 Ydw i'n rydw i'n gael eu merchd iawn i'r 10 ychydig hwn o'r Gweithgareddau Gweithgareddau Gweithgareddau Gweithgareddau I Fy fyddio ddim yn siŵr i'n wneud i'r ffordd mewn cy électronic item ar swyddaf yn ynraig, ac ond rwy'n cael y peilwydau a'r gwaith. Mor hwn i'n ei cyfryd agen agen nhw i 1 gyda'r hwn i gael y Prif, ac nid gaf i'n meddwl. Agend item number 2 is accountability, audit and the further devolution of powers. The first substantive item on our agenda is evidence from the Scottish Government on accountability, audit arrangements for the proposed further devolution of powers to the Scottish Parliament. There is written submissions that have been provided to members, like to the main members and witnesses that were ticked for time this morning, and I'd appreciate short answers to questions and also to answers at the same time. I'm delighted to welcome John Swinney, Cabinet Secretary for Finance, Constitution and Economy, Stephen Saddler, team leader of elections and constitution division, and Aileen Wright, deputy director of finance and the Scottish Government. I understand that the Cabinet Secretary is a short opening statement. I welcome the opportunity to discuss the audit and accountability arrangements for the further devolution of powers following from the recommendations of the Smith commission. As I indicated in my letter of 5 May, it will be important that appropriate and robust arrangements are put in place to support the new powers and responsibilities and allow the Scottish Parliament and its committees to hold to account those who collect or spend public money in Scotland. This committee is considering what those arrangements should look like. It is as timely as it is important as we await the publication of the UK Government Scotland bill later this week. More work will be required in the coming months to develop audit and accountability arrangements at the same time as we discuss and develop the detailed proposals to devolve the powers themselves. Since the publication of the draft clauses, we have been working with the United Kingdom Government to ensure that the Scotland bill delivers the substance and the spirit of the Smith commission. We have offered comments across a range of subjects covered with the aim of developing legislation that the Scottish Government can support. There is, however, some way to go to achieve that, and the recent report from the devolution of further powers committee concluded that, while the draft clauses achieved their aim in some cases in other areas, they fell short. Once we see the bill, we will be able to assess how far the UK Government has taken on board the range of comments that it has received since January. We will also have a firmer basis on which to take forward the work to develop the necessary audit and accountability arrangements. The transfer of powers to be delivered through the Scotland bill will have implications for a range of organisations that will, in future, be accountable to the Scottish Parliament. The work to be in place appropriate arrangements to reflect this development will need to continue alongside the parliamentary consideration of the bill's proposals, both at Westminster and in this Parliament. The committee's consideration of those issues and the eventual report will help to ensure that the UK Government and the bodies concerned give them the prominence and the attention that they deserve. The Scottish Government's approach will be to ensure that the arrangements that are put in place for audit and reporting must enable this Parliament to scrutinise satisfactorily the use of the transferred powers and what is spent on them. We will take a pragmatic view seeking to build on existing experience of what works well. That view will be informed by the comments of this committee and, of course, Audit Scotland. It will be important that, whatever the specific arrangements for individual bodies, they are clear, consistent and transparent in terms of responsibilities and reporting. Where bodies have an established relationship with government, there will be existing frameworks for accountability and audit, where it is clear that those arrangements work, we will work to build on them in a proportionate way that provides efficient and effective accountability, whilst minimising additional burdens. Where new requirements arise, the Government will prepare those to ensure that appropriate arrangements are in place to establish effective scrutiny in partnership with the committee. I would be happy to answer any questions that the committee might have. I thank the minister for his contribution. Before I open up to other members, can I raise with the minister on specifics in relation to, and one particular example, the BBC, who will now have reporting arrangements that should be put in place particularly in relation to audit to the Scottish Parliament? I just wonder how the minister envisages this particular process to be followed. Essentially, the command paper indicates that the BBC would be required to lay its annual report and accounts before the Scottish Parliament and submit reports to and appear before committees of the Parliament in the same way as it does through the United Kingdom Parliament. Providing the presentation of those accounts provides clear and satisfactory information that enables this committee and other committees of Parliament to determine the degree to which the BBC's operations within Scotland can be fully and properly identified from that process and can be accordingly scrutinised. I think that those arrangements are broadly satisfactory, but it will depend crucially on the degree to which that information reflects the activities of the BBC in Scotland and, therefore, the ability of committees to scrutinise that activity. I would envisage this being taken forward in a memorandum of understanding between the respective Government's Parliament and the BBC. I just ask the minister what discussions have taken place with the BBC in this respect. Are there any elements of that that you could make public today? The discussions on this and on a range of subjects have been taken at a Government-to-Government level so far. Obviously, we are dependent on seeing the clauses that come from the UK Government in their final form before we can then begin to take forward some of the detailed follow-up discussions that will be required, but there will be a necessity for discussion with the BBC in that respect. I would expect that to take its course once the clauses are available to us in full, which we expect in Thursday. Tom Beattie. Cabinet Secretary, a number of organisations, for example OFCOM, have identified that the ever-reporting requirement for their annual accounts, which is set out in legislation, and is subject to direction from UK ministers. What are your views on whether the Scottish ministers or the Scottish Parliament should be consulted before any such directions are given by UK ministers, and should any consultation requirement within that be set out in statute? The Smith commission report provides for an organisation like OFCOM the provision for the Scottish Parliament and the Scottish Government to contribute towards the formulation of the setting of the strategic guidance of an organisation such as OFCOM. Obviously, we will wish to utilise that access to the full to ensure that OFCOM is particularly well cited on the requirements and the needs of people within Scotland. If I give the committee an example of this, I met the chief executive of OFCOM just the other week there, and I was making the point to Sharon White that, for example, on broadband, it is all very well for OFCOM to tick a box that says 97 per cent of the United Kingdom population have access to broadband, but if the 3 per cent that does not have access to broadband is fundamentally located in rural Scotland, it is about as much use as a chocolate teapot. The importance that I attach to the dialogue that the Scottish Government can have with organisations like OFCOM in ensuring that their strategic direction properly and fully reflects the needs of people in Scotland will be an important responsibility for us to have. As a consequence, it is also important that parliamentary committees are able to hold OFCOM to account on some of those tests to establish whether or not an organisation like OFCOM is properly and fully taking into account the needs and the requirements of people in Scotland, which is what I think the Smith commission provision of enabling the Scottish Government to have access to the formulation of strategic guidance for an organisation like OFCOM had in mind when this issue was considered. Has any analysis been done by the Scottish Government to determine whether further UK legislative change will be required in order for the annual reports and the accounts of bodies identified in the draft clauses to include with Scottish-specific expenditure and performance information? That will essentially be the responsibility of the United Kingdom Government and I would expect that to be reflected. Any provision of that nature, I would expect to see reflected in the draft clauses that come from the UK Government. Just looking at the evidence that has been submitted from Citizens Advice Scotland, I was noticing that they highlighted the question in relation to DWP and universal credit and so forth and obviously the benefits that we hope that will come to the Scottish Parliament. They highlight the fact that the process, as they said, does not seem to be equitable. They are highlighting the fact that the clauses require the Scottish Government to consult the UK Government and to gain their agreement on the timing of any variance. However, if the UK Government wishes to make regulations, they require to consult the Scottish ministers, but they are not required to gain their agreement. It does not seem a very equitable partnership agreement. The issue that has been material to the consideration of the draft clauses that were published in January is that the draft clause in its respect places a requirement on the Scottish Government to be able to secure the agreement of the United Kingdom Secretary of State for particular changes that we would wish to make, but there is no reciprocal obligation on the United Kingdom Secretary of State. That clearly gives the ability to a United Kingdom Secretary of State to withhold consent. In that scenario, there is not a proper and full devolution of responsibility, because there still remains some ability of the UK Government to say, well, I know that we are not going to allow that to happen for whatever reason is the case. That is one of the material issues that we have been raising with the United Kingdom Government. It was one of the substantive points of concern that we had when the draft clauses were announced in January. We have sustained that point with the United Kingdom Government and we will await the publication of the Scotland Bill to see if the UK Government has amended that in any way, which I think is necessary for the Smith commission to be properly put into practice. I wonder if I could just go back to the BBC. I am sorry for jumping around. We did receive a very short submission from the BBC Trust, which stated, our expectation is that the BBC will provide exactly the same annual report and accounts to be laid in the