 Ieithaf, wrth gwrs, wrth i ddim yn gwybod i'r 12 oed yn y Cymru oedd y public audit i'r 223. Fy oedd y 1rgynwyr yn y cyfnodau ymddiannol i'r cyfnodau i'r cyfnodau i'r cyfnodau i chi argynnu o'r nôl i gyd-glyniadau a'r cyfnodau i'r cyfnodau three, four and five in private. Are we all agreed? We are agreed. We've received apologies from Colin Beattie and I'd like to welcome Bill Kidd who joins us on the committee this morning. The principal item that we have consideration of today is the 2021-22 audit of Ferguson Marine Port Glasgow holdings limited. I'm pleased to welcome our witnesses this morning, Auditor General Stephen Boyle. The Auditor General is joined by Mark Taylor, Audit Director at Audit Scotland and Joanne Brown, a partner at Grant Thornton. We have quite a number of questions to put to you this morning, but before we get to those, Auditor General could ask you to make a short opening statement. Many thanks, convener. Good morning, committee. I'm presenting this report this morning on the 2021-22 audit of Ferguson Marine Glasgow holdings limited under section 22 of the Public Finance and Accountability Scotland Act 2000. The Scottish Government brought the Ferguson Marine shipyard into public ownership in 2019. There is now a limited company wholly owned by the Scottish Government and also a non-departmental public body. As the committee well knows, Ferguson Marine is contracted to build two ferry vessels, the Glen Sannocks, also known as vessel 801 and vessel 802, with the Scottish Government funding those costs under contract. The auditors issued an unqualified opinion on Ferguson Marine's 2021-22 financial statements. In doing so, they also highlighted risks and uncertainties to the financial viability of FMPG within their audit certificate. That judgment from the auditors draws on the management's own assessment of its ability to operate as a going concern for the following 12 months. At the time of reporting, Ferguson Marine estimates suggest that around £9.5 million of additional funding was required beyond the amount already approved by Parliament. That would bring the total direct vessel-related costs to £293 million. That figure excludes other funding that the Scottish Government has provided to the yard. In December 2022, the Government issued a letter of comfort to the FMPG board to provide assurances that it intended to financially support FMPG for at least a further 12 months from February 2023. The former Deputy First Minister has since informed Parliament that the Scottish Government's full assessment and due diligence of costs is due to conclude shortly. The chief executive has confirmed that FMPG aims to work within existing cost estimates. It remains critical that the Scottish Government and FMPG work together to establish and clarify funding and plans both for the vessels and for the yard itself as quickly as possible. That will help to provide more certainty to both the workforce and island communities. My report also highlights that six senior managers at the yard were paid performance bonuses of £87,000. It is, in my view, unacceptable that those payments were made without proper governance and oversight arrangements. On 16 March, the former Deputy First Minister also assured Parliament that new processes had been put in place, aimed at ensuring that that does not happen again. I will continue to monitor the progress of Ferguson Marine during 2022-23 and report further in public as appropriate. As you have mentioned, I am joined by Joe Brown, who is the appointed external auditor from Grant Thornton, and Mark Taylor, audit director, with a great deal of familiarity with the workings of ferries in Scotland from an audit perspective. Between the three of us, we look forward to answering the committee's questions. I would like to begin by going back to what has been a recurring theme with the delivery of the two vessels, which is about cost overruns. In particular, I want to ask you about paragraph 13 of the report, in which you draw attention to the fact that, during October to mid-December 2022, Ferguson Marine Port Glasgow made expenditure commitments of between £10 million and £15 million more than the Scottish Government had allocated. The obvious question is, how could that be? Was it appropriate? Where was the sponsorship team of the Scottish Government during that? You are right to draw attention to this, convener. This was a serious issue. It reflects a wider concern. I will go back to address the specifics of the point in a moment. What is ambiguity about the arrangements in the yard in terms of projected future spending? The Scottish Government is oversight of that. Although it was resolved with a subsequent letter of comfort from the Scottish Government, there is a point to hear concerns about in-year spending. What would have happened had the Scottish Government not provided the letter of comfort and what that might have meant for the delivery of the project? You ask about the role of the sponsorship team, and Jo can come in and say a bit more about that in a moment, if she wishes, but it really speaks to wider concerns that we highlight, both in the section 22 report and very clearly in Grant Thornton's annual audit report, that there remains ambiguity about how oversight works in terms of the day-to-day sponsorship arrangements, and the lack of clarity that is within the framework document that sets out how the relationship between FNPG and the Scottish Government operates. That goes absolutely to the heart of the financial transactions that exist, but it also extends into other matters that include governance and pay arrangements, too. I am keen to say more about those matters, convener, but I will stop and bring Jo in to issue issues to elaborate. In particular, in terms of that time period, there were on-going discussions between FNPG and the Scottish Government's sponsor team. From what we understand, there were a number of verbal agreements. From the perspective of the FNPG board, they were looking for those assurances more formally in writing, which, as the Auditor General said, came in December through the letter of comfort. At that particular point in time, the accountable officer of FNPG also sought advice from the Scottish Government around their role in remit as accountable officer, the nature of the commitments that FNPG had incurred. We understand that it was a particular timing issue around the budget announcement in the December period, which set out the future funding for FNPG, but the sponsor team were aware that the issue seemed to be more around that hard commitment from the sponsor team that that funding would be provided to FNPG, which created a risk and uncertainty for them in that time period. The Auditor General spoke about ambiguity and the framework agreement not being as clear as it might be. How do you think that sponsorship teams' relationship should be with an NDPD when there is, presumably, not in substantial amounts of public money, £10 million to £15 million that needs to be committed? Does it come as a letter of comfort at the end? We have heard this before in other circumstances around the contract. Does it come as a letter of comfort at the end of the process, or shouldn't there be some kind of prior sign-off by the sponsorship team, or by the minister or however, to allow that expenditure to be committed? I would characterise in general that the relationship should be one of respective understanding of risk and opportunity. I know that the committee has had a keen interest in sponsorship arrangements on how they operate across the Scottish Government and its bodies for many years. Where there are higher-risk entities—I think that it is reasonable to say that Fergus Ewing and Port Glasgow would be categorised as such—that that would involve a higher level of day-to-day engagement from a sponsorship team. It is probably not for me to specify the specifics of what that would mean in terms of sign-off of individual transactions or spending, but the reason that we include that in today's report is because it speaks to an example of surprise from our perspective that spending beyond budget was committed and that resulted in a letter of comfort thereafter. We would have thought that if that was the anticipated spend that was required, that would have been managed in advance rather than retrospectively. The totality of sponsorship arrangements—we have not covered in detail in today's report as it relates to FNPG and the Scottish Government, but we draw attention and, as we do Grant Thornton in his annual audit report, about a need for additional clarity on how that relationship will operate, the need for the framework document to be clearer, clarity on governance arrangements to do, and the last point that is particularly relevant in those circumstances is about value for money. The Scottish Government is asking Fergus Ewing and Port Glasgow in terms of its future