 Rwyf yn fawr, a chyfnodd yn gyfweld i'r 17 ymddian nhw'n gwneud y pwblig hwnnw, a'r gwrthgwrnau lleiwyr hwnnw yn 2018. Mae'r ystafell o'r ystafell o'r eich cyfgweld i'r eich cyfweld o'r ei gweithredu, oedd o'r cyfweld i'r cyfweld o'r eich cyfweld i'r ystafell o'r cyfweld o'r cyfweld i'r ystafell. We have apologies today from Jenny Marra, our convener, and I would like to welcome David Stewart, who is substituting for Jenny. Good morning. At the outset then, I'd like to invite David Stewart to declare any relevant interests. Thank you, convener. I have no relevant interests to declare. Thank you. Item 2 on our agenda is for the committee. Do the members agree to take items 5 and 6 on the agenda in private? Thank you. Item 3 on the agenda is the Scottish Fire and Rescue Service update report from the Auditor General. I'd like to welcome our witnesses today. First of all, Caroline Gardner, the Auditor General for Scotland. Mark Roberts, senior manager at Audit Scotland, and Catherine Sibbled, audit manager from Audit Scotland. Good morning. At the outset then, I invite the Auditor General to make a short opening statement. Thank you, convener. Today's report is a follow-up to work that we published back in May 2015. We've looked again at the progress that the Scottish Fire and Rescue Service has made since its establishment in 2013. In our last report, we commented positively on how the merger of the eight former regional fire and rescue services had been managed. In this report, we go on to examine the progress that's been made since then in integrating the service into a genuinely national organisation and transforming itself to respond to the changing risks facing people across Scotland. Overall, we found that progress has been steady but slow. The service has taken a cautious approach to transformation over the last five years, seeking to secure public, political, staff and union support for its vision, and that's taken time. The main union for whole-time firefighters, the Fibrigates Union, operates and negotiates at a UK level, while fire and rescue services are a devolved matter. In addition, finance has been a limiting factor. It was only at the end of last year that the Scottish Fire and Rescue Service felt that it was in a financial position to move ahead with its plans for transformation, given additional funding from the Scottish Government as part of the draft 2018-19 budget and the Treasury's decision in November 2017 to end the fire and rescue services VAT liability. Other challenges do remain. First of all, the retained duty system that the Fire and Rescue Service operates in many parts of Scotland is under pressure, as it is in many other countries. Secondly, the service inherited a significant and, we think, insurmountable backlog of £389 million in the capital investment required to bring its estate, its fleet and its equipment up to acceptable standards. To put that in context, the service's capital budget for 2018-19 is £32.5 million. Finally, convener, members know that I place considerable importance on public bodies understanding their financial sustainability and developing long-term financial strategies. The Scottish Fire and Rescue Service responded positively to that recommendation in our May 2015 report, and the work that the service has done since then has placed it in a much stronger position to move ahead with its strategy and its transformation plans. Convener, as always, the team and I are happy to answer the committee's questions. I would like to start. On a very positive note, it seems to me that the key message on your report talks about how the board continues to work well and talks about it having real strengths in the quality of discussion and scrutiny and challenge of management. That contrasts somewhat with a number of inquiries that the committee has done in the past few years. We have looked at governance failures in other bodies, which have had significant issues for whichever audited body it is. It is really refreshing to see the positive message on the SRFS board. Can you tell us from your perspective what is it that is making the board different from the other boards and what qualities it has? I will ask Mark Kerr in a moment to talk you through some of the specific features of this board that we think have led to our positive conclusion on their effectiveness. It is probably also worth me setting in context that many of the issues that come before this committee are here because something has gone wrong. The examples that the committees are not necessarily representative of the way that boards operate across the public sector, and I absolutely recognise the importance that this committee places on good board working. I will ask Mark Kerr to give you what insights he can from the work that the team has done with them. We said in our previous report back in May 2015 that the board was starting to perform well. I think that what we have seen is a continuation of that process ever since. The board has had a relatively high degree of stability in terms of its membership, which I think has helped. I think that within the board there is a real culture of self-reflection and self-evaluation in terms of how we make this work well, which is very, very positive. The history has been, I think, in the early stages of the foreign rescue services. It was a big shift moving from the local government environment into the central government environment. I think that the management of the organisation did take a little time to adapt to the new level and intensity of scrutiny that was going on, but that has now become a very, very positive relationship, not in an overly too close relationship at all, but one where the interests of the service are shared very much between the board and the senior management. There is genuine real challenge and discussion and debate at the appropriate strategic level. As the Auditor General said, it is an organisation that we think quite highly of in terms of how its board works. Colin Beattie Auditor General, the report actually waxes quite lyrical for once, so it is very nice to see a positive response on that. One of the things that does pop out, of course, is the backlog on maintenance. A comment that you make here in paragraph 53 is that there is a result of legacy from the previous eight fire services. How much of it is that backlog is legacy and how much has arisen since? I think that it is very difficult to break it down in quite that way. We do know from the work that we have done on fire and rescue services over a number of years back in 2015, but also on the eight former legacy services that there was already a backlog of capital required and a risk that in the run-up to the merger for local authorities funding the former rescue services, investing in assets for the long term was less of a priority than it otherwise would have been, so we think that the backlog built up further then. It is not possible to draw a line and say this much is what was inherited and this is what is required now, not least because the changing needs for fire and rescue services across Scotland have been happening across that period. That is a big part of why the level of investment that is required now is needed to make sure that buildings are in the right place and equipped for new ways of delivering fire and rescue services and to make sure that the vehicles and other equipment are fit for new ways of working. I guess one of the first things that is looking at the headline figure is how much of that is critical. Do you know how the NHS has a very