Scottish Parliament, as is laid in Westminster. By contrast, BBC ALBA provides an annual report on accounts that indicates its progress against objectives and outcomes, information on corporate governance, etc. Exactly the same report as is currently laid at Westminster. Is that acceptable in terms of appropriate and robust arrangements for the BBC or would you be looking for something more in line with what BBC ALBA currently produces? In my earlier answer to the convener, I indicated that the process of laying a report before Parliament seemed to me to be an acceptable approach, but what is essential in that judgment is what information in that report conveys and what opportunity it provides for Parliament to properly scrutinise the activities of the BBC in Scotland. The points that Mary Scanlon raises about the comparison between the contents of the approach of BBC ALBA and the BBC in general is a welcome comparison. A fuller amount of information to enable committees of this Parliament to properly scrutinise the activities of the BBC would be required. Therefore, the contents of the submission from the BBC, in my opinion, would need to be developed to take into account legitimate desires on the part of this committee and others to properly scrutinise the BBC. You would be looking for an annual report that was not just the same as the one laid at Westminster but the one that allowed this committee and the Parliament to more meaningfully scrutinise matters relating to Scotland and also on the annual BBC Scotland manager review report. What I am really saying is that the submission that we have today from Rona Ffairhead, the chairman of the BBC Trust would not be sufficient simply to do what they are doing just now. We would need something much more focused on Scotland for the future. Something more akin to what BBC ALBA is producing. That is a fair summary. The submission from Rona Ffairhead is not, in my view, the last word on this subject, because there is a memorandum of understanding that has yet to be created, discussed, scrutinised, tested. Out of that process, I would expect the type of issues that Mary Scanlon has fairly raised to be properly taken into account. I could ask the Deputy First Minister firstly about the Marine and Coast Guard Agency. The Government's own submission makes a couple of observations about separating out the MCA's expenditure in Scotland, which I thought were fair remarks. I wonder whether you have given any further thought to how that could best be done, so that the Government and Parliament could properly scrutinise exactly that area. To be fair to the MCA, I think that its initial response was very much an initial response. We have now had some subsequent discussion with the MCA on behalf of my officials who have taken that forward to try to advance those issues. The MCA's submission, of course, predates the Scottish Government's submission on communication with the committee. I think that I would be optimistic that we will get to a much better position, where more information that can be made available that better captures the distinct and discreet activities of the MCA within Scotland, and therefore enables committees to properly and fully consider all the implications of those issues. In that respect, I think that the committee has got a significant role to specify what type of information the committee believes would be appropriate for the committee to have at its disposal. Clearly, the Public Audit Committee is in a particular position that can advance some of those issues and those points across a range of different organisations of which the MCA would be one. Without getting drawn into the policy areas, which are not our direct responsibility, and you have reflected on Smith's agreement in that context, there may be, for example, areas involving co-location with other blue light emergencies services in Scotland, which would make eminence sense. Is that the kind of area that you envisage if a Government is being involved? I appreciate that that will not be a direct matter for a parliamentary committee, but since you have the fire board sitting behind you, that is the kind of thing that I have been thinking about a lot of late. I think that the policy opportunities that arise out of having greater scope to influence some of those agendas, but I think that it comes back to the crucial point as to whether or not the bodies are prepared to consider some of those opportunities. If I go back to the example that I cited with Mr Beattie about OFCOM, it is appropriate that organisations such as OFCOM, with the Scottish Government and the Scottish Parliament, are being accorded an opportunity to influence the strategic direction of those organisations as Mr Scott will be entirely familiar with from the Smith commission. That has to be for a purpose. That is to get those organisations to take greater account of the particular and specific requirements within Scotland. The broadband example to Mr Beattie fits into that category. The point that Mr Scott has raised about the MCA is particularly relevant given the extent of coastline that we have, the extent of maritime interests that we have and, frankly, the extent of risk that is disproportionately carried in Scottish waters with which Mr Scott will be entirely familiar with his constituency interests. There is an opportunity for us to shape imaginative ways of delivering public policy if there is an opportunity to properly use that strategy and put it in the way that the Smith commission envisages would be the case. I agree with that. I can ask two rather brief questions. The first is about the Crown Estate. The Government's submission makes some interesting remarks about the continuing Crown Estate. From an audit point of view, it would be for this committee and indeed for Government to properly scrutinise what that might be. The Deputy First Minister, as I wish to share, has emerging thoughts on the best way in which the continuing activities of the Crown Estate might be properly scrutinised from an audit perspective. I am anxious about treading into the use of the term continuing. I am just wondering where Mr Scott is trying to take me here. There is a real uncertainty here about what is—when I signed up to the Smith commission report, I felt that I was signing up to the full devolution of the Crown Estate and all its interests to Scotland. That was what was in my mind. We now have this point emerging that the Crown Estate might do that, but it might also do other things, which then opens up another front of Crown Estate activity in Scotland. Mr Scott has heard my evidence to the devolution of further powers committee on that point. I think that this is at best confusing, at worst that it is undermining the whole principle that the Smith commission signed up to. Whatever happens—I am just a little bit reluctant to accept at this stage that there is a proper continuing role for the Crown Estate beyond the devolution of the Crown Estate responsibility to Scotland. In whatever shape or form the Crown Estate emerges, what I do believe is that the committee and other committees must be able to properly and effectively scrutinise Crown Estate activities in Scotland in a fashion that has not been the case to date. I think that the devolution of responsibilities brings that more into the scope of this Parliament and therefore places particular obligations on the Crown Estate specific in relation to this committee and what this committee can undertake to clarify for members of the public the issues about which members of the public will be concerned. The final question, convener. Can I go back to the chocolate teapot analogy that the Deputy First Minister used with some aplomb earlier on? It would also be open to his Government to say on the 3 per cent in which I entirely agree with him that Government policy could change so as to encourage exactly that to happen, because, as he knows from his own constituency, as I do from mine, there are people who are not going to be caught by the current Government policy, which is a UK Scottish joint policy. However, in the audit of that—and that is, of course, something that Audit Scotland has done—it could be that the policy was specifically targeted on those areas—off-com, of course, or part of that, but Government is, too. Would that be fair? Yes and no. I think that I have been pretty clear about the Government's intention here, that we believe that the roll-out of superfast broadband is an absolutely essential requirement for all localities in Scotland, regardless of where they are and how difficult they are to reach. Mr Scott has extensive experience of the challenges and difficulties in this respect. I am keen to ensure that that commitment is fulfilled. It will be more easy for us to fulfil if there is a greater obligation placed on providers. I cannot do that because I do not have legislative competence to do that, but I intend to use the strategic opportunity of dialogue with off-com to advance those arguments. In any way, that is not me trying to pass the buck. That is me properly trying to use the constitutional settlement to ensure that we have more extensive coverage of superfast broadband by virtue of the obligation that is placed on providers. Yes, there is an opportunity for the Scottish Government to influence that process, and the chief executive of off-com, if she was in front of you today, would be very clear to the committee that she left St Andrew's house knowing that the Scottish Government attaches the greatest of importance to superfast broadband being available right across the country. Off-com has a critical role in ensuring that the obligations placed on operators and providers are set within that context. Your comments earlier regarding the MCA and Crown Estate have certainly been helpful. On the Crown Estate once again, have there been any further discussions regarding the two Crown Estate solutions that your officials have been involved in with the UK Government in terms of the potential accountability situation? Officials have been involved in discussions around the substance of the implementation of the taking forward of the clauses on the Crown Estate. Those issues have been explored again with the United Kingdom Government officials. In relation to the accountability issues, there has been no further discussion on that. Essentially, a number of those points in detail will await the finalisation of the clauses that emerge. We are in a position that I have not seen as yet a full outline of the clauses that will be published later this week. I am sure that the committee will want to come back to meet some further point on that particular area. The second question is about the COSLA's submission. It suggests that it might be appropriate for certain other bodies to submit focused reports on specified issues, one of which was on the Gambling Commission regarding the transfer of some of the powers of government and the Fixed Odds betting terminals. Is it useful for this Parliament's auditing and accountability processes to have some of those organisations to report to this Parliament? There is a case for it. If there is an appetite for inquiry within this Parliament on whatever question the Parliament should pursue, it is legitimate inquiries. We may not hold all of the responsibilities in that respect, but