 Good morning and welcome to the first meeting of the Public Audit and Post Legislative Scrutiny Committee in 2020. I'll ask everyone in the public gallery to switch off electronic devices or switch them to silent mode so that they don't affect the committee's work. We have apologies from our convener, Jenny Marra, this morning, so I'm taking the chair and I welcome David Stewart, who attends in place of Jenny. Item 1 on our agenda is a decision on taking business in private. Do members agree to take items 3 and 4 in private? Thank you. Item 2 on our agenda is consideration of a section 22 report on the 2018-19 audit of the Scottish Police Authority. I'd like to welcome our witnesses to the meeting this morning. We have Caroline Gardner, Auditor General for Scotland, Mark Roberts, Audit Director, Performance Audit and Best Value, and Stephen Boyle, Audit Director, Audit Services, both of Audit Scotland. I'd like to invite the Auditor General to make an opening statement. Thank you convener and happy new year to you and members of the committee. Today's report, convener, is presented under section 22 of the Public Finance and Accountability Act on the 2018-19 audit of the Scottish Police Authority. It's the sixth consecutive report I've prepared following the annual audit of the SPA. The auditor Stephen Boyle, on my right, has given an unqualified opinion on the annual report and accounts for 2018-19. The SPA has maintained the improvements in the quality of its accounting that I reported on last year and there have been clear improvements in its financial reporting. The annual report and accounts were signed off earlier than in previous years and the financial statements were of a good standard. I welcome the progress the SPA has made, but the organisation continues to face considerable challenges. In 2018-19, the SPA's operating deficit was £35.6 million. That was agreed with the Scottish Government and accommodated from elsewhere in the Scottish budget. Plans to achieve financial balance in 2020-21 will not now be achieved. That is due in part to planning for the impact of EU withdrawal, which has meant that the planned reduction in police officer numbers has been postponed. The SPA now needs to reach agreement with the Scottish Government on how it will achieve financial balance in the longer term while still delivering its strategy policing 2026. Rebust workforce planning is an essential part of the SPA's overall financial planning. The workforce accounts for about 85 per cent of police Scotland's expenditure and having the right workforce in place is also crucial to delivering policing 2026, so detailed workforce plans are therefore needed urgently. Finally, the recent resignation of the chair of the SPA highlights the continuing lack of clarity about how the system of policing in Scotland should operate and the roles and responsibilities of all those involved. The SPA and Police Scotland were established in 2013, almost seven years ago now. As I reported at the time, this was a major piece of public service reform carried out very quickly and its history since then has been turbulent. In my view, it is now time for a review of the way in which the system of governance and accountability as a whole is operating, taking in the roles played by the Scottish Government, HMICS and the Perk, as well as the SPA and Police Scotland. In order to protect public confidence, it is essential that everyone involved has a shared understanding of how the SPA will fulfil the role envisaged for it by the legislation and what else is required for it to do so. Thank you, convener. My colleagues and I will do our best to answer the committee's questions. Thank you, Auditor General. We will open questions from Alex Neil. Happy new year, Auditor General. Can I just start off where you laid off there about the future? Here we are again. We have a temporary chair and an interim chief executive. While progress has been made undoubtedly, particularly in reporting of financial matters and so on, we still, in terms of the stability of the organisation, at the top of the organisation, have some serious questions. The departing chair clearly made a number of statements that suggest that all is not right in the SPA. Your suggestion of a review, what would the remit of that review be? Should it be an independent review, a parliamentary review or a public inquiry? What format do you envisage? What would be the purpose of that review and who should do it? I will take a step back from you with your final question, Mr Neil, if I may start with. As I said in my opening statement, the new system of policing in Scotland has been in place since early 2012, now nearly seven years. In that time, we have had four chief constables, three chairs, a series of concerns raised about the way the SPA has operated. My team and I, as you would expect, thought very carefully about what we have seen through our work and the wider picture. It seems to me that, as I say in the report, there is not a clear and shared understanding of the roles of all of the players involved here—not just the SPA but Police Scotland, the inspectorate, the Government, all of the people who have a role to play. Over that time, other parts of the system have grown and changed. The justice committee has established a sub-committee on policing, which plays a role here. The policing sponsor division within Government is now around 40 people, so it is a very significant scale of team in its own right. There is a real focus on making sure that the system as a whole works, from my point of view, rather than just the SPA itself. The SPA needs to develop its own capacity and capability, as I say in the report, but, for me, the focus needs to be on the way the system as a whole works together to deliver this really delicate balance between making sure that policing is properly held to account in the way that we all expect, given the powers that police have over our lives, our rights and freedoms, but also that it is accountable in a democratic society and that policing continues to be delivered by consent. Does that mean that you see this as a kind of independent review looking at the entirety in terms of the management and delivery of policing in Scotland for the future? Yes. My concern is to make sure that we do not keep on focusing just on the SPA itself. The SPA has got a very important role to play, and as the chief inspector of constabulary has highlighted, that can be done in different ways. I think that what we need to do is to look at the system as a whole, in a sense that it is not for me to set out how that should be done, but I think that it could be done by Parliament or by Government. For me, that is less important than that it looks at the system of policing as a whole, rather than an individual part of it. In fact, you mentioned 40 people in the Scottish Government in the sponsoring department looking at what is happening on top of all the staff in the SPA, all the staff in the police, the inspectorate and all the other bits around about it, forensics and so on. It seems quite a lot of 40 people in a sponsoring department. I think that that is the sponsor division for policing in Scotland, but I agree with you that it is a big team. I think that it has grown since 2013 because of the history of events and because of the felt need for there to be that oversight of what is happening in policing. As I say, we have grown the system in response to events, the establishment of the justice sub-committee on policing as well. What we have not done is step back and say that it is the whole system working as intended under the legislation. We are looking to the future