 I welcome members to the audit committee and I ask those present to ensure that all electronic items are switched to flight mode so that they do not affect the work of the committee. Apologies have been received this morning from the convener Hugh Henry and also Tavish Scott John Pentland. We welcome to the meeting. We will be attending as Hugh Henry's substitute. The first question is that we take agenda items 8 and 9 and private. Are we all agreed? Committee will now take evidence on the 2013-14 audit of the Scottish Government consolidated accounts and will take evidence this morning from Graham Dixon, Jonathan Price, Drew Sloan and Moises. I welcome the witnesses and invite them to brief the committee. I understand Graham Dixon that you wish to make an opening statement. I will try to be brief. I just wanted to remind the committee that the new common agricultural policy to be implemented next year is radically different from the existing one. The futures programme that we are discussing today will give us a new system that will ensure the safe delivery of nearly £4 billion of support to our farming, food and rural affairs sectors over the next five years. The system will have a life well beyond that. As well as necessary and desirable business changes, the new system, together with the business changes, is going to form a challenging and complex programme. We have had to make many of the changes as a result of the EU, and we knew that we would do so against a very tight timetable. For that reason, the futures programme has been fully within the sight of senior management in the Scottish Government and our ministerial team right since the early stages of the programme. The IT system is only part of the programme, but sound IT systems are required as a qualification for EU funding. Since the systems themselves are not just the payments that we make through it, we need to make EU auditors tough requirements. One of the issues that the Auditor General reported to you is the increase in the cost of the programme from the original business case to the current one, and that is pride predominantly in our IT development. The other cost estimates that we made are much closer. When we agreed the initial business case in 2012, we did not know the details of the new schemes, nor did we foresee the complexity of the system that we would need to build. The EU promised us a more simple cap, and in fact we will have the most complex cap ever, and I believe that the new Agriculture Commissioner has acknowledged that. It is not surprising that we have had to keep our business case under constant review and to amend it quite substantially. The second area that the Auditor General raised is independent assurance. The programme benefited from new procedures that we put in place following Audit Scotland's report in 2012. Our information systems investment board used the Audit Scotland checklist when it considered the programme in 2012, and the programme itself has been subject to gateway reviews and regularly reported to our audit committees. The gateway reviews flagged a number of themes, some of which we had identified ourselves. For example, last year we went out to recruitment for additional resources. We did not have those staff in place by the time of the mayor review, but we do now. We have also recognised the issues with governance and planning, and again that was not helped by the delay in the programmes being tied down by the EU. In June this year I asked for a rapid support team to be put in place to work with the management of the programme and address the issues that have been raised. That has been successful. We completed a further gateway review in the last couple of weeks, and that records that we have made great progress and that we are in a much stronger position to tackle the challenges. In terms of progress, the programme itself has moved on from the section 22 report. We have completed user acceptance testing of the first major piece of software. The final part of that has now been integrated and is in testing. It is all running on our new IT environment, and that will give us a solid underpinning for the programme. We plan for the portal to go live to customers next month, and at that point we will be at a critical phase in the programme. The remaining releases of the software, those that will develop the functionality, will sit on that platform and will be fed out at regular stages next year. We have a clear plan in place, and it is being followed. We now also have an excellent team in place, and we are working well with our IT partner, who is giving us support at the highest level in the company. The one thing that we do not have is spare time. That was always a challenge, and it remains so, but I can assure the committee that this programme is an absolute priority for me as the accountable officer, and indeed for our cabinet secretaries, and it will remain so until it is completed. I am very grateful for that. As you know, there were issues raised in our last evidence session with the Auditor General, and I think that I will go over to Bruce Crawford to start the committee's questioning. First of all, I thank you, Graham, for your introduction and for bringing us up to speed in the effort that is being put in to ensure that this is delivered as close to budget as we can. Obviously, timescales are hugely important, because I feel that you are in this area would have a real problem for our farmers. I want to make sure that we are talking about the accurate base figure to begin with. When the Auditor General was here the last time to discuss this and we have had a bit of paper from the Auditor General, I want to make sure that the Scottish Government now agrees with the figures. The original business case estimate, which was in paragraph 8 of the Capsuture's programme report, suggested that that was £88 million, but we now have had an adjusted figure provided to us from the auditor that says that it is £102.5 million. Can I just confirm that both the Auditor General and herself agree that figure? We have agreed that figure with Audit Scotland and are happy that it reflects the adjusted baseline. That is helpful, because it is still at an increase, but it is not to the degree that it had previously presented. You rightly said that the figure will deliver £3.9 billion of payments through single-farm payments to the SRDP and so on over the next six to five years. What is the percentage that you are expecting, the overall cost of the programme to be of the cap budget, if you can tell me that, and also what do you think the system lifetime will be? The previous system, if I understand it correctly, was about 20-year-old that was falling over anyway and was pretty moribund, so what is the sort of percentage number that we are talking about above the roll cost? What is the lifetime of this system going to be obviously depending on what happens in the cap in the future as well? On top of that, can you give me a reflection on what is happening in the rest of the UK? This is not obvious to just a problem for Scotland, because everyone is facing these difficulties, not just in the UK but around the rest of Europe. I would like to come to the European issue at some stage as well. I will never promise to seek the question, but you are, if you can break that down in the 10 sections. While I answer Mr Crawford's point in the first couple, I will let my colleagues work out the percentage. You are correct to our current system, which we are still operating and which will make the payments to farmers this year is about 20-years-old. If you think back to 1994 and the type of IT systems, it gives you an idea of why we needed to replace it. We believe that the current system should last at least two programmes, which is the future programme. The future system should last two programmes, the same as the further one, which would be about 15 years. We have to depreciate it over a much shorter period in our accounts, but we would expect maybe a 15-year lifetime. It is slightly under 3 per cent of the current programme. Maybe I can ask Drew to explain the calculation in a minute. I will do that. I will not get too much technical. Can I just also say that you are very welcome to supply written evidence to the committee if it takes too much time and calculations today? Thank you, convener. We might reflect our working and short to the committee if that is helpful. I think that the other thing, if I could just add as a supplementary, Mr Crawford, in terms of the VAT, we have calculated that as a big amount. We challenged it because it is quite clear in the contracting out regulations that VAT for bespoke software should be recoverable. HMRC, however, wrote as a 12-page letter explaining why it was not, but I think that given the quantum of VAT, I am inclined to go back and challenge that and we will take it up with our finance people as to whether we can get that money back because it would make quite a difference. In terms of the rest of the UK, I noticed that when the Auditor General gave you evidence, Mark Taylor, who is perhaps more in touch with the NAO and other organisations than we are, said that people in the rest of Europe were facing similar challenges. We do not go into the detail in terms of other programmes and the way we do in this one, but we know that colleagues elsewhere in Europe are facing challenges through complexity, not just in developing new systems but in delivering a complex system. We have tried to keep the changes that we made in Scotland as simple as possible at a Cabinet Secretary's encouragement, but even so it is going to be terribly complicated. I do not know whether Jonathan Price has just been meeting the European Payment Paying Agencies. I do not know whether you want to add in what else is going on in Europe. All I would add is to say that every paying agency across the whole of the European Union is facing its own challenges in how it implements the new common agricultural policy. There are very strong consensus that the new policies are very complex and it makes the implementation and delivery of those policies in an operational sense extremely complex. That is what we have been finding. We know that our colleagues in every part of the United Kingdom, as well as in every part of, well, we know for certain, around other UK paying agencies, that each are finding