 I welcome you to the 26th meeting in 2014 of the Infrastructure and Capital Investment Committee. If you have not already done so, I remind you to switch off all your mobile devices as they do affect the broadcasting system. I have received apologies from Gordon MacDonald today, and Gil Paterson is attending as committee substitute. Gender item 1 is items in private. The first item is to seek the agreement of the committee to take items 4 and 5 in private. Item 4 is to consider the evidence taken earlier on draft budget scrutiny 2015-16, and item 5 is to consider the committee's approach to the freight transport inquiry. Are members agreed? Are agreed. Thank you. The second item of business today is to hear evidence from Cabinet Secretary for Infrastructure, Investment and Cities on draft budget scrutiny 2015-16. I welcome Nicola Sturgeon, Cabinet Secretary for Infrastructure, Investment and Cities, Sharon Fairweather, director of finance of transport Scotland, Dominic Munro, deputy director of housing and sustainability and innovative finance, and Scott Mackay, infrastructure investment unit of the Scottish Government. I welcome you all. Cabinet Secretary, would you like to make an opening statement? Thank you very much, convener, and thanks to the committee for the invitation to be here. As we see private sector investment start to recover and economic growth strengthen, the role of the Scottish Government moves very firmly towards supporting strategic investments that underpin improvements in productivity, growth and wellbeing over the long term. That includes investments in transport schools and digital infrastructure. We are also investing in affordable housing, energy efficiency and health facilities to help to address the challenge of poverty and inequality to improve wellbeing for some of the most disadvantaged people and places in the country. Those objectives underpin the spending plans that I am about to quickly run through. First, we are looking at our capital investment programme. They are focused on sustaining the economic recovery. We will deliver more than £8 billion of investment over 2014-15 and 2015-16. That will support around 40,000 full-time equivalent jobs. That, of course, is despite some significant cuts to our capital budgets. To help to address and compensate for those cuts, we are extending our revenue-funded investment through the NPD programme by £1 billion, taking that programme to £3.5 billion in total. Out of that additional £1 billion, we are investing more than £300 million in schools for the future, £400 million of additional health investment and two new college campus developments. We also continue to directly support infrastructure spending through switching from resource to capital, utilising capital receipts and through the regulatory asset base rail enhancements. We do all of that while continuing to maintain the commitment that we have to allocate no more than 5 per cent of our future Dell budget on the costs of revenue-funded investment. Our annual progress report on the infrastructure investment plan showed that, in 2013-24, infrastructure projects worth £625 million completed construction. We are making good progress in delivering the NPD investment programme with almost £650 million worth of projects beginning construction in 2013-14 alone. We continue to make excellent progress in taking forward our key investments. Queensbury Crossing is on programme to be delivered in 2016. We have secured a further £50 million of savings, taking the total reduction to the cost estimate to £195 million. Work progresses towards completion on time and on budget of the New South Glasgow hospital project. Schools for the future programme will now deliver over 100 new or refurbished schools by 2019-20. 17 of them are already complete and operational. Lastly, construction is under way to deliver significant improvements to the M8, M73 and M74. The budget enables us to deliver on our commitment to provide at least 30,000 new affordable homes over the life of the Parliament. Since publication of draft budget 2014-15, the budget for housing, regeneration and welfare has been augmented to reflect deployment of additional funding of £200 million. That includes additional loans and equity funding of £160 million to support the housing sector and additional resources for regeneration and affordable housing. We have also included £35 million in the draft budget for discretionary housing payments in order that local authorities can mitigate the impact of the bedroom tax in 2015-16. Turning quickly to transport, on-going investment in transport obviously connects regions and people to economic opportunity, so it is vitally important in contributing to national social cohesion and reducing inequality between different parts of Scotland. Our investment in the transport infrastructure such as the Queensford crossing or the dualling of the A9 between Perth and Inverness plays a key role in creating the best possible conditions for business success. As I have mentioned, a cumulative total of £195 million worth of savings has been released from the fourth replacement crossing project since construction started. That means that the five-mile stretch of carriageway between Cincreig and Delradiate on the A9 will be the first of the 12 dualling schemes to be brought forward and is due to be completed in 2017, which is six months earlier than anticipated. We have also increased our plans for expenditure and air and ferry services, recognising the importance of them and reflecting the acquisition of Presswick airport, which we will come on to talk about later on. We are also increasing our expenditure on support for sustainable and active travel by a further £10 million to £25 million. We have now invested more than £84 million in active travel since 2011, as well as publishing our plan to replace petrol and diesel vehicles with electric vehicles by 2050, and back by more than £14 million of investment until March 2016. In contrast to that, we have been able to reduce the budgets for rail franchise and rail infrastructure to reflect the efficiencies that have been secured through the new franchises, which have, of course, secured improvements to services. At the end of September, I wrote to the committee to inform you that I had agreed Scottish waters investment priorities for the next regulatory period. The committee will be aware that that runs from 2015 to 2021, and I agreed the principles that should underpin customer charges. The investment programme is worth £3.5 billion. It is a massive programme of investment. It will support growth by allowing new customers to connect to public services and will enable mandatory standards in relation to drinking water and environment to be met. In addition to that, that scale of investment will support some 5,000 construction jobs across every part of the country. The Government's contribution to that investment programme is £720 million of new loans, and in 2015-16 we will lend £80 million in support of the first year of the new investment programme. Charges for the next period are due to be confirmed by the end of this month by the Water Industry Commission. The commission indicated in its draft determination in March that household charges will be capped at 1.6 per cent, and business charges will be frozen in nominal terms. That is a quick run through the key headlines of the budget convener, and with those remarks, I am happy to take questions from the committee. If I could start off, cabinet secretary, the committee and the witnesses that we have had on the budget have, to a large extent, welcomed the increased expenditure on investment budget. However, it is estimated that most of that increased expenditure is on projects and programmes that will, in the short to medium term, increase Scotland's greenhouse gas emissions, and there has even been a small reduction in the expenditure on projects and programmes that had the potential to reduce that in the medium to long term. As we all know, Scotland has missed the annual climate change targets in 2010, 2011 and 2012. Given that your portfolio contains many of the policy levers in what ways do you think spending plans set out in the draft budget in this portfolio help Scotland to get back on track in meeting the forthcoming annual climate targets? Let me try to answer that with some key points. If it is okay, I will maybe touch on transport and housing separately there, because they are both very important areas of government responsibility in terms of meeting our climate change targets. Let me say, just as the preface to my more detailed remarks, that meeting our climate change targets remains a key objective and priority of the Government, and that objective runs through all of our budgetary decision making. In my own portfolio, if I look at transport, just to take some key points here that are pertinent and important in terms of reducing greenhouse gas emissions and meeting our targets, we are doing a number of things. Many of those things were manifestal commitments for the current Government, for example, developing the infrastructure to support electric cars and increasing the proportion of transport spend that goes on low-carbon, active and sustainable transport. Those are key priorities at the moment that will see emissions savings flow from investments that we are making now. If I look particularly at sustainable and active travel, we have committed substantial funding over the current spending review period. 200 million pounds will be invested over 2012-13 to 2014-15 to reduce the carbon impact of transport, and in current plans that will be over 300 million over 2013-14 to 2015-16. We are also doing a lot to develop different networks and to develop strategic partnerships to reduce transport emissions. For example, one that has a very long title here, so forgive me in advance, switched on Scotland a road map to widespread adoption of plug-in vehicles. That was developed in conjunction with a wide range of partners that were launched just over a year ago. We have also instigated an annual cycling summit with local authority leaders to lead on and monitor progress in our cycling action plan. Lastly, a future transport fund is supporting a range of sustainable transport infrastructure improvements—low-carbon vehicle fueling, charging infrastructure, green buses, shifting freight from road to rail and sea, and cycling and walking infrastructure. The budget for the future transport fund in 2015-16 will be up from 2014-15. It will go up to 20.25 million from 18.75 million. On housing, the energy efficiency of our housing plays a significant role in meeting our climate change targets. In my view, we are making good progress on improving the energy efficiency of our housing stock, which has improved steadily since 2007. We still have a lot of work to do, but we are making progress. The Scottish house condition survey indicates that in 2012, 44 per cent of homes had a good rating in their energy performance certificate, which compares with only 16 per cent in 2007, so that gives some idea of the scale of progress. We also know that Scotland is outperforming the rest of the UK on the delivery of energy efficiency measures through Eco, the energy company obligation. We have seen nearly 12 per cent of the total measures that are installed in Scotland, while we have just over 9 per cent of the share of households. We estimate that investment under Eco in 2013-14 was about £170 million, and we have an on-going commitment to just under £80 million of government funding in household energy efficiency. I am happy to go on for as long as you want me to, but those just give some examples and help to give a flavour of the particular approaches that we are taking to make sure that we are delivering spend and designing interventions across transport and housing that are not just about making sure that we have got the right transport infrastructure and the right housing provision, but we are doing that with a view to the environment and reducing greenhouse gas emissions. I am sure that my colleagues will draw more deeply into that, and Jimmie will start off. The committee has been looking specifically at the impact of the budget on reducing our greenhouse gas emissions and whether the Government is in a good place in meeting our ambitious climate change reduction targets. With that in mind, our predecessor committee, as part of the 2011-12 draft budget scrutiny, said that any future carbon assessment brought forward by the Scottish Government should adopt a methodology that would enable comparisons to be made from one year to the next to aid in understanding of how emissions from the budget are changing over time. However, a number of our witnesses in evidence have suggested that it is difficult to tell from the budget document what the actual impact of the spending plans will be on Scotland's climate change emissions targets. I am aware that there is a related document that sets out how the spending plans will support the delivery of the climate change act implementation plan, but that has been quite a gap in the publication of the budget and the publication of that more detailed analysis. I am just wondering whether we have actually got it right yet in terms of enabling the Government and the external environment to assess whether or not the Government is on track to meet its targets. I would start my answer to that question by saying that I do not think that we should sit here and assume that we have everything right and that there is nothing that we can do better both in terms of the substance of what we are doing to try to reduce greenhouse gas emissions but also in how we report and monitor progress against that. We will continue to listen to both the committee and to expert stakeholders about how we improve how we do all of that. You referred specifically to the document that is related to the budget setting out how our spending plans support delivery of the climate change act implementation. That is the document that you were referring to, which was published last week. I have heard it or read it in some of the evidence to the committee that there had been some delay in the publication of that document. There has been no delay in that at all. The information was published and the Minister for the Environment is currently in the process of writing to committee chairs about it. That document is published as soon as it is practically possible to do so after we publish the level 4 budget data on which that information is based. That allows time for additional parliamentary analysis of that. That information is available there now and gives the committee the opportunity to look in more detail at how our spending plans relate to our obligations under the climate change act. I have already run through some of the headlines of that. That information is there for the committee's use. Can we do it better? We should always try to do these things better. We should always try to improve and refine. I know that some organisations have pointed to the use of carbon accounting methodologies to monitor trends over time. I think that the Government is keen on doing that, not just to enable us to better monitor trends but to make sure that exercise is consistent across the public sector. I am not going to push you on the issue of the delay. I am content with the explanation that you provided. I know that witnesses will have heard that. Other than to observe, it is not something that we have been able to factor into our process. The witnesses have not been able to take that into account, but I am sure that being the intelligent people that they are, they will find ways of communicating with the committee if there are issues that they want to raise. The wider point is that, by supporting investment in infrastructure, as you have outlined this morning, such as support for active travel, that could have a very beneficial impact on reducing greenhouse gas emissions. Active travel will have an on-going impact on health spending and improving energy efficiency of existing homes can result in a reduction in fuel poverty. How do you make sure that, when you are prioritising spend and allocating spend, you are taking those issues into account? We do that partly by common sense and partly by a systematic process. The Government has a policy appraisal toolkit that states that any potential intervention should consider financial, economic, welfare and distributional benefits. If you take transport as a particular area of the budget, Scottish Transport appraisal guidance has a section that looks at policy integration impacts. Those would look not just at the financial impact or in terms of what you are talking about, climate change impact but disability, health, rural affairs, social inclusion. Right across how we budget, we try to assess and factor into our decision making the various different impacts that any one particular policy intervention would have. Underlying your question is a premise that I absolutely agree with. If you improve cycling or walking, sustainable transport generally, then yes, you are going to have a positive impact on the environment, but you are going to impact people's