it is not stopped Parliament exercising what is an entirely legitimate democratic right to probe and scrutinise on any question. Committees should be free to take that forward. I think that what might limit that is the statute of the establishment of this Parliament and the ability of committees to command evidence. For my recollection of section 23.1 of the Scotland Act is not departing me, it is a pretty formidable power that Parliament has to require information to be brought before it. There is undoubtedly a case for that to be made. Has yourself or officials from the Scottish Government put this particular case forward to the UK Government regarding the Gambling Commission or other examples such as the FCA, the Health and Safety Executive and the Equality and Human Rights Commission? In my answer to one of the earlier questions that Mr Milne raised, I indicated that a lot of the discussion about accountability and scrutiny arrangements would have to follow the definition of the final clauses. Essentially, early discussions have taken place around some of the accountability issues, but I think that there is a long way for us to go on these points. I reiterate the point that I made earlier on to Mr Scott. I think that it is important that this committee specifies many of the terms of what it believes to be the appropriate and acceptable level of information to be available to the Parliament to enable this committee and other committees of Parliament to properly exercise their functions. I would like to briefly see what your thoughts are on what I think of the third leg of audits. The first leg is mainly just making sure that the numbers add up. The second is making sure that the governance is there. The third to me is ensuring that we have data that enables us to work out how effective an organisation is and whether it is actually doing what you want it to do and how efficiently and effectively it is doing that. I appreciate that it is very early days simply because of the things that you have probably spoken about and the bills that are about to appear, but I wonder whether you could give us any thoughts as to how you see those other organisations that we are not going to have a greater interest in accounting to us for their effectiveness. I suppose that those issues fall into two categories. If there is a responsibility that is transferring to the Scottish Parliament in its entirety, my view would be that the existing arrangements of the Scottish Parliament through the Public Finance and Accountability Act and the arrangements that that act provides for, which are, of course, the basis upon which we undertake our audit and scrutiny work at the present moment, those arrangements should be applied to any responsibility transferring and full to the Scottish Parliament and under our competence. Because those arrangements work well, they are viewed to be of great strength in international standing and we should therefore apply them as we apply them to the current day-to-day arrangements in which are the meeting drink of this committee's work. I think that where there is a shared responsibility, we have to take care to ensure that the committee is properly able to have available the information that will allow it to satisfy itself of the authority, the governance and the effectiveness of all of the public expenditure that is being undertaken within Scotland by those bodies. Some of that will involve, I think, a greater degree of joint working between the Auditor General for Scotland and the Controller and Auditor General for I presume England and Wales or maybe the United Kingdom, I suppose the United Kingdom. That will be an area where a lot more joint activity is going to have to be undertaken because the committee has to be satisfied that it has access to proper information that challenges and scrutinises that activity, without us having essentially two separate exercises having to be undertaken, which I think would be difficult to justify and difficult to interrogate. I think that I would fit my answer to Mr Don's question into those two categories. Where something is transferring in its entirety to the Scottish Parliament, PFA act requirements should be applied and where there is some form of shared endeavour, DWP activities, some of those type of activities, then I think there has to be some substantive response to that requirement from the UK body and that has to involve some a greater degree of involvement for the Auditor General in the process. Thank you. Do you sense that the UK Government understands the point that you just made and will push the national audit office to work with the Auditor General for Scotland? From time to time, I encounter elements of the UK Government that do not seem to be particularly aware of devolved arrangements, so it is but no means a complete process. So I think that there will be a challenge to get these issues and these questions more widely understood and therefore reflected in practice. I am not also to be active in the UK Government. I am not altogether sure that it is its obligation to push the national audit office in that direction. I think that it is perhaps for the national audit office to realise that the world, the landscape has changed and it has to ensure that there is a way of working with the Auditor General for Scotland and Audit Scotland in a fashion that enables information to be, for work to be undertaken, an information to be presented in a fashion that enables Parliament to properly discharge its functions. That suggests that maybe we need to talk to the Auditor General about our working relationship with him. I think that that is the appropriate conversation. Thank you. I am sure that you have. I hope that you will agree with me that it is quite difficult to second-guess what is in this Queen's speech and the legislation that is likely to be published tomorrow. My understanding is that the Secretary of State for Scotland has listened to feedbacks and has also said that he is very open to amendments to the Scotland bill, so I look forward to that. There are so many devolved issues under Smith that it is quite difficult just to look at one. I thank my colleagues for the general ones, but perhaps if I could just pick out one that, to be fair, your Government has been very critical of, and that is the work programme. That is a new economic power under the Smith commission proposals. How will you measure the employment programmes in Scotland when they are fully devolved? What sort of auditing and accounting arrangements? What sort of outcomes would you be looking for in order to ensure that money is well spent and we get value for money? I would be looking at the ability of these employment programmes to ensure that individuals were supported into sustained employment and that that employment was sustained on a basis that was acceptable to the Scottish Government. One would be essentially the central outcome of an employment service programme. We would have a range of other key indicators that would determine the basis of that, the relative cost of that and the performance of any providers and supporters in that respect, in the way that we have a whole range of key performance indicators that apply to the work of Skills Development Scotland, for example, on modern apprenticeships or to a programme such as the Youth Employment Scotland programme, which SCVO takes forward. At the moment, people are supported for up to two years and they are back into employment, and while they are in employment, so would you be continuing that same level of support on a similar basis as to what is provided just now? Those are questions that the Government would have to determine in policy terms. One of my concerns about this whole area of policy is that our ability to do this will take a great deal longer than any of us who sat on the Smith Commission could have envisaged. I sat on the Smith Commission between September and November 2010, and as we are having a discussion about devolving employment services at the earliest possible opportunity to the Scottish Government, the United Kingdom Government was renewing the contracts of existing employment and support arrangements, which will ensure that we cannot exercise devolved responsibility before 2017, which is a position in which the Scottish Government deeply regrets. Clarify to the record the official report of the Smith Commission in 2014. What did I say? I think it says 2010, just want to... Two to my, two to my questions. I think that was a comment. Thankfully, I never sat on the common commission. Well, the point is that in two years' time it will be fully devolved and you will make the changes, but do the basic principles still apply that the employment programme will help long-term and short-term unemployed people and give them the support to get back into the work environment? Would the same principles apply? Of course, there would be no point in the employment programme if it wasn't about getting people back into employment. That would be the core purpose of an employment programme, but I think that the issues that I'm concerned about in the short term are the fact that the Smith Commission envisaged this power being devolved early and it's now going to be devolved late. Secondly, I don't think that there is the comprehensive scope for devolution or exercising devolved control over employment services that I would like to see being in place. I'm sure that we'll come back to that one. Can I just clarify? Don't be careful, we don't understand the policy areas, because the committee's business is primarily on audit arrangements. The second very brief question is from the Chartered Institute of Public Finance and Accountability SIPFA. It previously recommended the development of a Scottish balance sheet to provide overall context and administration of the financial affairs of the devolved administration. Is that reasonable and is that something that you're looking at going forward? We have very comprehensive information that is gathered and published on the Public Finances of Scotland and the resources under the control of the Scottish Parliament. I think that that information is sufficiently comprehensive and what we will look to do with the further devolved responsibilities is to ensure that that comprehensive standard is reflected in the arrangements that we've put in place for the presentation of financial information about the performance of public expenditure and the work of the Scottish Government. Is that the equivalent to a Scottish balance sheet? I don't know quite what information is required here. The Government produces all the necessary financial information about the conduct of public expenditure in Scotland. From where I'm sitting, that is a comprehensive explanation of the position. I'm not quite sure what further would be required to satisfy the point, but maybe we'll just scan it. I'm sure that in the weeks and months ahead, this will become clearer. I've asked you this question in the chamber at Oral Questions and I did get a very constructive answer. It's about the Crown Estate. There seems to be an understanding that the Crown Estate is only responsible for the shoreline around Scotland. There are actually 36 tenant farmers in Murray and Glenlivitt, who are very worried about the devolved Crown Estate. The Scottish Government