it in their own different ways difficult. Other European countries are finding different elements of it, whether it is keeping the mapping up to date, whether it is the detail not all of which do we yet have from the European Commission. We are still having regular teleconferences with commission officials to be able to establish the detailed interpretation of what Europe is set out in the regulations. All of those things continue to make this a challenging set of policies that we are working on, and we are not alone in finding it so. On the European issue, when we had—although it is Scotland—people in front of us previously, I was able to quote from the European Court of Auditors opinion, which said that the courts doubted us to whether the measure proposed can be implemented effectively without imposing an excessive administrative burden on managing agencies and farmers. That is there, it is real. You have reflected that in what you have been telling us. The question of my mind is now, how do we now learn the lessons from this, not just as what happened in Scotland, but how can we across the European Union learn the lessons for this, because if there are extra burdens, extra costs, extra inefficiencies or extra issues having to be dealt with in Scotland, the cost across the whole of the European Union must be enormous. What processes do we get involved in, or do you get involved in, as a Scottish Government to try to make sure that, I am assuming that it is the commissioner learning the lessons here of this incredibly complicated process of land that it is with? The new commissioner coming in has perhaps been horrified by this and said that there is massive complexity. I think that his initial approach was to say that we needed to take measures to simplify it. Of course, when you are so far down the road, beginning to reverse, it could cause even more problems. Do you want to continue what we are doing, John? I suppose that we need to start now thinking about the next common agricultural policy that will begin in 2020 and make sure that we are in at the beginning making these points, and we shall be. I think that the commission is learning lessons from this in terms of quite how the policies developed. This was the first time that the European Parliament had a competence in relation to the common agriculture policy, so the very complicated co-decision process between the commission, the council of ministers and the European Parliament itself has created the space to allow a lot more complexities to be added in. Obviously, each party tends to want to have their own particular ideas included. I am afraid that what we have ended up with is far too many options, far too many different elements that some of which are compulsory, some of which are optional, but as soon as they are optional, in the domestic space we get lobbying by different sets of interest groups. All of these things have been quite a shock across Europe, quite how this whole process went over the last three years. I am pretty confident that we will all learn something from that, and then we will take it from there. It is worth pointing out that the European Court of Auditors report was in 2012. A lot of the complexity has been added since then, so it will be a lot more than 15 per cent. On the lessons learned issue, because obviously there are lots of learning issues to be done here, I am sorry to quote Colin Beattie's question and answer session that he had with the Auditor General last time, but the Auditor General said in response to a question from Colin that it was practically impossible to let a contract that affects price at the outset and cross-increases the work develops. Is there a different way we can do this in future to make sure that the type of contract that we are drawing up takes account of the complexity that can come at a later stage, because that would hopefully save some additional costs that were being borne? I will ask our chief information officer to tell you about what we do in other areas. If we were going into a normal process where we had it in our own hands, we would not have done it this way clearly. We would have specified our requirements much more clearly in advance and gone into negotiate with a contractor to help us deliver something as a fixed price for what we wanted. The problem was that we did not know at the start. I think that Mr Coffey in his interventions last time I read said that you build something when the customer tells you what you want and you start off thinking that you are building a house and end up building a block of flats. In other areas, and I could ask Ann to give you a couple of examples, we do have a fixed price contract, but in this case we have had to adopt a system of building things incrementally. At each stage of that increment we have an open price with a contractor where we talk about the specification for that part and then tie it down and move on. It is a very difficult process to manage, but if it would help the committee, we can give an example of what we would normally do if we were starting ourselves. Effectively, I would always prefer fixed price contracts and then to subsequently keep change control to a minimum. We do let a lot of fixed price contracts, but we tend to do that when we have a very clear idea of the specification. We know exactly what size and shape of house we are building and where we know that there will be relatively little disturbance or change during the life of the build. We have a clear idea of when we start, what we are delivering and the timescales, and ideally relatively short timescales. In those particular occasions fixed price normally works really well. We have a track record of quite a number of in-house and fixed price contracts that have been delivered completely to time and budget. None of those contracts are as complex as the cap reform. If we had gone fixed price at the start of that, as Graham suggested, the amount of change control would have been unbelievable. Companies tend to make quite a large margin on change control as you are aware. Colin Beattie Just looking at the timescales and so on here, the original business case was approved in December 2012. Obviously, there had been some months before that while that was being developed. The IT partner did not come on board until March 2013. In retrospect, would it have been helpful if an IT partner had been identified and taken on at the time that the business plan was getting put together? I realised that there were issues with information coming from the EU. Colin Beattie I think that the gap between—we agreed the business case in December 2012. We then went out to tender and I think that there is a fixed tender time, so it was in March 2013, only about three months later, that we appointed an IT partner and then they started work shortly after that. I think that it would have been difficult to compress the timescale any more, given that we need to go to tender in those things. Colin Beattie It just seems a little bit difficult putting a business case together when IT costs are really something that you are pulling out with the air, in effect. We can see that, obviously, the increase in IT costs is a major part of this overrun. Colin Beattie Yes, it is very difficult when you have to go to competition to work with one preferential supplier to work them out. In assessing those costs in the business case, we used our advisers at that point and we also took soundings from a range of other people in terms of what the likely cost of such a system would be. The difficulty was that there was no comparable system out there of this complexity. As the figures clearly show, despite having a lot of caveats in the business case, we undersized what that cost would be. Colin Beattie Is it true to say that every single country in the EU is going to be individually developing some sort of system to cope with this? It seems remarkably inefficient. Colin Beattie One of the reasons that each country does something differently is because they have a different agriculture system, a different geography, their stakeholders, as Drew said, ask them to tailor things to different places. Even within the UK, the cap that we will be implementing is quite different from England, Wales and Northern Ireland. I hope that I am confident in saying that ours is simpler than those two others. Colin Beattie I guess what I was moving to is that there is any way to save costs by sharing with others? That is something that we have looked at historically even 20 years ago when we did the current system. We looked at that and there has been nothing that has emerged EU-wide that provides a system that deals with the complexity and the different range of things that you need to deliver. Colin Beattie Notwithstanding the huge increase in IT costs, you are taking out of the planning a number of key functional areas or functionalities from the system. How is that going to impact? Does it mean that there are going to have to be workarounds for that? Are you scheduling in for the future to capture those? You said that this present system would be good for two sessions, a bit of a further on down the line. How does all that work? There are a number of things that have been changed from the original plan, and if I can let Drew say a bit more detail, the first thing that we do is that we have a land parcel information system, which handles the half a million fields that we have in Scotland that is a key control in terms of our payments. We have modified our existing lipis system to help to buy us some time in this one. The functionality that will be lost is that instead of farmers or farm agents going online and amending boundaries, we will need to do them ourselves. They will be able to see them on the screen but not do anything. The second thing that we have taken out is that we currently use mobile technology for mapping those field boundaries where our inspectors go out with a kit on their back and a laptop. We would hope to extend that into doing animal inspections and some other things, so that we have descoped the animal inspections part of it. I think that we have also taken out the ability to do SMS messaging to people. Other than the first one that we have redesigned, they are fairly minor things that we will bring in at a further stage. However, just to stymie us further, the commission