and taking into consideration the comments of the departing chair and the comments that you have made about the financial situation. Clearly, the immediate period in terms of the financial situation is still quite worrying, given that, as you say, the deficit is estimated to carry on as things stand, potentially until 2022. So, in terms of the financial situation, does that mean that closing that deficit is contingent on shedding the kind of manpower figures referred to in your report, nearly 800 officers? Or is that a deficit because we still keep those numbers of officers? I will ask Stephen to come in in a moment. When I reported last year, I reported that there was a plan in place to achieve financial balance by 2021-22, which was contingent on moving away from the fixed target of 17234 officers and reshaping the workforce overall. The plans that came forward during 2018-19 were to not make the reductions in police officer numbers that were planned attributed to the requirements of the UK's withdrawal from the EU. What happens next is exactly the question that you are describing, and I will ask Stephen to pick that up. Can I just ask an answering, Stephen? Can you give me an indication of the number of officers required for the EU function and whether, given where we now are in terms of the EU, whether those officers are still required? I will do my best, Mr Neil. I may not have the specific number that you are looking for in terms of officer numbers. The order of magnitude? If I am able to move to step back a second, I will do my best to cover that point. We absolutely agree with you the point about the financial sustainability of the Scottish Police Authority, which reflects the overall spending of Police Scotland. It is undoubtedly challenged, we comment. It is one of the main themes in our report about that financial sustainability not being on an even keel. The chief finance officer took, I guess, the most recent report to the Scottish Police Authority board meeting in September, which outlined two scenarios, two options to return to financial balance, one of which was to reduce police numbers by 750, a number that has been talked about over a significant period of time, to deliver that financial balance, or else the second scenario to receive an uplift in funding, essentially, from Government. The delay in achieving financial balance that had previously been anticipated by 2021 was on the basis of the operational requirements to meet the implications of the UK leaving the European Union, and from an operational perspective, the chief constable said that it would not be possible to reduce police officer numbers by that in order to maintain an effective policing service. For that rationale, that had an implication for when policing would return to financial balance. I probably do not have the specific number that you are looking for in terms of putting something that we can come back to. What you are saying is that one of the options that is being looked at is reducing the number of officers from around 17,200 odd, effectively down to under 16,500. Seriously being considered? It is being considered in the context of the delivery of financial balance. On how much additional money—obviously, the budget process is in a bit of a hiatus at the moment for reasons that we all know—in terms of next year and the year after that, how much additional money is the SPA going to require in order not to have to shed 750 officers? In the current financial year, in 1920, the SPA is forecasting a deficit of £25 million. That is within the existing funding level. As we touched on in the report, it is able to continue delivering services by receipt of cash allocations to allow it to continue functioning during the year, and we capture that in around £35 million is provided by the Scottish Government for it to continue to providing operations. It is also received a £17 million one-off allocation from the Scottish Government to allow it to meet the costs of Brexit, EU-related costs. Both those two factors added together in the region of £42 million is the operational implication of continuing to deliver services added on with the EU context. It is tens of millions of pounds that are needed in order to meet that scenario of not reducing officer numbers to move the SPA from its current position. It has been around for many years of receiving Government support over and above its overall grant and allocation from Government in a way that the Government chooses to do to rebalance the financial position of the Scottish Police Authority. For the SPA to properly plan the services that it has to provide and to make sure that it has the officers to deliver those services over the next two financial years, how much additional money does it require over that two-year period? For the current financial year, as it is projecting, it has received £17 million in the 2020 financial year. It anticipates that it will receive cash funding to match the £25 million deficit that it will require during the 2020 current financial year. Is that not confirmed? Or is it? I probably need to come back to you, Mr Neil, in writing. I think that there is an inherent assumption that it will continue to receive that, as it has done in previous years. Otherwise, there would be very significant cash flow implications in terms of meeting its obligations as they fell into use. So you are saying that there is no shortfall on funding for the next two years? No, no. Sorry to be claiming the last note of what I am saying. In terms of the SPA's financial position, it has had to be supported over and above its funding allocation with additional cash provision during the financial year. So what I want to know then is that in the budget that we are going to have at some point in the next couple of months, how much of an additional funding allocation for the next two financial years starting in April this year, does the SPA need to avoid having to reduce its number of officers by 750 or so? I will do my best to give you a broad figure and maybe one for the SPA to give you the specifics of what they need. I suspect that much of that will come through the budget that the chief finance officer will take to the SPA board in March, but, essentially, it will be tens of millions of pounds—I would assume in the region of £40 million to £50 million—that it would require in order not to have to continue to receive cash allocations during the course of the next two years. Is that per year or is that for the two years? I say that that would be my assumption and estimate that that is over the course of both two financial years, but it is probably the specifics of it. It is maybe a question for SPA or Police Scotland. Right, but in terms of order of magnitude, an additional funding allocation of about £40 million over the next two financial years is required to maintain the existing numbers of officers. Of that order, Mr Neil, yes. Thank you. I would like to stay with the same sort of area for me. Coming back to the SPA and how we get to this point, your report, as Mr Neil has just examined, looks at that financial balance will not be achieved because the chief constable postponed the planned reduction in the police officer numbers. Given that you said within an answer to Mr Neil that a lot of this was to do or that this was around the EU withdrawal planning, to what extent could this have been foreseen and planned for by the SPA? The second question that arises from that is how much control does the SPA actually have on budget and decisions if the chief constable is in a position to just say, I need the officers and that's what's going to happen? That's a very good