comprehensive system of estimating which buildings are in a critical state, which maintenance is critical and so on, sort of a traffic light system in a way? Is there anything similar with fire services? I will ask the team to talk you through the way in which the estimates built up. I think that it is important to note that what we are saying is not that at the moment this is presenting immediate risks to the fire service ability to provide its services. It is more about thinking about what is required for the future and also providing good fit for purpose working conditions for firefighters and other staff, which is obviously very important. On the breakdown, we did the audit look at information about the structure of the capital backlog, but I do not have the detail to give you an outline of what that breakdown was, but we can certainly provide that. Can you provide us with a priority, if you like? It categorises the different capital backlog issues. It goes from critical to... It is more breakdown by the property fleet and the arrangements within that, rather than prioritising it specifically. There is no way of knowing what is critical. We are talking about £389 million here. Is 10 per cent of that critical? Is 25 per cent of it critical? That is the real issue. Mark, can I add to that? I think that that is probably a more detailed question for the fire and rescue service. They have a medium-term asset management strategy in place, which sets out where they want to prioritise their efforts. What we have been recommending is that that is updated and that is complemented with a longer-term plan for their asset management, which would take into account that degree of prioritisation that was needed. If I am not wrong, I think that you said that the current capital expenditure was £32.5 million. The budget for the current year, I think, was £32.5 million. You have stated that an annual investment of £37.8 million over the next 10 years would ensure that the assets did not deteriorate. So, there is just a little bit below that in terms of investment. Yes, in terms of simply making sure that they do not deteriorate, but for other reasons to do with the changing risks across Scotland and the challenges of recruiting and retaining retained and volunteer firefighters, we think that they need to go beyond simply stopping the deterioration into investing to make it fit for the future, or they will not be able to ensure that services continue to operate safely and effectively in the longer term. Indeed, in paragraph 55, you expand on that, and you are talking here of three years of investment at £170 million and seven years at £42 million. How is that calculated? Those are the figures that come from the financial modelling that the Scottish Fire and Rescue Service has already done, which the audit team has tested for reasonableness, and they are linked very much to the vision for transforming services to meet both the changing needs of Scotland and the challenges that they have in terms of recruiting and retaining the number of firefighters that they need right across the country. Now, you say in the same paragraph that it is unlikely that funding will be available to achieve the options that you are talking about here. Is that simply because of the austerity? I think that what we are doing is looking at the long-term trends that we have seen so far for funding of the Fire and Rescue Service and putting that in the context of things like the Scottish Government's fiscal outlook that was published a week or so ago, and the trend figures that that gives for the likelihood of changing. We have said in here that the Fire and Rescue Service needs to continue working with Government, but it also needs to be progressing its plans for transforming the services more widely, which is likely to require looking again at the use it puts its buildings to the scope for sharing with other public services and changing the way services are delivered in some parts of Scotland. Clearly, there are some difficult decisions in there, which is why the Fire and Rescue Service has been so keen to engage with its stakeholders. Has the Scottish Government accepted the report? Absolutely. We always, as the committee knows, clear our reports for factual accuracy. That is not something that we have changed as a result of that. Mark looks as though he wants to add a little bit of detail to what I am saying, just to keep this straight. I was merely going to endorse what the Auditor General said, yes, that the Scottish Government cleared that number with us. Just to be absolutely clear, the £389 million is capital expenditure that is required. No part of it could come from revenue. I am asking him because we do not know the components of that figure. Absolutely. It is possible under the Scottish financial management rules for revenue budgets to be used to invest in capital where that is available, but the overall point is that the £390 million is a very large amount of money that is seen against either the long-term trend of capital budgets or the overall capital budget for the service, which I think is about £265 million a year currently. It is very significant. We think that the only way it can be overcome is by taking that long-term view and thinking about how the service can be transformed both to meet the needs of the population but also to make sure that the capital investment is targeted at the places that it will make the most difference. Perhaps I can just briefly ask you about something else. On Exhibit 1, on page 13, I am looking at the breakdown of the incidents and the total of 56.6 per cent false alarms. Is there any pattern to that? In other words, is there any core reason? Does it come from public buildings? Does it come from private residences? It is a startling figure overall. One of the things that the Fire and Rescue Service is trying to do is to understand exactly that pattern better itself so that it can work with the people who are accounting for most of the false alarms to reduce it. Mark Can tell you a bit more about that. Just to say that over two thirds of those false alarms come from non-domestic buildings, so the likes of schools and hospitals and, for example, care homes. What the Fire Service has now got in place is a commitment to try and reduce the number by 15 per cent over the next three years, and they have a strategy for how they are going to do that. It will be interesting to monitor what progress is made on reducing that figure against that target. There is also a comment here in paragraph 30 about an increase in deliberate fires. There are two different aspects. There is the lower-grade deliberate fires, which is things like waste bins. They have also got an increasing level of deliberate fires associated with what are more primary fires, which the statistics show are particularly around vehicle fires. I suppose that there is not a great deal that the fire services can do to in themselves to reduce that, but presumably they are working with the partners and the police and so on to mitigate that. Yes, the focus of a lot of the preventative work is working with partners, whether it is other blue light services or with councils and other community planning partners, as well as the community's own prevention work around tackling issues such as deliberate fires. In paragraph 77, one of the preventative programmes that the Fire and Rescue Service is working on has a young firefighters programme where they seek to engage with young people, particularly young men, to get them involved in the fire service