takes a view that the organisation that takes over the Crown Estate should report to the Parliament. That should include performance, financial information and the contribution that is made to the national performance framework. I'm just asking, are the farmers going to be accountable to a minister in the Parliament? Or, as COSLA said, we need to ensure that the Smith's commission's recommendations are acted on in full by ensuring that Crown Estate operations and associated revenues are fully devolved to local government. Having spoken to many of the 36 tenant farmers, many of the tenancies have come down generations, they are a bit worried about councillors or ministers being managing their farm activities. I appreciate the evidence that is being taken at the Rural Affairs Committee on this issue today, but I wonder if you can bring any comfort to the Glenlivitt and Murray farmers. I don't think that I'm not aware that any Government or council has ever controlled or managed farms. Can you give me any comfort about how you see the auditing and accounting arrangements, notwithstanding the shoreline, but focusing on 36 farms? There are a multiplicity of issues in here. I know that I'm absolutely very much aware of that point. My colleague the Rural Affairs Secretary, Richard Lochhead, who represents the area, has made that point very clearly in our discussions about those issues. Can I separate a couple of the points in there? On the auditing and accountability arrangements, those will be about the activities of the Crown Estate. Needless to say, some of the individual farmers will have a relationship to that in the sense that they will be paying rent to the Crown Estate. In that respect, there has to be transparency around the activities of the Crown Estate, which I would expect Parliament to want to exercise. On the Crown Estate, not on the activities of individual farmers, I cannot envisage there being any appetite for the Government—this is my point of reassurance to the farmers of Glenlivitt—to try to direct the work or role of 10 farmers in any respect. I cannot see why on earth that would be. Those are people who, as Mrs Scanlon said, have come through generations of involvement in the nurture, care and stewardship of some magnificent parts of Scotland. What the Government would know that it was more about those activities than the 10 farmers of Glenlivitt wouldn't be worth knowing. I really don't think that there is any cause for concern here, but I assure those individuals—I am Mrs Scanlon—that the issues are properly and fully understood by the Government. I think that it is going to be devolved to local government, that is in their submission. In our paper here from Spice, it says that it is going to be devolved to an organisation. What organisation are you expecting to take over the management of the 36 tenant farms of the Crown Estate? There will be a Crown Estate in Scotland—that will be the body. The Crown Estate will remain as the— This is where we have to be very careful about using— Sorry, I am just trying to understand. No, but this is where we have got—this is not a guidel of my making. This is a guidel of Her Majesty's Government's making because of a lack of clarity from Her Majesty's Government about the proper devolution of the Crown Estate function. When I sat on the Smith commission and sat in her discussion in Good Faith with all parties about the Crown Estate being devolved to Scotland, it was the devolution of the entire functions of the Crown Estate to Scotland, which would then be under the scrutiny of the Scottish Parliament. Yes, within that, we may take decisions to devolve particular functions within Scotland to individual local authorities, as we have very clearly presented to us by the three island authorities in Shetland Orkney and the Western Isles. There would be a Crown Estate in Scotland where the issues have become somewhat muddled is the idea that somehow we would do that, and then the Crown Estate would have some other activity going on. For the issues of the interests of the tenant farmers, there would have to be somebody to whom they were—well, somebody whose land they were managing, and that would be the Crown Estate. The Crown Estate would still be there in some form. The Crown Estate functions will be devolved to Scotland, so there will be a Crown Estate in Scotland and it will be accountable to the Scottish Parliament. Okay. Committee, do we have any further questions? Can you thank the minister and his colleagues for their contribution this morning? Can I move the committee into a two-minute suspension to allow for the changeover? Thank you, ladies and gentlemen. We can reconvene. The next item on our agenda is evidence on the Auditor General report for Scotland, the Scottish Fire and Rescue Service. Welcome, Caroline Gardner, Auditor General for Scotland, Angela Cullen, Assistant Director, Mark Roberts, Senior Manager and McDuff Audit Manager of Audit Scotland. I understand that the Auditor General has a brief opening statement. The report that I am bringing to the committee today looks at the process of establishing the Scottish Fire and Rescue Service. The progress that the organisation is making in reforming how it delivers fire and rescue services and some of the financial challenges that the organisation faces in future. I will briefly summarise our findings under three areas. First of all, the formation of the Scottish Fire and Rescue Service and its governance arrangements. Secondly, the costs and savings associated with the merger. Thirdly, reviewing future service delivery. It is important to note that, at this point, I have focused on the merger process rather than on the longer-term reform that the fire service is undertaking. I will keep this area under review and may report on it in future. Overall, we found that the Scottish Government and the Scottish Fire and Rescue Service managed the merger of the eight former fire and rescue services effectively. The Scottish Government clearly defined the roles, expectations and initial targets for the chair and the chief officer, and eight of the 10 recommendations that we made in our earlier report on learning the lessons of public body mergers have been implemented or are in progress. The SFRS board is starting to perform well in providing strategic direction and effective scrutiny of the management of the organisation, and, in a variety of ways, the board has demonstrated that it is committed to improving its performance. One important aspect of the new arrangements is the network of 17 local senior officers who are responsible for maintaining links with local authorities, and this structure is proving to be effective. On costs and savings, the financial memorandum to the Police and Fire Reform Scotland Act 2012 estimated a cost of £39.5 million for the establishment of the Fire and Rescue Service. The actual cost was £35.7 million, around 10% lower. Reported savings to date put the Fire and Rescue Service on track to exceed the overall expected savings of £328 million by March 2028, which were anticipated by the financial memorandum. However, as a result of future cost pressures and likely reductions in public sector budgets, we estimate that the Fire and Rescue Service may face a potential funding gap of £43 million by 2020. The Fire and Rescue Service does not yet have a long-term financial strategy to show how it will close the funding gap, and I believe that it is now crucial that it agrees a long-term financial strategy by March 2016 to set out how that will be done. It is clear that this has been a challenging period for the organisation and its staff, but Her Majesty's Fire Service inspector has concluded that there has been no impact on the public across the merger period. The Fire and Rescue Service's performance is improving, and it is making progress in removing important differences in how the eight predecessor Fire and Rescue Services were managed and operated. Although the merger was managed effectively, in some respects the hard work of reform is yet to come. The Fire and Rescue Service is currently conducting a number of reviews to determine how it will deliver a national service in the future, addressing some of the important differences that we have previously reported on in the way that was done across Scotland in the past. Those reviews aim to ensure that its resources are used as effectively as possible to provide a sustainable service that reflects current and future risks. Ensuring that those reviews are completed promptly and inform the development of a long-term financial strategy is a matter of urgency for the Fire and Rescue Service and a key part of the next stage of the reform process. As always, convener, my colleagues and I are happy to answer questions from the committee. I start by referring you to paragraph 3 of your report with you, and you referred to this in your opening statement. The cost pressures that will be placed on the organisation resulting in potential savings of up to £44 million to be saved. Can I just ask you in terms of your own experience in dealing with some of the organisations in your experience, is that an alarming level of potential cost savings that have to be met and in what areas would you expect the organisation to have to look at making those savings from? It is certainly a significant gap, there is no question about that. I think that the budget this year for the Fire and Rescue Service is about £230 million, so a funding gap of £40 million is significant in that context, there is no question about it. One of the rationales for merger of the fire service across Scotland was to help it to face the funding pressures that the Government foresaw in the period that we are currently in by releasing resources that could be invested in fire services. There has been good progress made on doing that. The point that we are making here is that there is still a gap even after the initial savings have been made in the first two years of the organisation's life. I think that the sorts of things the fire service is looking at are the areas that we would expect. The reviews that we list in our report are looking at areas such as workforce, assets, procurement, the use of ICT, all the important areas that both affect the effectiveness of the service and the amount that it costs to do it. We know from previous work carried out by Audit Scotland that there were very significant differences across Scotland that did not appear to be related either to the level of risk that was faced in different parts of Scotland or the effectiveness of fire services. The right things are in hand, but it is a significant gap, and it will be very important that those reviews come together to inform a financial strategy that shows how the gap will be closed five years from now. I encourage you to ask in percentage terms the savings compared to the overall budget. Do we then reach a stage where perhaps we get to the bare bones of what is available and then perhaps there can be issues relating to staffing levels and potential workforce planning in respect to that? That is a question that you might want to address with your following panel of witnesses. What we show in the report is that significant savings were made in the first two years by reducing some of the obvious duplication that was there in management structures, in