spending to be very clear on the value for money that will be derived from the use of public funds, but the value for money—as we know and indeed the conversation that I have had with the committee over the past few weeks in terms of value for money judgments—is a rounded assessment, but the criteria for that assessment need to be defined and they have not been so yet. All of this work needs to happen quickly. For the avoidance of doubt, the enterprise must comply with the Scottish Public Finance Manual guidance. For example, there should be openness and transparency, there should be value for money and there should be things like an internal audit function. My reading of the external auditor's report is that there was not at the time of reporting an internal audit function. Is that still the case? I will bring Joe in a second to update on the status of that, but I thought I might say a word about the Scottish Public Finance Manual first convener. The risk of repeating myself is another example of the ambiguity that exists as it relates to Ferguson Marine Port Glasgow Holdings Ltd, which is a non-departmental public body, but it is also a company limited by guarantee registered with companies' house. Both those factors are having to coexist and, in some circumstances, there has to be a judgment as to—there can be competing criteria around those registrations. Some will involve openness and transparency, but it is also a commercial entity that will engage in commercial transactions that will not always be in its interests to be entirely open and transparent. What we do not have and what I think now that Ferguson Port Glasgow and the Scottish Government have been clear yet, and I think that Ferguson Marine Port Glasgow absolutely deserves to have this clarity in its framework document about how it can run its business. However, if the absence of that clarity will mean that those factors will rub up against one another and compete in delays, those needs to be resolved quickly. On the factor of internal audit before handing to Joe, as you would expect me to say, convener, an effective internal audit function, especially for an organisation like Ferguson Marine Port Glasgow, is an essential component of its control environment, a key tool of management to support its management of risk. We understand that progress is being made and there are references in the annual report and accounts to disclose the circumstances, but again its absence would be a deficiency in the management ability to run the yard to best effect. Again, I will stop. I think that Joe will want to come in and see her judgment on where things are at. The framework document and the letter issued to the accountable officer highlights that FMPG is required to comply with the SPFM. That is something FMPG is aware of and they have spent time, as the Auditor General said, looking at what part of those arrangements they are currently deficient in and what would need to happen to put those arrangements in place to allow full compliance. They have disclosed that in the governance statement in the accounts. In terms of the position for internal audit, it was something that we raised in our prior year audit, as well as in this audit report. It is something that the Audit Committee has considered and has looked into the possibility of internal audit and I know that it has explored a number of options around that. One of the challenges that it has and one of the areas that it has focused in on is predominantly the delivery of 801 802. With internal audit, there is obviously an associated cost with internal audit and they are speaking to the sponsor team around that. That in part links to the need that we have highlighted in our external audit report and in section 22 around that wider business plan and the future direction of the yard. That would also shape the investment in internal audit for Ferguson Marine. It is in process and it has disclosed that it does not currently have that and they are speaking to the Scottish Government about how that potentially would be funded. Before I move on to the deputy convener, I just wanted to, because you've couched it in those terms, Auditor General, about there being the attention between the fact that it's a company limited by guarantee and yet some of its governance is also dictated by the Scottish Public Finance Manual. I mean, there's been a report in a national newspaper today about the commissioning of some consultancy work, which is trying to scope what needs to be put in place for the company to thrive in the future. The report suggests that the people carrying out the report, FMI, requested a non-disclosure agreement around their report. Initially, the Scottish Government said that there wasn't an NDA, that they've now accepted that there is an NDA in place and that there's talk about commercial sensitivities. Of course, we all understand that there will be some commercial sensitivities, but there is also a public interest and there must be a way through that which would allow as much of that report to be in the public domain and subject to some scrutiny as possible. I just wonder whether you were aware of that and whether you've got any reflections on that. On the specifics, no, we weren't aware of that. We haven't seen the report and only became aware of it when the article was brought to our attention. The transactions, as I understand it, will have been in the new financial year, the one that has just completed the 2223 audit, so the external auditors will consider that as part of their audit. Steffan, back to the wider point, as we've discussed already, there is something of attention between the requirements of the Scottish Public Finance Manual, FFM Glasgow being a non-departmental public body and also being a company operating in a commercially competitive environment. To repeat, the Government and FNPG need to come to a shared understanding of what that means. I should say, convener, that, as you were experiencing, I don't think that overrides the need for openness and transparency given the very strong parliamentary and public interest in the work of the armed, the delivery of the vessels and its future. Indeed, our section 22 report, part of that is the driver for that shared understanding, that clarity being provided as quickly as possible. On the work, as it is framed in the article, the intent behind the consultancy work about future options, I don't know the status of that, but it sounds like there are parallels between the Scottish Government's own assessment of the future of the yard, the report that is awaited from the Scottish Government. There are two pieces of future consideration that are mentioned and sometimes mixed up. One is about a due diligence of costs that took place at the end of last year, but the other is the wider report that the Scottish Government is currently working on. We await publication that, as I understand, will set out what the Government views as the future provision options. Again, we think that that needs to happen quickly so that there is clarity for both people who work at FFM Glasgow and also for Scotland's islands communities. The Scottish Government issued a letter of comfort to FNPG, providing assurances that FNPG would be supported financially for at least 12 months from February 2023. Does that mean that FNPG can continue to make expenditure commitments, such as the ones that were made between October and December 2022, beyond its allocated budget for the year? I will bring Mark in and say a bit more about the Scottish Government's role in supporting the delivery of vessels. At a high level, the contract exists between the Scottish Government now and FFM Glasgow for the delivery of vessels. The committee has previously explored, I recall, with the Scottish Government about the evidence that you took on the section 23 report about the nature of that commitment, the extent to which it was managed and evaluated by the Government. However, it is our understanding that the commitment remains and is linked to timescales. If Milestone dates are met, the contract continues and amounts will be paid. If dates slip as they have done, there is an opportunity to consider a break in the contract. If that is not exercised within a 14-day period, it is assumed that the contract continues and will be funded. We draw attention to that in today's report, because it is critical as part of an auditor's assessment of going-concern arrangements that the business can continue to exist for 12 months after the date of the signing of the annual report and accounts. Management's assessment were that they could, but they also draw attention based on doubts about—not doubts, I should say—following their review of cash flow, the provision of the letter of comfort and their assumptions in the draft budget, where the factors that allowed them to make that assessment, but quite rightly Grant Thornton and their audit