question, convener. My first comment would be that I'm not sure anybody could have predicted the events surrounding Brexit last year, the SPA and nobody else. It was a turbulent year in all sorts of ways as we headed towards the end of 2019. The wider point and the more central point to this is that I think that the SPA is fundamentally reliant on Police Scotland and on the chief constable for things like workforce planning. That's one of the reasons why I started off this morning by saying that the question is not just the functions of the SPA and the way they're carried out but the roles and responsibilities of everyone involved in policing in Scotland. I've been reporting since 2013-14 about the central importance of having good workforce plans for policing in any case because of the financial sustainability gap that was apparent at that time, but increasingly as Police Scotland has done some of the work around policing 2026, which has highlighted changing public expectations, changes in technology, changes in types of crime and the need for policing to change to respond to it. We've seen the concerns about the effect on the police staff workforce of maintaining the target of 17,234 police officers and questions about whether that's leading to the right allocation of work between police officers and civilian staff. We don't yet have detailed workforce plans for the way in which policing 2026 will be delivered with, I think, likely a different mix of staff than that we've required in the past. Now, it's difficult for the SPA to do that without the Police Scotland team preparing the information, the detail that's required, based on a professional policing perspective. But the SPA, without having that workforce plan, can't then do the financial planning, which would be needed to engage with Government on what the priorities are and how they get funded. So there is a really circular element to this, and my concern is that the SPA is in the spotlight, but the system as a whole needs to be operating well for this to be a functionally and effective way of organising police in Scotland. Mark, I'm not sure if you want to add to that. No, I don't think so. I've nothing to add. On that financial planning, the SPA has identified two options. Again, Mr Neil was right to explore this. In terms of the medium-term financial situation, one of the suggestions is that, as you've said, you adjust the mix and the structure of the workforce, and the other option is to receive additional funding. We know from your report that there are no immediate plans to change to reduce the workforce. Equally, we also know from your report that the financial situation will be driven by the budget. So might it be suggested that neither of those options, as identified in the planning, are feasible? In an ideal world, what we would like to see is what we've been calling for since 2013, which is really strong, robust workforce plans, that say, this is what policing will look like in 10, 20 years' time. Here is the workforce that we need to deliver that, including police officers, new types of specialists in cybercrime and other specialisms, and here's the civilian staff needed to support that way of working. It's affected by different use of ICT and therefore probably needs different estates and buildings around the country from what we have here, and all of that would then play into the financial plan. We don't have that. What we have is projections of the costs of carrying out policing as it currently is in broad terms, and then of either increasing or decreasing the number of police officers and staff around it, and that feeds back to a budget number. In the absence of workforce plans, there's a sense in which that's all you can do, but the workforce planning I think is the really important way of making sure policing is fit for the future and provides the best basis for saying what can we afford and how do we prioritise and balance the two from there? It has to be iterative, but starting with the workforce plans would be a much better way forward. Auditor General, the question that arises from that, if you've been calling for that since 2013, and this is not news to this committee in terms of all of the areas that we look at, the workforce planning on any of the things that we look at is key, on whom is the onus to be doing that, and who hasn't done that for the last seven years? I think, as I said in response to your question earlier, the only people who can do the detail professional planning are the leaders of Police Scotland with support from the teams and the people that they employ. The SPA has a really clear responsibility in testing and probing how that matches up against policing 2026, the policing priorities and the strategic direction that is set by government. However, in professional terms, it would be very odd for anybody to accept Police Scotland to be preparing those plans as the people responsible for operational policing and for delivering, for understanding the way policing is developing in a professional sense here in Scotland and globally. The annual report talks about this 100 extra officers—or 100 officers—were recruited relatively recently to reverse a reduction of 100 officers. That is not cost-neutral. I'm not an expert on police recruitment, but I do know from a previous life that it costs money to reduce a workforce and it costs quite a lot of money to re-increase a workforce. What were the additional costs of, first of all, the reduction and then the re-recruitment? If I'm clear, it's paragraph 45 of the annual audit report that you're referring to. In terms of the reduction of police officer numbers, it's perhaps not as significant cost implications as you might anticipate. As our expectation, those are not related to exit costs or redundancy arrangements. With a workforce of 17,000 and a police officer cohort of 11,000 approximately within that number, there is a significant level of churn within that. Given the volume of recruitment that takes place within policing, they are able to vary the pace of recruitment in a way that doesn't require them to defer to redundancy measures should they so wish to do so. I'd probably be able to give an approximate figure of the implications, but for 100 police officers, we would assume that that would be in the order of £4 million or so to bring on to the police force for a full-year effect cost implication. Like with all of these, I'm doing my best to give approximate answers, but I think that perhaps Police Scotland itself can give the specific costs as to what that would cost them. It's just worth remembering that it's not possible to make police officers redundant, so the workforce has to reduce naturally and then recruitment makes up the gap from there, so it's worth being clear for all of us of that, I think. Final question for me is that your report indicates that medium-term financial position remains challenging, and we've looked earlier on that there's no funding currently available beyond 2019-20 to support the additional officers. Do you get any indication of how the Scottish Government is responding to that position? I think that the Scottish Government in its programme published in the autumn was very supportive of the need to maintain policing for the future, but we don't have the detail of what that means in cash terms. As Stephen said, there is a budget deficit planned again for this year, and then the future years after that, neither the expenditure nor the revenue sides of the equation are clear. We understand that the two scenarios referred to in my report will be the basis for discussion between the SPA, Police Scotland and Government, but it's