health and wellbeing as well. We know that if you take housing as another area that if we invest in the energy efficiency of housing, then absolutely we will have a positive impact on greenhouse gas emissions over time, but we will also improve health, improve the cost effectiveness in terms of people heating their homes, improve the wellbeing of people that come from living in warm, watertight homes. We have an analysis that suggests, just as an illustrative example, that every £100 million that we spend on energy efficiency measures, we also create more than 1,000 jobs across the country, so there is an economic impact as well. That interrelated policy impact is something that feeds right through our decision making on all budgetary issues. You mentioned carbon accounting methodologies, can I ask you specifically? When we are developing those to monitor trends, is there any particular work that the Scottish Government is undertaking to help to standardise those methodologies so that all of that work can be appropriately cross-referenced? The specific work that the Government is doing, which is work that we are doing through the Public Body's duties under the Climate Change Act is to work with local authorities in the wider public sector health boards, higher education institutions, NDPBs and Government agencies to look at how we standardise and make consistent the monitoring and reporting of operational emissions from the public sector estate. I am not going to attempt to go into all the complexities that I am about to refer to, but carbon accounting is a very complex topic and the methodology adopted can depend on the purpose and the nature of the monitoring that has been undertaken. There is UK and I think that there is international guidance available for organisations to use when they are measuring and reporting environmental impacts. All organisations should use approaches that are appropriate and proportionate to their particular activities, but the work that we are doing is to try as far as possible to make sure that there is a consistency of methodology and a consistency of reporting and monitoring across the whole public sector, which I think in years to come will be useful to a committee like this, as well as useful in terms of making sure that we are meeting our targets. I will ask you finally about active travel. A point that has come up in evidence from witnesses, specifically spokes and Transform Scotland, has pointed to the fact that there is a need for greater clarity of how the actual funds are to be spent on active travel, because that is not always clear. I readily can see that this is possibly a question more for officials than it is for you, Cabinet Secretary, but nonetheless it is an issue that causes concern. The example that they have given is that there are two funds at the moment, a sustainable and active travel fund and a future transport fund, but it is obscure as to how much of that the money within those allocated expenditures is spent on active travel. It strikes me that if the Government is increasing investment, as it says it is and as I believe it is, it is not necessarily getting the credit for that, because it is not clear in those budget headings how much of that money is being spent on active travel. The suggestion that they have made is that, in order to support greater transparency, they could replace those two budget lines by having one for active travel and another for other future stroke green transport. Is that something that the Government would be willing to look at and consider? I am happy to take that away and consider that. I recognise the issue that has been raised. It is not in the Government's interests for the money that we are spending to be obscured in the midst of a complicated budget document. If there is a way that we can make that more transparent, easier to understand and easier for people to see exactly where that money is going, then I am happy to go away and look at that. The one caveat that I have inserted into discussions like that in the past is that we have also got an obligation to make sure that you, as a committee in Parliament as a whole, can look year to year in our budget and draw lines between the different lines year on year to see what the trends are. Often, if we change how budget lines are presented, we can run into criticism from the other end, which is that we are making it difficult to compare year on year. With all of that stated, I am more than happy to look at that. There is probably an even deeper issue than the one that you have outlined there, because there will be other parts of the budget and other parts of activity that include support for sustainable and active travel that are not shown in either of those lines. Let me give you one example of that. If you take the new rail franchise, you know that there is much in that that is about supporting infrastructure for cycling at stations and on trains. Now, that will not show in either of the budget lines that you have spoken about, but nevertheless it is support for active travel that is supported by Government investment. So maybe as well as what you are asking me to consider, we need to consider how we draw out all of the support for this particular area from all of the different parts of the budget to make it easier to look at the totality of the support that we are providing. If we move on to other transport issues or transport issues in general, Mark. There was consensus from a lot of the witnesses that the Government had a strong record of support for sustainable and active travel and that there were a lot of good pilot projects and strong work done by local authorities and universities in developing those projects, which could make a difference to the Government achieving the greenhouse gas emission targets, but there was consensus again about a concern that those projects weren't being rolled out quickly enough right across the whole country and that more funding was needed and that the Government should look at benchmarking with other northern European countries and move more towards 10 per cent of the transport budget being allocated to that sustainable and active travel, particularly given the additional social and health benefits. Does the cabinet secretary agree with those witnesses who have called for more funding in that budget line? I absolutely sympathise with the sentiment behind those comments and the sentiment behind the question. I think that I can say fairly categorically on the part of the Government that we are very anxious to maximise the support that we can give to sustainable and active travel, not just because of its impact on the environment but for all of the other benefits that Jim Eadie referred to in his questioning. That is why we have been increasing the budget line here and we have seen into next year's budget quite a substantial increase in sustainable and active travel and the future transport fund as well, albeit that I have said that we will look at how that is presented. We are doing what we can within a budget that is fixed, so we have to make choices. Every time we increase spending on one thing, we have to take that investment from somewhere else. We have put forward a draft budget that gives proper priority to those issues, but we have a willingness and an appetite to go further in the future if we can find that resource within the budget. The first part of your question was about the speed at which pilot approaches are scaled up, rolled out and looking to benchmark ourselves across experience from other countries. I think that you particularly mentioned Nordic countries. I have a lot of sympathy with that as well. I would not just apply that to sustainable and active travel. If you look across Government, I think of many examples in my former responsibilities as health secretary, particularly around e-health, for example, where we are not always—the issues that are involved are very different, but we are not always as perhaps as quick as we could be at taking experience from small-scale trials and scaling that up into a larger scale. I think that there is more that we can do there and we should be challenging ourselves all along. One of the other issues that I picked up as I read through the evidence to the committee was a commentary on the long-term certainty of funding. Again, I absolutely understand where that comes from. We have been keen to set out a long-term strategic commitment to sustainable and active travel through not just the recent track record and funding that I have spoken about, but also the cycling action plan for Scotland, the RPP2 commitments. What we run into, though, is a UK spending review timetable that means, for example, that we cannot commit to more than a one-year budget at this time. We have a constraint there, but within that constraint we want to give as much certainty through long-term strategic plans as we can. As I started out by saying, we want to give as much support to sustainable active travel as we can within the constraints of our overall budget. That point that you raised about long-term funding has been raised by one of the criticisms that particularly comes to match funding. That long-term certainty would be beneficial because a strand spoke about being able to allocate £19 million of funding that is required to be match-funded. It was well outbid. It was £23 million of applications that it received to match fund that. The appetite is certainly there among local authorities, and that long-term planning would certainly benefit. I recognise the constraints around the UK spending. Another concern that was raised particularly by Sustrans and Stop Climate Chaos, and it comes back to your point about the balance of spending in the budget, was the focus particularly on spending on roads. If you believe that the current spending in the road-building programme is the best use of Government funds in the long-term to tackle greenhouse gas emissions and congestion. A certain Conservative member was nodding vigorously as she posed that question to me. Our road-building programme fulfills a number of our objectives within the overall purpose that we set ourselves as a Government, which is to make the country more successful through increasing sustainable economic growth. If you look at our on-going motorway and trunk road programme, that will return significant benefits to the country. It will deliver substantial direct economic savings to businesses and individuals. Those are savings that flow from better transport links. We will also see benefits through greater road safety and better accessibility. The benefits of our current transport investment programme are there for all to see. I am moving on to the crux of your question. Does that run counter to our objectives around reducing emissions and meeting our climate change targets? What is fair to say is that all other things being equal—I stress that first part of my sentence—if you increase road kilometres for whatever reason, that will lead to an increase in road emissions. The thing is that not all other things are equal. The other side of the equation is not in equilibrium. The RPP sets out the various ways in which we are intervening to cut emissions per road kilometre. Importantly, the other measures are taking to encourage mode switching so that we can bear down on the actual number of road kilometres that are driven, cut down and congestion. Those bear down on the emissions per kilometre. It is not a case that all other things are equal and you invest in roads and emissions go up. A couple of examples of the effect of what I am talking about in transport might be helpful for the committee. The average emissions from new cars has fallen year on year by over 20 per cent in the last decade. If you look at 2012, which is the last year that we have got those figures for, 55 per cent of new cars registered in Scotland fell into the category of emitting less than 130 grams of CO2 emissions per kilometre. 55 per cent, 10 years ago, that percentage was 3 per cent. We are improving on that side of things so that we are not in this situation where other things are equal. I accept readily that there is an on-going tension running through this, but I also know that the country needs modern fit for purpose transport infrastructure to keep our economy strong and competitive, but we have to balance that with the measures that we are taking to ensure that we are cutting emissions through the fuel efficiency of the cars on the road, encouraging people where they can and not to use cars, encouraging, as far as possible, the mode switching that I spoke about. Those are two sides of an equation that we have to keep in balance and we try to do that through all of the decisions that we take. Adam, you mentioned in your opening remarks a significant increase in the housing and regeneration budget, something like 37 per cent. You will be pleased to know that that has been warmly welcomed by the witnesses that we have had before us and, indeed, agreement with the general policy direction of the Government in this area. However, there were concerns that that would be targeted at the appropriate mix of housing to meet housing demand and targeting of the funds for optimal greenhouse gas reductions across Scotland's housing stock. How would you respond to those concerns? I will take them in two parts, which would be appropriate since your question. I think that it was in two parts in terms of the mix of houses and how we ensure investment in houses that are meeting energy efficiency standards. Before I come on to that, it is just important to reflect on the substantial increase in investment in the overall housing and regeneration budget. However, looking particularly at the affordable housing supply programme budget for next year, that is £390 million, which is an increase of about 21 per cent on the average of the previous three-year periods. I hope that that is a very strong signal of the importance that the Government attaches to housing for social purposes but also for the purposes of economic recovery. On the part of your question about the appropriate mix of houses, we take a resource planning approach that effectively puts councils in the driving seat of deciding what the appropriate mix is in its own particular area. That enables councils to be flexible and to look strategically across their area to determine what is required. They then put forward proposals to the Scottish Government for social and affordable housing developments, and all of that should be based on their local housing strategy. We take an approach that is not about the Government looking across Scotland as a whole and deciding what housing developments are needed, where and with what mix of house types and tenures. We think that local authorities are in the best position to assess, based on their local housing strategy, what the needs of their own areas are. That is the mix. In terms of how we contribute to building homes that are more sustainable and more energy efficient, we are strongly encouraging developments to be built to a higher level of sustainability than the current minimum requirements would demand. We offer an additional £4,000 subsidy per house through the affordable housing supply programme, so additional money can be accessed for houses that meet a higher standard of energy efficiency and sustainability. All new homes that are built within the affordable housing supply programme will help to make significant contribution to reducing greenhouse gas emissions, because they emit around about 70 per cent less CO2 than a house built—an equivalent house built—in 1990. That helps to reduce emissions and to reduce fuel bills for people living in those houses. From October next year, improvement to new build energy standards will reduce carbon dioxide emissions by around 21 per cent for new dwellings when compared to current levels. Those standards will be slightly more demanding than standards that are set across the rest of the UK. I hope that that gives some sense of—obviously, our affordable housing budget is trying to get as many houses built as possible, but how we allocate that budget is intended to ensure that we are getting investment to where it is needed and in the way that it is needed and the way that we are building houses is designed to make sure that we are contributing to the climate change target requirements. Sticking to energy efficiency, what investment does the Scottish Government believe is necessary to cut emissions while also helping to eradicate fuel poverty? You mentioned in your opening remarks something like 70 to 80 million pounds as dedicated in a budget to energy efficiency measures. Some of our witnesses indicated that, while that is welcome, it was short of what was actually needed. I think that existing Homes Alliance Scotland indicated a figure of 125 million and that was before we heard about the loss of funds from the energy company obligations measures to improve existing housing stock, which you also mentioned in your opening remarks. We understand that some 50 million pounds have been taken off that funding. There is an issue there in terms of sustaining and maintaining and improving