certificate, draw attention to those judgments. I will pause, deputy convener, and Mark Ruskell can come in and say a bit more about the Scottish Government's role. Thank you, Auditor General. I think that the starting point for me is around recognition that the Scottish Government in committing any expenditure is subject to parliamentary approval of its budgets and that there is a parliamentary approval process around those budgets and in offering letter of comfort. Those things are often quite nuanced in what the Government is able to offer up and give a degree of comfort to public bodies and their boards and to auditors, and it is a requirement to have that approval from Parliament for spending authority from Parliament. The specifics around the letter of comfort include caveats, which broadly say are subject to approval of budgets by Parliament and, importantly, any further due diligence that might be required from the Scottish Government itself before it signs those costs off. The idea is that it signs costs off off to a certain level. If Ferguson Marine says that it is going to cost more, although there is a commitment to provide that cover, it is subject to them looking in detail about the amounts that have been quoted to make sure that those are robust for the one of a better phrase. There is a clear caveats in that, and those caveats were also taken into account by the board of Ferguson Marine and Joan and Grant Thornton in their work as part of that wider package that the Auditor General talks about. More generally, there is that point of, well, does that mean that they can spend beyond their budget if they have to? I think that what we would say about that is, in the same way that we covered the existence of the £15 million, a better position is to have clarity about what that expectation is and what the budget cover for that is. If they were to continue to spend in that way, the letter of comfort gives a degree of assurance that those costs have been met but subject to those caveats. If they spend more money, will that need to come back to Parliament then? Just saying that they have to hit milestone payments and milestone targets. How would I articulate it is that, as part of future budget revisions, it will be part of that package of the wider budget that would be proved by Parliament, because Parliament generally will not approve individual elements of the budget, but it is part of that overall budget approval. One of the reasons that we touched on earlier for the gap between expenditure commitments being entered into and covered by budgets was the timing for that parliamentary approval and the process around that parliamentary approval. I would not expect to see that specific spending line approved in isolation, but that being part of wider budget approval or wider budget adjustments. State the FMPG funding requests are subject to due diligence by the Scottish Government. Can you provide more detail about the process that is in place for the work to take place? Just broadly about what due diligence is, essentially due diligence is a broad church and it is generally concerned with confirming the facts of a matter before a decision is made in relation to the financial decisions. Broadly, it is about an assessment of the robustness of the amount of money that has been asked for and the basis for that and how that has been assessed, and bringing in quite often, and was the case here, some independent experts to look at the basis for that and get into the nuts and bolts of where is your evidence for that, essentially, and to provide views on that. We set out in our report some of the outcomes that came from that due diligence review and some of the uncertainties that were in place in paragraph 12. What that highlights is that, on our broader point in our report, those costs are uncertain, there are some things that might, and we all hope that this is the case, reduce those costs because efficiencies are identified and reworks minimised and some of those things, but equally, inflation, some of the uncertainties and contingencies might mean costs move around, so the results of that we have highlighted in paragraph 12 of the report. The report also highlights that there could be future funding requirements of around nine and a half million based on FNPG's estimate of final costs. The report also highlights that the consultant commissioned to review FNPG's financial forecasts raised some concerns, including the estimate of contingency being too low. On that basis, how realistic do you consider the future funding requirement of nine and a half million to be? I think that it is hard to be definitive about that at the moment, so that is the best current estimate, effectively, deputy convener. We would say that it is the judgment of the Scottish Government and the ardent. As Mark says about the outcome of the due diligence exercise, I suggest that they need to build more contingency into the estimates. That seems pretty sensible, given what we have already seen of the project, that is continued to cost more and take longer than had been expected. Building in larger contingencies together with the assessment of the risks that remain, and the last point was about the drawn attention to some of the risks for delivery to the consultant's note around supply train pressures, the wider circumstances in the construction sector, building inflation and what that might mean for future cost estimates and delivery timescales. Probably that is the best estimate that was available, but it would be folly to suggest that that is a reliable final number that will be spent to deliver the vessels at this stage. It needs close careful management, and that comes back to that and regular engagement with FNPG and the Scottish Government together with approval requests at the right point to Parliament through the chief executive and his update to the net zero committee on progress. To what extent is the Scottish Government preparing for a future funding requirement, recognising that financial assurances have only been provided until February 2024? It is subject to on-going review and anticipation. We set out an exhibit 1 to the report to draw to the committee's attention. The balance is spent to date, and as you mentioned, the deputy convener has a budget of £57.6 million in the 2023-24 budget. I do not think that it is possible to say with certainty that that is it. The project has been subject to regular review of additional costs and additional timescales. I know that, as I am sure that the committee will have heard clearly, the former Deputy First Minister advised Parliament on the changes to the timescales for the delivery of MV Glenn Sannocks and the anticipated longer timescale for the delivery of vessel 802. That is the most up-to-date position that we also understand. I repeat that the project requires clarity through Parliament and will come through real close regular management of costs and anticipated timescales. The letter of comfort was given in 2023 and is covering it until February 24. The latest update that we have is that 801 or Glenn Sannocks would be finished by the summer or the end of 2023, which is outwith the letter of comfort. We are looking at the milestone payments, which looks as if they have already slipped on timescales. We have already said that we cannot be definitive on whether that cost will be accurate. We have asked officials before about whether that was a blank check-up, but we have already said that we cannot be definitive on whether that cost will be accurate. We have asked officials before about whether that was a blank check until the boats were completed. Is that in effect a blank check-up? Maybe to start with the dates, if I may. In terms of 802, the expectation of autumn 2024 is the former Deputy First Minister's statement. With a backstop date—I think it was a phrase all day—it was used of December 2024. You are right that, in terms of timescales and public expenditure, that will be into the 2024-25 budget, which, of course, has not been considered by Parliament. That will be a matter for parliamentary consideration in due course, but it is indicative that spending close management continues to be required. The committee has asked the question as to whether or not there is an open-ended commitment. As I mentioned a couple of minutes ago, contractually, that is not quite the case. Mark might want to say a bit more about that. There are potential breaks in the contract as it relates to not delivering the vessels in accordance with the timescales, and it is the timescales that matter. However, it is accepted that the contract continues to be funded unless the funding party of the Government says otherwise should those delivery timescales not be met. There are opportunities both to review timescales and future commitments still to come, but those are the most up-to-date dates that we are aware of. Mark might want to say a bit more. The