support services, in the other achievements that were done. In many ways they were significant achievements, but they are some of the easiest savings to take out in practice. The more difficult things are looking at the allocation of control rooms of fire stations around Scotland, the ways in which shift duties are organised, which have been very different in the past. Those are challenging things to get right, and the challenge for the fire service is to make sure that it does them in ways that protect the service while taking out the costs that need to be found over the next five years. In paragraph 47 and in your opening statement you say that the public had neither noticed or suffered any reduced level of service, which is obviously very good news. As I read through the report, I noticed that page 10, the post-implementation review, which was due six months after the merger, was now waited over two years, and we still do not have it. On page 11, the audit results about collecting views from users, staff and stakeholders on performance were still waiting for that. In paragraph 22, you have identified main risks in the corporate register. I will not read them all out, but on exhibit 8, you have got workforce awaiting consideration by the board, asset management due to be decided this month, and procurement. I am just wondering how you could make this statement not noticed or suffered any reduced level. When we are waiting for quite a considerable amount of information, including the post-implementation review. The evidence that I used in reaching that conclusion came from Her Majesty's Fire Service in Spectra review in 2013 of the progress that had been made on reform and the Government's mid-year review of performance for the same year. It is important to note, as I said in my opening statement, that that was about the transition from the eight former fire and rescue services to the new service initially. We know that it was a difficult time for the organisation itself and for staff, as I said in my opening statement, and we know that there are some difficult choices that have started to be made and that will continue to be needed in the years ahead. We have seen, for example, the handling of the control room closures that are planned across Scotland. I am confident that the evidence that we have supports the fact that, during the transition, as the report says, there is no impact on the public, and there are difficult decisions to come that will need to be carefully worked through both with elected representatives here and in the 32 councils around Scotland and with members of the public themselves. The fire service is a service that people care a great deal about and are attached to, particularly in the more remote parts of Scotland. We know that those decisions are difficult to take in ways that can help people understand the costs and benefits that are involved and what it will mean for them. That is very much work in progress, but the initial stages were handled well. I wonder whether Auditor General is either you or the auditors who undertook the inquiry. Were you given any reason why there has been a 20-month delay in the post-implementation review during six months? It is now 26 months. Was there a reason why that has not been done? I will ask Mark to pick that up in a moment. You are absolutely right, though. That is one of the recommendations that we made in our managing measures report, which has not been completed, one of the two. Mark, would you like to pick that one? As you say, something that was not done was only one of the two of the 10 recommendations from our previous report that was not done. The services recognised and acknowledged that that is not something that has done, as committed to going ahead and doing that, and the committee may wish to ask the next panel of witnesses about that. We think that it is very important because we see that this is a merger that went very well. We want the lessons learned to be captured as soon as possible so that they can be shared with other parts of the public sector. I mentioned the risks in paragraph 22. Are those risks a cause for concern? I will pitch in my final question. This is the first time that we have looked at a report for the whole of Scotland. You may remember Auditor General or might have been before your time, but the Accounts Commission had a very critical, highly critical report of the Highlands and Islands Fire and Rescue Service. I was hoping that many of the issues—I know that many of them have been addressed over the years—but I cannot ask about the Highlands and Islands, but I can only ask about the whole of Scotland. The first question is about the risks, but are there geographic areas that you feel still need a bit more attention, or do we have a consistent level of service across Scotland? You are absolutely right that Audit Scotland, on behalf of the Accounts Commission, produced a series of reports in 2012 about the predecessor of fire and rescue services, and they showed both a great deal of unexplained variation across Scotland in the way in which the fire service was provided and particular problems in the former Highlands and Islands fire and rescue service. The work that we have done demonstrates that the new Scottish Fire and Rescue Service has started the process of addressing those differences and making sure that it can produce a more consistent service across Scotland that reflects those very important regional differences, and there is very much more to do. It is fair to say that some of the challenges in providing a fire and rescue service in some of the most remote parts of Europe that we see in Highlands and Islands are not easy to crack. We are satisfied that the work that is going on through the reviews is starting to address them, but there are no easy fixes, and it is why I made the comment about some of the hard work of reform still being there to be done. We are not surprised by the risks that are in the corporate risk register, in a sense that we would be more concerned if they were not there. We take assurance from the fact that the reviews that we mentioned in Exhibit 5 are focusing on the right areas to address those in future and to do it in a way that can be managed within the funding that is likely to be available in future. I think that at the beginning I would just like to comment on how good a report this is. The merger has gone extremely well, and all the way through this document there are positive remarks about the way it has been managed and implemented. I think that I would like to ask a question about page 5 paragraph 3 about the potential funding gap, which is obviously very much a notional gap. What future cost pressures did you take into account, and what reductions in funding did you take into account to reach that figure? I will ask colleagues to come in in a moment, but it might be helpful to refer you to Exhibit 6 on page 21. What that Exhibit is showing in the top line is that, broadly, we agree with the Scottish Fire and Rescue Service about the likely cost pressures that they have in future. They have done a good job in understanding the costs that they have inherited from their predecessor organisations and in reviewing how they are likely to change in the future through things like pay inflation, the impact of VAT and the other changes that are coming through. Where we differ from the Scottish Fire and Rescue Service is in our view of what the likely funding is likely to be to meet those costs. The Scottish Fire and Rescue Service planning is based on steady-state budgets between now and 2020. If you look at the forecasts of public spending coming through from the OBR and others, it is more likely that there will be a reduction. The big difference between us is in the likely level of budget available to cover those costs rather than in the costs themselves. I will ask Mick if he can pick up by talking a bit more about the costs that are included in the top line to help you to understand that. The main cost increases relate to inflationary costs for staff costs and non-staff costs, and a potential £3 million increase in 2016-17 as a result of an increase in employers' national insurance contributions. Obviously, a lot of this is difficult to pin down, because we do not know what the reductions in funding are going to be. We might have a better idea come July, but at the moment I doubt even the Scottish Government knows what reductions are coming down the line. I think that you could take almost any piece of the public sector and project that there is going to be cuts. I do not know. One of the reasons why we think a long-term financial strategy is so important is that we do not know what the exact figures will be, but what a long-term financial strategy can do is take a number of likely scenarios and plot them out. We think that, given what we do know about the UK Government's spending plans and the time it would take for any further devolution of financial powers to the Scottish Parliament to take effect, there is a strong likelihood that, during the five years that we have looked at, there will be a reduction in the overall Scottish budget. We have applied that on a consistent basis to the fire and rescue service, but if other parts of public services were protected, the reduction for fire and rescue services would be greater. We think that our forecast is a reasonable one, although clearly there is an element of uncertainty in all forms of forecasting. I was looking at page 12 paragraph 13. There is a recurrent theme through the reports that we have been seeing over the past few years. You are saying here that it is referring to councillors, local councillors, that councillors on the boards had not in general provided strong strategic leadership. That seems to be repetitive through so many of the reports. Is it indicative of a greater problem? It was a particular issue for fire and rescue services, because in most parts of Scotland they were previously provided through joint boards that brought together councillors from a number of authorities on to a special purpose board that looked at fire and rescue services. First of all, it was not their main area of focus. They had been elected to represent their area on the council as a whole rather than the fire service. Secondly, as Audit Scotland previously reported for the Accounts Commission, they tended to be very poorly supported. There was little dedicated support in terms of analysis or challenge, which would enable them to ask questions of the officers providing the fire and rescue services. That was part of the rationale for moving to a new national service with its own dedicated board. It is one of the real improvements that we have seen as a result of reform. The board recognises that it has got further to go, but it is clearly both providing greater challenge to the service than was the case before reform, and it is much better placed to provide strategic direction working with the officers who make up the service itself. Thank you. Can I start by gently picking up the point about where income comes from for any public service? The Government at the moment has a tax power that it could put up. Do they not? Are all the assumptions that you have discussed with Mr Beattie, of course I am sure, fair to point out, but I do get a little frustrated when I