obviously very important that we move to something that is more planned and more sustainable than filling a budget deficit year by year, in some instances, quite late towards the end of the financial year concerned. Thank you. Annas Sarwar, thank you, convener, and good morning and happy new year. Ordinarily, you'll probably guess the area that I'm going to focus on, which is around workforce. You mentioned in the report around the need to have an urgently prepared or detailed workforce plan. Obviously, that connects to policing, but actually right across the board, across the Scottish Government, there are challenges around workforce planning. Can you say a little bit about what some of the challenges have been around developing a workforce plan, particularly around policing, and what that might mean in terms of vacancy rates and in terms of the skills gaps that exist? I'll ask Mark Roberts to come in in a moment. The only thing that I say and lead in to Mark is that we know that many organisations find workforce planning difficult. As the convener said, we've seen that in the NHS quite recently in this committee. I think that one of the things that I've reported previously that's made it more difficult in relation to policing has been the floor, if you like, of 17,234 officers, which meant that financial pressures could be responded to only by reducing the number of police staff. That has led to concerns that police officers were then doing work that police staff were better able to do or could have done at lower cost. That's been an additional complexity in workforce planning for policing. Mark Roberts? Yes, just to build on that, I think that the fact that there has been so little financial flexibility has meant that there has not been the kind of headroom to shift balances of the workforce, both in terms of the balance between police officers and civilian staff and also the skills mix that exists within that. Certainly in the early days of the SPA in Police Scotland, there was reform funding available, but our understanding was that, to a large degree, that was used to maintain day-to-day operational spending in order to try and reduce the scale of the deficits that they'd had. That opportunity, which might have been there to invest that money to shift the workforce in a different way, wasn't able to be taken, but that comes back, as the Auditor General says, to the very significant strengths that the finances and the floor number of 17, 2, 3, 4 placed on the manoeuvrability that Police Scotland had in terms of shifting its workforce. The need for a workforce shift is very clearly articulated in policing 2026 in terms of what the future challenges are and how the workforce may need to adapt in the future, but, as I say, there just hasn't been the space, the wriggle room, in order to move towards that. Similar to the NHS, you mentioned policing 2026. Sometimes you can have the best plan in the world, but it's still not going to work because there will be a balance between having the right plan, finding the right people, having the right skills mix, but also whether crucially we have enough people, which is one of the challenges that we have in Scotland. Where do you think that balance lies in terms of some of the challenges around policing 2026? That's a very hard question to answer. One example of an area that springs to mind in terms of one that would be very, very challenging is within the area of cybercrime, which is clearly identified as a growing issue. It's a challenging area across the public sector and beyond in order to recruit people with the right skillsets in order to work in that field. That's something that I think that Police Scotland has identified as a big issue, but, again, as with all other organisations, they are operating in a very competitive market in order to try and access the people with the skills to work on that type of issue. A broader question is, do you think that there's more that the Scottish Government can do to try and get one better workforce planning in place across the public sector, but finding better connections between how we identify the skills gaps and attract people to Scotland if we don't have those immediate skills in Scotland and workforce planning? Is there something structurally that's a challenge to you, rather than specifically to policing 2026? There's always more that can be done to work across different sectors. You mentioned the NHS in an example. Obviously, a huge workforce in the NHS, we have reported previously on workforce planning in the NHS and what needs to be done to improve there. There's always more that can be done to be sharing good practice and experience across different sectors of government, which does happen in some cases and doesn't happen in other cases. That's something that, in terms of not a structural solution but perhaps a behaviour on cultural solution, might be encouraged. Do you think that perhaps it's an area of work that Audit Scotland might do? Can you turn in looking at all the reports that we get, almost all, if not all, mentioned workforce challenges, mentioned vacancy rates, mentioned skills challenges? Do you think that there might be a piece of work that Audit Scotland might do that tries to bring together some of that challenge right across the public sector around workforce planning, identifying vacancy rates and the skills mix? Just to highlight that much deeper challenge that we face across the entire public sector in finding the right skills mix, finding the right number of people and solving the workforce challenges across the board. As always, Mr Sawa, the challenge for us is what we don't do, rather than what we do with the resources that we have available. There are workforce challenges at Audit Scotland? There are indeed, as in all public sector bodies. I'll certainly take the idea away and look at what we may be able to do. I think that we have already placed a lot of premium on providing good practice guidance for members of public bodies and for government from the things that we find, and we've done some of that in relation to workforce planning previously. The other thing that I'd say that adds to what Mark was saying is that even where we see workforce planning working well in one sector, what we're not seeing is joining the dots across the public sector. We know that police officers can spend a lot of time looking after people with mental health problems because they can't get a quick response from the health service with people with specialist mental health skills. I think that maybe we could do more to identify those sorts of connections and linkages that would both help to reduce the pressures on budgets and on the workforce of people working in public services, but also to potentially provide a better service to the people across Scotland who need it. I wonder if I could ask a few questions on the digital ICT strategy that is mentioned in the report, Auditor General. We know that, in 2018, the strategy was produced that set out the business case, and a figure was put of about £298 million required to deliver it over the next nine years or so, in the report. Given our experience with the I6 project, it's reasonable and understandable that there's a more robust analysis of the business case taking place within Government, but could you give us some kind of flavour of where we are generally with this at the moment? Stephen, do you want to pick that one up? Thank you, good morning. You're right in terms of the numbers, Mr Coffey. Just for completeness, the £298 million is analysed in terms of anticipated revenue requirement of £254 million and capital of £44 million for the