only thing that I have to add is that, in terms of the length of the letter of comfort and why it is 12 months from that date, that is largely a technical reason. The need for a letter of comfort is established by the board primarily has requirements to consider whether it is a going concern from 12 months of the date of signing those accounts. Therefore, in providing a letter of comfort, the Government would have reference to that. That is why it is 12 months and not a different period. It is related to the boats itself, so it is a technical reason. On the broader question of the extent to which there is a blank check here or an open-ended commitment, I refer to answer around parliamentary approval and some of the caveats around due diligence. The Government has said that it is committed to seeing through those boats, but that is not the same as advance approval and the formality that is required around approval of spending authorities as the boats progress. There is an opportunity for the Government to keep that under review and, as the Auditor General says, under the terms of the contract, there are opportunities to end the contract under certain circumstances. Effectively, the Government needs to accept and revise delivery dates for the boats as they go through. I turn to a couple of areas. The first is that, in paragraph 11 of your report, you highlight the fact—I think that this is an amplification of a letter that the chief executive officer of FMPG sent to the convener of the Scottish Parliament's net zero committee—that the estimated cost for the Glen Sannocks 801 is £101 million and the estimated cost for 802 is £108.6 million. Why is 802 more expensive than 801? I turn to colleagues so that we can shed any further light on that. My assumption, convener, is that it relates to part of the factors that were identified in the due diligence review that costs are increasing for the provision of materials, building supplies and so forth. That vessel comes later and will be subject to a heightened period of inflated cost provision. Beyond that, if we have any further information, we can provide it just now. If not, we will do our best, but it may be that it is a question that FMPG are better placed. I suppose that the expectation would have been that the second vessel would benefit from lessons learned in the construction of the first vessel and that that would therefore lead to a reduction in the cost base. That might well be the case as well, and it would have been higher still. However, those are only speculations in my part. I think that the yard themselves are better placed. I will ask a couple of questions about the wider business picture and the future of the yard. I think that I can speak for the committee as a whole in saying that when we ask these questions, it is because we want the yard to succeed and we want it to have a long-term future. One of the things that the present management team is involved in is an arrangement with BAE systems. From memory, when we visited the yard, that did not just involve sending FMPG employees down to the BAE systems yards in Glasgow. That was also about work being brought from BAE systems to be carried out in Port Glasgow. However, in the report that we have got before us this morning, there were some cash flow issues that arose from uncertainties about the financial arrangement between BAE systems and FMPG. Can you elaborate a bit more on what those uncertainties are? I will start by saying what more we know about that. Our intent for including that in our report is, as you described, to look beyond the delivery of those two vessels and to provide certainty to the workforce, the future of shipbuilding and what that might mean for island communities by extension who will rely on those vessels. Clearly, the vast bulk of FMPG's activity is on 801 and 802, but as it looks to the future and perhaps related to the report that you alluded to earlier about future options, how it gets itself to being a competitive provider of shipbuilding services. Where it currently is, though, is that its other income, as described in accounting terms, is relatively small and is confined to its relationship with BAE. You are right, there are the commitments of FMPG employees to support that arrangement and that may be a fruitful avenue for it to grow its other operations, but we draw attention to the relativity of that that is quite small by comparison to provision. Once those two vessels are delivered, it needs to have a plan, but that plan has to start now for it to be able to transition from the delivery of 801 and 802 to future operations. I am clear on a high expectation that is very much part of the Scottish Government's review that is currently undertaking. I will stop and invite Joanne to say more. In terms of the cash flow, we were obviously looking at the cash flow from an audit perspective and it is being touched on about the 12 months from the date of signing. The majority of the funding for FMPG, the income stream, is 801 and 802. As part of their group setup, they have a commercial entity, a commercial limited subsidiary. When we looked at the cash flows and the future forecasts for the cash flows in there, at the moment the only balance in there is related to BAE systems, which in terms of income at the point of our audit was relatively small scale. We were conversation with management around that wider business plan and how there was potential there for that to be upscaled. Equally, there was potential for Ferguson's to look and take on different commercial work, but from a look at the commercial cash flow, there was not sufficient cash flow there for a sustainable business. That is why, in our audit report, we talk about the importance of this business plan and the importance of the future direction. That future direction will also allow the yard to better understand what workforce requirements are needed and what level of investment is needed, whether they continue to work with BAE as planned or whether there are other contracts that are potentially in the pipeline for them. That was quite important around the cash flow position. It was not related to the BAE work, it was the wider cash flow of the organisation and how sustainable that was at the point of time of doing the audit. You have both spoken about being small scale. Could you give the committee an idea of what it is as a proportion of the income that is going into FNPG? Is it 2 per cent? Is it 10 per cent? Is it 15 per cent? Just looking at the FNPG annual report and accounts, if I can lay my hands on that convener, I will update you. If Joanne has it, she might be better. Thank you. I am just going to have a quick look at that. Maybe we can come back to that. You can come back to that. The other area was, and I guess I am asking you if you want to add to what you said earlier on, because it is in this whole area of the First Marine International report. Is that the report that has been commissioned by the Government and the Yard? Is there other work going on? What is the synergy between the Scottish Government, the sponsorship team and the Yard in developing a plan for a viable long-term future? Some of that, I do not know the answer to, so I do not know if the consultants that FNPG commissioned are producing the same report that the Scottish Government is going to use to determine its own financial viability. We understand, as I mentioned earlier, that it is the two reviews. One has been the due diligence of the costs and then the wider review, which is my understanding that this was a Scottish Government-led review as opposed to Ferguson Marine Port Glasgow. The Government could confirm exactly how those two reviews interact. That needs to be transparent quite clearly. There is no merit for that report to sit and be internal only. It has to be clear publicly what the Government's intention is, not just for the workforce, but for the very clear financial implications commitments, as Jo-Anne mentioned, about the change in scale from the delivery of 801.802 to future provision. However, how those reviews work together, convener, is a matter really for the Government and FNPG. From our perspective, it has to be clear publicly what the intent is at the completion of them. You use the word reviews plural. It is a little bit confusing, almost perhaps in the realms of bewildering, that there could be more than one review that presumably has got broadly similar terms of reference. It is about a business plan for the yard and what can be done to give it a sustainable future. What does the market look like presumably as part of the research that an organisation like FMI would carry out? Why would not there just be one review signed off by both FNPG and the Scottish Government? It might be less surprising, convener, that there would be more than one review, given the different relationship that exists between the yard as the provider, a company