with the intention and expectation that that may reduce the likelihood of deliberate fires being set. That is clearly a good approach to be testing out. We recommend that they should be doing more evaluation of their preventative work, but that they are active in trying to reduce those numbers for very good reasons. Willie Coffey, general in paragraph 48 of the report that confirms the SFRS, confirmed that, with the change to its vac liability, its 2018-19 budget is enough to allow progress with implementing transformation. How does that comment at the end square with what it has got and seeing that the backlog problem is insurmountable? That comes back to the running costs of the fire and rescue service. It is related to Exhibit 4, which updates the committee on the projected funding gap for the fire and rescue service over the next 10 years or so. You will see in the various projections that the Scottish fire and rescue service itself has made for its funding and its costs over that period, and, indeed, our own assessment of that. Although there is quite a wide spread between the lines, the important point about that chart is that the funding gap is very small in absolute terms compared to their budget for this organisation. Indeed, in a couple of scenarios, we are actually looking at a small surplus by 26-27, and even in the worst-case scenario, the maximum funding gap, we are talking about £80 million against a budget of, as I say, about £265 million. The revenue costs are now under control and the fire and rescue service has confirmed that it thinks that it can move ahead with the wider transformation that it wants to make, but that is dependent on the ability to invest in, particularly, the property and the vehicles and equipment that they need to be able to deliver those new ways of working. The figures that Colin Beattie mentioned, the £32.5 million capital allocation that is supplemented by another £4 million in the return of the VAT comes at £36.5 million. That paragraph says that we need about £37.8 million. It is hardly a huge gap to justify calling it in some way, I think, does it know? The annual investment of £37.8 million is simply to maintain the existing plant and property and vehicles and so on in a safe condition, but that would not allow the fire service to make the other changes that would both make their revenue costs sustainable and, much more importantly, meet the needs of the people of Scotland across the piece. It is my judgment that it is likely to be insurmountable without those sorts of changes, but, as Mark and I have said, that is not something that has been challenged by Government or by the fire and rescue service itself. It is a very significant investment that is required. In terms of arriving at the top figure of the £368 million, has there been any analysis and call and referred to as there a breakdown of this? Is there a breakdown that you have based your assessment on that top line figure? How do we mark? We have drawn that top line figure and compared it against the trends in capital funding that we had seen. As the Auditor General said, the likely future outlook in terms of capital funding and knowing the scale of the change that the fire service was envisaging in terms of how it operated. The simple answer to your question was that we took that top line figure. As I mentioned, the medium-term asset management strategy provides more detail that the service has in terms of exactly where that would be targeted in the medium term over the next three to five years. We do not know if there is an assessment of elements of that that are essential and desirable that Colin Beattie was alluding to today. Is it broken down in those terms? Again, I think that the fire and rescue service would be able to provide you with more detail of that, as I said in my response to Mr Beattie. You must have it if you are seeing the whole things insurmountable. We have got a copy of the asset management strategy, and that was one of the pieces of evidence that we looked at—the real detail about where that would be and what the scale of the investment against the various elements of it. We could provide that, or the fire and rescue service may be able to provide that as well. Is it so fair to say that the £37.8 million figure over the next 10 years is the figure that is required simply to deal with the critical maintenance requirements that are likely to come up over that period? The bigger figure is the one that is required to transform services both to make it financially sustainable for the longer term, but also to meet the needs of people across Scotland. The team has tested those figures out in the ways that we have described, but there are the two parameters in which investment is required. I probably want to see the details of that board report that breaks down the figure, I think, to give some clarity to the members of the committee. Before we leave the area, it would be useful if we could make this real to the people of Scotland, if you like. First of all, we have heard quite a bit about this nearly £400 million maintenance backlog. What does that actually mean? Does that mean that fire appliance is breaking down? Does that mean that fire is not being able to be put out to the people? It is important for us to be clear that it does not mean that, at the moment, that the fire service rightly takes a very structured approach to maintaining its most important equipment and vehicles so that people are safe. Things will go wrong from time to time, they are bound to in any service, but at the moment we are not seeing wide-scale problems because of a lack of maintenance. Those risks will increase if the lower level of capital investment is not made over the next 10 years, but more importantly than that, I think, because of the changing risk to the population, because of the way that we live our lives, because of an ageing population, because of the increasing number of severe weather events and the risk of terrorism, it will be harder to respond to those risks. That difficulty will be increased further because we know already that the system of relying on retained firefighters and volunteers, particularly in remote and rural parts of Scotland, is not sustainable because of changes in the way that people live their lives. To be able to have the right firefighters in place at the right time and to make sure that they have the equipment and the vehicles that they need to be able to work effectively requires a significant amount of capital backlog, and the best estimate is £389 million that we have used in the report. Catherine, I think that she wants to add to that. It is really just to highlight a point that Her Majesty's fine rescue inspectorate plans are currently undertaking an assessment of fleet and we will be reporting later in this year. We will come back to the retained firefighters later, but that sounds concerning and picking up on a point that Willie Coffey was raising. We are in a context where I think that the Scottish Government funding has decreased by about 12 per cent in the last five years. Somewhere in the report, we are projecting an £80 million shortfall by 2026, but that is set in the context of what we have just been told. There needs to be a huge investment, there needs to be a transformation, is the word that he used. I am struggling to square how those two can marry. I will try and unpick them for you slightly. The reform of the fire and rescue service pre-2013 was based on a need to make savings in order to be able to make the service financially