split. Progress isn't as was anticipated or hoped for by Police Scotland in terms of the investment that it would be able to deliver in terms of the timeline. There were some allowance made for that in terms of progress, I think that partly on reflection by them and to the I6 project, the strategy was designed to be modular in terms of its implementation in a way that allowed for variations in availability of funding or project delivery timescales, so that, in effect, to all intents and purposes, all the eggs were in one basket and it also extended to using an anticipated broader range of suppliers as also for the delivery of the project. That capital funding wasn't provided as had been anticipated, meant that progress hasn't gone as quickly as anticipated. The main example of where progress has happened has been with the handheld devices for police officers and moving away from—I think that there was a lot of talk at the time about police officers continuing to have to make written notes when interviewing situations or with members of public. I was able to access smart devices and technology on the doorstep, as it were. Much of the other investment requirement was also about aspects of improving some of the back-office functions in Police Scotland. The committee will be aware that, for many years, there has been an under-investment in police information infrastructure to the extent that there has been a range of systems that don't connect effectively with one another and the extent of multiple keying of evidence or interview notes by officers. The investment requirement was designed to modernise all of that requirement. Police Scotland anticipated that that will still happen in due course, but it really is dependent on the availability of funding that comes through. Again, it is another aspect of why the service hasn't transformed at the pace that it expected that it would do. All of that has connections with workforce implications and the financial balance in due course. I know that an additional £11 million was allocated for that mobile device project. Is that partly addressing one of the purposes that was in the I6? As I understand it, that was about replacing about 130 or so electronic and paper-based systems for crime. Is that what the mobile system is partially? That's my understanding. That's contained within that, but that's encouraging to hear that. Do you see it just operating over the next few years in a modular piecemeal fashion, if I could use that phrase, that they'll pick off projects that are affordable and deliverable in the short term? Are they trying to seek agreement for a whole strategic vision for ICT to take us to 2026? How are they doing it? I'd probably be making assumptions, Mr Coffey, about the extent to which Police Scotland is able to implement its digital data and ICT strategy is very clearly aligned to its funding requirement to replace its existing technology infrastructure and bring in new capital investment associated with it. The availability of funding, as it becomes available, will absolutely dictate the pace of which transformation can happen. As Mark Roberts mentioned, it can access the level of ICT skills to support its workforce transformation alongside the investment in technology itself. Do you have any indication of when it might be a bit clearer about the Government's view on the strategic vision for ICT, in the sense of when we might get a handle on when that will be? I'm assuming that that will come through in the next budget that the Parliament approves for and the aspect of what that means for Police Scotland and its ICT infrastructure investments. Thank you, Willie. Colin Beattie. Broadly, there seems to be quite a few areas where there's been some good progress getting made. Inevitably, I guess, we've got to look at the negative bits as well. I like how we look at leadership and governance, but before I do so, I'd like to just check on the potential costs here. In paragraph 18, you're talking about seven new board members, or any of these additional, or the additional costs around it. You talk about the chief executive, but there's an interim chief executive—I'm not sure from when—but is there an additional cost to that? That interim chief executive is going to be extended apparently until November 2020. You talk here about a new chief constable, three new deputy chief constables, and several new assistant chief constables. Are there additional costs around that? There isn't a simple yes or no answer to that question, I'm afraid. The information that you referred to in paragraph 18 was specifically about recruitment. In every case except the chief executive, there were some additional posts and some replacements for people who were leaving or moving on for different reasons. The team will keep me straight. I think that when the new chair was appointed in December 2017, she made some appointments to vacancies on the board and also looked at succession planning when people were due to leave and made sure there were plans in place to bring the board up to full complement. So there was an additional cost over what was being spent but not in relation to what was planned for the authority as a whole in its membership. The new chief executive was appointed in October 2018 to replace the interim chief officer who came to the end of his secondment from government to see through the SPA, so it wasn't an additional cost in that sense. It was a replacement of somebody who'd been there on an interim basis. The new chief constable obviously replaced the former chief constable and there was then a review of the structure of the senior team and recruitment to the vacancies that existed at that point. I'm not sure if Stephen or Mark want to add anything to that but it's that sort of picture of recruitment to vacancies and one or two additional posts. I suppose I'm just trying to find out, are we recruiting more chiefs at the expense of Indians here? I think there has been a growth in the size of the leadership team in Police Scotland. I don't have the detailed figures here, the detailed numbers here but it's certainly something that the committee could explore if it wanted to. Just moving on to the sort of corporate function and governance, clearly that's been a problem in SPA now for the last few years and I think that the media pass chair recognised that and so did the CEO and there was supposed to be a focus on capacity building. In your paragraph 31 you state that I remain concerned about the capacity and capability of the Scottish Police Authority corporate function. Given all the changes that have taken place and I'm assuming that these new board members and so on are supposed to strengthen the board, has there been any change in that position? Does it look stronger than previously? Have those changes made any significant movement in terms of quality and governance? Let me start where you started your question a moment ago, Mr Beattie. As I say in my report and I think it is important to not lose sight of, there have been some real improvements both in terms of the financial management, financial reporting which is core to our interest in terms of the transparency and openness with which the SPA carries out its business. We report also on some improvements in performance reporting that happened last year in 2019 and we have had recruitment to some key roles as we were focusing on just now during 2018-19 as well so those are all real improvements and I welcome them. At the same time though there has been a delay in really building the corporate capacity and function of the organisation of the Scottish Police Authority, the team requires to support the authority