and a non-departmental public body. The Scottish Government's perspective is the funder of the arrangement, so there is a different relationship between the two. I appreciate that there is a blurring of those boundaries with both being public bodies. I am not making any comment about the cost of no understanding at this point what those reviews are costing, notwithstanding what has been reported in the newspaper article, but I can understand why there might be a differently commissioned review from either party. Caveat all about that is that you would not want to duplicate the reviews if that could be avoided and if there needs to be an eye on the cost as well. Again, the cost as reported is £200,000 for the FMI report, which is the one where there is some concern about it being covered by a non-disclosure agreement. I am going to move on to the final area before I bring Willie Coffey in of my questioning. That is to go in a slightly different direction. One of the things that you highlight in the report is the question of the demographics of the workforce in the context of the broader point about skills and whether or not we are planning sufficiently to invest in the skills that we are going to need in the future. To what extent is it your opinion that the Scottish Government is addressing what you have identified to be a skills shortage? Just to clarify, can you be a doomier in totality of Scotland's public sector workforce? Shipbuilding skills, I am interested in. I do not know the answer to that from the extent to which the Scottish Government has a clear understanding of what shipbuilding skills will be needed and how it can access those. We draw attention to this in today's report, so it is a factor that has to be considered really carefully in terms of the future viability of the R. It is all very well to have intent to secure new contracts for the provision, but, as is highlighted, Ferguson Marine currently has a highly skilled workforce, but it is also an ageing workforce, and it is using contractors to support the delivery of the vessels. That may well be the intent. We are not expressing any view and we have not done any audit work on it, but as part of the overall assessment of the viability of the R, we have to be absolutely clear where the skill labour is coming from. Again, we would assume and expect that, when the Government completes its viability assessment, it will have a clear understanding of what labour provision will be available, not just in the immediate term, but in the years to come and how it will plug that gap if it does not currently exist. I mean, what I'm referring to is that there's a line in the report that says that FMPG considered there to be, quote, limited shipbuilding skills available in Scotland, and that, to date, it has been unable to compete effectively with the private sector for skilled staff. So again, I don't know whether you want to address that point. Yeah, of course. I mean, that's a very clear risk to the future viability. So there are many factors to that, convener, that is ability to compete with private sector, which feels, I guess, unusual in the relatively short time that it's been a public entity. So I don't have a clear picture whether that competitiveness was a factor when Ferguson Marine Engineering Ltd was the provider. But these are the factors that the yard's business plan will have to make assumptions. Its workforce plan will have to be part of that, about how it secures and retains a future workforce. There are no shortage of labour in the longer term that's supported by adequate training apprenticeships and so forth that could provide a future for the yard. It's transitioning from where they are now into a longer term workforce that will be the key task for the management of the yard and the Scottish Government. Thank you very much indeed. I'm now going to invite Willie Coffey to put some questions to you. Thank you very much, convener. I wonder if I could just follow that question briefly, auditor general. The yard is able to offer 18 secondments to BAE, yet it's bringing in contractors to complete the work. How do we square that? Is it different skills going out and different skills coming in? Could you explain that? It doesn't seem to make sense to me that we let 18 staff be seconded away when we still have to bring in contractors to complete the work. Good morning, Mr Coffey. I'll ask John to pick that up. Ferguson's themselves operate in effect a flexible workforce model where they have highly skilled and experienced individuals who are employed by Ferguson's. They also make use of a flexible pool of contractors as and how that's needed in terms of the delivery of 801 and 802. The individuals that are seconded out to BAE systems are not needed at this point on time in 801 and 802 and it does link to the wider point about upskilling the members of the employees of Ferguson's. As part of the arrangement with BAE systems, they will be learning different and new skills, which they are then able to bring back to Ferguson's, but the chief executive, I believe, has assured relevant parties that those individuals being seconded is not detrimental to the delivery of 801 and 802. My knowledge of shipbuilding is not great, to be honest, but in terms of what skills are needed when, it's at very fixed points in time, and that's how they've managed the delivery between 801 and 802 as well. We needed that assurance, convener, that clearly that's providing an income stream when we're waiting for the value in the figures associated with that. It goes to the yard but, of course, the Scottish Government's paying ultimately for the contractors that are coming in, but provided its different skills, that's the assurance that we're looking for. Could I ask a few questions, if I may, on the bonus payment issue? You said in your opening remarks, Stephen, that FMBG is required to comply with the Scottish Public Finance manual requirements. Do you think that the process of awarding those bonuses to the senior management team without any reference to performance indicators complies with the requirements of the manual? I might need to be absolutely clear on that, Mr Coffey, that Fergsymru and Port Glasgow as a non-departmental public body is required to comply with the Scottish Public Finance manual. However, the Scottish Government public sector pay policy arrangements don't apply utterly prescriptively to FMBG, but unfortunately I'm going to drift into perhaps ambiguous terms, but it has to have a reference to and parallels and understanding to pay policy. However, the framework document doesn't provide sufficient clarity on that. That's now come from the Scottish Government following the publication of the audit report. On the payment of the bonuses, I said in my opening remarks that we consider unacceptable that £87,000 of public money was paid in bonuses, not in an ideological perspective, but that the payments were made without clear KPI framework that was designed to support the payment of bonuses. Bonuses are relatively unusual in a public sector context. They do happen in a small number of other public bodies, but where they are made, there needs to be clear KPI, clear governance arrangements. We draw attention in today's report that those factors were in existence when those amounts were paid. Do you think that that money is ultimately recoverable? I'm sure that the public is asking that. It beggars belief that a bonus could be applied to this, given that the votes are five years late. What constitutes a bonus criteria in any of that to justify the senior managers taking that award? I don't know if those amounts are recoverable. That would have to be a judgment made by others in terms of the specifics of the terms and conditions that existed for those senior managers and what their contracts said. We draw attention to those amounts, Mr Coffey, because, primarily, the amounts were paid without effective governance by the remuneration committee being discharged before the amounts were paid. It was clear what performance measures had been met and that they were adequately scrutinised before payments were made. It is also a matter of public interest that bonuses were paid to senior managers at Yard balanced against the challenges that have been widely reported by the committee and elsewhere on the costs and timescales for the delivery of the two vessels. Is there no sense that any of the workforce received any bonus payment that was just the six senior managers that you referred to in the report? Last time, if you could detail that. From the perspective of the audit, it was just the six individuals that received that payment. Who ultimately would have approved that as a senior manager? A board decision was surely the six that got the bonus, but it was not part of that decision making process. I will start on that. We understand that there are two parts to the bonus. One was on intended to be on