recently specified that we would need to bring in a new and different land parcel information system from 2016, so we will have to go out and make a further substantial amendment as a result of that change. So there are costs that are going to come down the line that are not yet quantified? The cost of a new land parcel information system has not been quantified and is not in those figures. I would not want to make a guess at what the SMS messaging and animal inspections would add, but I imagine that they are fairly minor. Do you want to add that? I will add a few comments. As you can see, the business case is driven very strongly by making farmer payments, being compliant, avoiding disallowance and us being efficient and customer focused as the efficiencies that we need to get are about 20 per cent to avoid our costs increasing. The area of descoping is pragmatic because delivering farmer payments and disallowance drive the business case in front of our own efficiency, which is where some of those things come in. It is a very pragmatic decision to meet those first deadlines, and as Graeme mentioned, the land parcel information system had a much higher chance of being compliant in 2015 with the current system and some slight upgrades than we ever had of replacing it as the original business case. We had to take that decision to make sure that 2015 is successful. The commission has brought in the new upgraded rules through the delegated acts, the implementing acts that we did not find out until June this year, and we will have to revisit and have a new system for 2016. Anything else that is descoped is so minor in what we have to do for 2015. I am very relaxed. It will come in later. The priority of the programme is not to block the development, but to not do something that stops you doing those things later, is the priority of the programme at the moment, because they are small. I am looking at page 8 of the Second bullet point, 19. As mentioned, more detail planning is still to be developed for the remaining programme period. Does that imply additional costs? The detail planning is the plan itself as to how we would roll those things out and the stage of each little software drop. We have a high-level plan right through to December 2015, and within that planning deadline we have a detailed plan for each of the software drops. Through to the next one in March next year, we have enormous planning detail for the programmers. I think that what Audit Scotland is saying in the report is that we need to do that similar work for each of the successive pieces of software drop. It does not necessarily imply that there will be additional costs on it. It is just saying that we need to get those planning things tied down firmly. As you know, Audit Scotland did raise that. This is section 22 of the report on the basis that they were concerned about the costs and progress, and they highlighted the risks over several years, not just this year. Thank you very much, convener, and good morning to you, Mr Dixon. I certainly raised the problems of the change in requirements specifications last time. I would like to pick up on one or two of those issues with you again this morning. If I could, it is probably unusual for some of our witnesses to receive a sympathy hearing at a public audit committee in the Scottish Parliament, but I have great sympathy for what you have appeared to face here. There is nothing worse if you are a software engineer in trying to design a system only to discover that it is growing arms and legs as you work through the process and the difficulties that it can bring upon you. You said in your opening remarks, Mr Dixon, that sound IT systems are a requirement for the qualification for payments. My first important question is whether we have complied with what the EU requires of us to enable this process to continue smoothly and for the payments to be made. Ultimately, we will not know that until we audit them, but in terms of going backwards from the land parcel information system, we received disallowance under the current programme because the auditors said that that system, which is a key control, was not compliant. That is why, as Drew said, we have worked. Having got that into a compliant form, we have kept that and modified it to use in the current programme. There is a very high degree of confidence there. In terms of the main part of the system, we are building it with that compliance in mind. I think that part of the reason for the complexities is not just the rules that have come in on the programmes themselves, but the basic portal which we will launch next month has to meet those requirements as well. Things like handling the fact that we have farmers who go online and claim that we have agents, and we also have agents who act for farmers who are farmers themselves. We have complex conflict of interest rules, so if we have staff who have got relatives or friends or neighbours, then the system has to stop them interacting with it. We have a whole degree of security. This system will deliver hundreds of millions of pounds a year, so it has to be proof from attack from outside—some testing of that is currently going on. Even the complexity of a portal itself to meet those audit requirements is pretty high, and that is why it has grown the arms and the legs, even in the starting stages of it, but we are building it with that, with the audit rules in mind. I am pretty confident that that is what we will deliver, which is something that will meet those very high standards. Is it reasonable to ask you how much of that complexity, or any of it, could have been anticipated, given the political discussions that are happening in the European Union about CAP? I think that it was expected that there were going to be changes. You mentioned the 20-year-old IT system, which, in my experience, it only does what it ever did, and it does not do anything else. Is it fair to ask you how reasonably prepared we might have been, or should have been, or could have been, to anticipate some of the changes that came to us? I think that I am just to take you through the full story. If you had known the timeline, it was October 2011, when the first document was published by the commission. It was in the early parts of 2012 that it was this realisation that this is really big, and so we put teams together in the spring of 2012 to start the work on it. It took from then to December for the business case to say that this is not just a tweet to the current system, so your observation is absolutely correct. It is like, this system can't cope, and it will be more expensive and probably not be audit proof to try and make it cope. That is where some of your evolution of get to December 12 is. There had been a possibility that you could have developed new stuff alongside your little incremental steps, which was one of our consultant's views. It was clear that that was not going to go, so that is why you got to December 12, which is the question for Mr Beattie, why the IT partners in March 2013. That complexity continued to increase through the negotiations, so we could see some of it coming. Until the Scottish Government makes its decision in June at Parliament, we do not know exactly which bits of the possible complexity we will choose and which bits we will avoid. Going back to Mr Crawford's question and what lessons to learn, I think that the committee can take comfort from is that this Government and the cabinet secretary have absolutely had the policy colleagues and the implementation colleagues in the room together at all times. That is a benefit as a pain agency. I have the implementation part that not all our colleagues across Europe get. We did not get in the 2005 reform when I first joined the company. It was clear that it was thrown over the hedge from policy. While it is very complex, as an implementation team, we were at the table and listened to. The package that we have could have been even more complex. There is nothing in our final version that we feel cannot be programmed into a computer or maintained by farmers. There were choices that could have been taken and other countries have taken where we believe that it is virtually impossible to keep it audit compliant and deliver the payments had certain choices that were options being taken. You can pre-empt some of it, but we started in May 12 with a large team really looking at it and you could not really finalise till June 13. Some of the verifications that you asked in your previous question are still negotiations with Europe going on as to what we will have to put into the verifications that we launch in the summer next year. It is iterative. We have the application form in build. It will be ready to go. However, how we verify that data for audit proof is still awaiting decisions by the EU now. Thank you for that. That is very helpful and very fair. You also mentioned that user acceptance testing had been completed. I wanted to ask you who are the users and who else needs to be in the process of acceptance testing. I presume from your comments here, Mr Sloan, that the commission in some way needs to have oversight of the systems that they are fit for purpose to deliver what we think they should be delivering. No, audit. The EU have a great way of saying that the regulation will come and see you later and see if you have complied, so they would not offer any help. What they have done new in this process is that they are vetting the policy decisions that we have taken to make sure that we have not misunderstood the regulation from the policies, and that is why some of the work is still on going to say that you have chosen this option that is incompatible with another one and that you cannot do this. There is EU help there, but not on the implementation for our side. The user acceptance testing is through customer focus groups, finding what people want, working with people in the business. It is the business requirements that people, product owners, with a separate UAT team, check in what we asked for, which was fed from customer focus groups. It is a classic internal UAT. We have not gone to any friendly customers yet, and that is part of the soft launch next month. Very last point, convener. Mr Price just mentioned that we need to be in at the beginning before the next change in 2020. It is a general question about when the European