in carrying out its function under the legislation and I think that delay really is a function of the lack of agreement, the lack of a shared understanding of what the authority's role is, how it relates to Police Scotland, to Government and to the other players and the system, which is where we started this morning. I think that that lack of clarity will continue to be a barrier to development until it is resolved and it is that that is making it harder than it should be to really grapple with some of these challenging questions about what policing in Scotland looks like in the future, what that means in terms of people and staffing and how we afford it as a country. For me the underlying problem is that shared understanding of what the authority's role is and therefore what support it needs and how it relates to the other players around it. Looking at the comments made by the outgoing chair, despite all the focus on capacity building and all the rest of it, in June 2019 she said that there had been no progress. Why? I think that in a sense that is a question for the former chair herself but my view is that it does relate to this lack of a shared understanding not just in the authority but right across the system about what the authority is there to do and how it relates to the other players and the system. There was also at the same time, as my report says, further turnover in the role of the chief executive, the chief executive who took up post in 2018, was left in late 2019 after a period of sickness absence and that clearly will have held up progress as well, the absence of the chief executive, but I think that it's part of this wider question about what's the SPA there to do and how does it relate to the other players in the system. I'm interested in some of the points that you're making there. Looking back at reports that have come in front of this committee over a period of years, there's clearly been a long period of instability and frankly poor governance over SPA. Your comments as to uncertainty about the role of SPA raises the question, is SPA fit for purpose, is it the right structure, should it be getting reviewed, because we go on year by year and we don't seem to be making that step change we need to make this an efficient functioning body. I agree with part of your question but my concern is that we shouldn't simply be focusing on the Scottish Police Authority in itself. It is part of a wider system of policing that was put in place back in 2013. It was a very major piece of public service reform, probably the biggest we've had since devolution. It was carried out very quickly as I reported at the time and I think that, as you say, we have seen since the effects of different views from different chairs, different chief execs, different chief constables about the role that the SPA plays in relation to Police Scotland and in relation to Government. Just as an example of that, early in the creation of the Scottish Police Authority, the view of the chair then was that it should have very few staff and that most of the services should be provided by Police Scotland to it. That meant that many roles were filled on a temporary basis rather than setting up, for example, a strong finance function and putting in place a director of finance posts that were filled on an interim basis. The second chair came with a different view and started in a different direction. Those shared understandings of what the SPA does and how it relates to Police Scotland in particular, but also to Government and the Inspectorate I think have never been fully explored. I do think that there's a need to review that, but I don't think that it's just about the role of the SPA. I think that it's about the system as a whole. An interesting point that you're saying in your report is that the former chair and some of the other board members operated in a more executive capacity than you would have expected. Can you expand on that a little bit? Yes. I think that there's two aspects to it. Partly because the organisation itself was and is still underdeveloped, and for part of the period that this report relates to, the chief exec was on sickness absence, there was no alternative but for the chair and other non-executive members, members of the authority, to be more involved than I would expect in the running of the organisation. Over and above that, though, I think that there are still, as I've said, different views about what the role of the authority ought to be, and the extent to which it is like a board, which oversees a team of executive officers doing work on its behalf and how far it's an authority which plays a more direct role itself in overseeing policing. The legislation is silent on that degree, that nuance of the way in which the authority carries out its work, but it seems to me very clear that there needs to be a common understanding not just within the members of the authority but with Police Scotland, with Government, with HMICS, of how that's going to work in order to be able to build the organisation, recruit people to it and get it to the state where it can operate effectively. In my view, the amount of time that the chair and some members of the authority were spending last year was more than I would expect for members of a board, but if you're looking at an authority which has a more direct role in overseeing policing, the amount of time required could well be more than was originally envisaged for authority members. That's a bigger question than just the amount of time spent by the individuals. Do you think that, at this point, given several years down the line and where we are now, do you think that there is a case now for the Scottish Government to step in and define those roles and clarify in order to… Are they going to be able to work this out themselves or is somebody else going to have to do it for them? I don't think that they can do it themselves. I think that it has to be a shared process. I think that it has to involve, yes, the SPA in Police Scotland but also Government and HMICS making sure that they all can agree a vision, a set of working practices that are clear about who does what, who's accountable to whom, the accountable officer lines another important part of this and then equip themselves to carry out those roles without the ground constantly being shifted as individual players change in it. Just one last question. We've really touched on the SPA's input, increased substantially during the period. I think that it went up to 20 days a month, wasn't it? That was agreed with the Scottish Government. That extra input, do you think that it was justified and do you think that the former chair suggested and defined the increase or was it that request to the Government? You're right, it was agreed with Scottish Government along with a set of agreed objectives for the chair. I think it's important to remember that at the point when the former chair was appointed, Police Scotland had been through a very difficult period with the departure of the former chief constable, the former chair of the authority and the former chief executive of the authority. As I say in the report, the former chair was involved in an awful lot of work to make appointments to the authority and to Police Scotland to change the governance arrangements, increase the openness and transparency. In the circumstances, I think that it was justified, but in terms of the way in which at present the role of the SPA is understood, it is more than I would expect a chair and indeed some other non-executive members to be spending in carrying out their role. I'm not criticising the individual, I'm saying that it's another