sustainable in future. The savings that the fire and rescue service has achieved so far are very much in line with the estimated savings at that point, and we think that they are on track to continue over the 10-year period after the merger happened. The £80 million figure that you mentioned is the fire and rescue service's worst-case scenario for the forecast of the funding gap over the next 10 years. The best-case scenario is a relatively small surplus, so the £80 million is a worst-case estimate, but it could well be a small surplus or somewhere in the middle. We think that it is likely to be in the middle. Beyond that, their ability to become financially sustainable in that way depends on the need to invest significant amounts of money in the buildings that they work out of, the vehicles that they use and the other specialist equipment. The estimate of that is £389 million. That is very significant. The committee knows that I am careful in the language that I use in my reports. I do not use the word insurmountable lightly. I think that that is an important conversation for the fire and rescue service to continue having with Government and to continue developing its own asset plans and investment strategy in the way that we have recommended in the reports. The report identifies that there are some barriers to achieving a transformation. Presumably, one of those is whether or not the fire service can get £389 million out of Government. You will confirm or deny whether that is the case, but what are the barriers to that transformation being achieved in? We summarise those in the report and the team will be able to point me towards them in just a moment. We are at paragraph 38, which are the things that are difficult over and above the need to deal with that investment backlog that we have identified. Mark, do you want to talk the committee through those factors? Yes. As the Auditor General said in her opening comments, the process that the fire service has gone through has been a very cautious one. What they have been trying to do and the way that they have talked about it themselves is to build a coalition of the willing. They have been trying to build a consensus among staff, among the public, with unions, with politicians, about the direction of travel for the organisation. Here we are in 2018, five years after merger. They are now in a place where they want to start moving ahead with their transformation agenda. I think that that cautious approach has meant that it has perhaps been slightly slower than perhaps anyone might have thought back in 2013, but they have been trying to take a very measured approach to it. A second element is surrounding the nature of the environment that the fire service finds itself in with regard to the Fire Brigades Union, which operates at a UK-wide level and negotiates at a UK level. With the Scottish Fire and Rescue Service trying to move on to a slightly different agenda and a slightly different pace from other parts of the UK, they have been having to negotiate with the FBU, which operates at a UK-wide level and will clearly have UK-wide interests and position to take. They were also cautious because, again, as the Auditor General said, they wanted to make sure that the financing, they were confident that they were in a place to move ahead, and it really was only at the end of last year that they were sufficiently confident that, with additional funding provided by the Scottish Government in the 18-19 budget and the decision on VAT liability that they were now in that position, that has been underpinned by what we see as very, very good long-term financial planning. Again, as we have said previously, we recommended that the service produce a long-term financial strategy three years ago. They seized that recommendation and very much took it to heart and progressed it very, very quickly, and they were engaging with us during the course of that process. I think that has put them in a very positive position for understanding their future cost pressures, and that has allowed them to be now confident about where they are going to go. Finally, for me, in terms of that transformation, the report suggests that there has been a loss of continuity of leadership across a number of the integration and transformation projects. I noted that two of the four most senior officers are going to retire within the next two years. So, what are the Fire and Rescue Service doing to address that leadership issue and ensure a degree of continuity? We talk about the workforce challenges a bit later in the report around page 21. It is absolutely clear that staff turnover and, particularly, the retirement profiles of staff is a problem in general. We see it in Exhibit 5 with the number of staff throughout the Fire and Rescue Service who are likely to retire because of their age, and that is a particular bottleneck around the experienced senior officers who are required not just to run the Fire and Rescue Service but also to lead these complicated transformation projects that we have been touching on this morning. Part of that is due to the current arrangements for pensions, where firefighters who joined before 2006 are able to retire after 30-year service at the age of 50 on a full pension. That will change over time. For firefighters who joined after 2006, we are moving to a normal retirement age of 60 and 40 years of service, but we are currently managing through that transition. Secondly, as the committee has noted before, the changes to the taxation of pensions at the moment, which means that the incentives for people to carry on working are very much reduced for people who have built up significant pension pots. That change keeps on shifting year on year, which I think is encouraging some people to take their pensions while they can and move on. The Fire and Rescue Service has done some good work on workforce planning, which we set out on page 20, but at the moment it is finding it hard to counteract the effect of those pension and tax changes that are currently working through. Lots of the work that it is doing is about not just understanding the make-up of their workforce, the age make-up and when people are likely to move on, but also looking at how they can develop and train up-and-coming firefighters to take on those roles more quickly and, of course, importantly to increase the diversity of their workforce. At the moment, the Fire and Rescue Service is something like 94 per cent male among its uniform staff and being able to attract a wider group of people from the community, women and people from other minority groups would also help to deal with the sorts of pressures that we are talking about, but at the moment it is a short-term challenge that they will struggle to deal with. David Stewart Thank you, convener. Can I just go back to the UK Government issue? The lifetime allowance has been a problem across occupations and health service, for example. I think that it is just over £1 million is the current limit. That has caused an acceleration of very senior staff to leave at much earlier age. That is really outwith the control of Fire and Rescue Service, and it is very difficult for me to see an easy solution for very senior staff. Have you any general observations across your remit about the lifetime allowance difficulties? Ruth Davidson Only to agree with you, I think that we have seen in policing, in fire and rescue and in the health service, the effects of the reduction in the lifetime allowance and also the introduction of an annual allowance for the amount that can be