Union thinks that it is about to make a major political change that clearly has an impact of systems and processes that deliver and drive that. How better can we engage at a system level to make sure that the political decision makers are fully aware of what they are doing and the impact that it has on delivering systems to carry through those policies? It seems to be that that is a classic case of politicians making a decision and not really being fully aware of the impact that that will have in systems to deliver that. That is a very fair point. We do not yet have that relationship completely cracked. We do have our networks across the European Union again of other paying agencies where we share our experiences. We have a Paying Agency's director's conference every six months where we get a chance to share policies, but there are also regular meetings of IT professionals from across the paying agencies approximately twice a year where there is an opportunity to share and also to form views as to how those things could be done better. I think that where the disconnect at the moment is that there is not a significant link between either of those forms into the political decision making process within the council of ministers. Indeed, the previous commissioner was quite upset in 2013 when a report from our, I think it was, April 2013 conference was highlighting the complexities and countenancing that the council should do something to simplify. He was very put out that operational staff paying agencies should be taking a view on this when it was in the political space. The other thing that we find increases the complexity of the technology requirements is that there is a group called the Joint Research Council within the European Union that sets the standards for mapping and for remote sensing, and they are very keen to use the common agricultural policy and the regulations that go with that to require countries to do what we would see as gold-plating around the level of detail of the mapping that they were asked to do in order to control the activities of farmers. Certainly, at a more detailed level than would be required, simply to ensure that the money was being put out in a properly controlled and defensible way. We tend to find that we are responding, and I think that the upgraded LPIS system that we are being asked to bring in by 2016 is one of those things that it will be helpful, but to make it a mandatory requirement in 2016 is a degree of asking more than they needed to do. We thought that we would have until 2018 and they brought it forward in 2016, and that adds to the complexity and the challenges. I just say that although my colleague Willie Coffey said that he does have sympathy for the changing IT spec, I just say that you do not get all sympathy from this committee. Obviously, it is not our job. Just before going to Kenneth Macintosh, I will ask you two points that are in the committee in the report that I think would not lead to sympathy. One is that the Auditor General highlighted that the Scottish Government is estimated that it could incur costs of up to £50 million a year if the IT system failed to deliver the requirements of cap reform. I do not think that you would get much sympathy here for £50 million fine, so just to let us know where you are on that issue. The other issue where I think you would incur even less sympathy is that the farmers were not paid on time, and that point is highlighted in page 7. Key stakeholders have acknowledged that the new complexities arising from cap may affect the usual timetable, the target for making payments. On those two issues, and before I go to Kenneth Macintosh, can you tell us where you are on the £50 million and farmers' payments? I do not think that I would even get as far as the committee if that happened. The £50 million is a figure that we put into the benefits that we track as part of the programme, as well as the costs that we deliver. We have an on-going list of what we would expect in return. That was a rough estimate of a typical fine that the EU might levy on you if you get something wrong. By avoiding that, we say that we have a benefit. Drew and his team have done a further calculation in terms of looking at the—if we did not get the system right and we incurred the typical penalty that the Rural Payments Agency in England has incurred in the current programme, we would be disallowed about £35 million a year for the whole programme. That is what we are trying to avoid by getting in place a sound system that meets all the EU audit requirements. Can you give the committee any comfort that it is likely to be avoided? The system is designed to avoid having those fines levied on us. Our programme and how we deliver it and keeping it as simple as possible is designed to avoid paying any— That was highlighted last month by the Auditor General. Sufficient changes have been brought in that gives you confidence that we are likely to avoid what you call fines of either £35 million or £50 million. I can answer some of the short-term concerns. It is very hard to predict exactly what the EU will find you. It has arbitrary—2 per cent, 5 per cent, 10 per cent—but in our view, the first big deadline is customers being able to apply to the new CAP. If they miss the deadline of application, we would automatically be fined something, and farmers would expect not to forgo their total payments. There is a huge risk around the first deadline, which is May 15, 2015. We have to have the core portal with all the security that Graham mentioned, and we have to have the application form ready. Over the past three, four months, you have not got evidence since the Auditor General's report, which was based in the May report. Confidence in those early releases that get the farmers to the application form has risen dramatically, and we are in the final throes of that. We are billed, and we will complete for that in the next three and a half weeks. We need to do that to achieve the opening of the application when doing the closing. That is the first big deadline, first big dis allowance deadline. Then, in European terms, dealing with the dis allowance point first, the next big deadline is June 2016. That is the closing of the payment window when, as a paying agency, we must make the payments or the liability would potentially fall to Scottish Government, and they would find you anyway. That is why we look at the Royal Payments Agency in England and showed us what failure looks like in the 2005 reform, and our equivalent would be averaging £35 million a year. We have that June deadline, which is the backstop, and we have time to have a plan that is well ahead of that, because, as you say, the plan is not for June 16, but for December 15, when farmers normally expect their payments. That is what the current plan shows and what we are working towards. The caveat is that stakeholders in various meetings acknowledged that they wanted to get the policy right, even if that meant putting the first year's payments somewhat at risk on the timetable. They do not want to put them at risk, but they acknowledged that they should not just go for the simplest model and guarantee payments if that would be the wrong policy for Scotland. Our budget is very tight. I am sure that you have been very aware of the lack of budget that we have. The efficiency of the use of budget is demanded by stakeholders, and I would say that it is generally backed by the Parliament. I do not just follow who is backing what. It has added some complexity while it is acknowledged that it will be very challenging, but we are working to the disallowance of a May 15 deadline during June 16, and farmers are in between. There was a risk that was highlighted by the Auditor General last month. You are giving us an assurance this month that farmers will be paid in December 2015 in the usual timetable and that you are back on track for these payments. I said that we are on track for the first deadline for March 15 to let farmers apply by May 15. We have a plan to deliver by December, but I cannot sit here and give assurance that it will go exactly to plan between now and then. We will be discussing this in private session following the meeting. Thank you, convener. So far, I have talked about the complexity of the European programme. The Auditor General addressed that in a report, but the reason that she reported was not just the complexity of EU demands, but what she called the management shortcomings. Do you accept her criticism? I think that there were two aspects to that. The first, in my reading, was in terms of the staffing that we had in place and the resources that we had in place. When we went into the programme initially, we used the Audit Scotland checklist. We believed that we had the correct level of resource allocated to the programme. As the complexity began to roll out, probably about this time last year, I took the view with Jonathan Price that we needed to bring in more resource. We went out to market. We have brought in four highly experienced people to supplement it. We are satisfied that we have got through our IT partner the good programming skills that we needed. If we knew now what we knew then, we would have gone to the market sooner to get more people in place. We have got them and the gateway review that we have just done acknowledges that we have got a good level of resource and a good team in place. The second thing that was mentioned in the report is around the governance of the programme. That was something that came up in the gateway review that we were not entirely clear whether it was an IT programme or a business change programme in our agriculture staff or both together that we were managing. The gateway review said that we should do something to address that. It was not done to their satisfaction or mine in May this year, which is why we have put in a team to help advise Jonathan, Drew and the staff on how they could turn that around. Over the course of the couple of months, we have done that. The gateway review has picked up the fact that we are in a much better or very good shape to do that. I am satisfied that the action that we have taken has addressed the Auditor General's concerns and that when the auditors come back, I hope that they will agree with the gateway team that we have addressed any of the shortcomings in her report. You