funding for energy efficiency measures in the current housing stock. Could you ask for your response to that, please, cabinet secretary? There have been changes to eco and there are changes to eco under wages now that, in a whole variety of ways, have complicated and made things more difficult. Some changes have been welcome, but one of the frustrations that we have is that we do not control the overall design of these energy efficiency schemes. I am on record and will continue to say that it would be far better if we were able to have responsibility and design these schemes ourselves that would allow us to integrate and align them with our own activity much easier and much better. In terms of the scale of funding, as I indicated in my opening remarks, we are committed to spending £79 million a year through our home energy efficiency programmes, but the key thing about that investment is that that investment is then intended to lever in additional investment under both eco and other sources so that we intend to create a combined fund of around £200 million a year. Now, exactly what that will be will depend on our success at leveraging in that extra money, but we have a good track record in that to date. I think that I mentioned earlier on as well the recent statistics that come from DECC, which show that Scotland is outperforming the rest of Great Britain on the delivery of measures through eco. I will not go into all those statistics again, because I think that I mentioned them earlier on. We are getting about 12 per cent of measures versus 9 per cent of households. Investment under eco taken with our own budget allocations, which is our energy efficiency programmes of warm homes fund, green homes cash back, all of that would indicate a total investment in the order of about £260 million, which is in excess of the £200 million that I spoke about. That is what we have got to spend. I think that we can do an awful lot with that. I suppose that, like any other area of the budget, if you had more, you would like to be able to allocate more, but I think that I am correct in still saying this—I am sure that I am not correct in saying that somebody will correct me if not today then in future—that we are the only—certainly England now does not have Government-funded energy efficiency programmes. I think that with the commitment that we have got to the £79 million of Government investment every year, that does set us apart from certainly some other jurisdictions across the UK. I think that I am not talking out of turn here, but I think that the consensus view in the committee is that energy efficiency in our homes should be a national infrastructure priority, and I would imagine that that will form part of our report on the budget process, cabinet secretary. I would welcome that, because I agree that it should be a national priority. I think that some of the facts and figures and information that I have given there suggest that we are doing reasonably well, if I can put it as modestly as that, but if we had more responsibility for the design of something like Eco and were able to align that better with the Government funding, I think that we could do even better than we are doing, and hopefully in the not-too-distant future we might have that. We could also do something that I spoke about during the referendum. We could decide not to fund the main part of our energy efficiency programme through energy bills. We could do that through central Government funding, which would take some pressure off energy bills and allow that funding to be secured more progressively than it is when it is put on everybody's energy bill, regardless of their income or circumstances. There would be a lot of benefits to us as a Parliament having more responsibility in that area. It is just a supplementary question, and it follows on from the previous question about energy efficiency. It has been suggested in evidence that the greener innovation funds could be used to greater effect to incentivise builders to go beyond minimum standards and provide financial support for smaller building companies when they are building. I suppose that part of my question is about, if you look at the chicken and egg principle, because for companies to energy proof and put in all the measures in their homes and then reflect it in the price, it is about allowing consumers to understand or house buyers to understand the benefits of finding the house. It is about the demand needs to be there, people need to fully understand, and we need to use the funds better. I wonder how we can use the funds to incentivise, encourage and educate people about the value of buying greener homes. That is a good question. I think that we are through the various funding streams that we have here, including what I spoke about in terms of the affordable housing supply programme. We are trying to incentivise those who build houses to go beyond minimum standards. We are about to consult in the spring next year on draft minimum energy efficiency standards for private homes, both on and occupied in private rented sector private homes, and minimum energy efficiency standards can then help to drive and stimulate demand for low-carbon homes. We are engaging actively with stakeholders to look at the opportunities to increase demand to help to drive the market. That definitely involves work with consumers, both to identify what matters to them when they are buying a home but also to do what you are saying, which is to raise awareness and understanding among home buyers of the benefits, not just in terms of the environment but in a more immediate sense, in terms of the cost of heating their home of buying low-carbon energy efficiency homes. There is an awful lot, if the committee is interested, in some of the work in terms of demand stimulation and consumer awareness that is on-going around that. We can provide some more information, but it is a very important aspect of that work. I will theme a little bit on the need to stimulate the demand for energy efficiency housing. It has been suggested by some of our witnesses that the Scottish Government should consider using its tax-raising powers to stimulate the demand for energy efficient housing. For example, using the land and building transaction tax bans to incentivise energy efficiency housing or using energy ratings as conditions in any help-to-buy schemes. I am very open to looking at how we design our schemes and use the powers that we have to improve energy efficiency and stimulate demand. It was an issue that was discussed during the passage of the land and buildings transaction tax bill. There were amendments to that effect. That should be used to try to stimulate, to take up energy efficiency measures. Parliament did not choose to go down that road for a variety of different reasons, but in general, yes, we should be looking at how we do that. As was the case with the land and buildings tax, there are often very good reasons why what is proposed will not have the desired effect. That was certainly our judgment of the proposals around LBTT, but we should be very open-minded to and particularly put tax aside in how we design energy efficiency schemes and how we fund the building of houses and how we are directing the resources that we have around that to stimulate demand, to increase people's appetite for the uptake of energy efficiency measures. If we move on to digital infrastructure, Alex. When we spoke to expert witnesses over the last couple of weeks, we got a clear indication that, while there was a certain satisfaction with the level of investment in digital infrastructure, they still believed that it is a field in which a little more could go a very long way. Is the cabinet secretary convinced that sufficient investment is being put into digital infrastructure? I am satisfied that there is very significant investment being put into digital infrastructure and an absolutely necessary investment going into digital infrastructure. Just now, as you will be very well aware, because we have spoken about it at committee before, the vast majority of the current investment that we are making is on the delivery of the two next-generation fibre broadband projects that are currently under delivery by BT. Total public sector investment in those two projects over five years is almost £300 million, so it is a significant investment. Obviously, there is investment by BT on top of that. There has also been some further investment announced. We are also investing through community broadband Scotland in community-based schemes for those areas where next-generation broadband will probably still not go. I am sure that reasons of budget history do not appear in this portfolio. The funding for this will be the responsibility lies in my portfolio. The funding lines are shown in the rural affairs portfolio, so there is significant investment under way there in terms of providing the infrastructure. That investment is absolutely necessary, not least because of what it is doing to bring a backhaul network to a lot of our island and remote communities for the first time. Although it is a necessary investment, it is not sufficient on its own to deliver our 2020 vision of world-class digital infrastructure. We have recently charged Scottish Futures Trust to look ahead of the investment to identify technical options for delivering connectivity anytime, anywhere, using any device, but also to look at how we explore appropriate financial models for the investment of the future that will come after the investment. There is some initial work under way on that just now that will lead to an analysis of options that will probably be available in the spring of next year, and that will start to provide us with the basis for future investment plans. There is also a whole other issue that is integrally connected, but it is about how we increase and improve uptake of digital infrastructure as well as providing the infrastructure that we are investing in as well. Without wishing to dwell on my personal grief, I have maybe mentioned it to you before, that I live in the centre of a town that has a high-speed broadband and a blaze of publicity two years ago, and I cannot get it because I live too near that stage. I have told you that we have deliberately excluded you from it. Indeed, I suspect that that is the case, but it does highlight that there are a range of difficulties across the country. What steps are being taken to improve access of individuals and businesses is the superfast fibre network in order that the potential of Scotland's digital infrastructure can be properly realised in short order. I should, for the record, make it clear that we did not deliberately exclude Alex Johnson from it, in case people in years to come look back on the official report, and I think that we were a very, very cruel Government. I think that I wrote to you about—did I write to you about—you raised that before, or am I thinking of somebody else? I think that I may have written to you about your particular issue there. I do not know if I have seen that. If I haven't, and I am mixing that up with another letter, I will be happy to address, in the fullness of time, the particular issue and the locality that you talk about. More generally, what we do, while the infrastructure here is vital, so you cannot give people access to infrastructure that does not exist, so the infrastructure investment is vital. So, too, is the investment that is looking at going beyond where this main investment will take us, to the parts of the country that are particularly hard to reach. There is some top-up investment to our main investment, which will help us to do that, the community broadband Scotland. We have increased funding of it from 5 million to 7.5 million, working with communities to look at bespoke solutions that will help them in their own localities. We are also investing in demand stimulation so that there is no point in having this infrastructure if we are not equipping and enabling individuals and businesses to take full advantage of it. There is a whole programme of work here from the provision of the infrastructure through to the skills and the ability of businesses in particular to take advantage of it that is on-going. My very strong view is that this in the modern age is as vital as a good transport infrastructure. With the investment that we are putting in, because of the geography and the topography of Scotland, there will inevitably still be people who struggle to get the kind of quality of access that those of us living in urban areas take for granted. However, we are making a step change at the moment through this investment in terms of who and how many people will be able to access next-generation broadband. It is significantly ahead in parts of the country of where the market itself would have ever taken us. Finally, on this issue, perhaps some of the discussion that we have had has raised the idea that there may need to be further regulation to open up infrastructure to competition. Do you think that the regulatory environment, as it exists in Scotland today, is adequate to take forward what we need to do, or do we need to look at regulation in the longer term to open up competition? I think that there are undoubtedly improvements that could be made. I do not want to immediately start banging on a more powerful drum, but there is an issue here about the split of responsibilities, where we have a responsibility around fixed broadband, mobile, telephony is still largely the responsibility of the UK Government. There are issues about how regulation should be able to pick up any signal anywhere. There are lots of discussions on-going, not just with the Scottish Government generally, about how regulation in this area should develop. I think that, undoubtedly, there are, in the future, different and arguably better ways we could look to regulate in order to get the best services for people. Can I just follow up on Alex's point about, you know, we get a BT and the Government saying, you know, this and that, those communities are now connected to superfast. I think that there is a disconnect between that happening and people realising that they have to take a step themselves to get that superfast into their homes. Is enough being done by the providers to encourage people to take that step to access what the infrastructure that is being put in? I hope so, but I am certainly very happy to look at this and look at this on an on-going basis, because, as I keep saying, having the infrastructure is one thing, making sure that people are using it and accessing it is another. The infrastructure that BT is providing, of course, is open source, so it is not, you do not have to have BT as your provider in your home, you can use anybody. So I am more than happy to look at this. We are trying to be as open and transparent around the development of the infrastructure as possible, and there is a website that people can go to to look at progress. That also involves being very careful that we are not raising expectations in a particular community ahead of the proper surveys and technical work being done to ensure that that community will be a beneficiary of the project. So there is a cautious approach, but we are trying to take a very open and transparent approach, but the particular issue that you are raising about are people getting enough information and awareness that they then have to make sure that they are accessing that. I am very happy to go away and look at that and see if there is more that we can do or encourage our partners to do to make people more aware than they are. I raise some questions about the future opportunities and innovative ideas. Could the cabinet secretary highlight any innovative practice or programmes that the Scottish Government is considering for future investment or infrastructure plans that could contribute to meeting their G-H-G emissions targets, improve traffic congestion and support sustainable and active travel? There is a whole range of innovative approaches that we are trying to take right across the spectrum of government and within the portfolio in particular, so I could run through a range of different innovative funding methods that we are using in terms of construction of houses, which are not all solely about reducing greenhouse gas emissions. A lot of that is about how we get more houses built for the available resource that we have. In terms of greenhouse gas emissions, the policies that are in RPP2 are rolled out and evaluated. What we get are emerging findings on the measures that are more successful and that then allows us to look at how we can be more innovative. Technology also does not stand still, so we have to keep abreast of that. The pilot study of, for example, smarter choices and smarter places identified that mode share changes are achievable in targeted populations, so our further round of funding next year for that highlights what we now think are the most appropriate and effective approaches to take to that. We are doing work on alternative fuels, where we are actively supporting the development of hydrogen as a fuel source. Aberdeen is shortly going to see the first hydrogen bus operational, and