very explicitly precludes me from commenting on the merits of policy. That is Government's job. I am here to look at how it is implemented. Having said that, I think that in this report and the report that we published on health and social care integration at the end of 2015, we have said how complex some of those arrangements are. I am conscious that this committee is likely to take on a role in post-legislative scrutiny if the committee wanted to look at the implementation of the legislation that set up the integration authorities. I think that we are very well placed to support you with the range of work that we have done in that area. Can I suggest that when we look at our work programme later, perhaps we look at that offer, please? I think that it is a very interesting idea and it is something that the committee should certainly look at. We will take up that offer from the Auditor General. Do you have any further questions, Mr Neil? It is in two areas. I am identifying where the slowness of progress is being made. It seems to me that one of those areas of slowness is the inability of the social care sector to deal with the additional demand that would come from reducing the number of people who are hospitalised. As we know, about one-third of all the people in Scottish hospitals at any one time do not need to be there. The reason they are there is because of the lack of social care provision in their community. It seems to me that, with the introduction of the living wage from 1 October throughout the social care sector, perhaps we need to put a bit more emphasis and oomph behind further improvements in the social care sector to be able to absorb the capacity. A major problem, of course, is recruitment and retention, but it is not just about the living wage. All the evidence shows that the major problem is the lack of a career structure in social care. Do we not really now need to put a foot much more on the accelerator in terms of further improvement to the social care sector, including proper funding of care providers? Quite frankly, we have admitted in a joint statement with COSLA two years ago that it needed to be dramatically improved in order to deal with those challenges in social care. Similarly, in parallel, the community health hubs, which are based on the Alaskan model, where they de-hospitalise to a massive extent, we really need to put our foot on the accelerator and that as well. If we did both of those things across the country, would that not have a major impact on how quickly we can realise this 2020 vision? I think that there is no doubt that we do need to invest in transforming social care in the same way that I think the health service has been over-focused on the acute sector and on the acute targets, which have made it more difficult to think about the wider system. Social care services have been very bound up in getting people out of hospital as quickly as possible rather than being able to pull back and say, how do we keep people at home healthily as long as possible? My only note of caution is that looking at either bit of that in isolation is not very helpful. What we need to do is to pull back and look at the system as a whole, and that is what the great examples in our report are tending to do both here in Scotland and further afield to take a whole systems approach. The final question is—I commissioned it, but it disappeared after the reshuffle—a strategic business plan, which is the connection between the vision and making it happen. What you are saying is that there is the need for the Scottish Government to produce a strategic business plan, not just guidelines and frameworks and visions, but a strategic business plan as to how we can make it happen by 2020. I have spent a long time with this committee over the years arguing about what a business plan might mean and might not mean in relation to police reform and other things. I think that what you are describing sounds like what we intend here by talking about a framework, by describing what the new models might look like, having a financial plan for it and knowing what milestones and targets you would need to know if you are making progress. Absolutely. Thank you. Auditor General, you said that since 2012 information on general practitioners is not being collected. Given GP shortages, what impact does that lack of information have on your ability to scrutinise general practice service and on the Government's ability to forecast public spending on general practice? It does affect our ability to do all work, but I think that it is much more important on the Government's ability to plan public spending and services. The new clinical strategy, which again has been widely celebrated in the health and social care world, is absolutely based on GPs playing a much wider role in future, being at the heart of services for all of us, with hospital being something that is only there where it is absolutely needed. To do that, we need enough GPs in the right places, appropriately skilled, feeling they are appropriately rewarded, not having the information to plan that and to think through the implications of the new GP contract is a drawback. There are plans in place to fill that gap, but, as far as we know, it is still there at the moment. Gillian, do you want to add to the information question? I think that all of you can say at the moment about the information that there is a new system that ISD has been working on over the past few years around filling that gap again, because it was through ISD that information was available up to 2013, but we do not know what that looks like and what kind of information is going to be available. However, it is due to be available in the next few months, but we are still unclear exactly what it is going to look like and what kind of information is going to be available, but we are keeping in touch with them around that. Do you know why that information was seized to be collected and that gap has occurred between collecting the information that stopped in 2012 and the new information system that is coming online in the next few months? I think that the system before was based on a sample of general practices across Scotland, so I think that there were issues around how representative the information was. It was scaled up to estimate what the figures would be on a Scotland-wide basis, and I think that there were issues around how the data was collected. It was seen that it could be greatly improved, but unfortunately it was stopped while the new system was being implemented, so that is why there has not been anything available for the past few years. It seems very worrying that, at a time of GP crisis, we have a gap of information for four for a total of four years. Are you saying that we do not know how many GP's there are in Scotland and that we do not know how many hours are being worked by general practitioners at the moment? We do not have good enough information about it. We have used the information that is available, pulled it together, used estimates from surveys and other places to give you the information in our report, but in my view, as it says in the report, that is not strong enough information given the pressures that we know currently exist and the central place of GP's in the new clinical strategy. I have talked a bit this morning about the IGB's budgets, and it was reported in the press just a couple of months ago that they would not all be set by June. Obviously, the report was published in March, but do you know if all of the integrated joint boards have now set their budgets? As far as we know, they have not, but I will ask Anthony to update you on a position. We do not have information across all 31 IGBs at the moment. It is something that we will be looking at as part of the next phase of audit work on health and social care integration. As part of that work, we will also be exploring the extent to which there have been delays in the green budgets between health and local government partners. We do not know if all the IGBs across Scotland have budgets set for the next year. I do not want to give the committee misleading information. We know that there have been problems from our audit work and the same press coverage that you have seen. We also have a concern that some places where budgets have been set, those budgets may not be realistic or fully agreed between the people who will have to deliver them. I do not want to give you a headline figure that does not do justice to the complexity of