said that there were three points that she made in the report. The first was that there was insufficient capacity and capability. The second was that there was a lack of programme plan and critical path. The third was the integration of the whole programme and the lack of consistent approach. I think that one of the concerns that the Auditor General raised and that certainly was shared by this committee was that these are the very same issues that were raised by the Auditor General in our 2012 report managing ICT contracts. Now, am I right in thinking that you were aware of that report, the difficulty that the Government has in managing IT, before you started down this particular programme? Yes, as I said in my opening remarks, we used that Audit Scotland checklist, our information systems investment board, we used that checklist to assess the programme when it looked at the business case and at that point they were satisfied, I assume, in the case. As things have rolled out and become more complex, we have gone back and we have looked at the issues of governance and resourcing and addressed them. I did not pick up the Auditor General's third point, which is about planning. It is very difficult with a programme of this nature, which does it in short bursts to have a detailed end-to-end plan. We have a high-level plan right through to December 15, and we do each of those bursts of software. We have a detailed plan in place for it. The assurance process suggested good practices to have something called a plan and a page. We have a plan and a page now. It is an E3 page because it is so big and so complex. That was part of the work that we did in the spring to address those concerns. I think that Mr Crawford asked you earlier what lessons we could learn from this particular process or project, but the point is that the lessons should have been learned already. Why would they not, if there had been IT problems like this before or the governance of IT projects by the Government, have led to exactly those same problems? Why were the lessons not learned in the first place before you started? Why did you have to wait until the things went wrong? I think that what I was trying to explain is that when we went into this, we believed that we were going to deliver a big programme, but not necessarily the one of the complexity that we are doing now, and that when we scoped it, when we looked at the lessons learned, we put the resources in place. Within a few months of the contractor coming in and his beginning to deliver it, we realised that this was going to be a much tougher, much more difficult programme than we envisaged at the beginning, so we then took the action to address the fact that we were living with probably a much more complex programme than we have ever delivered before, which is why we have had to bring in substantially more senior people than we envisaged at the beginning. We had right-sized it for what we were starting with. It became a much bigger project and we have now addressed those concerns and put the resources in place. It is not entirely an EU-driven project, is it? A decision was taken to try to get other benefits from this programme, including the land mapping and the mobile technology and so on. Whose decision was that? Was that taken by the senior management team? Was it taken by the minister? At what stage was that taken? I am being told by Dr Price that it is the senior management team, but the benefits are part of delivering a better service to farmers and getting more efficiency out of our staff. The land parcel information system is a basic requirement of the European Commission. We have to have a detailed database of the half a million fields in enormous detail. We have the mobile technology in place for doing that part of the inspection. One of the business benefits was extending it to doing animal inspections. I do not think that there was any gold plating on it. It was improving service and improving our business efficiency. The point is that you have dropped all those parts. We are not going to get any of those benefits. That seems to me that they were unnecessary. You were adding something to the project that was unnecessary at the beginning. I know that Drew wants to come in, but I hope that we explained in our previous evidence that a couple of the benefits that have been dropped and that we will bring back later are fairly minor. They are not high cost. The main issue that we faced was around how we got a compliant land parcel information system in place. We have modified the current system rather than build a completely new one, so that will be in place. Subsequent to that, we have now been told that we will need to put a completely new system in place because of changing EU requirements. Did you want to add to that, Drew? No, I was referring to the previous answer. The Lippus is a key control within the EU, and we believed that the successful path for 2015 at December 13 was to continue with the current one, with very slight upgrading. Subsequently, the commission has shown us that we need significant upgrading, and therefore a new one has to come back into scope. It was acknowledged that that is not in the current cost. However, the drive for some of it being high technology is that, during the last couple of years, there has also been a drive to the level of maintenance and accuracy that you have to have in there, as Jonathan mentioned, is beyond anything that you would imagine as to the accuracy that we have to have on the ground of all features on all maps, and we are trying to push that into the farmers' hands because they are the ones that are there every day, rather than us looking at aerial photographs or the surveys that are always out of date. Therefore, there is a whole technology drive to be more compliant and more efficient and more customer focused, and that will have to come in from the regulations. The other descoping in my mind is very peripheral. I think that you recognise what you are saying. The difficulty is that it is these additional features that have added to an already complex system that have now been dropped, but the cost has risen, so we are getting no benefits, and it has actually jeopardised the future of the project itself. Am I right? There is no jeopardy to this programme at all. This programme is on course. It will be delivered on time. What you are saying is that did these features add to the jeopardy? No, they added to the complexity and the major part of it that we descoped early on. The other two minor factors around the animal inspections in MMS, we took out, but were not a big part of it. As we said earlier, we are in a better place now than we were early to give you the assurance that we will have the first part of it up and running next month. We are now in a much more confident position to say that the next stage where the application forms are online for farmers will be in in March 2015, and we have a plan to work through the successive bits of the software to deliver them on time. When is your cut-off point if you have a deadline of May next year, May 2015, at what point are you going to agree that this programme is going to work and you are going to go with it? At what point are you going to abandon ship and put in place the contingency plans that the original general refers to? One of the decisions that we will need to make probably in the next month or two is whether that is a risk that we need to address. It will come fairly quickly. It is not something that we would make lightly and we would do so in the light of the current information. As Drew said, the programme team meets every morning. We keep a close track and progress. By the time that we have gone through another month, I would hope that the assessment in terms of the deliverability of the application forms will be even higher. We will not need to make that decision for contingency. In terms of cost, the original estimates were out by at least 25 per cent initially, that is when May, when you put in the gateway review. After the gateway review, cost rose again by another £10 million. Have cost risen since then? There are a couple of items that are not in the current business case for the examination of contingency, which was agreed by ministers a couple of months ago. We will need to scope in the cost of putting in a new land parcel information system. Neither of those are in the business case, but we keep our business cases up to date. There is a review of one coming in shortly. We report our costs regularly. They go regularly to the programme board. If things increase without a particular margin, they are flagged up. If it is within a certain margin, then they have to be reported to ministers. Dr Price and I meet two Cabinet secretaries pretty well every month to keep them up to date in this project, to appraise them of any deviation from our plan and any risk to the costs. The cost, as the committee knows from July 2014, is that the costs are already 34 per cent higher than originally estimated. You are saying that, since then, the cost has risen again. There is one particular item that we have incurred and one that we know that we will need to incur in future. Against that, we are working particularly with our IT delivery partner to look at ways in which we can mitigate costs and to keep down the pressure as much as possible in the programme. Will you give us a cost at the moment, a final out-turn cost? I cannot give you a final out-turn cost, I am afraid. You do not have a final budget forecast for this project. I think that we would rather work through our business case at the next stage and look at all the contingency options and others before we come down to a final figure. At the moment, the £137 million is going to be higher than that, but you do not know how much higher. We do not know precisely, no. Can I just ask, convener, whether you can share those costs with the committee when they become available? If you are having a review and you can have those costs, I think that the committee would want to know how much has risen again. The figure of £50 million, if we do not get this right, has been mentioned. That is just one estimate. It could be a higher than that, couldn't it? In theory, the EU tends to bring in blanket disallowances of 2.5 per cent or 10 per cent. We would, in our record in the past, average over the programme