Aberdeen City Council understands that it is already going to hydrogen fuel vans in its fleet. Mobile technology, the ability to use apps to better plan journeys, to use smart ticketing and pay for services, are examples of how we are trying to be innovative in how services are delivered to make them easier to access for people, but how we encourage people to shift from cars to public transport and to use more fuel-efficient means of transport. Those are just some examples, but I could go right across or send the committee information in much more detail about how we are trying to be innovative, but also make sure that we are not left standing as technology moves on. Can I further ask you in order to meet the GHG emission reduction targets of at least 42 per cent by 2020, what the Scottish Government is spending priorities for the next five years likely to be? Obviously, our spending priorities for next year are set out in the budget that we are discussing. I said earlier on in relation to Mark Griffin that we, because of the UK spending review cycle, cannot set out spending plans beyond that one-year timescale at the moment. However, in terms of our spending priorities, much of what I have been talking about today will form our priorities, so making sure that the country has the right infrastructure to support sustainable economic growth to meet our targets in terms of emissions reduction, to make sure that we are providing houses that people need where they need them, with the right mix of tenure, making sure that we have a transport infrastructure that is both servicing our economy but supporting that shift in the way people travel that will further support our climate change obligations. In that portfolio, those are our broad priorities. How they will then be supported by specific spending plans will require to wait until the other side of the UK spending review, so that we can set those out in the knowledge that comes from that. Cabinet Secretary, in your opening remarks, you mentioned the new borrowing powers that the Government has. You mentioned the 10 per cent, the £304 million that the Government intends to borrow in 2015-16. Do you know how much of that will be or has been already in the budget allocated to infrastructure, and what projects we will figure in that spend? I am not clear whether the level 2 financial transactions include part of that. The borrowing capacity that we will have will support our overall capital programme, so it is not allocated to individual specific projects. You will not look at the budget and see if some of that goes to a particular hospital, roads or school. That capacity is taken into account in the overall assessment of what we are able to invest across our capital programme. I suppose that the simplest way of putting it is that looking ahead to the borrowing powers has enabled us to increase the total level of investment that we estimate that we can undertake over the period that we are talking about. That increased level of investment is reflected in the draft budget that we are scrutinising today. It is important just to stress that point that the borrowing powers are not limited to individual project finance, so we will draw down on 304 million is what we estimate that it will be borrowing that will be available in 2015-16, as we require it, and that will then sit with all of our other available resources to support the overall investment programme that is reflected across the budget. Mary, you have had some extra questions on housing. I just wanted to ask an additional question around housing, cabinet secretary. It is around the increase in the level 4 figure for housing supply. It is expected to provide 6,000 affordable homes, of which 4,000 will be social homes, and will allow the Government to continue to support innovative financial finance methods for the housing sector. If you have any more detail on the exact mix within the 6,000 homes that will be built of what that would look like, and obviously the help to buy has been very successful. I wonder if you could perhaps give us some detail around what other types of innovative finance methods you intend to use. In terms of the first part of your question, looking at the affordable housing supply budget, which I have already said is £390 million, the majority of the homes that will be supported through that will be homes for social rent, but there will also be homes for mid-market rent in there. There will be some shared equity provision in there as well. Those will be delivered mostly through grant, but there will also be some loan funding for our open market share equity scheme, for example. We also give guarantees through loan funding for the national housing trust. We have an out-turn report every year from the affordable housing programme that will be able in due course to let you look back and see what the exact mix will be. I cannot tell you now looking forward what the exact mix will be, but I think that I have the breakdown for 2013-14 where just over 7,000 in 12 affordable housing completions and of them 4,368 were social housing completions. That gives you a sense of what the breakdown there was, but in due course that very precise information will become available for future years as well. The second part of your question remind me was about innovative financing. I think that you mentioned at the start of that part of your question help to buy, which has been hugely successful. We are continuing to support help to buy into next year. We have made some changes to the eligibility, and I make no apology for that. We want that money to be able. We have a finite resource, and we want the resource that we are allocating to help to buy, which is £100 million next year to help as many people access the housing ladder as possible. Other innovative ways. We have got quite a substantial chunk of our funding in housing now comes from financial transactions from the UK Government. I should say that I would not choose to receive funding in that form because it severely restricts what we can do with it. Effectively, it is loan funding that has to be repaid, and there are limits to how we can invest that. It is welcome in the sense that it is resource that we would not otherwise have, but I would rather just have straight funding that gives us proper flexibility. Much of the financial transaction funding is being used on what would be described as innovative ways of funding housing. For example, just some illustrative examples of that would be around open market shared equity. We are looking to extend that. We have housing infrastructure loan schemes that are trying to unlock housing developments by offering up some funding for some of the infrastructure development that has to go around them. The national housing trust has been very successful, and we are looking to have developed and will continue to look at variants of that, which will be appropriate in different circumstances. We have invested in the ground-breaking, in many respects, in charitable bonds to support the construction of social housing and some community project financing, such as the warm homes fund to tackle fuel poverty. Those are all innovative ways of trying to invest in things that we all want to invest in and also help us to use a particular form of funding through the financial transactions that is not as easy to use as straight grant funding is. I note that the financial charges for NPD and PPP are not actually stated specifically in the budget itself. I wonder if the cabinet secretary could say how much the IC funding line has been spent on NPD and PPP projects payments? There may be more information that I can send to the committee about that afterwards. The first thing to say is that there are no NPD payments in 2015-16, because none of those projects have yet got to the stage where we are starting to make the revenue payments for them. What is included in the 2015-16 line will be PPP contract payments. In budgetary terms, in the IIC portfolio for 2015-16, those payments will amount to £89 million in the region. They relate to three transport PFI projects, M6, M77 and the M80 steps to hags. That is the extent of PPP revenue payments. Within the transport side of things and the current NPD investment programme, probably the first payments there will kick in in 2016-17 and will flow from the M73, M74 motorway improvements. If there is more information, I would be happy to see what the committee wants and provided, but those are the headline figures. I suppose that it is an on-going operation to try to find ways to reduce those charges. The legacy ones that we have to live with in terms of NPD. NPD is a far better way of financing infrastructure projects than the old PPP method was. What comes into play here and is very important is what I referred to in my opening remarks. Whether it is NPD, the legacy PPP, borrowing capacity, or any scheme in which we are effectively borrowing in order to pay through our revenue budgets over a longer period of time, we set the 5 per cent ceiling on that so that no more than 5 per cent of our Dell revenue budget is being taken up by on-going revenue payments. That is an important discipline for us. We want to invest as much as we can in infrastructure, but we have to be mindful of the obligations that are putting on revenue budgets for many years into the future. I think that there are a couple of items that I went through that I offered to send more information. We will follow that up. If there is any further information that the committee wants before concluding its report, we would be happy to provide it. I will suspend the meeting for a few minutes. We are slightly ahead of time and we are going to be joined by other MSPs for the next session, so I will suspend the meeting. If we can resume committee proceedings, agenda item 3 is Prestwick Airport. We are going to hear evidence from the cabinet secretary again this time on Prestwick Airport. The update was offered by the cabinet secretary when she previously gave evidence on the matter in June of this year. I welcome Nicola Sturgeon, cabinet secretary for infrastructure, investment and cities, Sharon Fairweather, director of finance and joining us, John Nicholls, director aviation maritime freight and canals from Transport Scotland of the Scottish Government. I also welcome Chick Brody, James Kelly and John Scott, who are attending for this item. I will take questions from committee members first, but if you want to catch my eye and come in on the back of a question, rather than hold your questions until the end, that would be preferable. Progress continues to be made in the work to return Prestwick Airport to profitability. It is going to be a long-term project, which I have always said, but progress is under way. What I want to do today is to give the committee an update on this work and also an overview of what comes next. As you have said, I am accompanied today by Sharon Fairweather and John Nicholls. They are, as you have indicated, part of the senior management team at Transport Scotland, but perhaps more pertinently for the work of today. They are also board members of TS Prestwick Hold Co Ltd, which was the company established for the purposes of the Government's acquisition of Prestwick. There have been a number of developments since I last gave evidence to the committee in June. Some of those issues are covered in my letter to the committee on 16 October, but there are some further updates that I want to give today in addition to those covered in my letter. First, if I can touch on corporate governance and update the committee on the arrangements for this, as I indicated previously, we have established a two-tier board structure with a holding company board, which will be responsible for the long-term strategy for developing the airport and give the Government an important oversight over that strategic development of the airport. Secondly, an operations company board, which will empower management to deliver the strategy. That is a point that I will stress at many times, no doubt, during the course of our discussions. The responsibility now for running the airport lies with the management team at the airport. The airport will be run on a commercial basis at arm's length from the Government. Following an open recruitment process, I am able to advise the committee today that I am appointing Andrew Miller as the non-executive chair of TS Presswick Hold Co Ltd and the operating subsidiary. Andrew has a wealth of experience in business development across the aviation sector. Amongst many other posts, he is a former chief operating officer of the global aviation business at Air New Zealand, and I will provide the committee with details of Andrew's CV, which will give an insight into why he is an excellent appointment as chair. His job now will be to work closely with the management team to take forward the proposals in the vision statement, which was published on 31 October. It is worth also—I know that this is something that has been of particular interest to John Scott—updating the committee on our arrangements for local authority representation on the Hold Co Ltd. Further to the work that we are undertaking with South Ayrshire Council on the newly created stakeholder groups that will be chaired by the council leader, which will initially focus on supporting the airport spaceport submission. I can advise the committee that we have agreed that membership of the Hold Co Ltd will include the council's chief executive in an observer capacity. The council has also proposed and I have agreed that the Hold Co Ltd chair will become a member of the wider stakeholder group. What that will enable is a close integration between the development of the airport and the wider economic strategy and development of South Ayrshire generally. The membership of the two boards will now be completed by recruitment to the board of the operating company through an open procedure of a number of non-exec directors. Going forward, the non-exec chair and directors will oversee the operation of the airport. They will support the senior management team to implement the repositioning and provide appropriate and robust corporate governance of all of his activities. As I have said already, the airport will operate at arm's length from the Government, and this new structure helps to reinforce that. Moving on to the strategic vision, which was published at the end of October, the document includes plans for investment, business development and the optimum operating structure that is deemed required to take the airport forward. I was just very briefly highlighting some of the key actions that are detailed in the vision document that has been taken over recent months. They include investment in infrastructure, adjustments to the operating cost base of the airport, particularly to align that with changes to the winter schedule, improvements to the passenger experience, which has been reflected in passenger surveys. The airport also hosted recently the Scottish Re-established Scottish Airshow. It has delivered new airshare chamber of commerce and industry offices within the terminal and secured the long-term future of search and rescue at the airport. It is worth pointing out—I say this with a degree of caution because I think that we have got to take a long-term view of those things—that freight tonnage is up by 38 per cent in this financial year compared to last financial year. In an environment that remains very challenging, there are nevertheless some signs of growth in aspects of the airport's business. Going forward, the strategic vision builds upon the stage 2 business plan, which the senior adviser developed. It includes as much of his work as possible without impinging on commercial confidentiality and the airport's ability to operate commercially. That is a point that I will be unapologetic in stressing today. If we expect this airport to operate commercially and we do, we have to allow the space to operate commercially. That means that a degree of what it is planning in terms of the return to profitability requires to have that degree of commercial confidentiality. However, recognising that it is in receipt of Government investment in the form of loan funding right now, it is, in my view, appropriate that I and any successor of mine reports regularly to this committee on progress in turning the airport around. As a strategic vision details, the overall aim is to operate the airport in a safe, cost-effective and efficient manner and to develop and enhance its variety of business interests in order to return it to profitability, with the long-term intention of returning it to the private sector. The senior management team is now tasked with delivering the vision statement. They have in doing that to take account of the winter 2014-15 schedule and the summer 2015 flight schedules. They also have to take advantage of new opportunities and, obviously, for reasons that we all understand, the spaceport attracts a lot of attention in terms of a new opportunity, but there is a whole range of opportunities that have been identified for growth at the airport and it is their responsibility to advance all of them. To touch on a