the picture across Scotland. I was very interested in the part of your report where you talked about the balance between local provision and national guidance and strategy on health and social care. I am sure that it is something that the former cabinet secretary wrestled with himself. It was discussed at length during the election process about that balance and local accountability and different needs. Clearly, your report has come down on the side saying that there needs to be some. What kind of framework or priorities or a hesitate to use the word targets, but what kind of structure would you see would be useful in that in terms of sustainability and equality of delivery across Scotland? If we look at paragraph 51 onwards, that is where we try to set out in the report what we think is needed. Again, I want to stress that we are not talking about centralised control or micromanagement but about bridging the space between having a clear vision and what happens on the ground. What we think would be really helpful for the Government to clarify is, first of all, the immediate and the longer-term priorities that the partnerships should be focusing on. We have given some examples of the approaches that people are taking in the report. Many of them are around prevention, either short-term prevention or avoiding people needing to be admitted to hospital because there is not a good community alternative in place all the way back upstream to helping people to stay active and healthy for longer so that they are less likely to need that as they get older. We have talked about a clear framework about the types of models that need to be tested. We have tried to categorise them into six categories here, some of which are those short-term prevention ones and some of which are population health models. We have set that out in the exhibit at the centre of the report. A long-term funding strategy that gets a better estimate of how much money might be needed both in the long term to run this new overall health and social care system and what, if anything, is needed for double-running offer investment in developing new services. Finally, how the Government will measure progress, what milestones it expects to see in place, from things like the balance of spend between acute-based hospital services and community-based services through to shifts in the number of people being admitted to hospital, the number of people being looked after in care homes as opposed to in their own home, and the whole range of measures that would let you know whether you are making progress as planned towards the vision. We have had the 2020 vision for five years now that recommends the shift from acute to community spend. Your report clearly identifies that that has not happened. From your analysis, what are the pressures on Government that is preventing them from making the shift that they want to make? As well as the clarity of the support to local partnerships that we have just been talking about, there are a couple of barriers that get in the way. One is that it is always harder to do this when funding is constrained rather than when it is growing. We had a decade at the beginning of this century when public services had huge amounts of investment. We are not in that position now and it is harder to make a shift when you are having to press down on costs across the piece. That is without doubt. We touched earlier in response to Ms Lennon's question about the effect that the acute targets have had on the health service. All of us understand why those targets are there, having quick and predictable access to acute care matters to us. In the long term, I think that it matters much more to us to have good community-based services that will look after our parents and in not very long us as we get older and need that support at home. We need to be shifting that conversation away from whether 12 weeks' wait for elective surgery or 4 hours' wait for A&E is right to something that is talking about the sort of care that we want to be provided in communities across Scotland. Something else that we touched on in the report that we have not talked about today is a shift in the culture that all of us have in relation to the health service. It is very easy for all of us to see a hospital to recognise it, to have a real emotional attachment to it, where most of us were born and where parents have died and everything else. You can see a hospital. It is much harder to see some of the services that we are talking about here and to recognise the good work that they are doing. We have not found a way yet of involving people right across Scotland in relation to the community empowerment agenda and the wider political debate that we have about why the vision is actually a much better way of providing health and social care than the things that lots of us think about when we are thinking about the health service. I have pulled out those three things as priorities convener. Thank you very much. Do my colleagues have any further questions for the Auditor General and her team? There is just one thing. I hope that I can find references made on page 18, paragraph 27, to the Scottish Government working closely with 10 test sites over the next two years to offer support and guidance and share learning. We are touching on the fact that there was perhaps a need for the Scottish Government to be more involved across the board. Do we know the dimensions of what the Scottish Government is going to be doing with those 10 test sites? Are they going to be giving that level of guidance that you seem to be indicating in the report is required or is it something totally different? I will ask Gillian to talk to you through what we know about the 10 test sites. I think that when we were carrying out this audit that was still at very early stages and it wasn't entirely clear what the role of the Government was and how that was linking with those sites apart from that they were identified as 10 pilot sites to try out different ways of working. We will be picking that up with the Government during this year as part of our annual overview of the NHS to find out progress against those and what learnings are coming out of those pilot sites as well. On that point, you have to know what that means. Not entirely know, but we will be picking that up with them this year. Just a quick one, and you will forgive me because I am just in the door, so that might have been answered previously. The services and the levels of pressure that you are talking about in the report are a function of use and people needing the services. More usage requires more funds at whatever level it falls down to. Is there any work being done on preventative measures such that people don't need to access the services at any level in the first place that you can point me to? That is a really good question. I think that it comes back to my response to the convener's question earlier, that we talk about prevention in very broad terms, but it can operate in a whole range of ways. Many of the examples that we talk about in this report are very narrowly about preventing particularly older people, frail older people needing to be admitted to hospital when they have a fall or an infection or something. That is obviously important, both because of the pressure that it places on the health service, but also because it is not good care for most of those people themselves. Most of us do not want our parents to be in that position. We need to be thinking about this in the big sense, from how you avoided at the point where somebody is frail and struggling to stay at home, how we build primary and community healthcare services that know who the people are who are at risk, who are hanging on now, but maybe are vulnerable to winter and bad weather and colds and flues and so on, all the way back to how we keep whole populations more active and less likely to be falling into that category in 10 and 20 years' time. There are projects involved looking at each of those levels of prevention. What we are not seeing at the moment is that very strategic approach that Mr Neil was outlining that lets you plan what you intend to do, what the priorities are, how you might take some of the pressure off the system here to release resources, you could invest further upstream. It is that strategic approach that we are looking for. I thank you very much for your evidence today, Auditor General and team. We are now going to move into private session for the remainder of the meeting.