about 1.2 per cent disallowance, which is probably better than most of the rest of the UK. It certainly puts us well in the middle of the field in Europe. Our aim is to keep this allowance to an absolute minimum. That is not just having the IT system deliver the programme. It is keeping the programme complex date as low as we can. The big part of it, too, is that Drew's staff of agricultural inspectors are a big part of that. Getting the thing delivered, aside from the IT system, is one of the skills in this. Our aim is to keep that disallowance to an absolute minimum. The final question for James Dornan. Can I just say that, on Ken MacTosh's last point, it may well be higher than £50 million, but the possibility is that it would be much, much lower than £50 million. Is that correct? It is my aim to keep it. I would like to deliver a zero disallowance in the next programme. See when the original business plan was put in place, was there any flexibility in it to combat possible EU changes to the specifications? The original business plan had a figure in it with a lot of caveats because we did not know at that point what the complexity was going to be. As I said in my opening remarks, we were promised a much simpler cap when we did not get it. To be fair, as we began to work through even the basics of the system, it became clear from an early stage that our caveats were going to all be used up. We should have taken a much higher degree of optimism bias in terms of the figure that we came up with in that. Given the level of the changes that were required, the ICT report, which was mentioned earlier on, would not really have been much used to you in this case? If you had no idea of the scope that they were going to be asking for changes, you would not have been able to manage that earlier on. I think that Audit Scotland's ICT report was helpful in giving us the checklist, but it is about how we manage and run programmes. We have adopted that generally across Government. We have just delivered the Scottish wider area network, which is about £240 million again to time using that checklist. We are bringing in glow, the IT system for schools again on time. It is a very helpful report and checklist for governance, resourcing programmes, but it does not help you to scope the cost of a particular programme. The last question that I would ask is that, again, it refers to something that has just been mentioned about the farmers' payments and the deadlines, etc. It is part of the reason why you scaled back to make sure that you—I think that you said this earlier on—but why you scaled back on some of the periphery stuff, which might be an unfortunate phrase to use, but the less central stuff was to ensure that everything was in place to make those deadlines of May next year and December next year? Absolutely. That has been our predominant aim in the programme, to make sure that it is delivered to those regulatory deadlines. When we look at each of the little parcels of software, discuss them with our contractor, we want to make sure that nobody's goal-plating, putting anything unnecessary into it, that we're doing it in the most efficient way as possible, and that we're getting the right teams and their contractor staff to build that software, to do it as quickly as possible. We track their productivity, we're working with them to make sure that they have got the right staff working in those things, and their productivity is coming up. Again, that helps to give us some assurance around our ability to meet those tight deadlines. I'm sorry, I've got a video last last one, if you don't mind. Can I just ask, are you confident that you will be able to achieve those targets? Closer we get to them, the more confident them will become. The first big release of our portal in December, I'm very, very confident that, you know, other than something completely untoward happening, that will be launched. As of this morning talking to the SRO, I'm very confident that March next year we'll have the software. We are in place for the online application forms. The closer we get to each, the more detailed we can do the planning, the more confident I am. We get an excellent team in place, we've got a very good working relationship with our IT contractor. The more they deliver and the more they see things roll out, the more confident they become and the more confident I become in their place. Thank you very much. Can I just remind our witnesses that the auditor general did tell us that our state delivery of the cap futures programme will carry significant risk right up until implementation, which most of the members have asked about today, but she also said, and beyond, and I think that that does give us some concern. On behalf of the committee. Can I just explain that we explain to the auditor general, we asked for the words and beyond to be added, because even when we have a fully compliant IT system, we know from previous experience that there are many things that the European auditors will come and quiz us on, and if there are any process slips of any sort, or indeed if an individual farmer has made a mistake and we have not adequately, in the European Union's eyes, penalised that farmer, taken money off them, then we will face disallowance. It was just to emphasise the fact that getting these regulatory deadlines that we have to meet in relation to the IT and the overall business change programme, that's not the end of the story as far as potential disallowance risks is. Much of the evidence was about meeting deadlines, but I think that it is important to get that on the record. On behalf of the committee, can I thank the Government officials for their evidence, and I'll suspend the committee to allow witnesses to leave the table. To reconvene the meeting and to move on to item 3, the committee has a response from Glasgow Kelvin College to the Auditor General for Scotland's report entitled the 2012-13 audit of North Glasgow College. I invite questions and comments from committee members. Colin Beattie? I have to say that what I see before me here is very disappointing. It seems to be a litne of errors and misjudgments. If I look at the conclusions that are on Annex A page 1, if I look at those individual components, the remuneration committee has not met for a number of years and they give reasons for that, but they are pretty weak. The remuneration committee should be meeting periodically. The committee received inadequate management support. The committee was unaware of SFC guidance. They are paid to know. They are professionals. They are supposed to be aware of that. The college had no severance policy requiring compliance with SFC guidance. Why not? Comment is made further down the page at paragraph 6. The governance applied to this agreement was inadequate. The chair of the board also chaired the remuneration committee. The board also authorised the payments. You can go through the reports bit by bit and just take it apart. On page 9 of the report, paragraph 45, there is no evidence that any specific HR advice was received by the committee. I think that the whole thing is absolutely shocking. It is hard to know where to start. Who made the decisions on gardening leave? Who decided that that was a good idea? It was never used, so clearly it was poorly thought out. The actual report by Scott Moncrief does not come to any conclusion other than the actual facts, which I suppose is all that it can go to, but what is the college doing with this? What is its next step? This is completely inadequate. It is appallingly poor. It is a very bad indicator of how colleges handle these things. We would say that North Glasgow College no longer exists, but it is merged into Glasgow Kelvin College. Indeed. Obviously, we are looking at this snapshot in time and what happened around that. I would say that what has happened here is certainly not best practice. It has been poorly executed. I think that it has to be investigated further to ensure that there is no recurrence of this. No, I thank you for that. I cannot say that I disagree with anything that you have to say if any other member has got issues that wish to raise James Dornan. Thank you. My concerns around the governance of the issue, I had been on a renumeration committee before and we met when required and we always made sure that our decisions were reported to the full board and were made on public record. That, for me, is one of the big issues. There are a number of issues around about the moneys paid and the gardening leave and the fact that they do not seem to have complied adequately with what they should have done. I think that there are lessons to be learned. The convener is right that North Glasgow College no longer exists, so there is not really anybody who is at fault here or to blame here, but it is a case where we have to take the lessons from here and make sure that the SFC gets that message out to all the colleges and any other bodies that they are responsible for. I think that my interest would be trying to get an idea of exactly when the not only did the board know about this, but the role of the non-executive members in pulling all this together. The issue in terms of going forward for me would be something along the lines of, are the people who are in the present college system aware of the rights and responsibilities of non-executive members in pulling this sort of thing together and ensuring that it does not happen again? I think that you are right. If we were looking for a template of how not to do things, that is probably what we are facing today. Before looking at how we go forward to the committee, Kenneth McIntosh. When you read the support, there is no audit trail that has been criticised and flagged up, but the remuneration committee gave evidence that they were aware of the settlement and did approve it. The worrying line for me was the fact that they did not identify the full cost to the college because of either confusion or misinterpretation of the guidance from the SFC and an assumption that it would be funded. The college marriage process was a highly controversial one, a highly political one, and something that received quite a lot of scrutiny and attention. I would quite like to know, I would like to be reassured as to what monitoring of this did take place. I would very much like to know the relationship between not just