couple of points, route development and air passenger duty, I will give a brief update on investment before stopping to take questions. On route development, when I last appeared before the committee, I said that we would commission work in two areas—the new EU rules in support to airports and air passenger duty. On route development, we have now reviewed the new aviation guidelines and we are aware of both the constraints and the opportunities that they represent. Increasing the number of direct flights from Scotland to international destinations is one of our key objectives. We have had significant success over the last year working with all of our airports to support route development ambitions, but there is much work still to be done there to help airlines to ensure that new routes are sustainable in the long term and to help us to fill gaps in our international connectivity. We will continue, as Government, to help all our airports in that highly competitive market. On air passenger duty, work that we published in October showed that cutting APD would lead to an increase in passenger numbers at Scottish airports and press week would benefit from that, alongside our other airports. I think that one of the biggest things that could be done right now to help route development at press week in particular, but all of our airports generally is the devolution of APD. I know that Scotland's airports support that as do a number of airlines and I very much welcome the recent submission that three of our airports published. The aviation industry repeatedly cites APD as one of the major obstacles when it comes to securing new routes, as well as maintaining existing routes, and we have to be absolutely firm that getting control of that and being able to do something about that would be very, very beneficial, not just to press week but in particular to press week as we go forward. The last area that I want to cover convener is around investment. The picture here has not changed since the last update that I gave to the committee. We have to date advanced a total of £7.5 million in loan funding to press week. £4.5 million of that was in financial year 2013-14, £3 million of that so far in 2014-15, and we anticipate providing a further £7 million in 2014-15, but that does not change the totals that I outlined to the committee at my last appearance. Members will be aware, and we have just had budget scrutiny that we have included provision for £10 million of loan funding for press week in the draft budget for next year. I repeat what I said before, all of our investment in press week is in the form of loan funding. We require to make a return on that investment for the taxpayer, and that will continue to be our objective. The final point that I would make on investment is that it is worth just to put that into context, remembering—I think that you raised this point, convener, at the last meeting. Press week airport is estimated in the last year that we have figures for here to have contributed nearly £50 million a year in gross value added to the Ayrshire economy. My final point is just to remind everybody why we are here. If the Government had not acquired press week airport, it would be closed right now. That is the stark reality. We did acquire it because we think that it is important to the Ayrshire and the wider Scottish economy. Having done so, we recognise the challenges that we face in turning it around. We think that it can be done, but everybody who agrees with us that press week is important and that it was not the right thing to do to allow it to close now has to get behind us and, more importantly, get behind the airport in doing the hard work that will be required to make this airport a success. Thank you very much, cabinet secretary. I thank you for making the strategic vision report available as soon as it became available. There is a lot to get through in this document. You mentioned that it is the aim of the Government to return it to profitability and private ownership. That will be welcomed by other airports, especially Glasgow, who at any body that I am at, where there are representatives of Glasgow airport, they always mention press week as a threat rather than anything else, particularly because it is in private ownership. Does the Government have a target date of when it would like to return it to private ownership? I am not prepared or able to put a date on that at the moment. The most important thing for me to do on all occasions and not least on this occasion is to be frank with the committee. I believe that it can be returned to profit. If the Government did not believe that, we could not have acquired it in terms of the European state aid rules that we require to operate in. I believe that it will be done, but we have to be patient and we have to recognise that there is no quick fix. The aviation market is not only competitive, it is highly changing, so the airport has to have a range of options at its disposal, and it has to seek to increase its business and expand its business across the whole range of the spectrum of what the airport does. It is going to take time, and anybody who thinks that there is a quick fix, if they want to tell me what they think it is, I will be very happy to hear it, but we need to be patient around all the things that are in the strategic vision. If we do that, then I believe that it can be returned to profit. As time passes and as we start to see some of the work that is being done bear fruit, ministers who are sitting here on a regular basis over the next few years may be able to give a more definite prediction of when that time might be, but at the moment it is important that we back the airport management in order to do the work that it has to do. I believe that press can flourish in the market that we have. I am a Glasgow MSP, I want Glasgow airport to flourish. I know how hard all our airports have to work to win routes, to sustain routes and to win business, and I would not underestimate that for a second. However, if you look at some of the successes that Glasgow has had and is having, even in the year since we acquired Glasgow Presswick airport, I would suggest that Glasgow is a very good proposition with or without Presswick. The management team is doing an excellent job in growing that airport, and I think that it is important to put on record. You mentioned the loan funding that Presswick airport has already had and will get over the next few years. Are those loan funds reducing operating losses and is the operation getting on a sounder footing? When do you think that you will begin to see a return on the loans? Again, let me break that question down. The loan funding that we are providing is doing a mixture of things, but two things in particular, enabling the airport to operate, enabling them to pay the bills in an operational sense that keeps them running. I went into some of that in detail at my last appearance. Some of that is capital investment to undertake some much-needed capital maintenance at the airport. This is an airport that has been neglected for a long time, both in terms of the fabric of the airport but also in terms of the leadership vision for the airport. We are trying to bring a lot of that back up to where it should be. There is also some of the funding that is about what we have described as capital repositioning, so it is not the capital spend that is absolutely essential to keep the airport running, but capital spend that it is considered will help to increase revenues, so making the duty-free area more conducive to people who want to buy things, improving the customer desks, things that will help with the other objectives, which is to grow the passengers and grow the business at the airport. I think that I said last time that the capital investment will peak this year and next year, and we have set out in next year's budget the £10 million that I spoke about. In terms of when that Government support can start to reduce, that is tied up very closely with how successful the management team is now in getting on to reduce the losses at the airport and to grow the business in order to reduce the losses, and that is what they are absolutely focused on. In terms of the repayment of the loans, that will flow from our judgment of when the airport starts to move back into profit. I am not going to sit here today and give a definitive timescale for when we can return the airport to profit to the private sector, nor am I going to give a definitive timescale about when we will start to see the payment of those loans, because those things are tied up. However, I remind the committee that, overall, we have to make a return on taxpayer investment, so repayment of the loans with that return is an absolutely essential underpinning part of everything that we are doing. Alex Rowley. One of the great disappointments over the last year for Prestwick anyway was the announcement that Ryanair was going to begin services from Glasgow. Could you give us an assessment at this point of what impact that will have on Ryanair's plans for future development at Prestwick, and what question mark does that put over the viability of future passenger services? I am glad that you said that it was a disappointment for Prestwick. I think that Glasgow would not describe Ryanair's decision here as a disappointment, and it is obviously a very good news story for Glasgow. Ryanair is hugely important to Prestwick, obviously. Ryanair has made very clear the retain and on-going commitment to Prestwick airport, and I very much welcome that. I think that it is important for members to—I know that members are aware—to remember that the importance of Ryanair is not just in terms of the passenger services that they operate in and out of the airport. Their maintenance and repair facility is located at Prestwick as well, which, for Ryanair, makes Prestwick important, but also that Ryanair is important for Prestwick. Personally, I have had discussions with senior management at Ryanair, and I believe that they are committed to the airport. They have been very clear in return with me that they think that APD is the significant constraint on passenger growth at Prestwick. If APD was to be removed, it would change substantially its ability to put new routes and new services into the airport. They have been very frank about that. Obviously, there are other issues around how Ryanair wants to position itself as a business going forward. Anybody who has travelled Ryanair recently, which I have from Prestwick, I have to say, will know that they are going after more of the business market. Consequently, on that, they are locating themselves more at mainstream, as opposed to subsidiary airports. We do not operate separately from that overall operating environment, but I am satisfied that Ryanair remains committed to Prestwick, and it is now for the management team to work with them and with other prospective customers to grow that part of the business over a period of time. The cabinet secretary spoke at someone fairly earlier and again in her last answer about air passenger duty. Its devolution and its eventual removal are a subject on which I may even be willing to join her on the barricades at some point in the future. However, could she take the opportunity at this point to explain to us how it is interpreted that the removal of APD would particularly benefit Prestwick airport given that, if it is abolished in Scotland as a whole, surely the danger is that spare capacity at other airports may be taken up before new services arrive at Prestwick? To be clear, I am not saying that APD will particularly or solely advantage Prestwick. Getting rid of APD in Scotland or substantially reducing APD in Scotland would benefit all of our airports. That is the starting position, but it would benefit Prestwick as one of those airports. Michael Leary of Ryanair put it quite starkly last month when I was talking about the effect in Scotland of scrapping APD, where he said that it would effectively double in size. It would go from 3.5 million to 7 million passengers in two years with £1.5 million more at Edinburgh and £1 million more between Glasgow and Prestwick. When you look at where Prestwick is just now, that kind of increase in passenger numbers, even if Glasgow and Edinburgh are benefiting as well, would make a substantial difference to the revenue and profitability of Prestwick airport. Do not read into what I am saying that APD abolition is somehow a particular benefit for Prestwick, but it will benefit Prestwick. There is absolutely no doubt about that. The other side of that is that it is a significant constraint in terms of passenger traffic in what the management of the airport is trying to do just now. In a roken in statement, the cabinet secretary also spoke about root development. I and others in the party have suggested over a number of years now that the reintroduction of the root development fund would be the way to go. You have said about how you wish to support root development. Is the new advice that you mentioned earlier does that rule out any return of the root development fund in a recognisable form? It does not enable us to return to the kind of root development fund that was in place before the new rules, as they were then, in 2005, came into place. Just to remind members of the background to this, the European Union's 2005 aviation guidelines effectively forced the discontinuation of the root development fund, as it was at that time. The aviation guidelines that have been published earlier this year, which update those, do not materially change that situation. However, within those guidelines, although we cannot have a national root development fund, we can and do work with our airports to support root development. That is done on our Team Scotland approach right now, where we will offer marketing support to new routes, and that can be offered to Presswick just as it can to other airports. Because Presswick has below 3 million passengers a year, there is also the possibility of more direct help around airport charges. The airport itself is able to offer deals to airlines in terms of airport charges within certain rules. Local authorities do not operate quite within the same constraints that the Government does. I know that South Ayrshire Council is looking at some options around root development right now, and we will no doubt give its own views on that in the fullness of time. Therefore, there are things that we do with our airports and things that we can do with Presswick. There are things that local authorities can do. What we cannot do is re-institute a national root development fund along the lines of the one that previously existed. How effective do you think the co-ordinated marketing strategy will be in attracting additional routes and services to Presswick? I think that it has got the potential to be effective. Without having a go at the previous owners of the airport, it is one of the things that just did not happen in the way that it should have done. Having a co-ordinated marketing strategy that looks at existing routes at the airport and how to get more passengers on to existing routes looks at marketing Presswick and the Ayrshire economy. Part of the marketing approach will be to work with Visit Scotland to market the area as a destination of choice. The third component is actively marketing the airport with airlines in order to encourage overtime with all the caveats around the APD that I have inserted there to look at new routes and new airlines operating out of the airport. That is the kind of strategy that they need to be taken forward, that they have not been implementing for, I do not know how long since they have operated a proper approach like that. It is not going to overnight deliver new routes and new airlines into that airport. Nobody should be under the illusion that that is going to happen, but that kind of approach, over a period of time, can start to drive a growth in passenger numbers, which is one of the elements of the revenue base of the airport, not the only one, but one of the elements that we want to see increase. Just in terms of the comment that was made regarding Glasgow, there are actually two elephants in the room, a big elephant and a baby elephant. The big elephant is what is going to happen to London and the south-east and the investment, not just the airport but the infrastructure around it. I was down there two weeks ago when they had a problem. The baby elephant is recognising the unique capabilities of Prestwick in getting support from the other airports in Scotland. It is MRO capabilities, the ability to handle big jets. How can we get the overall acceptance of a Scottish aviation strategy that embraces all the airports working together and recognises their capabilities? First, I think that we have to be realistic. Our airports are in competition and we have to recognise that. That is why the Government has to take an airport neutral stance when we are offering route development. For example, our marketing approach will be offered to whatever airport wins a particular route, not tied to any particular airport. There are other things that I am sure that we can take a more