invested in a pension scheme and contributed to a pension scheme tax-free each year. It is not simply the fact that those limits have been introduced by the UK Government. It is the lack of predictability about them that they can change year on year without very much foresight of how they are likely to affect an individual that is causing some people who have the option to take their pensions and limit the risk in that way. It is a reserved matter. I do not have a role in relation to the UK Government, but we are looking closely at the effects of people's retirement decisions in the uniform services that we are talking about today and also in the NHS, where we know that it is a significant issue. Ruth Davidson It was, obviously, a lot higher in recent times. My memory serves me right. It was about 1.5 million, I think, even in just a few years ago, so there has been a dramatic reduction. That seems a large amount of money, perhaps for people watching this broadcast, but certainly for a lot of professionals over a lifetime, that is a million. It is not actually a huge pension pot if you are at a very senior post. I would agree with you. If you look at the remuneration reports for the most senior people in a range of public bodies, they are affected by this simply because of the lengths of careers that people have in the public service. You do not need to be terribly well paid to be affected by the cap where it currently sits. It does also play into the annual allowance, which I think is now £40,000 a year. Again, if you have a large pension pot with contributions going in from the individual, the employer and the growth in what you already have, it can tip over that quite easily. Of course, we all recognise that they are large sums of money compared to the average earnings of people right across Scotland, and that is probably why it has not received as much attention so far. We are looking at it in Audit Scotland. It is one of the challenges that public services are going to have to plan for in making sure that they have the people they need to continue providing high-quality public services in the future. It is one more of the areas where the division of responsibility between the UK Government and the Scottish Government means that it is difficult to manage. I have some questions of workforce management, but I will take that at a later stage. Of course, Willie Coffey, do you want to come back in on something? It was just on the point that you raised on Exhibit 4, the long-term projections, financial projections, and you picked out the most negative figure that is in the chart layer of minus £77 million. I just wanted to clarify with the Auditor General that the most positive assessment of that is a surplus of £44 million in the same chart, so we can live between the two. I think that Audit Scotland's own projection according to this chart is about a £400,000 short gap, which is nothing like £77 million of a shortfall. It is almost break even, is that what you just confirmed at that year? That is exactly the point that I was making, Mr Coffey. There is a wide range there. I think that even at the extremes, it is still a relatively small gap compared to a £265 million annual budget. Our own assessment is very much in the middle of that. Thank you very much. That was all. Iain Gray Thanks. The report is generally very positive, Auditor General, as colleagues have said, but in the opening remarks he identified two concerns or two areas of concern. One was the capital requirement, which we have explored a bit, and the other was the problems around retained firefighters. You said when you were talking about the capital, the inherited capital shortfall, that you are always careful in your language. I think that that is true, but when it comes to retained firefighters, you are in the report quite strong in your language again. You say that the current RDS model in Scotland is no longer fit for purpose. The figures that you give are certainly worrying. An overall availability of 82 per cent and, in weekdays, as low as 67 per cent. You also point out that four out of five of Scotland's fire stations rely wholly or in part on RDS, so that is a very significant problem. Finally, you point out that 20 retained firefighters or volunteers are leaving the service every month, so that is a problem that would appear to be getting rapidly worse. My question really is, to what extent do you think that this is jeopardising the capacity of the service, or how close is this to jeopardising the capacity of the fire and rescue services to deliver what we want them to? We say in the report that the current model with its reliance on retained firefighters and volunteers is unsustainable in the longer term. That is not an issue that affects only Scotland. It operates right across Scotland and indeed internationally. It is related to, first of all, the fact that we have an ageing population, so that there are fewer people of an age and fitness who are likely to want to be and to be able to be retained firefighters, and also the fact that people who live in remote and rural communities are often having to travel further to their main jobs and are therefore either not available at all to act as retained firefighters or are available for less time. That is what is leading to the sorts of availability patterns that you are seeing there. It is absolutely recognised by the Scottish Fire and Rescue Service and it is one of the things that underpins their vision for how they want to transform the service for the future. I will ask Mark, who would like to tell you a bit more about what we know about the timescale and what they are doing to make that transformation happen. As the Auditor General said, Scotland is not alone in having this problem, and the service is taking active steps to look globally at what other countries have done in terms of trying to respond to this situation. I think that the message that came to us very clearly was that no one has cracked this. There is no simple solution to this. What the service is trying to do as part of its long-term transformation agenda is revisit and rethink how it deploys both whole-time firefighters and retained firefighters, and perhaps have a more mixed model where you have a mix of whole-time firefighters and retained duty firefighters within a single crew. That could apply both in rural areas and in urban areas. What they are trying to do is work out how that can best be matched against contemporary risks, both in terms of fire risk and the wider community safety risk that they are trying to expand their role into. That process is very much on-going and is absolutely integral to the changing shape and role of the organisation in the future. Going back to the conversation about capital, it also fits in with what is the nature of the fleet that they are going to need in the future? Are they going to need smaller, more agile vehicles that they can use? I think that they have been trialling that in certain parts of the country. Obviously, they will still need traditional appliances in many cases, but are there other options for the ways that they can crew? Having smaller vehicles and needing smaller numbers of crew is still appropriate to the level of risk that they are facing. As the Auditor General says, it is very much part and parcel of the transformation agenda as well as responding to the situation with the existing model of the retained duty firefighter and feeding that into the role, shape and how the organisation operates in the future. It would seem that we have a problem