hear everyone saying that it is someone else's fault. We have a power in this place right now to put tax up if we want to invest more in public services, don't we? At the moment, as of 1 April this year, it is a power to raise the small taxes of land and viewed. No, but 3P in the tax, which existed from 99 onwards, means that you can put tax up if you choose to as a Government. It existed for a period until the implementation of the Scotland Act and was then repealed. We drew it for other reasons. What I am looking at here is the funding that is available between 15, 16 and 19, 20. I agree with Mr Beattie's observations about how strong this report is in terms of how well this merge has gone. The Auditor General rightly mentioned the lessons learned. Would she care to give an oversight as to why this has gone so well when police has clearly been the opposite? I will ask the team to chip in, because we have thought a lot about this as the work has been progressing. One of the differences is that the structure of the Fire and Rescue Service is simpler. For understandable reasons, when the reform process was going through, the Parliament approved a structure for policing, which provided a separate Scottish Police Authority to which the Scottish Police Service is accountable, reflecting all the well-known concerns about the role of policing in a democratic state. For the Fire and Rescue Service, we have seen a single body, which, like many other public bodies, is accountable to this Parliament through the accountable officer and where the roles and responsibilities were more clearly defined very early on. Mark, do you want to expand on that a bit? I do not think that there is much more to say. In addition to that, the point at which the board was appointed prior to the service coming to existence was very much focused on ensuring that it worked effectively and was continually trying to improve how it held the management of the service to account. As we say in the report and various points, they have done a lot at work at trying to ensure that the information that they get from the service is what the board wants in terms of performance, finance and risk. They are very focused on continuous improvement and understanding the nature of the service and its job. That has worked very, very well. I am sure that is very fair. You said that the roles and responsibilities to the single body were clearly defined earlier on. Can you elaborate on that? Again, that strikes me as exactly what did not happen with police. I recall when I reported on police reform at the end of 2013, that was one of the clear findings, that the roles and responsibilities had not been clear at the point when the new police service was being established. It took longer than it should have done for those who have been clarified. A sponsoring team responsible for that within Government was clear and therefore provided that clarity to the incoming board and to the management team of the new fire service, which for whatever reason, which we never got to the bottom of, did not happen with police. That is true, and the basic structures were more straightforward here. So there was less scope for confusion this way. Sure. I think that is a fair point too. Can I just ask one other question? If I may convener, and that relates to power 63 in relation to the retained fire system, fire service, which the report accurately says affects 85 per cent of Scotland's fire stations, Mary Scanlon was reflecting this, and I couldn't agree more with that challenge. Your report says that there is some work going on here with respect to the longer and indeed medium-term options. Have you got any perspective, and I'm obviously going to ask the later witnesses about this, have you got any perspective on your confidence that that will happen, because this is, if I may say so, fundamental even to the island that I live on? You're absolutely right about its importance. I think your question is much better aimed to your following witnesses, but I think it's fair to say that this is an area where there is no simple answer. Fire reform across the UK has been a live topic for more than a decade now. When the Bain report was published in around 2003, the retained duty system was seen as being key to providing services in more remote and rural areas. I think there's now a growing doubt about whether that is possible, given people's changing lifestyles, the difficulty in being available when needed. My understanding is that that's very much at the core of what the fire and rescue service is trying to review at the moment to come up with something that is sustainable and is affordable for these remote and rural communities, where it's been very important in the past. Did this suggest to you when you were discussing this with them that there needed to be, as it were, a reconsideration of the need to appoint someone else to have a look at this? In other words, a new Bain, or is it just going to be an internal exercise of the current fire board and their fire service? Is it an internal exercise? Do you think that's adequate? Do you think that's enough, given how serious it is, given that it affects 85% of our fire stations? Do you think that's enough? I think at present that's the sort of the I have to rely on the fire service to provide the key source of expertise about how this is done, and I think that is appropriate. That's fine. Can I just add to that, Mr Scott, by saying one of the things we think has gone well in this is using the different experience that came together across Scotland to make the changes we've already seen. So if you look at the way in which standard fire appliances are now crude, the experience that had been built up in parts of Scotland that did it differently and more effectively in the past of playing into the new models, we're seeing that expertise being used well. That's not to say it's guaranteed to work around retained firefighters, but that experience of learning from what's working in other parts of Scotland has been one of the success stories of this so far. I'm grateful to Mr Scott for getting where he did, because I want to really just continue that. I'm looking at paragraphs 55 and 57, but you won't need to worry about the detail, because it's the general point that you observe in paragraph 55 that home safety visits have made a difference. I suspect that they've actually made a huge difference. And in 57, you comment about malicious false alarms, but more importantly, equipment failure false alarms. Now, the next panel, undoubtedly, the people to ask about the details of all that, but my question to you in the context or to general is, are you satisfied that the way in which these questions are being addressed makes sense? And we've got the appropriate level of expertise. And again, should other people be involved in some of this, or do you think that the fire service is actually correctly addressing these in principle? Stage, yes. We think they're looking at the right areas. And as I said, in response to Mr Scott's question, the experience so far is that they have tapped in well to experience in different parts of Scotland that have tried innovative approaches that have worked. And we make the point in the report that the changes that will be needed in future are significant, not just because of the funding gap, but because the nature of the risk is changing so significantly, and particularly in Scotland, because it varies so markedly across the country. So we'll be continuing to look at how well those reviews are being carried out and how well they're leading to changes in practice. But at this stage, we think the groundwork is well in place. That's the last of the game. Finally, a big question from Mary Scanlon. Yes, we were very critical if you remember about the police because they didn't develop a full business case. On page 10, you do say that the second paragraph that fire and rescue service did not develop a full business case to look at costs and savings, et cetera. Could you perhaps expand on that, how essential or not that was? Of course. We actually say on page 10 that the Scottish Government didn't develop a full business case, and it was the same business case for police and fire reform. Develop the business case. And the reason we haven't reported on it further in this report is that we reported it in the report on police reform in November 2013. It was the same business case. We felt there was nothing more to say. But it did the same issue apply. So the Scottish Government didn't develop a full business case. Is that one of the reasons that you've been a bit critical about fire and rescue service not having a long-term financial strategy? Is that perhaps one of the reasons for the delay in post-implementation reviews? Or what has been the effect of not having a full business case at the start? What's been the impact? As with the police reform and our report, the absence of the full business case makes the long-term financial strategy all the more important. That business case not having been developed and the outline business case not being updated means that having that picture up to date now taking account of all of the experience since about the financial pressures and how they'll be addressed is even more critical than it would have been had there been a full business case. That's true on both. I don't think that it has any relevance to the failure to carry out a post-implementation review. That's a separate issue. As Mark said, we understand from the fire and rescue services they intend to carry one out and it's one of our recommendations that they should do that quickly. But you would be looking for a more robust long-term financial strategy at this point in time, which you don't have. That's the key recommendation from this report, so it should be in place by next March. We discussed the issue of the long-term strategy and how to deal with the funding gap that you've identified. You suggested that that's a five- to 10-year strategy that should be available by March of next year. I'll ask you to comment on the fact that that's entirely deliberate for the fire service of where they are now in terms of their financial planning. Do you think that it's reasonable that a report of that magnitude can be produced on that scale of time? It will be challenging, but we do think that the work that they've got under way with the various service reviews is exactly what's needed to inform it. I'll ask Mark to give you a bit more detail about the work in progress. As we've highlighted in Exhibit 15 on 13, there's four major strands of work which are ongoing, which will come to fruition over the next nine to ten months. In addition to that, as the Auditor General previously mentioned, there's the reviews about workforce procurement, asset management and ICT, which will all be coming together. The long-term financial strategy is putting the pound signs around all those things. We see that those things coming together over the next nine to ten months in parallel, long-term financial strategies, entirely reasonable. I take your point about the differences between the fire service and the police service in terms of complexity and other issues. Do you think that in terms of that plan and particularly the workforce element of that plan and planning for how many personnel we need into the