strategic approach. I think that getting Prestwick to be very focused on where it sits in the scheme of things is the first thing to enable that to happen. Again, one of the things that has just been lacking at Prestwick is that—forget the way that it sits in the overall strategy—it is its own strategic approach to developing its business. I said at the last occasion that when you look at the airport's base revenue, less than half of the revenue comes from direct aviation. I will immediately qualify that by saying that some of the other half of the revenue you would not get unless you had aviation. Unless you have passengers, you are not going to have people buying perfume in the duty free. Those are all integrally connected. However, there are other aspects of the airport's business. Some of the facilities at the airport, the runway, the length of the runway, the weather conditions all add up to making that an airport that has a diverse range of possibilities. What we need to get the management team focused on is developing all of those. That is why the document has a range of different options. The last thing that Prestwick should be doing right now is narrowing its focus, because one of its strengths is the diversity of what it can develop. I should say that I am about to offer up the management team to you, which they will love me for, but as well as having ministers here regularly, it is entirely up to the committee to decide its own business, but it might be worth getting the management team in. I know that they would welcome the committee if it wanted to make a visit to the airport to see—not long after the acquisition of the airport, I went down and had a proper in-depth tour around, which gives you a real insight both into some of the challenges that the airport faces but also some of its opportunities. I am sure that if the committee was minded to do that, the management team would welcome it. I have a question on freight, but if I could ask a supplementary question on the marketing strategy and attracting additional services that I have read in the newspapers that Donald Trump will be making an announcement on Friday with the chief executive of Presswick Airport, I do not know if you are able to comment on any additional services that are going to be coming to Presswick as a result of that announcement. The very idea that I am able to sit here and speak for Donald Trump is interesting. No, I am not able to date—this underlines the point that I am making. The airport is in charge, so I am sure that any announcements will be greeted with interest. The committee can ask whatever follow-up questions from that at once, but I am not able to go into detail about that today. On freight, you mentioned that freight was up 38 per cent at Presswick, and the vision document certainly puts a lot of focus on that market, particularly in the vision documents. It has an ambitious plan to strengthen the airport's position as Scotland's premier cargo airport. Even though freight is up 38 per cent, I am able to give us any figures on the market share in terms of establishing itself as a premier cargo airport. Given the figures seem to be in steady decline and recent years were overtaken by Edinburgh, what progress is the airport making to re-establish that market share? I can provide figures—there are figures in the vision document around this, but I am happy to provide figures about not just Presswick's operation on freight, but where it fits within the overall market. You are absolutely right that there has been no aspect of the airport's business, if I can put it as bluntly as this, that, a few years before we acquired it, it has been going in the right direction and freight is included in that. However, it is still important that, over a fairly short period of time, we have seen quite a substantial increase in freight. That has to be maintained, and I am not being complacent about that. However, what it starts to demonstrate is that it is possible, with the right approach, with the right leadership and the right grip on things to start to grow aspects of the business. The ambition that has been set out in the vision document for Presswick's place as the premier freight operator is the right one. It will be down to the management team now to achieve that, but it is the right to set that ambition. Is the management team at Presswick doing anything in particular that you can detail to increase the number of freight services that are coming? They are, and they will continue to work both with the two operators that currently operate from Presswick, which are Cargillux and Air France, to grow that business both from them and looking at other possible operators. Without wanting to close down any questions, I am asked. That is where there is a commercial airport. The management team on any given day will be pursuing, investigating and exploring a whole host of commercial opportunities, but, as with any commercial business, you do not always want to talk about those because your competitors might hear and get in there and trump you, so they will be pardon the use of that particular pun. I stress this point. You should and you will, because I know how you do this as a committee, you should hold the Government to account in terms of the overall progress over a period of time, the trends in all of this, our predictions for when we get that return on taxpayers' investment, but, when it comes to the day-to-day operation of this airport, that is what is going to matter and turning this around, we have to trust that management team and we have to give them the space and the ability to do that. I am not going to sit here and go into great detail about all the different commercial opportunities that they are pursuing, because for me to do so would be undermining their chances of success in that. I will give you a little bit in this area because, obviously, the vision document does not really go into detail on revenue generating initiatives, commercial confidentiality, obviously. Can you give us a broad overview of how the press airport intends to increase revenues on the aviation side and then on the commercial side? It intends to do it through a whole range of different ways. It intends to do it through increasing over time its passenger numbers, secondly, through increasing the freight load, and, as we have just been talking about, that is probably, at this stage, the area of the business where they are having most early success. Some of the capital spend that I have been talking about is designed to raise revenues, and some of what I will describe as probably not the correct terminology is the kind of subsidiary parts of the business. Whether you have increased numbers of passengers or just the passengers that they have at the moment, are they maximising the revenue from those passengers for the period they are in the airport? As somebody who, a few weeks ago, flew from the airport, I think that the answer to that is that there is a lot more they could be doing, and that is through the duty-free retail outlet, the food and drink offer that is there. They are looking at that, and some of the capital investment is about to make all of that more attractive and more conducive to raising revenue. There is work to look at car parking and looking at how they maximise within reason, obviously, the revenue from car parking. Then, wider than that, looking at the property portfolio and coming up with a strategic approach to—we have talked about this before—there is a lot of land held by the airport. Some of it will undoubtedly be needed for some of the longer-term ambitions around the airport, but some of it is probably surplus to requirements. Can they maximise the value of that? Right across the business, there is a focus going forward on raising incrementally, in some cases, the revenue as well as keeping the costs as low as possible and making sure that the costs are not getting out of sync with the passenger numbers, etc. Those things that I have spoken about are the immediate short-term things that the airport has to do to properly position itself. Okay, thanks for that answer. Can I ask one on a more specific issue? In the vision document, one of the key success factors for the airport's future is identified as an, I quote, our integrated partnership approach to business development and marketing should be adopted with the airport working cooperatively with the local tourism and aviation-related industries. In that context, I do not understand the rationale behind the termination of the leases of two specialist ground handling companies, Greer Aviation, which I visited and I know what other colleagues have, and Landmark, which have been operating successfully at the airport for several years. Can you give us an understanding of the rationale? I certainly will do that. I will preface it with what I have just said. This is an operational decision that the airport management has taken. If we get into a situation in which we are second guessing every operational decision that the airport takes, then this airport will not be able to operate successfully as a commercial enterprise. We have to be very mindful of that. We cannot expect a management team to return an airport to profitability and then tell it what it is allowed and not allowed to do in the interests of moving the airport forward commercially. The airport management is right to these companies, and I attribute it to both companies for what they have done, but the judgment of the airport management is that they can provide those services to a higher quality by bringing them in-house. They can do that more cost-effectively, which goes to my point about making sure that the operating cost base of the airport is kept as low as it is feasibly possible to do. They think that it better positions them to grow that part of their business. The fixed-base operations relate to the ground-handling—prestical ready provides ground-handling services to scheduled passengers and cargo flights. Those companies provide services to military, corporate jet and ad hoc aviation services. That is a part of the business that the management team want to and think that they can grow. They think that they will be more able to do that if they have those services in-house. They will be able to deliver them to a higher quality, they will be able to integrate them better with their other services and it will enable them to attract more business. The airport will be held to account in the fullness of time about whether it is right about that, but that is the operational judgment that it is making. Without going into detail around the figures here, they are estimating that that will result in a significant cost saving for them as well as leading to potentially significant revenue generation. If that is their judgment, as the people charged with running the airport, then I think that they have to be trusted to make that judgment and to implement it. The last point that I would make on this, because in relation to the two companies involved, we are talking about people and people's jobs, and that is always hugely important. The airport will require to employ people to carry out those functions in-house, so it is likely that many, if not all, of the numbers that are employed by those companies will continue to be employed by the airport. All of those obligations will be adhered to. Obviously, the airport has its own legal advice in terms of that, but discussions are on-going about employment and transfer of employees, and it is important to allow them to take place. Of course, I understand how both of those companies will feel about that decision, and I have made no criticism of them at all. I know how anxious their employees will feel, and that is why the last bit of my answer there is so important in terms of the discussions on transfer of employment. However, whether it is a decision about fixed-base operations or a decision on any other part of its business, if we are asking a management team to operate an airport commercially at arms length from government, then they have to be given the ability to do that and to make the decisions that they deem are going to further our objective of returning the airport to profitability. I thank you for responding with the airport management rationale, and I look forward to having the airport management in front of us for a future session. I think that it would only be fair to point out what the company's affected view is. There is no doubt that the airport can handle the technical aspects of the businesses that operate, such as refuelling or looking after the crews of private or military people who are coming to the airport. However, it is the handling of the customer relationship that those businesses have specialist skills in, and those skills are likely to be lost. I know that the US-owned company, for example, intends to transfer its operation to another competitor airport, and the senior management in greer aviation will not involve itself at press rate. Potentially, there is a significant loss of business by taking this activity in-house. In my view, my judgment, which is not the judgment of the airport management, is a bad idea. I also send the wrong signals to the potential private sector investors that an airport management can unilaterally take over the business that they have been operating successfully. Can the decision be revisited? You mentioned that there is a new chairman appointed. Is that not something that he can review? The decision is not going to be revisited by me because it is not my decision. I am not going to get into the space of trying to micromanage the operation of the airport. If we go down that road, we will not succeed in turning this airport around. I am going to be pretty hard and robust in my view of that. You have cited to me a perspective on the part of the businesses. Those are the businesses offering those services. I am not saying that they are wrong. I am not able to judge whether they are right or wrong. I think that it would be surprising, given that they are operating those services right now, that their view would not be that they are best to continue to do it. The airport management has taken a judgment that they can deliver those services to a higher standard and in a way that positions them to win more business. That is a judgment that they are empowered to make. They are perfectly free to quiz and query, as I am sure that you have the airport management about that. I am sure that they can answer for themselves on that. If we let the airport close, there would be no jobs at Presswick Airport on the airport or in any of those businesses that are working in the airport. That is where we were. Having decided that we did not want to let the airport close, we have acquired it. There is a long road ahead in turning it around. We believe that it can be done, but that long road is not going to be easy all of the time. It is going to involve decisions that might be tough decisions on occasion and decisions that some people disagree with. However, if we turn the airport around, we will have to have a management team that is empowered and equipped to have a hard focus on the commercial realities and making those decisions. That is the space that that decision falls into. I understand the perspective of the businesses. I absolutely understand the anxiety of employees. I stress again the importance of on-going discussions to give those employees the certainty that they deserve, given that it is their jobs that we are talking about. I am not going to sit here around a committee table or anywhere else and presume that I am better placed in the airport management to make decisions about fixed-base operations and whether they are better delivered in-house or by external companies. I have Mark, James, Chick and John who want to come in on the back of this. If the questions could be brief and the answers as brief as possible, I agree with pretty much all of what Adam has just said. I would question the rationale around losing that rental income from two companies at the outset and also the potential loss of business as those two companies take their customer list elsewhere. I think that conflicts with the vision document set out and the constraints that presswick operate under. One of those things was the high operating cost base as opposed to other airports where presswick manage a lot of their services in-house, so that operating cost base is higher than other airports. I think that this decision will only compound that and increase that operating cost base as well. The question that I really wanted to ask was about the contracts that these companies currently have. They were competitive tenders and they were won against in direct competition with the company that presswick owned themselves. If you are confident that presswick and in effect the taxpayer is not going to be liable for any legal action as a result of anti-competition law where a company that is lost out on a competitive tender and exercise takes over a contract as a result of terminating someone's property rights? First, in relation to that, I am assuming that the member is aware of the changed legal environment around that as