here that is not unique to Scotland to which no one has an answer, which is worrying. I am trying to get at just how critical a problem is. Four out of five of our 356 fire stations rely, at least in part, on retained firefighters, but I assume that some of those are smaller, less busy fire stations. Do we have any sense of the activity and the work of the fire service and how much of that is dependent on RDS? We know that the problem is most acute in the Highlands and Islands, in the remote and rural parts of Scotland, as you would expect, where population is much more thinly spread, fires are less likely to happen on a regular basis than they do in an urban area like Edinburgh, but, nonetheless, when a fire happens, you still need a very strong emergency response to it. They are also affected more by the availability of volunteer and retained firefighters, so the remote parts of Scotland, particularly the Highlands and Islands, are the most affected. They are the areas where it is least clear what the longer-term response should be, and that is why the Fire and Rescue Service is first of all making sure that it understands where the challenges are, where the fire stations are, which are finding it most difficult to have the staff that they need at the time so that they need them, and then to look at what the options are for responding to that. Mark has talked about the trials around rapid response vehicles and other types of equipment that can be safely operated with fewer firefighters. The Fire and Rescue Service is also currently chairing the national strategic planning group that is pulling together the other emergency services to see how they can pull their resources to operate more effectively, but it is transformation on that scale that will be needed, not just for reasons of finance, but much more because the risks and our ability to respond to them are changing because of demographic change and things that we cannot control like severe weather and terrorist threats. It sounds like we are really just at the beginning and I have tried to find a way through this problem. Is there a place in Audit Scotland's programme where you will be returning to this to see what progress there has been? We will be monitoring the Fire and Rescue Service's response to the recommendations in this report through the annual audit work that happens every year. I am happy to bring an update back to the committee when I think that that would be a useful thing to do, either because of good progress or because the problems are accelerating. Before I come to my main question, can I go back to the issue of the lifetime allowance on the pension? I think that the Cabinet Secretary for Health became a major issue. The work that you are doing across the public sector is looking at the impact of the lifetime allowance on early retirement or early air retirement. To get it in perspective, the 40 grand a year maximum allowance means that anyone who is able to get 40 grand in would only work 25 years and they hit the lifetime allowance cap. It used to be £1.8 million and George Osborne gradually reduced it to £1 million, just one of his mistake. In the health service, my view was that it did not just affect retirement. When it was reduced to £1.25, in Glasgow alone, we suffered a 40 per cent reduction in the availability of doctors for out-of-hours services. As well as looking at the impact on earlier retirement, and you are looking at the impact, for example, on the fire service, is it disincentivising certain people to do additional work? I think that it does in the health service. I think that this is a big issue in public services at the top level, but there are a lot of vacancies at the top level. You are absolutely right. It does not just affect people's decisions about retirement, but the broader decisions about their working lives—whether they are looking to reduce their hours if that is an option, whether people who have retired come back to act as locum doctors or provide out-of-hours services or whatever it may be. We are not doing audit work directly on the effects of the taxation of pension, but more generally looking at the impact across the workforce of some of those bigger forces, such as changes to retirement age, changes to pension taxation, public sector pay policy, the whole range of things, demographic change, which we know are making it harder for a range of reasons to not just retain the people who are needed now to manage public services, but to see that pipeline of people coming through for the future. I know that it is a matter that you have expressed interest in over a long period, Mr Neil, and we would be happy to talk to you about that, but we are currently scoping out what the questions are and what information we need to answer them. Is it your intention to do a report on this at some stage auditor general? Probably more a briefing, I think, for lots of these issues that are matters of policy, such as UK Government policy around pension taxation or pay policy in relation to the Scottish Government. However, I think that there is a risk that when you bring all of those together, you start to have unintended consequences for our ability to have people at the right level providing vital public services. I think that a briefing on that might be useful to Parliament. I think that that would be extremely helpful. I think that also, on the back of that briefing, we should ask the Scottish Government to raise that with the Treasury in the run-up to the November budget. It must not be just in Scotland, it must be across the UK. It is having a very detrimental impact on the availability of people for senior positions that are absolutely critical to the successful running of public services. Once we get that briefing, we need to take it up. My main question is on the savings. I think that it is about £300 million. Can you give us more details on where those savings are going to be? Why is it £300 million? What are the chances of it happening? What are the implications? Do you have a paragraph reference in front of you, Mr Neil? I do not have the original report in front of me. We will find it and come back to you. Paragraph 46. We note in the report that the financial memorandum to the bill, which established the Fire and Rescue Service, suggested that reform could generate £328 million of savings by 2728, so over a long period of time. We note that the Fire and Rescue Service is on track to deliver that. Mark, can you give us a bit more detail about how that is being done? Just to add to that, a lot of those savings were driven early on by the bringing together of the eight services and some of the efficiencies that were generated during that process, which are then recurring over the next few years, up to 2026-27. The information that we have had from the Fire and Rescue Service is that they are confident that they remain on track to deliver that service. I guess that the attention has now shifted more to what is the necessary investment needed in the future to realise the transformation that is going on. We say in the report that they have made substantial project progress on a number of integration activities that they have been doing over the last few years. For example, they have rationalised their control centres from eight down to three. Part of that was a saving, but part of that was also improved service provision. In the longer term, there was standardisation of breathing apparatus for firefighters as well. Most recently, they have moved to a standardised terms and conditions for uniform