future, is the fire service in a position to benefit from the fact that there is frankly less political interest and headcount in the fire service than there has been over a prolonged period of time in the police service? Part of the criticism has been that money is removed from one area and numbers of staff are reduced in one area in order to preserve a different area. Do you think that there is a more comprehensive approach to workplace planning in the fire service? On police reform, I made the point that having a fixed target for the number of police officers made their financial strategy more challenging because it reduced their room for manoeuvre in a very significant part of the budget. That is a policy that the Government is entitled to set and it has a consequence, which is that your financial management becomes more difficult. The fire service does not have the same constraints around it in that sense, which means that it is more able to work with its staff, with the unions, with local communities to look at different options for the way that the fire service is provided. We think that they are taking that opportunity well at this stage. That is not to say that there will not be some very difficult decisions further down the line, but it does mean that they have more room for manoeuvre in looking at what their options might be. Perhaps there will be lessons for politicians as well as for the people who run our emergency services, but could I maybe just end with that? You commented in the report about the reductions in five incidents, which of course we are all welcome. Did you have any awareness of how that is reflecting other parts of the world or other parts of the UK? That is a long-term trend in terms of reduction in crime, although we have seen that used a lot as a measure of success in the police services. Is there a similar story to tell on fine and rescue? There is. I will ask Mark to pick this up in a moment. We are seeing both an impact of prevention visits and so on, which Mr Don referred to earlier, but also much wider societal changes such as people being less likely to use chip pans and improvements in furniture design and so on. Mark, what do we know about the international comparisons? To be fair, we did not look in detail at any international comparisons, but I understand that in many parts of Europe there is a similar pattern going on for exactly the same reason that European legislation on fire retardment, furniture and applies across Europe. I am sure that the fire service would be able to provide more information on that. I thank the panel for their contribution. We are going to have a look for a brief interval and we convene at 11 o'clock. The report entitled the Scottish Fire and Rescue Service. I would like to welcome Pat Waters, chair of the board of Scottish Fire and Rescue Service and Alasdair Hay, chief officer of the Scottish Fire and Rescue Service. I understand that Mr Waters has a brief opening statement. Chairman, not really not the statement, but just to say that we welcome the report that is always encouraging to have outside organisations looking at how you are conducting your business and giving your report on that. We welcome the report and welcome the opportunity to answer any questions on it. Okay. Can I, by way of introducing the first question, refer you in a similar question that I put to the order general in connection with the potential savings that have to be made by 2020, which I referred to in paragraph 3 of the report? I just wonder for the record if you could confirm that you accept those findings and if you could elaborate on how your organisation would be seeking to make those savings. We certainly want to question the figures that we have put down. It is a projection, it is not an exact science that says that we have got a projection for ourselves that gives us options on how we would do that. Although there was mention of no long-term strategy, we do have a critical savings pathway that it takes us right through to 2020 and we have options on that. Obviously, in the light of the figures that have come out from us in Scotland, we will have a look at that and maybe we adjust that, but it is a projection. I would not say that I accept the figures, but I accept the theory behind that calculation and the impact on our budget, if that does happen. You accepted the direction of travel as there is going to be substantial cost savings to have to be made in the run-up to 2020? Yes, we do. In terms of the kind of areas that would be pursued, are there any red lines that would be in place that you would not pursue? Well, I think that our first priority is to protect the front line and other areas to communities in Scotland, so that has been an area that we would work and always work to try and protect. When you said front line, what would be off-limits? Obviously, there have been reviews carried out in the past that have referred to control rooms, shift rosters, staff savings, are those the areas that your organisation would seek to pursue? We will continue to pursue those areas and, obviously, we have caught some work being done at the present time in looking at a fire review of Cover and Scotland and looking at where the priorities are, where the risks are and how we tackle that. I am sure that the chief officer would want to comment on that as well. I also welcome the report from Audit Scotland. The main purpose of the fire and rescue service is to make communities safer. I am particularly pleased to note in the report that, in terms of those safety outcomes, reducing the number of fatalities and the number of casualties, both in fires and special services, we are improving those safety outcomes. In relation to the money that we have available to deliver safety outcomes for the community of Scotland, I also recognise within this report that the budget has been managed prudently to date. Across the whole of the Republic sector, everybody is anticipating that there is a potential for a reduction in budgets going forward. We are on track to deliver the savings that were identified through the fire reform process. £328 million by 202728 was the anticipated savings asked off the fire and rescue service, and we have had a strong focus on that. We, like Audit Scotland, have projected forward to the financial year of 2020. We have anticipated that our cost base will increase within the organisation, but we anticipated that we would have a steady state in terms of our budget. What we would have to do is absorb the normal inflationary pressures and other changes within regulation and legislation, particularly the increase in the employer's contribution. The cost base would go up, and what we would need to do is maintain our budget at a steady state. The reason why we made that assumption was because it was in line with some of the predictions that were made by Professor Gowdy and, equally, in working with our sponsored department in the absence of any real decisions on what future budget provision would be. That was a reasonable assumption to make. Even with that, we anticipated that we would have a funding gap of approximately £8.5 million by the time that we got to 2020. We thought that we would anticipate a potential reduction in our budget. We estimated 5 per cent, and that would give us a funding gap of approximately £20 million. If you use the office's budget responsibilities figures, then clearly that gap approaches £43 million. The approach to whatever that gap will be—and it is a potential gap—is prudent that you plan for this, of course, so we welcome the Auditor General's report in that respect about strengthening our long-term financial strategy. The approach that we will take on this will be to continue to look at the best practice guidance offered by Audit Scotland. It is about a reduction in the number of people that work within the organisation, and it identifies within the report that 79 per cent of our budget is based on staff costs. To take that much out of the budget, you would have to reduce headcount in the organisation. We will also look at the rationalisation of our assets and the contracts that we engage in across Scotland. We will also look at streamlining processes and finally working in partnership to do shared services with other public bodies here in Scotland and other organisations. Those are the areas, but our focus will always be on using the resources that we have in Scotland to best effect to improve the safety outcomes of the people of Scotland. Can you refer to headcount? Does that also include firefighters? Firefighters are the key to delivering successful outcomes, and I am always extremely reluctant to reduce the number of firefighters that we have within Scotland. However, I was alluded to in the evidence given by Auditor General earlier that we do not have a fixed number of firefighters in Scotland. We had approximately 4,000 whole-time firefighters before we came into the single service. As we stand today, we have approximately 3,850 whole-time firefighters, so we have seen a reduction, but it is a flexible way in which you deploy those firefighters, ensuring that you have the availability of our front-line emergency response vehicles and front-line staff that can deliver the essential prevention work that we focus on. We have reduced them, but if we were to take the amount of money out of the budget that has potentially been indicated within the report, you would have to look at a reduction in the number of whole-time firefighters across Scotland. You just asked, finally, would that envisage be in compulsory redundancies? One of the biggest factors, I believe, in ensuring what has been a successful reform today is the promise of no compulsory redundancies in the fire and rescue service. Clearly, as you go through a reform process, it is an anxious time for staff. It is the staff that have made the difference here. That promise of no compulsory redundancies has meant that they have been very open to sharing their experiences. They have been very open to changing work and practices and being flexible in their approach. If you were to remove that promise of no compulsory redundancies, I think that it would have a detrimental effect on our ability to truly reform the fire and rescue service and bring about the changes that we anticipate will be needed in a changing environment. It is a policy that the Scottish Government has. It is a policy that has been readily endorsed by the board and the senior management of the Scottish fire and rescue service, and I believe that it is a key element to success. We have a workforce plan going forward, so up to 2019-2020, we know how many people would be anticipated to retire through reaching their normal retirement dates. That number would go nowhere addressing a reduction in our budget on the scale that the Office for Budget Responsibility indicated might be possible within the fire and rescue service or other public bodies. Can you tell the committee why the post-implementation review to monitor progress and look at whether you are on course to deliver the long-term benefits? That is why it is 20 months late. I think that you are right that it is late. In six months, it was maybe too early to look at what was the effect of that transformation. The reform process is a three-year project. We have been indicated that we will