this college, but the other college mergers and the SFC and the Government. I would like to know if it is possible for us to ask the SFC what they knew of the process. They knew that three colleges were coming together. They did not only require one principle, and therefore arrangements were made for the other two principles. How much involvement did they have, how much notification were they given? Particularly given, as Colin Beattie said, the committee was unaware of SFC guidance. I am also right in saying that the additional funds that were required led the college into a deficit position, so it was a very serious position. That is exactly it, but the assumption clearly felt that they were receiving assurance from somebody. I would like to ask the same question to the Scottish Government as well. How much were they kept in the loop? What notification were they given, either by the SFC or the colleges themselves? The options that we have with the report, which is gathering the thoughts around the table, does give some serious cause for concern. We can note the response. We can seek further written or oral evidence on the issues raised in section 22 from the Government, the Scottish Funding Council or other relevant stakeholders. I am aware that we are looking forward for assurances. Alternately, we can refer the report to the education committee. I will go to Colin Beattie and Bruce Crawford. Can I suggest that we need some further comment from the Scottish Funding Council? We can talk about oral evidence on this. We may be written, which will allow us to look at what they say and decide whether it is something that should be taken further forward. We may need to look at some of the other stakeholders. It is difficult with the college not being there anymore, otherwise you would call on them to come forward. Yes, but I think that certainly the SFC, my concern is that if this college was unaware of its guidance, we would need an assurance with the new college structure moving forward. I am on with Ken here. I think that he is nailing the head here in terms of the specifics on this college. We certainly need to go to the funding council to ask them what they knew about it, what guidance was available to the college, so that we can see what that looked like. On the generalities, I think that general assurance from the SFC and from the Scottish Government about whether it would be difficult for the Scottish Government to depend on what is happening in each individual college, because, obviously, there were independent bodies at that time, but what they knew of the other processes. I recognise how tough that might be for the Government to get that information, because it will not be easy. I think that we are really looking forward here, as you say, in North Glasgow College no longer exists, so we want an assurance that we are not looking at the worst of practice, but we are looking at the best of practice in the future. Are the committee content that we write to the SFC and the Scottish Government to seek the answers that the Scottish Government raised? Yes, I know that both are the same questions, but— The same question is just to find out that the college itself seemed to be under the assumption that they were getting funded. The funding came from— The funding came from the support that they get, but— That is right. I would just like to find out whether the Government had any direct contact with what was the involvement, because this assurance clearly is not auditable, so I would just like to the Government to say, what did they know about the process? How much were they kept informed? How much direct involvement did they have? I am happy to write to them. I just do not really understand what it is that we are right to ask them. When we ask them, did you tell somebody, do not you worry, we will give you money to pay people off? Yes, I am fine to just find out what their involvement is. Surely that is the role of the Scottish Funding Council to have managed that. I would have thought that that was the obvious place to write. If you think that there is a benefit to writing to both the Government— I think that it would also be helpful. James Gardening-Leave was mentioned by Colin and others. Given that we have a smaller structure of fairly successful merged colleges, it would be nice to get an assurance from the Government that the guidance is in place and that no one can plead the evidence in the future. That is the way that I am looking at it. We write to the Scottish Funding Council and the Government to seek the assurances that have been raised by members of the committee today. Is that agreed, Bruce? First of all, I will make sure that we know exactly what we are doing here. First of all, on the specifics of the college, what guidance was available to them, what information, what did the Scottish Funding Council and the Scottish Government know about it, but more general terms in terms of the rest of the college structure, assurances or what they know about what actually happened on the ground as the mergers went through? Yes. I think that we just go back to Colin Beattie's point. It is the conclusion in the report that the remuneration committee had not met. That is not acceptable, as James Gordon has said. The committee received inadequate management support. That is not reasonable. The committee was unaware of SFC guidance. I do not think that that is acceptable as an excuse. The committee had no sevens policy requiring compliance with SFC. I think that we are moving forward if we can have an assurance that those are in place that lessons have been learned. Is that all right? Finally, Molly. Thank you, convener. I just add in a further comment from seeing examples, perhaps not similar to this but in the same issues about governance and accountability. For me, putting guidance in place does not guarantee that people will implement or even read that guidance. We have seen a few examples of that over the years. How ultimately do we our boards and colleges accountable so that we can make sure that they practice and put in place the guidance that is issued to them? We expect them to do it and we hope that they will do it, but how do we make sure that they do it? You would hate to think that something like this could occur again without any accountability line? No, I think that that is a very good point. I think that that is a reasonable point, and that is something that we cannot ask the Scottish Funding Council. I just think that it is unacceptable to say that the guidance was there but we did not know about it. In terms of Willie's position, I think that what we should do is ask the Scottish Government to explain how the changes that have been made to the college structure will improve that. That is the real issue. The governance on how it used to work was that those were very much stand-alone organisations, but it is not quite as much. How would they make it better? I am quite happy to do quite a detailed letter covering the points that will be circulated to the committee to make sure that the issues that you are concerned about are covered. Are we agreed with that? Our next item 4 is a section 23 report on reshaping care for older people. Again, the report was looking at the progress three years into a 10-year programme. The Scottish Government has committed to providing further information on some of the committee's recommendations once on going work has been concluded. Can I invite questions or comments from members on reshaping care for older people? We have various options. We can note the responses. We can request further oral written evidence. We can highlight issues to the Health and Sport Committee or we can ask for a progress update on any report recommendations in the next Scottish Government progress report, which is due in May 2015. That was quite a worrying report from the Auditor General, if you recall. I think that the comments were that there was limited evidence of progress being made. In fact, instead of shifting resources from the acute sector to community care, what is actually happening is that the community care budget is going down and the acute sector is going up. We heard evidence that there is a number of policy pressures on the sector, as well as reshaping care for older people. Perhaps the bigger one is just waiting list targets and other things. They have priority when you might say, well, they are not meeting those targets right now, but that is a separate issue. It was felt that they are not actually making progress and that there was limited. Therefore, it is a non-sustainable situation. I think that there are concerns. Exhibit 11 illustrated that out of all the commitments, three out of eight have made progress, but I do appreciate that we are three years into a 10-year programme, so it is taking that into account. We have had an evidence session on this already with Paul Gray. I do not see much point in going back over it again. There was a promise under paragraph 7, however, which is that the Government is working to develop indicators and outcomes for integration. I assume and will if I come back to the committee with this next year. I will be honest with you, although we have got concerns and we have aired them. I am not sure that the response entirely addresses them. It just talks about what is already happening and clearly isn't making a difference. It is going to come back to the committee, and I am quite happy. I think that we do receive a progress report. We have, of course, done our own report on that. I just do not feel that we can't truly expect every eight recommendation to be met within three years, but I think that we are looking at the progress, which I appreciate is disappointing. Let's remember that this is an additional £100 million that is going in to support health and social care partnerships and so on. One of the issues that came up at the committee was the integration of data, localised data to help us to manage the processes better. Members can see from the Government response on page 3 that it is rather catchily titled health and social care data integration and intelligence project will enable local authorities to link social care data with health data. That is one of the issues that comes up from time to time, convener, about how those different systems and areas of responsibility that were probably sort of