firefighters, which was the last element of the integration bit of the reform process that was going on. All those things to greater and lesser extent have contributed to that £328 million savings figure that was projected back when the bill was being considered by the Parliament. Most of that was happened early on through that integration process. Early on, are you able to check that those savings, when the Fire Service tells you that they are making progress and they are in line with their budget on the savings, have you double checked that that is the case? We were very content with the information that they gave us about that. Right, okay. In the period left, how much of that £328 million is still outstanding in terms of savings still to be made? I think that you might be challenging my mental arithmetic here. I rather than give the committee an inaccurate figure, can I get back to you on that? Can you also tell us how most of those savings are going to be made? Is a recurring expenditure that has been reduced? Is it reductions in manpower? Is it still dealing with the legacy inefficiencies and getting those out of the system? A broad overview of that would be very helpful. The first point to make is that the vast majority of the Fire Services budget is staff. There were reductions in staff numbers in the early years of the services history, so some of those are recurring savings from reductions in workforce. Also greater efficiencies being built in through having national services and shared access to national facilities as well is helping as well. Again, the finance was not the sole driver for doing these. It was trying to improve the service at a national level in terms of what we were doing. As I said, most of these things have happened through in the early years of the service in terms of recurring costs resulting from the merger and the subsequent integration work that went on. That is very helpful, but it would be useful to get the balance to be achieved and what is still to be saved. We will write to the committee on that. Supplemental from Bill Bowman on that point. Oh, sorry, it was on another point. I will bring David Stewart back in just now, then it will come to you. Thank you, convener. Can I raise just a couple of issues around workforce planning? Obviously, in any large organisation, workforce planning is absolutely crucial to the success of the organisation. If I can just erase two very quick examples, a very positive example is the out-of-hospital cardiac arrest policy. That is where obviously firefighters respond with paramedics, which I think is excellent in terms of intervention and join services up. As you know, the pilot was a success, but the trial is currently suspended. Is the service clear about the numbers of staff that it needs going forward? This is an excellent initiative. It is clear that there are some budget issues. How can this continue? What are the workforce planning issues around this excellent initiative? The first thing to say is that this is a good example of some of the challenges that the fire and rescue service has to respond to in negotiating with the FBU at a UK level. As you say, the pilot here in Scotland of the out-of-hospital cardiac arrest service was very positive, had appeared to have a real impact on people's lives and well-being and was welcomed right across Scotland. I think that the FBU at a UK level decided that they were not yet ready to agree that this is a way of working, even though the pilots in Scotland had been successful and the negotiations are continuing as part of that. We talk in the report about the fire and rescue services vision for changing the role of the firefighter more generally. That is one aspect of that, but I think that there is scope for firefighters to keep people safe in a range of other ways. That is very much the negotiation that is under way just now. I will ask Mark and Catherine to talk you through what we know about the detail in relation to the cardiac arrest pilots, particularly. I would like to meet more people who would be around. Obviously, the pilot was very successful. As you said, Mr Stewart, if they are able to progress with this, there will be a training requirement to support firefighters in how this goes on. It is all dependent on the negotiations with the FBU because the changing role of a firefighter is being negotiated at that UK level. Everything is in abeyance until those negotiations are able to progress. Should they be successful and should an agreement be reached to move ahead and roll out that out-of-hospital cardiac arrest work, there will be a training requirement and that will have an impact on the service. At the moment, everything is just on hold at the moment. I understand the negotiations around the union and I think that that is crucial. I think that the general point is that clearly having first response services to save lives is crucial. I know from experience that some members of police force carry defibrillators, for example, who are more likely to meet someone in an emergency in a few seconds can be vital. However, can we move on to another, my final area, where there is a bit of a challenge to say the least? That is in support staff. There is a real problem, I think, in the recruitment and retention of support staff, 65.5 full-time equivalent short. There is a particular snag areas—ICT, for example, 20 per cent—under. Does the service understand the issues around the support and recruitment of support staff? I am particularly concerned in the areas around finance, when clearly you flagged up there are some financial issues. There are considerable shortages in finance and procurement staff as well. Any general observations around us? The first thing to say is that all those support services often get a bad rap that is seen as being an overhead rather than a key part of providing public services. We are very clear that they are key. That includes finance staff and, particularly, ICT staff, where lots of divisions for transformation relies on having the right information and IT support available to do that. The workforce planning that the Fire and Rescue Service has done is clear about the staff that they think they need to do it, the challenges in recruiting and retaining their staff for the longer term, and making sure that they remain engaged and feel that they are a vital part of the service. Mark, do you want to pick up a bit about what they are doing in that area? Very briefly, in answer to your question, they are acutely aware of the scare of the challenge here and are not alone in this. We have seen across our work real challenges and recruitment and retention in particular of ICT staff for public services, and that is a particular risk. I think that it is worth saying that although there are below their target operating model in terms of finance staff, and as we have commented in the report, I think that financial management is very strong in the Fire and Rescue Service, there are real challenges in the future, and we have discussed the implications of the capital backlog, for example. In short, I think that they are very acutely aware and actively seeking ways to try and attract people into the service, and that is part of their on-going recruitment strategies. Is there any general issues that you have gained on this? The classic management, for example, would be to look at the salary, the environment that people experience, the job design. Is there any issues around that that you are conscious of? Should there be an Edinburgh Glasgow premium for ICT staff, for