the delivery of the hull, as I understand, of vessel 801, which comprised 7.5 per cent of the bonus. There was a further 10 per cent discretionary element. The governance and decision making around that, Mr Coffey, was based on a recommendation by the former turnaround director, chief executive, to the international committee of FMPG to make those payments. However, as I am sure Joanne wants to pick up, it is our view that that was not sufficiently robust. It was not clear whether the KPIs had been met. Again, it speaks to real ambiguity about progress and process. As led Joanne and the judgment that I repeat in the section 22 report, that those were made without adequate decision making having been in place. Just to add to that, the actual approval, as we understand it, was through the remuneration committee. Aside from the KPI point, it is also referenced that the level of detail in things such as the remuneration committee minutes and the board minutes, particularly earlier on in our period of appointment, were very limited in detail. There was not anything in that Rem Coe paper that expanded on the rationale or the discussion that that committee potentially had around it. It was approved by them. From looking at the board minutes, which were very light in detail, we could not see reference to it in the board. It was based on the short paper that the turnaround director presented to the Rem Coe, which they subsequently approved. You mentioned the word completion, Auditor General. That was part of whatever the KPI framework, whatever shape it took. That word was in there. They decided to award themselves that bonus on completion of the whole, which was years late. How on earth can that be? Why is it not a successful completion or a timescaled completion or that kind of language being part of a bonus award scheme that it can still be validly paid even if it is years late? I am not here to offer any mitigation, Mr Coffey. I think that this is a new management team that has come into Ferguson Marine Port Glasgow and inherited the circumstances that they were appointed to. The payment of bonuses in the public sector is really in any organisation, but certainly the public sector has to be done transparently on the basis of a clear performance framework supported by robust governance. That is what we draw attention to in today's report. A couple of points for me, just to add to that. As we heard the former Deputy First Minister on his statement to Parliament, the Scottish Government was not aware of those bonuses and nor did they approve them. We understand that those arrangements have been tightened as they exist. Bonuses still exist though, I should say, in the contracts of senior officials at Ferguson Marine Port Glasgow. The new chief executive has a bonus arrangement in their contract to be paid on the basis of delivery of KPIs. It is the case that no bonus was paid for the chief executive in the 2021-22 year. We hope that those arrangements are enacted and improved upon going forward. The external auditors, as Grant Thornton has done for this year, will keep a close eye on that as part of their audit work. In terms of timing of it, can you pinpoint any timing as you hear when exactly the bonuses were taken compared to when more public funds were being given to the Yard? Is there any comparison that you can draw there that were they closely associated in time? I am trying to get as the bonuses paid while the public post was paying the Yard more money to complete the ships. I will ask Joanne to pick up a bit more detail on the timing, but I think that that is the case. Unfortunately, I do not think that we are able to lay our hands on the relativity of the amounts of other income that is being derived from BAE systems, but it is a very small fraction of the total income that FNPG receives. What means effectively is that the Scottish Government is funding the provision of services, both materials and delivery vessels, and staff costs. Public funds are paying the paid for bonuses. If you are asking about the timing of additional funding requests, Joanne might have that detail. Do you want to check if we can come back to the committee? I will pick up on the point and we can get you the exact number that comes through the income from BAE monthly, but at the point of our audit it certainly was not any more than 1 to 2 per cent of the total income that Ferguson's were receiving. In terms of the timing, the REM co-paper was around about February 21 and reflected on the position of the hull. I do not believe that it was associated with any change in delivery milestones or any change in funding. It was looking at it at the point of view of the hull completion and the end of the financial year 2021, which meant that the payments were made in 2021-22's accounts. You have answered the question about whether FNPG sought approval and you have made that clear that they did not. In your view, do you think that the decision to award the bonus payments was a complete lack of awareness of the seriousness of the situation in the yard and for the management team to award those bonuses completely and utterly inappropriate? I have said publicly that the payment of those bonuses in those circumstances without a proper KPI framework, without adequate scrutiny and effective governance around the payments, is unacceptable. I think that Bill Kidd wanted to come in on this question. Yes, please. It is just to re-emphasise, if you do not mind, out of your own report and what you have stated there that there is a lack of transparency in good governance around the assessment and approval of the payments. In your report, you also state that FNPG's remuneration committee membership consists of the chair of the board, two non-executive board members and the turnaround director. It does not do any harm to emphasise who is making the right of those payments to be made. To me, that suggests that there was not proper oversight being taken of what was happening in the situation from outside. To elaborate on that, you are right that you have set out the membership of the remuneration committee of FFG Glasgow, which is a committee of the board, which is overall responsible for the effective governance of FFG Glasgow. You have quoted from the report that good effective governance, effective operation of a remuneration committee, as it considers senior manager salaries and bonus payments, would be to follow proper scrutiny around the performance KPI framework. That is clear in terms of deliverables that are scrutinised effectively, and we have not seen effective processes around the payment of the £87,000 of bonuses. In terms of what has happened since, it is maybe worth updating the committee that in November of last year, after those events, the FFG Remco has considered a revised performance framework for its senior managers and the chief executive. We understand, and Joanne might be able to say a bit more about current events, that that is still awaiting approval and consideration by the Scottish Government. I think that it speaks to the matter at the start of the meeting that there is a lack of clarity about how the Scottish Government expects FFG Glasgow to operate as both a public body and a company limited by guarantee this operating in a commercial environment. Those matters need to be resolved so to avoid a repeat of the bonus issue and the wider need for viability of the yard. Thank you very much. Thank you. That is a very clear message. Craig Hoye has got further related matters that he wants to bring up. Good morning, Mr Ball. Just for clarity and just to some extent to recap, from your perspective, does the yard have a viable future? If I may, Mr Hoye, I think that it is a question that we are perhaps not in a position to answer quite yet until we see the conclusion of the Scottish Government's assessment of the yard's deliverables. What we look to do to point to in today's report is looking beyond the delivery of the Glen Samock and Vessel 802 is that there is not a long-term order book. There is progress in terms of the relationship with the BAE systems, but in order to transition effectively to a long-term successful shipyard, there has to be a clear business plan supported by a viable workforce, and that is what is awaited. At the moment, I am not able to say that it does or that it does not until there is a clear transparent view that there is a potentially successful business plan. The Scottish Government and the former First Minister have said when asked about what has gone wrong and the shortcomings and the misgivings that we should lay all that to one side because ultimately they have saved the yard and saved the jobs of the yard. In light of what you said, is it premature to see that this yard has a long-term future that is safe? I think that that is clear. There are two significant vessels to deliver in terms of 801 and 802, but there are doubts about the