independent previously are now coming together and, of course, the burden to bring together data that manages that and gives us the right—I am pleased to see that, but I do not underestimate the difficulty that that could bring us, particularly when you look around Scotland, for example, when you see that GP systems are kind of different all over the place. I am wondering how, among all the health boards and local authorities, we will proceed with that, but I am happy to keep an eye on that and get some progress on that as it develops, because it is crucial that it is about data management and it is about doing it correctly for people next time. I could not agree more, so I think that basically we do have some concerns. I agree with the general thrust that we need to come back at a later date, but I think that, to me, one of the key paragraphs is paragraph 2 that highlighted what they are trying to do to shift the balance of care and the various methods that they are trying to employ and then suggested further down that there may be savings available from the acute sector on that. I, for one, am not convinced that they may get savings, but that does not mean to say, of course, that that will transfer into care in the home, for instance, because we all know that the huge pressures are on the health service and, while there might be savings in this area of the acute, that does not necessarily mean that it will automatically come into other parts of the service. It may have to remain acute to allow them to continue to deliver, so I would like to understand when we get that update if there are savings going to be identified, actually, where they are going to be applied. Well, I think that your comments are on the record. I think that we do not underestimate the complexities of this issue. I think that we do not underestimate the complexities of this issue. Can I ask colleagues if they are content to note this response, given that we will receive a Scottish Government progress update in May next year? Our next one, I think, probably got Kenneth McIntosh's name all over it. Section 23, report managing early departures from the Scottish public sector. We have had evidence from the Scottish Government to the Auditor General's report. Can I just invite some questions and comments from members on this issue? I have named you Kenneth. I am straight to you. Thank you very much, convener. Just to remind members what evidence we have heard on this, the Auditor General's report, which flagged up weaknesses in the approach to early departures, we also had, as we had took evidence on this, we explored further difficulties about the use of confidentiality or gagging clauses, and, in response—I think that you remember this—we had a very satisfactory response originally from the head of the service. In response, the Government has changed its practice and its policy, or at least it says that it is going to. Of course, the difficulty that we have is that it said that it had a policy of not using confidentiality clauses in the health service, but we know that not only does it use them, it uses them virtually in every single example, and it has been growing every year. Clearly, the worry that we have is that we are able to monitor the commitment not to use these clauses. What the Government is going to do from now on is that it is going to report annually to Parliament, and not only that, it has expanded the number of bodies in which it will report, and it will collect the information century. That has to say to be applauded, and I look forward to seeing that report. The only points that I would make are that, although it will report on settlement agreements, it will not report on voluntary redundancy, which, as you can imagine, is one of the biggest costs and one of the biggest schemes. It is perhaps worth noting that, given the previous agenda item on the redundancy programme for senior management at colleges, it is very important that Parliament itself is able to at least cast an eye if not ask further questions about how much money is being spent, because we are talking about hundreds and hundreds of millions of pounds—huge sums of money being spent on redundancy and the second part being the confidentiality agreement. Although the police authority is covered, police Scotland is not. In other words, police officers, settlement clauses and redundancy payments for police officers are not covered. It is something to bear in mind, because we know that a couple of cases have been widely reported of officers leaving and being given very generous settlements, and then being re-employed a matter of weeks later in some cases. Similarly, universities—I am pretty sure that colleges are covered, but universities are not. It is to bear those in mind, but I am happy to note that the Government is not covered. I agree with you. I think that we have moved forward on the issue. There is now a presumption against confidentiality clauses, and it is fair to say that there is more transparency, whether there is enough or something else. The auditor general is in the room, so I am sure that she has heard what you are saying about Police Scotland. Crawford, did you want to— I agree that we have just noted that. Ken made some pretty sweeping statements. Without looking at some of the numbers, I am not prepared to accept what Ken said in terms of the health service. I need to go and look at it just because he said that it does not make it right. I think that what Ken was talking about is what was historical. We are actually moving forward. The main point is that in terms of voluntary exit schemes, it is entirely clear from the letter that we got from the head of civil service that the numbers of staff leaving the voluntary exit schemes and associated costs are reported in the consolidated annual accounts for each public body. They are reported centrally to Parliament, so there is oversight by this Parliament of that. I remind members that at the end of our last meeting on 5 November, the auditor general confirmed that she will report back to the committee with further information on the number of settlement agreements and the use of confidentiality clauses in the NHS, along with any concerns that are raised by local auditors. Let me correct the record. Sorry, I made a mistake. I should have put in the word not reported centrally to Parliament, but they are available for the accounts that I meant. There is more transparency, whether it is in office or something else. Are the committee members agreed to note the submission and bearing in mind that we will receive a further report from the auditor general? The next one is on modern apprenticeships. We have had written submissions from Skills Development Scotland and the Scottish Government to the section 23 report on modern apprenticeships. We took evidence from Skills Development Scotland as long as it goes to 28 May. Following that, we sought clarification from the SDS and the Scottish Government on several issues. Do we wish to note the submission, seek further written or oral evidence? Do the committee members have any questions or comments that they wish to make? Any suggestions? James Dornan, I think that this is also an issue in the education committee. Are the committee members agreed to note the report? We are doing a real mopping-up exercise today, so sorry about that. We are now on to agenda item number 7, section 23 report on self-directed support. Again, we have a 10-year strategy running to 2020, and the auditor general reviewed the early progress of the report and gave a commitment to continue to monitor the strategy as part of its work on the NHS. Just so happened, I was talking to a social worker from Fife last night and he was saying that a lot of progress is being made on the ground. Again, we have six years before the strategy will be fulfilled. Are there any questions and comments or do committee members wish to note the report or seek further written evidence? I think that this is clearly a major change that is taking place in our communities and in our services. One that has the support, I think, of all the parties in Parliament, but one that is also quite painful. In many cases, there are budget cuts, but there are also changes to self-directed support, and they are happening at the same time. A lot of daycare services that are provided by local authorities are being closed as people do not use their own budgets to purchase those daycare services. It is quite a traumatic process for some, but this is a particularly useful letter because it tells us how the Government is going to collect information about it, including, in note, a survey regarding the views and experience of social care users and their carers, which I think is very useful. I am sure that the health committee will appreciate this as we will too when we come back to it in about a year or whenever we come back to it. I think that it is worth coming back to it and also the complexity of the merging of the health and social care budgets, which Willie Coffey mentioned earlier, James. Yes, I am delighted that everybody supports it. I was really happy to hear that you had a social worker you were speaking to last night. He was happy with it because it is a great thing. However, it would be nice if there was a more uniform way of local authorities implementing it, because there does seem to be huge differences between the way local authorities are taking SDS and running with it, and Ken touched on daycare centres. I think that when you raise the cost of daycare centres to a fairly exorbitant amount, it is a disincentive for people to use them, so I think that local authorities should think very carefully about that. I think that you are absolutely right. I used to monitor how many local authorities gave direct payments, which went through in the health and community care act in the first parliament. Five was always the leader in direct payments, so the social worker that I met last night was from five, so maybe they are just in the lead. However, I think that the committee are right that it is worth monitoring and it is quite a complex issue. There are many changes happening just now. Are we content for the time being to note the submission? I am pleased to say that we can now move into private session. I thank all members for their forbearances as I stand in for our normal convener, Hugh Henry.