example? I do not think that we have got into that level of detail with them in terms of how, at the individual job level, they are trying to attract people. That would perhaps be a question that the committee might wish to ask of the service. Can I go back to the capital investment backlog that we spoke about before? In the conversation, the term investment in maintenance has been used interchangeably. Are we talking about investment in the future that would go into the balance sheet? Are we talking about maintenance that would go through the expenses? What is the make-up of that so-called backlog? The £389 million is all capital investment that is required. Some of it is to bring existing assets up to the required standard to continue operating. Some is to change them more fundamentally in terms of the type of building that you are using or where it is located. Some of it is to create entirely new assets like the rapid response vehicles that would enable different staffing models, for example, to operate. There is a range of things in there, but we are confident that it is all capital investment rather than running costs in quite that way. There is no backlog of maintenance? There is a backlog of maintenance required to bring them up to the standard that is required to be fit for purpose, as we say in the report. When this investment comes about, will there be any cost by retiring assets that are currently in the books? The £389 million figure is an estimate, but it is the best estimate of the net cost of doing it. Clearly, there is scope to the net cost. Do you mean in terms of what would go through the income statement? The net investment required less things like capital receipts where they would be available. Would those receipts be more or less than what the relevant assets are in the financial statements act, which would then go through the income statement? At this stage, we are all talking about estimates on all of it and lots of the estimates are contingent on decisions about whether assets need to be replaced or relocated or, indeed, provided in a different way altogether. The fire and rescue service is best estimates based on its vision for transforming the service. It seems from the conversation that this is the big number here. We have all been asking questions, and the answers, as I sort of understand them, are that this is the number from the system. We have looked at the output from the system and checked that it is producing what we would expect, but we do not really have an understanding of what the number means over what is critical, what is not critical and some of the things that I have just asked you about there. Mark, in a moment to tell you a little more about the audit work that we have done on the estimate, which is there, because I think that is at the heart of your figure. In the audit work, it is more about what it means in terms of the number of £389, because you have referred us to either to ask the fire and rescue service themselves what it means. If we have to do that, then I think that we have to do that, but if you have not done that. Mark, please. As I have said, what we will do is provide the committee with the information that we have from the fire service in terms of its asset management strategy, which sets out what it wants to do. We looked at that. We considered it to be a reasonable estimate and a reasonable approach to planning what it was going to have to do in the future. We did not get into the detail of looking at particularities about either fleet or estates, because we knew that our colleagues in HMF are at its high. We will be doing that during the course of this year. Nor did we get into the level of this audit, a detailed review of assessments of condition of a state and that sort of thing. We examined it at a fairly high level, it is fair to say, but we will be able to provide you with more breakdown. That will be useful as long as it is not just a pile of information, it is an interpretation. On wording, in your summary in item 3 in the first bullet, you say that the SFRS has taken a cautious approach with the aim of securing and maintaining political staff, trade unions and public backing for its vision. Can you just confirm that the SFRS has not really been getting into taking political stances and getting involved in politics? No, I think that we recognise that for good reason the fire and rescue service needs to change quite significantly over the years ahead, both to meet changing needs of the population and because the way that it has been operating since its establishment in the late 1940s is not sustainable because of changes in the availability of retained and volunteer firefighters. We know from experience and the committee knows better than we do that those sorts of changes are often sensitive and can be contentious with local communities and with politicians at local and national level. I think that the approach that they have taken has rightly been to seek to gain back into the changes that they are doing. The judgment that we are making is whether that has been done fast enough. I think that it has been steady but slow so far and that they now need to pick up the pace of that change given the challenges that they are facing around both staffing the service and the costs of bringing its assets up to the condition that is required for the future. So it has been one of informing but not taking a political position? Well it is a difficult distinction to make, I think, that they clearly have to work within the framework set by the Scottish Government's framework for fire and rescue services, which encourages them to innovate. They have to operate within both their understanding of the risks facing the population and the money they are likely to have to spend over the years ahead. That will require them to make changes. I do not think that that is politically in any party political sense but it obviously is political in the sense of choices about the way that resources are used, public money is used. Thank you. Unless there are any further questions from the panel, I would like to thank the Auditor General and colleagues for your evidence this morning and bring this particular evidence session to a close. Thank you. I will just allow a little time for the Auditor General and colleagues to leave the table before we move on to our next item. Moving on to item 4 on our agenda, this is consideration of Petition PE1676. Petition PE1676 from Tony Rosser calls on the Scottish Parliament to urge the Scottish Government to review the Land Registration, etc. Scotland Act 2012. As members are aware, the committee has previously shortlisted the 2012 act as one of the acts that it will consider as part of its post-legislative scrutiny work programme. The Public Petitions Committee has referred the petition to this committee on that basis. Members will also recall that, for each of our shortlisted acts, the committee has agreed to hear further from the stakeholders who suggested the act before agreeing its approach to the post-legislative scrutiny. This will give the committee an opportunity to explore the concerns in more detail and gain an understanding of the issues, and generally help inform the committee's approach. The committee is invited to consider whether it wishes to include the issues raised in this particular petition when agreeing its approach to post-legislative scrutiny of the Land Registration, etc. Scotland Act 2012. Are members agreed? Thank you. I now close the public part of this meeting and we move into private session.