long-term viability until it is clear that there is a plan in place. As we have discussed, that plan is awaited. Mr Coffey asked about the bonus payments. In paragraph 26, the report confirms that the framework agreement includes an overall framework for pay, but that was not formally agreed until March 2022, which was obviously after the bonus payments were approved. Given that FMPG came into public ownership in November 2019, why do you think that it took so long to establish that vitally important framework for pay? I think that that is a question for the Scottish Government to be absolutely clear on its perspective on the timescale. I am going to ask Joanne to come in, because we know that there were considerable conversations and iterations of the framework agreement. Joanne can set that out for the committee. Even in settling on a framework agreement, we still have ambiguity. A challenging process was undertaken to arrive at a framework agreement, but it is still not delivering the clarity. The public body deserves absolute clarity on what is expected from it, so there is work still to be done. Joanne can set that out for the committee. On the development of the framework agreement, I understand that it took about 12 to potentially 18 months to get that agreed between both parties. An initial version shared by the Scottish Government was a NDPB template framework agreement, and Ferguson highlighted a number of points and concerns around that framework and how it would be able to in practice comply with the framework. One of those was around whether public sector pay policies applied or did not apply and what was intended in some of the wording in the agreement. The agreement itself proved a little bit more complex because of Ferguson's group structure and the fact that it has a limited company, and whether that was nuanced sufficiently within the framework agreement from the point of view of Ferguson's. That was then officially agreed in March 2022, but there was a period of time of discussions there. You mentioned that the language was somewhat opaque around the issue of the pay policy. You say that pay should be broadly consistent with the provisions of the Scottish Government's pay policy and that any significant deviations would require further approval. In February 2023, the Scottish Government provided clarification on those requirements. Can you provide further detail on what those clarifications were, and are you confident with the steps that the Scottish Government has taken? I would like to say a bit more, Mark, if he wishes, on the specifics of the clarification. The science of progress, Mr Hoy, is that there is a move towards a clear understanding of how Ferguson Marine, Port Glasgow, is intended to operate as a public body. Stepping back for a moment, if I may, particularly around pay arrangements, we look to draw attention to the arrangements that now exist for the chief executive. I mentioned a few moments ago in terms of performance-related pay and, as a matter of public records, the salary arrangements for the chief executive. That is quite at odds with the salary arrangements for the former turnaround director and we include in the report the overall salary. It speaks to the fact that Ferguson Marine, Port Glasgow is an NDPV, but it still has to operate and recruit very specialist skills in a different environment from other public bodies. I understand the need for that flexibility, but it is the clarity with which it has to operate and marry up those two factors that matter. As I understand it, as the Auditor General said, the November 22 remuneration committee for Ferguson Marine has proposed KPIs around potential bonus payments, and there are nine KPIs. That includes the KPI framework to assess the chief executive and whether they, as an individual, are entitled to a bonus payment. That has not yet been approved by the Scottish Government. Ferguson Marine has shared it with the Scottish Government for approval. At this point in time, I understand that that is something that they are still discussing, alongside how Ferguson's can potentially benchmark their salary pay arrangements with other similar entities to Ferguson to determine whether that is reasonable or otherwise. Again, that is a matter for Ferguson's and Scottish Government to seek approval on. I will add a couple of overall observations once around the timing. I think that we have been clear that the Scottish Government was not asked for approval around the bonuses that were paid. It is our understanding that, as a result of learning about those bonuses, that clarification was then provided about how the system would work. Given an overview of the detail of that, right to the heart of that is any future bonus schemes or bonus payments that are required to be approved by the Government. I think that clarification for me is among the essence of what that discussion was about. In relation to the chief executive's bonus, I think that the provision is potentially for a 40 per cent of base salary to be granted as a bonus. You say that, obviously, those negotiations are on-going. What would cause there to be a delay in that? It would seem to me a relatively easy thing to benchmark. Is that the prevailing rate in the private sector, recognising that there has to be some consistency with the private sector? Is there any, should we redo that into the fact that that has not yet been agreed and the status is somewhat delayed? I am not sure that we are cited in any immediate challenges to that framework. I am not cited yet on the FMPG's internal governance. At this stage, there is an assessment of the delivery of the KPI framework that Mark mentioned. It is something that we will review as part of this year's audit. When we visited the yard, some of the workers who had been there from the get-go said that, at various stages, they likened it to a gravy train running through the middle of the yard, where people who were doing the work were not being necessarily rewarded, but certainly senior management were at various points. That gave us some cause for concern. Obviously, it appears that the issue of pay is now being addressed satisfactorily. Are there any other areas, expenses or the use of contractors or third-party agencies, that could give you cause for concern in the future, or have you adequately looked into all other areas of potential expenditure? Joanne will certainly have a perspective on that as part of her audit. It is probably just to repeat the point that I made earlier about value for money, which is a phrase that remains undefined in terms of the Scottish Government's expectations of Ferguson Marine to deliver value for money for the public purse. It is reasonable for the accountable officer, especially with the nature of the framework and the funding arrangements for the Scottish Government, to have clarity on the funder and the Scottish Government's expectations about the criteria with which a value for money judgment will be made. That needs to be brought into place. However, in terms of the overall assessment, as Joanne or her colleague Grant Thornton said, they will have considered value for money as part of their overall audit, based on and informed by the judgements that the yards management have made as much as they are able to do. In terms of the salaries and wages and the contractors, in terms of the forecasts for 801, 802, those are very detailed, and that is where the due diligence happened. That included salary, inflation, pay changes and a challenge back around contractors, the cost of contractors and where, potentially, if a contractor failed to deliver, what clawback Ferguson would have around that. That was subject to the due diligence requested by the Scottish Government. In terms of wider pay at the yard, they obviously have in place unions, and that is discussed with the unions. Any approval of annual salary changes, et cetera, has to be signed off by the Scottish Government and the Scottish Government to have to approve that. Can I just pick up on that point before a bill in bringing Bill Kidd? That is to go back to the framework agreement. Johann Brand, you said that it was 12 to 18 months in the making. The framework agreement at regard pay talks about maintaining regular dialogue on any pay proposals with Scottish Government finance pay policy with an expectation that those pay proposals will be broadly consistent with the provisions of Scottish Government pay policy for staff pay remit. Any significant deviations will require further approval. Was that iteration in circulation at the point at which the turnaround director drafts a paper that is approved in February 2022, just a month before the framework agreement with those clauses in it, introduced? Was it a pre-emptive strike by the turnaround director? It's hard to be definitive on that, convener. I think that we want to be absolutely clear in terms of the extant text of the