indication of a system where roles and responsibilities aren't clearly defined. Just a small point, I asked about whether it was the chair that suggested the increase or whether it was the Scottish Government that asked the chair to increase the input. My understanding is that it was the result of a dialogue between the two of them. I don't know who initiated that dialogue. Okay, thank you. Thank you, convener, and good morning. I've got a very straightforward point. The annual audit report, as you well know, pointed out that without a corporate plan and planning framework, the SPA cannot assess its own performance in holding Police Scotland to account. Could you expand on that point? Certainly. The SPA has been focusing on the direction of policing as a whole and engaging with Police Scotland on the way in which performance reporting back to the authority will happen so far. It hasn't put in the work needed so far to be clear about its own role, which is a recurring point that we've been coming back to this morning. Mark, I wonder if you'd like to say a little bit more about what we were seeing in there. So, I think, as the report says, that Police Scotland, in the early past of 2019, established a new performance framework, which was a significant step forward in providing performance management information and performance reporting, which the SPA could then use. What was lacking is something for the SPA itself to go beyond that to look more broadly at that information, place it in a wider context against other benchmarks and also give itself a system for assessing how well it was doing in terms of holding Police Scotland to account. I think that what we were arguing for there was for the SPA to look at something that would allow it to assess its performance in holding to account and also take a broader view of the information that is provided to it by Police Scotland. Do you have any insights into why there has been a delay by the SPA in developing the corporate plan? I think that it probably comes back to some of the issues that the Auditor General has mentioned about the limited capacity within Scottish Police Authority as an organisation, the large amount of turbulence that has gone on over the past few years, the fact that we have had a number of interim chief executives in place and the chief executive who was on a long-term sickness. All have slowed progress in doing that. I think that there is clear recognition that it is an important thing that needs to be done, but I think that the capacity of the organisation has not been there to do it. It seems to me that this is extremely central and the standard is being turbulence and change and movement, but it is effectively having no financial compass, is it not? To continue my analogies, it is like who is guarding the guards in this situation. Have you any insights why this is a matter of urgency for the future? We absolutely think that this is important and, as you say, having that compass and all the other associated instrumentation that goes with that is absolutely vital for the SPA to know in the broader sense how well Police Scotland is performing and delivering against its priorities and against Police in 2026 and also how well it, as an organisation, is performing in holding Police Scotland to account. That comes back to the wider point that we have been discussing about the clarity about the roles and responsibilities of the SPA. Clearly, we will have, presumably, a new chair appointed at some stage in the future. Have you any insights again that is this a matter of top priority for the new board and the new chair? At the moment, there is an interim chair in place. I am not clear. I would have to come back to you as to whether or not there is any defined timeline, I do not know if Stephen Lones fought for establishing something, but it may also be something that is awaiting the arrival and appointment of a permanent new chair. Can I stick with the annual audit report? I have one or two points to raise there. First, you made the point that neither the performance report nor the governance statement referenced reported weaknesses in the SPA's corporate function. You said that your audit opinion requires you to consider the consistency of disclosures and identify any potentially misleading information. That omission was deemed to be an issue in both respects. I think that you maybe got that adjusted in the final financial statement. Do you know how that omission occurred? Thank you. Good morning. Yes, you are right. The unaudited accounts that were provided to us did not reflect the very significant comments that the chair made in one of our former chair and one of our board reporting about the weakness of the SPA corporate function. It was our judgment that that required to be reflected in the governance statement. We probably do not have a very detailed answer for you, Mr Bowman, as to why that was not picked up. My assumption reflects the fact that the preparation of the accounts involved a large number of parties in the Scottish Police Authority more so than in other organisations whereby the finance department and the corporate functions play an important role. That involves both officials and board members from the Scottish Police Authority and largely finance officials from Police Scotland. Something fell through those arrangements. We were pleased that it was quickly recognised that that was an important disclosure that it had to be made. As you can see from the final version of the annual reporting accounts, it does make the necessary disclosures. We are also reassured that the need for full disclosure and recognising the full suite of events is recognised and part of their plans for the 1920 annual reporting accounts. Would that suggest that nobody reads these financial statements from cover to cover apart from yourself? I am not sure that I would make that judgment. I think that we make many judgments through the course of the audit. What we receive in the unaudited accounts is an important milestone in the accounts. It is a point that we have been trying to make, not to be fair, not just with SPA Police Scotland but really across all public bodies. The unaudited accounts themselves are a statement of public bodies financial results for the year gone. It should not, by the stage that they come to be provided to auditors, be still regarded as another iteration in the process. It is emphasising that point. We think that SPA and Police Scotland recognise that and expect to see that coming through during the audit that will undertake of the course of summer. There is a risk that they might see you as part of the accounts preparation process rather than a reporting function and a complete set of financial statements. I think that that is a risk in any audit. Mr Bowman, we are very clear on the boundaries of our role and the independence of the auditors. Nonetheless, we will make sure that we read every single word in the annual reporting accounts and ensure that we draw on our wider source of evidence. One of those examples is the one that you refer to as the comments of the formature. I also looked in a little bit more detail in the report. I remember from last year I think that an issue came up about board members' expenses not being fully supported or something like that. I think that that has maybe been dealt with in the current year. I noticed two things. For example, there does not seem to be a strategic risk register. The implementation date was that of 31 December 2019. The procurement strategy did not seem to be in place and the timescale for that was September 2020, quite a long time ahead. There is a brought forward issue