covers presswick in terms of European law. When the third parties were brought in, the business at presswick was covered by the EU ground handling directive, which was because of its at that time volumes of passenger and cargo freight. That directive requires an open market at airports for ground handling services, so it was not possible for presswick to have all of that operating in-house because that directive applied. However, that directive applies to airports that have above 2 million passengers or 50,000 tonnes of freight per annum, and presswick is now, unfortunately, below those thresholds, so that directive does not apply. That opens a different approach to presswick. In terms of your point, that is the legal environment that people are aware of. The contractual points presswick, the management team, have to satisfy themselves. They are operating on a sound legal basis in terms of contracts, and they have given notice to terminate those contracts in terms of the contractual arrangements that apply. Thirdly, I hear what you are saying, and you think that the judgment is wrong. I am not going to sit here as a politician and presume that I have that degree of aviation knowledge to look at an airport management in the eye and say that you are getting it wrong. You are telling me that your cost base is going to be improved by taking this in-house, integrating it with the service that you have for your scheduled passenger and cargo services and that you have an ability to deliver a better service. I do not have the expertise to say that you are wrong about that. The airport will be judged on whether what they are saying is right in terms of whether it enables them to reduce their costs and grow the business. However, if that is the judgment that they have made from the perspective of the people running the airport, I think that they have to be trusted to make that judgment. It would be a strange operating environment for any commercial entity to have a politician telling them that they have to take a different decision. I have a specific question about revenue overview. I would like to cover the issue of profitability. When the Government took over the airport, the losses were running at 800,000 a month. What is the current position? The accounts for 2013-14 will be published very shortly. The board will sign those accounts off in the next week while. The annual loss for 2013-14 will be in the region of £5 million. That is not an absolute figure. That is a broad figure. The accurate and specific figure will be in the accounts, and you can study the accounts when they are published. You can take from that the monthly loss. The airport is running at a loss. The revenue support that we are providing through loan funding commensurate with that scale of loss. The focus now is to try to reduce those losses and move the airport into profitability. The figures that you have provided indicate that the airport is continuing to run at a loss of at least £800,000. That means that there has to be a strong focus on increasing revenue. In terms of the vision document, page 27 of the vision document deals with a revenue overview. Can I ask why there is not any financial data or financial analysis included in that revenue overview? Within the bounds of the commercial confidentiality that the airport has to operate in, I am happy to provide any additional information to the committee that the committee wants to request. It may be the committee that requests information that, for the reasons that I have set out, I cannot provide. However, I am not in the business here of trying to cover up the scale of the challenge that we have. I come back to a central point. We took the decision to acquire the airport because we thought that it was wrong to let the airport close. If people think that that was the wrong decision, that is a legitimate point of view. I do not agree with that, but it is a legitimate point of view. If people think that it is wrong to have acquired it and it is wrong to be supporting it while we try to take it back to profitability, people should have the courage to say that and say it up front. If that is not their position, you have to get behind the airport now as we try to do that job. It is going to be hard, it is a long slog, it is going to have its ups, it is going to have its downs, but I think that we can get there. However, we cannot constrain the airport, either by second guessing the operational decisions that they are taking or forcing them to put into the public domain information that their competitor airports would not. I will provide whatever information to the committee. If you want to tell me the range of information that you want that you do not think is currently available, I will look at that and if it is possible to provide it, we will provide it. Do you not accept that in order to get right behind the case for the airport, you are making a substantial investment of public funds of more than £20 million, but when you put great stay by this vision document, when you look at it, there is no financial data or no financial analysis. Do you not accept that if public funds are being invested in the airport, politicians and taxpayers have a right to more information than simple headlines as to what the main revenue streams are? At the outset, no, I believe what the public wants to know is that we have a management team in place at the airport that is focused on doing the things that are required to... Going back to the first question that the convener asked me, I think that as we move through the period ahead, as those actions are implemented by the airport and as they start to bear fruit or the ones that do not bear fruit, that degree of information that we can share about our projections or the airport's projections about when it can come back to profitability become more developed and potentially more detailed. Right now, my judgment of public opinion around Presswick is that they want the airport to remain open. They want to see a return on taxpayer investment, but they want now the airport management to be able to get on with the job that will return it to profitability. I do not know any more whether you agree that we are doing the right thing in trying to save Presswick or whether you think that it is the wrong decision. All I am saying is that if you think that it is the wrong decision, that is fine. We can have an honest disagreement about that, but at least make it clear that that is your position, that you think that we should not have rescued the airport. Final point, convener. I am very clear at the start of the process that I supported the Government in taking the airport over. What I am saying now is that you have indicated this morning that the losses are continuing at least at the level that when you took the airport over, substantial money is being invested. We want to get behind that initiative to save the airport and to save the jobs, but it is difficult to understand how it has been taken forward when you produce a document that lacks detail and has no financial data or financial analysis to back up your case. I said at the outset that the vision document is the strategy for taking the airport forward. I referred in my first answer to you or it might be my answer to Mark Griffin that, in a fairly short period of time, the annual accounts of the airport are going to be published, which will give detailed information about the financial position across the whole range of the airport. The idea that that information is not going to be available for people to scrutinise is simply not the case. In the interests of trying to build a bit of consensus between us, I think that you are absolutely right. People—parliamentarians in particular—and the public investment involved here—want to know in detail what the airport management is going to be doing. I repeat, I get down there and speak to them. I am not going to name names, but there are a number of people around this table who, on a regular basis, make very constructive suggestions to me that they are then passed to the airport management for things that they could be looking at doing. Not all of them—and the people involved will know that—not all of them prove to be possible to be taken forward. They do not come to fruition, but there are lots of people around this table who are actively engaged at that level of detail. If you have things that you want to take directly to the airport management, do it. If you want things to bring things to me, do it. Get in about the annual accounts when they are published, and if you have questions off the back of that, fine. That is all part of your responsibility as a parliamentarian. All I am saying is that it is easy to say that you are behind this until it comes to the difficult decisions. If we are all behind this, we all really need to be behind it and we need to accept that it is not going to be easy. If all of us can try on this issue, perhaps even if there is no other issue, to put the short-term party political bickering to one side and accept that we are trying to save an important strategic asset of the country and we are just all going to get behind it and try to support the airport management as it does it, then I think that that would be better than the attempts, perhaps, to—that we can all be guilty of of scoring political points around it. The cabinet secretary mentioned that the politicians are getting involved, so I will take my political hat off and put my business hat on. If I were the chairman, Andrew Miller, the new chairman, I would be very upset to say that he has the business plan and you better go out and achieve it. He clearly has to lead and hopefully we will see when the strategic document has been absorbed, see the business plan that goes along with that, which will include all the financials and funding, et cetera. Can I just very briefly on the two companies? I had a conversation, in fact, I had a litter, which was distributed to everyone about the two companies that were asked to terminate the business with the airport. I spoke to Greger Aviation, and I immediately then went to speak to the airport management to understand the rationale behind the decision. They did not handle it well in terms of how they disseminated the information, but clearly from seeing information and going through it, on the basis that they did not indicate that they would transfer to be considerations being taken on board, that there would be jobs for some of the people. Clearly, at the back of all this, which we have probably lost and certainly lost and impressed with over the past few years, is the customer centric approach to this. As far as I am concerned, a light went on as soon as I realised that the airport management, in my view, had made the right decision. There will be more consequences like this, but running to newspapers rather than running to airport management and discussing it and looking at the logic of it is rather unfortunate. However, this time, I believe that the airport management made the right decision. Thank you, convener. I welcome the Government's continuing commitment to press with the airport. I also note what she said. I take the point that, if the airport had indeed closed, there would have been a loss to the airship and the wider Scotland economy of around £50 million. However, I would, however, absolutely identify myself with Adam Ingram's remarks about grey aviation. I do not wish—it is not my nature really—to be difficult over this, Deputy First Minister, but there is a point of principle here about grey aviation and landmark, and they have been reasonably and successfully providing an income stream. I cannot disclose the figures, and that would not be reasonable with me to do so. However, I know that they are providing a good and proper income stream to the airport month in, month out and have been doing so for the last 15 years. I also think that the philosophical point is that, if we are intending to encourage new business development at the airport and the airport now, in this set of circumstances, see their way forward as removing the competition to allow them a clear field to compete for this business, I think that that will discourage other small businesses from starting up a press with the airport as they too, in future, may be evicted from the airport as their business model is copied by the airport. I think that that is a philosophical point, which certainly—and I very well understand your hands-off approach and totally understand that. However, I think that this is something that the new board is going to have to grapple with very, very quickly and be grateful for your comments on that. I am not going to repeat everything that I have already said about this. I take the point. Trust me, when I say, I absolutely appreciate where both yourself and Adam are coming from in this, you are local MSPs here, with local businesses affected by this decision. If I was in your shoes, I am sure that I would be making representations just as strongly as you are, so do not take from what I am saying any criticism of the fact that you are making these points as strongly as you are. That is your job and you both do it well. However, that is an operational decision. You are right that those businesses provide an income stream to the airport, but the airport's judgment is that they can increase that income stream by doing it differently and that they have to be entitled to make that judgment. I echo some of your comments and I certainly agree that the airport has to be careful that that is not the impression that it sends—that it is in any way hostile to business development at the airport—on the contrary. That is a point that would be worth stressing, that they have taken a decision for reasons that they consider to be sound. In terms of what Chick said and what you have said, if there is a perception locally that that decision was not handled well, or if there is a perception locally that it sends the wrong message to business, then of course those are things that the airport board and I am sure that the new chair in particular will want to reflect on. However, if they are not listening to this live, they will certainly be looking at the official report on these deliberations and questioning today. Edgym, do you have a short point on this? Not on this point, but two specific questions just for completeness, convener, and they are in relation to maintenance, backlog and the radar. Before we move on to that, have you heard a point about the staff involved in these companies? The vision document talks about reducing the operating cost base and staff. Costs make up 50 per cent of that. Can you give an assurance to staff that their employment in terms of conditions will be maintained? Also, the vision document says that there has been an adjusted cost base in line with the revised winter passenger programme. Do you know if there have been any changes to staffing levels? As with any businesses, there will be changes to staffing profile as the business develops. There have been no redundancies at the airport, if that is what you are asking. Within the bounds of what I said previously about a management operating in a commercial environment, we would not be sitting here discussing this right now if the whole objective of the Government had not been to save jobs at Presswick airport. We are doing this to protect employment. That is the whole objective, or a big part of the objective of this, is to protect the jobs of the people who work at the airport. It would make no sense of how we then decide to take it forward as undermining that. The management will have to have the freedom to make decisions around staffing and deployment of staff as they see fit, but let us not forget that the whole objective of this exercise is to protect the jobs that depend on the airport. I had two very specific points just for completeness. The first relates to the maintenance backlog. How confident are you that that will be removed within a reasonable timescale? I could also ask you about the radar facility. The capital plan does not include the cost of replacing the existing primary radar. Clearly, that is of a critical nature. Therefore, do you have any information from the management team on how the replacement of that will be financed and what the likely timescale for that work will be? In terms of the first part of your question about backlog maintenance, the key aim here is for the airport to operate in a safe, effective and efficient manner. The focus of prioritisation of backlog maintenance is with those principles in mind. Obviously, Presswick is operating in an evolving market. It is operating to try and work itself back to profitability. It is going to, beyond that safety requirement, take decisions on capital works, on the basis of work that is projected to improve its overall standing and its overall revenue generation. There will be a long-term requirement for capital investment in the airport. The focus of the investment just now is on those aspects that have fallen most into disrepair that are required to be done for safety reasons but also required to be done to start to reposition the airport. It would be wrong to suggest