framework agreement that was in place when those bonus payments were made. I'm hesitant to say that's the case. I'll maybe ask Johann to think about that further. There's probably a couple of points on timeline to pick up on. In terms of the potential entitlement to that bonus of up to 20 per cent, that was in the employees contracts that were put in place in 2019 by the turnaround director when those individuals transferred or joined Ferguson's as a public sector entity. In terms of the actual timing of the remuneration committee, the approval of the bonuses that were paid in the 21-22 accounts, the actual approval happened in April 2021, so it was before the March 22, when the framework agreement was approved. There was also a somewhat complicated process when Ferguson's became a public sector entity to make the turnaround director the accountable officer. At that point, the turnaround director wasn't made an accountable officer until November 2021, and that also reiterated the SPFM requirements. There is a little bit of ambiguity around the timeframe and the sequencing of what applied when, but the framework agreement broadly remained consistent on those points in the drafting of the document. There is a possibility that there could have been a preemptive strike. If I look at the 2021-22 pay policy guidelines of the Scottish Government, the guidelines are a minimum, but it is 2 per cent pay increase for public sector workers who earn more than £25,000 up to £40,000, and it is a 1 per cent guidance figure for those earning between £40,000 and £80,000. The payment of a 17.5 per cent bonus is, in any body's terms, a significant deviation from the pay policy. No doubt about that, convener, and I don't think that it's the only example. Perhaps more significantly than the bonus, and I know that it's been a matter that the committee has considered previously, and we highlight this paragraph 28 to the report, is the overall remuneration of the turnaround director, which doesn't bear reference to what other, as Joanne mentioned, other accountable officers would be paid. So, there are real, really significant differences to the pay arrangements that were in place when fixed mean engineering limited existed and then transitioned, and then some of those practices continued operating as a commercial entity would but being funded by public purse. There is a whole host, both the bonus payments and some of the overall remuneration arrangements, that were quite at odds with public sector pay and rates that would be paid elsewhere in the public sector. For us as a public audit committee, the question is not just that these things happened, but that they were allowed to happen. Where is the sponsorship team and where is the Government's oversight of this? Is it seems to me quite a fundamentally important question here? I agree absolutely. I have used this phrase a lot this morning, so there has been prolonged ambiguity about the Government's intentions. I am manifesting the duration that the framework agreement took to be agreed. That still contains sections that are open to interpretation. I suggest that there needs to be real clarity provided as quickly as possible, bearing in mind that, although Ferguson Marine may be operating as a commercial entity, as we have discussed this morning, it is almost exclusively funded by public funds. I have a final couple of questions from Bill Kidd, so I am going to invite Bill now to put those questions. Thank you very much, convener. I do not want to just be reiterating something that has been stated a few thousand times, although it does seem, as your report refers, to the approval of the Ferguson Marine Remuneration Committee of a Performance Framework for Senior Managers and the Chief Executive. It has not yet been discussed with or approved by the Scottish Government, so I am not sure if there have been developments in terms of seeking approval as such. You have mentioned that there have been moves to talk about those things, but are there been any real developments taking place that can say that we are going in the right direction in terms of relationships between the company and the Scottish Government? Let me pick up the relationship point on the last join, just to say a bit more. She is partly covered in terms of the KPI framework and the remuneration. There is clearly on-going engagement between the sponsorship team of the Scottish Government and Ferguson Marine Port Glasgow. We are asking through the annual audit report and the section 22 report that, given the risks that exist, given the on-going nature of the delivery of contracts that I have continued to call on to further public funds and delays, is the Government satisfied that the relationship that is sponsorship of Ferguson Marine Port Glasgow is operating as it wants to? There is not a one-size-fits-all approach to sponsorship of public bodies. I think that that feels quite a contrast. It is not perfect analogy, Mr Kidd, but the original intent around the framework agreement was a fairly generic, non-departmental public body. Ferguson Marine Port Glasgow is far from a generic NDPB, so the Government and Ferguson really need to be satisfied that relationship is operating and is managing risks and safeguarding public funds. I will stop and ask Joanne to say a bit more about what we know of the approval arrangements for pay. The revised KPI framework was considered and approved by the Ferguson's Remuneration Committee in November. We understand that that was shared with the Scottish Government in February for their consideration and subsequent approval, and that those discussions are still on-going between Ferguson's and Scottish Government. There is a piece of work, as I understand it, around benchmarking salaries—senior salaries, but also just salaries more widely across the sector. There is also a piece of looking at the employee contracts and what is within a contract and what is sufficient from a public sector openness and transparency perspective, along with what contractually, potentially, Ferguson's are required to deliver on. Those discussions are on-going in a matter for Ferguson's and Scottish Government. On that basis, the fact that the measure report states that the Scottish Government commissioned an independent review of Ferguson Marine estimates of course concluded that Ferguson Marine cost estimates are reasonable, but more contingency needs to be built in as risks still remain. Is that basically where you are going with this, that this is an on-going process and there is still a lot of work left to be done in terms of bringing Ferguson Marine under a more sustainable route towards success and continuing work once those two ferries are completed? I think that a number of things are part of that. The section of the report specifically relates to the due diligence that the Government undertook on Ferguson's request for additional public funding and made the broad assessment that they were reasonable, but that they contained risks, particularly around the need for additional contingency in light of past history and then other factors that are included around future cost growth, cost inflation, the delivery of supplies and so forth. I think that it is too early to say that that provides the secure solid foundation that future costs are manageable and then beyond into the delivery of a viable long-term future. That judgment can only be made when we have clarity from the Scottish Government that they awaited a report alongside that about what the future viability will be, only upon reading that will we know more about what the future holds. Then we can feel more confident about sponsorship arrangements working in the effective manner in which they should be. I think that those two things have to go hand in hand. Sponsorship arrangements in other public bodies are a key part of the Government getting assurance, getting an early understanding of progress of events that ultimately the public body is doing what it is intended to do. The risk is heightened in Ferguson Marine port Glasgow, given the scale of public interest, and perhaps unlike other public bodies, it is rare for other public bodies to be coming back with additional supplementary estimates, budget requests and spring autumn revisions. The scale of Ferguson requests and the pattern requires effective two-way relationship and robust sponsorship arrangements. Indeed, we have run slightly over the time that we anticipated, but it was important to draw out some of those important pieces of evidence that you have given us this morning. As always, I thank you very much for your co-operation and your frankness. It has been very helpful for us and we will of course need to determine what our next steps are. For the moment, I thank Auditor General Yu, Mark Taylor and Joanne Brown for your candor this morning. It has been very valuable and I am now going to move the committee into private session.