from the previous year to do with weaknesses in the imperio system and the processing of journal entries. Processing of journal entries is something that lots of frauds are often centred on because you can make adjustments right into the heart of financial statements. That does not give a completion date, but just further improvements have been agreed. Do we have a competent and fully functioning audit committee here who are on top of all of this? There seems to be a lot of serious issues, some from the past, that are still being worked on beyond dates of even this meeting. Maybe if I can answer those points in turn in reverse order, if I may. Yes, I think that we do have a competent and functioning audit committee within the SPA that track audit recommendations from our internal audit, and broadening out the scope to think about the recommendations that it receives from other organisations that have commented on the work of Police Scotland and the Scottish Police Authority, for example, the information commissioners activity too. I think that that is functioning well. In terms of the points that we have made, the SPA does not yet have a functioning strategic risk register, and as a consequence that is some of the other issues that we have talked about this morning about the lack of capacity and capability within the SPA. In contrast, Police Scotland does have a well-developed risk management function and reporting, and that is also coming to the SPA audit committee. We are reassured that that arrangement is in place. There is more to do and that is something that will continue to track in terms of the SPA's risk management arrangements. Procurement that you mentioned, Mr Bowman, has been an issue within Police Scotland. It is one that they have identified and are working through in terms of quite a detailed improvement programme. Getting a far stronger handle on their contract management arrangements, monitoring and recording of that, is a big piece of work. It is one that they are making progress on and one that both ourselves and the internal audit are tracking. Lastly, the point about payroll has undoubtedly improved. That was an area of key weakness in terms of the control environment and one that our colleagues in the internal audit have made a number of very important recommendations on. We are really pleased to see that those recommendations have been implemented. I think that it is large in a lot of ways that has helped with some of the investment that Police Scotland has made in its payroll functioning. It has inherited a wide variation of payroll arrangements and payroll centres when it moved to the national police force. It now has almost a single payroll function. Within the next few months, it will move to a place for the first time that all officers and members will all be paid on the same date. That has taken a lot of work and effort to get to that stage. As the auditor general mentioned, 85 per cent of the costs within Police Scotland accounts relate to staff costs. It will always remain a very important part of our audit work to get the assurance that we need. Journal entries are such an important point of the control environment for any set of annual report and accounts. As effective, that increases the risk of manipulation of any set of accounts that a journal entry has posted that changes the resultant disclosures in the accounts. We include a significant amount of testing in our work to gain the assurances that we need that the journals that have been posted to prepare the accounts are correct and accurate. The committee will recall from a couple of years ago that there was one example of a miscoding of a journal and how that related to the disclosure and the remuneration report. We have not seen any examples this year and I am pleased that that allowed us to get to a point to provide a clean audit opinion on the annual report and accounts. Although there are quite a number of issues, which, if you take them at face value, look quite serious, you are saying that this is dramatic. It is not like a festering sore, it is a healing wound that is the situation that we have here. Absolutely. As the annual audit report and as the auditor general noted in the section 22 report, we have seen really clear improvements in financial management and the control environment in Police Scotland. It is not that long ago that the sets of accounts were signed off in December with modifications to the audit opinion. Police Scotland's accounts are now signed off in September. It is consistent for large complex public bodies, so we would absolutely recognise the improvement that has been in financial management and the control environment during the past few years. A couple of questions from me, if I may, just before we wrap up. First of all, your report notes that an estate strategy is now in place, but the annual audit report indicates that 150 million of the 400 million investment required over the next 10 years is not guaranteed and will be a risk to the SPA's ability to carry out the work. Can you comment on that level of risk? What is the SPA doing to address that? Ultimately, it is part of the wider funding requirement that the SPA has identified that it needs to transform its activities. What that means for how and where it will deliver services are in part reflected in its estate strategy, as it is part of the overall suite of strategies to deliver policing 2026. By way of example, and as is captured in the strategy, it talks about where police officers will be based, whether it involves moving to sharing of services with other public bodies and so forth, given the drop in footfall that has been experienced into police stations in recent years. For the services that it currently operates and the premises that it uses to deliver those services, some of them are not in a good state of repair and require investment. That is the paragraph that you mentioned that looks to capture that there is a need to invest to ensure that it addresses the backlog maintenance requirement that has built up in some of its estate. There will be some key decision points ultimately for the police as to whether it looks to move away from some of the premises and services of where it has been delivering those services and deliver policing in a different way. All of that captures the scale of risk until it has clarity around its financial position and a challenge to how it will plan to deliver services into the medium and long term. Final question for me. The former chair's total remuneration for about 11 months was over £200,000. Given what you know about the changes and perhaps advances that have been made during that time, do you consider that that represents value for money to the taxpayer? The figure that is included in my report, convener, is around £125,000 for the 2018-19 year, which is what this report looks at. As I said in response to an earlier question, I think that in the circumstances that was reasonable, we know that it was agreed by the Scottish Government and we know that the Government also agreed a series of objectives reflecting the situation when the chair took over in December 2017. We have not yet looked at the 2019-20 expenses up until the former chair's date of resignation last month, but my understanding is that the number of days for which he was claiming had come down from the peak in 2018-19. I cannot give you detailed figures, but that is my understanding at this stage. Do members have any further questions? Absent witch, I thank the Auditor General and your team for their evidence this morning. I now close the public part of this meeting as the committee moves into private session.