that over the next couple of years we will get to a stage where there is no more capital requirement at the airport. I am pretty sure that no airport operates on that basis. On the radar, and yes, the replacement of the primary radar is a particular issue facing the airport, it will be considered as part of the overall programme of maintenance and repair. It will factor the investment that is required for that into the overall investment and that will take the priority that it deem it to be necessary. Adam Ingram is familiar with that work. He is looking at whether there is a commercial opportunity there so that he can replace the radar. I am not going to promise to go into all the technicalities of that, but he can replace the radar in a way that might bring additional revenue into the business in a way, for example, that they have done around some of the wind farm mitigation works. Overall, that will be part of the general capital maintenance and repair programme of investment. My colleague Gil Patterson had wished to ask a question, but it is sad to leave for another meeting. That was about capturing what the impact of the Government's intervention has been in securing the jobs at Prueswick Airport and the positive impact of the wider Ayrshire and Scottish economies has been, particularly thinking about the supply chain and what the number of jobs that are directly dependent on Prueswick but also indirectly depend on that facility. We have not yet done a specific exercise to assess that. It may be something that we should look at doing. Obviously, we can look at, as I cited earlier, the publicly available figures in terms of GVA impact, jobs impact, which shows that, albeit that we are investing a significant sum of public money in the form of loan funding, when we put that in the context of the value of the airport to the local economy, that suggests that it is worth doing. However, the more general point about assessing and evaluating that on an on-going basis is one that I am happy to take away and look at how we do that. John Finch-Earl, have you got a question on development in the capital expenditure? Development, convenier, if I may. The question is that one element in the document that thus far has not been touched on, and I hope that I am not treading on others' toes by asking this question about the development of a spaceport. John Finch-Earl, on the other opportunities, specifically on capital expenditure on the airport or anything. We will move on to the other opportunities such as the UK spaceport, the rail station, land and property portfolio and the airship, etc. Adam, do you want to kick off on this? John Finch-Earl is raising a very exciting prospect, all press week, being the base for the UK's spaceports, which I understand should be open by 2018. I also understand that the bidders have to decide that the competition will be determined by early 2015. There are eight sites in total, six of them in Scotland. My question to you is, should the Scottish Government's position not be that the press week airport is the preferred bid of the Scottish Government for the location of the first UK spaceport? There was a murmur of approval from the Ayrshire MSPs around the table when you said that. There are eight sites that have been long-listed. We have described that at the moment. Six of them are in Scotland. The Government's principal objective is to see it come to Scotland. At this stage of the bidding, we have to retain a more neutral position between the locations until we see what bids develop. If there is one of those bids that is clearly—not all of those locations may bid at all, but if there is one that is clearly ahead of that, that is obviously a decision that we will take at that time. Press week is in a very good position here and will be able to put in a very strong bid. At this stage, I do not think that it would be appropriate for the Government to have a preferred option at this stage. Anybody else has a question on the spaceport? John Finch-Egg? Can I endorse everything that Adam has said unsurprisingly? This is the one truly visionary element of the document and I therefore welcome it. The document is a little anodyne. Whether it is anodyne simply because of commercial confidentiality, because I have huge respect for you, Deputy First Minister, I am prepared to believe that. However, this is the one truly visionary element in this document. As the location of choice and self-evidently from the evidence, I have seen that it is the location of choice in Scotland. We should all get behind it. I mean all of us as politicians, but particularly the Scottish Government, because that would carry much more weight. The other point that I would make, though, notwithstanding if indeed we are unsuccessful in this regard in terms of attracting the sport of the Scottish Government or indeed the UK Government for this being the location of choice for this venture, what would the plan be, what would the contingency be for Prestric, if this does not appear for Prestric? I think that I have spent most of this year answering questions about plan B. I thought I got beyond that. In terms of the last part of your question, the vision document sets out the range of opportunities that the airport has. The space port, in the words of those who wrote the vision document, is that it would be transformational and it would be. However, if for whatever reason it does not happen, then it does not change the reality around the other things that the airport has to do. It is not about plan A and plan B. It is a plan with lots of different potential components, all of which have to be pursued in advance for as long as they can be. In terms of anodyne and commercial confidentiality to one side, common sense would tell you that any potential location at this stage before bids have been submitted that set out the detail of its bid in public would probably undermine in its own case. What I would say to anybody in the committee, the committee collectively, particularly to the Ayrshire MSPs, as I am sure you will, is to get in there and talk to the airport directly about its bid, because I know that it is intended to submit a very strong bid for this. Again, with all the words that I have already said about Government neutrality at this stage, I think that they have got every reason to feel very positive about going forward on this front. I respect the Government's neutrality, and it has to be taken in the interests of Stornoway and the other Scottish airports. However, I ask the question of the chief executive of Visit Scotland, and apart from a side comment about the need for visas going forward, it clearly has implications, and I ask what his involvement or the organisation's involvement had been in the plan, which I have discussed several times with those involved in it. Newke and Cornwall have served a team from their major agencies. It has some major disadvantages, but I understand that they have been across to NASA and Houston and what have you. Would it be possible to ensure and secure a task force of the strategic forum of the Enterprise Agency, Visit Scotland and Transport Scotland, so that they can support the bid wherever it comes from? Clearly, we hope that it is a presfic, but would that not be possible? We want to make sure absolutely that we are doing everything to secure Scotland as a winner of this bid wherever in Scotland that may end up being. I would also, just in terms of presfic, point to the work that the local council is doing through its stakeholder groups. The first priority that it sets is to support the airport as much as possible in terms of its spaceport bid, so I think that there is an opportunity to bring in some of that other expertise through the work that the council is doing. We may well get to a stage where the Government is not neutral that not all of the locations bid or that there is clearly an outstanding bid, but we are at an early stage of this process, so I think that it is important that we recognise that. I think that there is something missing in terms of an all-on attack, whatever it is. I think that if you listen to me carefully, which I think you always do, then you will hear that I am agreeing with you, which I obviously always do. Sorry, did I cut you off, John Scott, or did you have something else to say in this? No, no. If we move on to the assets, the land and portfolio property portfolio, Adam. Do you have any more detail on the plans to exploit the airport's land and property portfolio Cabinet Secretary, although I dare say that we can read into the fact that the press conference that Mark Griffin mentioned is going to be held in the 747 hangar on Friday with Mr Trump and the airport management, but that might be indicative of developments in this area. What am I wrong? Time will tell, Adam, time will tell. In terms of the part of your question that I am going to answer, I do not have any more detail that the airport has to look strategically across its land holdings. Some of its land will be important if certain other developments come to fruition, the spaceport being one of those. Other bits of the land holdings around the airport is probably difficult to see where they fit in in any reasonable overview of the strategic development of the airport, but the airport has to come to those decisions in its own way. I know that it is one of the things that it is investigating just now. It is looking very carefully at making sure that— The key thing here is putting into place something again that has not existed, which is a strategic plan for land management. If they are holding on to land, they know why that is. If they want to get rid of land, they know why that is, and they are trying to maximise value from it. Are there any other revenue-raising opportunities that are likely to produce significant returns? You mentioned the air show, which successfully returned to press rate. The railway station is obviously an investment opportunity. The railway station is an important part of the picture. It is one of the big selling points for the airport. It needs substantial capital investment. It is not included in the investment that I have talked about already, because how rail investments are funded is different. I think that we covered that at the last time. No decisions have been taken around the railway station yet. It is part of the on-going discussions about the investment priorities, how that might be delivered and what timescale that that would take place over. The airport here has to have an entrepreneurial outlook to that. The air show was a success this year. I remember going to the air show at Presswick airport when I was wee. From that point of view, it was nice to see it come back. The gumball is that what it was called? I am not going to tell you what it is, but it is another major event that the airport played part of. Those events in and of themselves are not going to turn the airport around. The airport has to do everything. Even the small things, if they are part of the bigger picture, are going to make a difference. All of those things are important. Bringing it all together in a strategic future for this airport is what is most important of all. John and anybody else have anything on the other opportunities? Just to go back to the strategic importance of the airport, I remind the cabinet secretary of the strategic importance of defence, of other airport users and international strategic security elements. I know that I labour at this point constantly, but I do not think that it can be overemphasised the strategic importance of Presswick to European defence, particularly given the level of activity in the north-east, north-sea and the Baltic. I just want to ask this question earlier, if you have permission convener, if you have forgiven me, about loan funding. You said that it was, of course, a commercial basis. The one question that was not asked was, is there a ceiling? Do you have a figure in your head at which point the loan funding will stop, given the underlying asset base of the airport? Should we know? There is not. If I was to sit here and say, we'll get to X million, then that's not going to give the airport a very certain position, but equally it's not a free-for-all because the principle we operate under is what I was talking about before, the market economy investor principle, which is the state aid rules. That means that we have to judge that any investment at whatever level it ends up being can generate a return, a long-term return on taxpayers' investment. The discipline and restraint on government is that if we ever get to a position where we think that we cannot do that, that's where we would have to look again at this. It's not a case of that there is only so much, it's can you, at whatever level it rests at, generate that return on the investment that we're making. That's what we have to continue to assess. I suppose I'm seeking your reassurance that we're nowhere near that at the moment. We couldn't be doing what we're doing if we didn't think that we could generate a return because we wouldn't then meet the requirements that the state aid regulations set out. Thank you. If we move on to corporate governance, you've got a small question. The cabinet secretary, in your opening remarks, you actually answered a lot of the questions that I was going to ask you about corporate governance, because your explanation around the set-up of the board, the way the boards would operate, arms length from the Government, the whole co-chair being part of the stakeholder group was all very helpful. But I suppose, given the public funding for the airport, I would be keen to hear from you what role the Scottish ministers are going to play in the development and the management of the airport going forward. Secondly, will there be any review of the operation of the boards and how they operate and who would do that and how will it be done? The need to notwithstanding everything that I've said about the operational independence of the management team, the need to make sure that ministers on behalf of Parliament, on behalf of the taxpayers have an oversight of the strategic direction of the airport and be able to make sure that we are satisfying the requirements that we have to satisfy. That's why we're putting in place the two-tier board, normally with a company of one board. I don't think it would be appropriate to have ministers, not directly or officials of Transport Scotland in an operational board trying to second-guess the operational decisions. That's why we have opted to have a strategic board over that in which ministers' interests through Transport Scotland will be represented so that we have that proper strategic overview of where the airport is going without interfering on a day-to-day basis with the operational decisions. The chair, whose identity I've announced today, will chair both of those boards, which gives that the overall coherence. Are there any plans to review how that operates going forward? Obviously, we'll keep that under on-going review. At a much earlier stage of that, I think that it indicated that our preference was to look at having an outside operating company come in to run the airport. In the course of the deliberations and the discussions, we took a decision that that probably wasn't the right thing to do, because it wouldn't necessarily—if you have an operating company come in, you've effectively got a fixed-price contract—it wouldn't necessarily allow us to have the incentives on the management team to do what we need them to do. That's something that we want to keep under review. As we look over time at the performance of the airport, the performance of the management team and how it is structured, but also the governance arrangements have to come into the equation. Are we getting this right or are there different things that we have to do? Ministers will have to—ultimately, we are responsible to you and to Parliament for the use of taxpayers' funds. We are always going to be in a position of answering questions to Parliament about whether we are taking the right decisions around the strategic framework or not. As time passes, the performance of the airport will tell us whether we are getting those things right or whether we need to do things differently. Of course, Audit Scotland is also publishing the reports— Audit Scotland is also, of course, currently undertaking a report into the acquisition of the airport. As with any issue that involves public funds, Audit Scotland will no doubt have an on-going role to play in reporting to Parliament and reporting to the public. Can I thank your officials very much for their presence here today? Cabinet Secretary, I am very conscious that this is your last appearance as Cabinet Secretary for—in this capacity. Can I thank you very much? You have always been very honest and open and transparent and very helpful in your answers. I am sure that my colleagues will join me in wishing you all the best as you go on to greater things. Thank you. I thank the committee. It has been a pleasure to work with you and I have always found a very constructive relationship, which I hope all being in another capacity will continue into the future.