have that report with the Government shortly. It is certainly well on its way to being produced. I accept that it was late, but I think that we will get better information from it with the delay that we have actually incurred. The collecting views from user staff and stakeholders, the audit results from that, they have not yet been published. Is there any reason for that, or when is that due, page 11? If I just go back and address your first question to a degree, I am clearly doing a review of the reform process within the first six months as a recommendation made by Audit Scotland in relation to the best practice guide on how to bring about public service mergers. I agree with Pat that we will be better placed to produce a meaningful report when we have more experience of how we have brought the service together. The timing of it now as we come towards the end of the third year will mean that it will be a more meaningful report, particularly in the light of the comments that were made by Audit Scotland, that this has been a successful merger and that it would be beneficial, anticipating perhaps further mergers in the public sector. This has been a successful merger and it would be useful for people to learn lessons not only about what has not gone well within a merger but, importantly, what has gone well. The timing of that will be important. That said, the chief inspector of fire and rescue services, Stephen Torrey, he did do an inspection within the first six months of the fire and rescue service to make sure that, critically, we were on track to deliver the benefits of reform. The public were not noticing that there had been a change in the governance of the fire and rescue service as opposed to what we actually do to make communities safer. What he also reported on was that it was being managed well. We did have that review within the first six months, conducted by Her Majesty's chief inspector of fire and rescue services for Scotland, and what we have also embarked on is a series of gateway reviews to make sure that the whole programme management of that has been conducted robustly and that is focused on the blueprint in delivering the benefits of reform. We have had a whole series of those prior to us going live as a service within the first year of the new service. We have also had one recently where it indicated that we were green and we were on track to deliver the benefits of reform. When we get to the end of the three years, I am confident that we will have delivered the benefits of reform, but, importantly, we will be in a place to produce a really useful and meaningful report to help others going forward within the future. I will move on to Exhibit 9 on page 25. The firefighter absences in 2013 were 9.1 shifts against the target of 8.4. You have changed your target and I appreciate 2014-15 that we are talking about the end of quarter three, but the absences were 7.1 against the target of 6.4. Quite a reduction in the target. Other staff absences were 6.3 against the target of 6 last year, and that has been reduced to 4.5 shifts against the target of 2.6. We often sit here and criticise the NHS for not reaching a 4 per cent target, but you have significantly reduced your target for firefighter absences and staff absences, neither of which were met last year. Is this a reasonable thing to do? Is it part of the cost-cutting exercise? Does it reflect the sort of normal on-going needs of your firefighters and staff? It is important that we encourage staff to attend where that is appropriate. We are an emergency service. As an emergency service, we have a situation in which our firefighters are working in extremely dangerous circumstances and at times somebody who is off ill is the result of all work related. Equally, in times of change, it is extremely difficult to ensure that staff are comfortable on going forward, and staff have been under tremendous pressure during the past two years. It is only in recent weeks that we have concluded our review of our support staff. We went out to ballot for that in Tuesday of this week. Given the fact that people were guaranteed a job and knew that they had a job, given the fact that they did not know what that job was or where it was, it was extremely pressure for the staff. They were under a lot of strain during that period. We were hoping that, once we get to the situation of if we get an agreement with the trade union how we move forward in our staffing structure, that things would settle down and become clearer for staff and staff with much easier result of that. It was very much because of the dangerous circumstances and the harrowing experiences of many firefighters that were shocked that you have reduced the target from 8.4 to 6. For staff, it has gone down from 6 to 2.6. We all want to encourage people to go to work, of course, but at the same time we have to respect the fact that sometimes people are ill and sometimes it takes them a bit of time to recover from some of the experiences that we expect firefighters to do. I am just shocked that, given that the absences were not achieved, you have brought in a very significant reduction in your target for both firefighters and staff. I ask that against an understanding of the incredible work that they do. I am grateful to hear the concern for staff that work within the fire and rescue service. Firefighters do work in an inherently dangerous environment, and they do see things that are harrowing at times. Because of that, what we have is a very supportive system within the service. The welfare of our staff is one of the things that is uppermost in our thoughts. I can just perhaps explain the target to you. That is a target that is set within the fire and rescue framework for Scotland. The way that it operates is that the target that we have aimed to hit in terms of staff attendance is based on the average attendance of the previous three years. What we have to get is the middle of the average of the best-performing antecedent service over the last three years. Every year, as we roll forward, the target automatically changes because of the way that it was set up within the framework. That is why you see that attendance has improved in the fire and rescue service. It clearly demonstrates that. It also shows you that the target has got tougher, but that is because of the way that the arithmetic works and the way that the target has been set up within the framework for the Scottish fire and rescue service. That does not detract from the fact that we absolutely understand that good attendance is important in all public sectors and organisations, but equally, we have a very supportive welfare system within the fire and rescue service. I appreciate that, which is before going to my final question. Are the unions representing your members quite content about the significant reductions in fire fighters and staff absence targets? I think that we have a very good relationship with our representative bodies, both in fire fighters and in our support staff. I think that, like I said, they would be willing to work with us to ensure that what we do is treat staff with dignity and support when it is necessary, but we also try to make sure that we get the maximum attendance as possible. It is not an attempt to get people who are ill or injured back to their work, but it is an indication that we want to try to achieve the maximum attendance that is possible during that period. We will always work with our two-union to try to ensure that we do that sympathetic. I understand all that, but I did ask you the question if I could get an answer, because maybe I am pursuing the wrong issue. You are working day and day with the trade unions. They represent the fire fighters and the staff, and I would like to know whether they are content with the significant reduction in the target for absences that is contained within the Audit Scotland report. I know what your commitments are. I am just asking one direct question. I have not asked them that exact specific question. They do not know about the targets, but I have not asked it in the manner in which you have just presented it to me, but I am happy to go back and do that. I can say that we have a partnership working arrangement with all of our trade unions, particularly the Fire Brigade Union, when we are speaking about fire fighters. We produced a new attendance management policy with the underpinning procedures for the Scottish Fire and Rescue Service, and we did that working in partnership with the Fire Brigade Union, so that they understand the targets that are set. They have also worked with us to make sure that the policies and the procedures that we have are designed to improve attendance, but are very supportive of the staff that work within the organisation. It is about the retained fire fighters. The convener was asking you about losing staff and losing headcount. Around the Inverness area, there are more than 30 per cent vacancies for retained fire fighters, and I know that 85 per cent of Scotland's 359 stations rely wholly or in part on their service. It is a matter of serious concern to people in remote and rural areas that retained fire fighters have to commit up to 120 hours a week. It barely gives them seven hours a night to sleep, but they have to commit all that time to their service. Do you think that you would get more retained fire fighters where you would have to reduce that level of commitment, given that people have families and jobs, etc? Are you concerned about the 30 per cent vacancies around Inverness itself? I often hand over to the chief officer to answer that. I would be concerned about that. I do not think that it is the first time before this committee or other committees in the Parliament that we have an issue with the retained duty system. We believe that that is why we have made it a priority that we need to make a system work that delivers for rural communities in Scotland. We believe that the retained duty system is broken. It is not something that has happened within the past two years, but probably within the past 10 to 15 years. There have been various attempts, not only in Scotland but in other areas of the UK and elsewhere, to try and look at how we operate a retained duty system and make it work. Family circumstances that you are absolutely right have changed, hence the commitment that we ask for people is a lot. That is why we have made it a priority to get a piece of work done, which we will be reporting probably before the end of this year and how we try to take that matter forward. I cannot tell you what the outcome is, but I cannot tell you what the outcome is, because it is still a work in progress. You will be looking at that. I am concerned about the availability of retained firefighters across Scotland. We are absolutely a service that is focused on improving safety outcomes, and predominantly firefighters do that through their prevention activities and their emergency response. We want to maximise the availability of our staff irrespective of the duty system that they operate. It is clear in this report how significant retained firefighters are to the safety of communities right across Scotland, but particularly in rural areas. Over 90 per cent of land-massive Scotland is protected by retained duty firefighters, and more than 40 per cent of our operational staff are retained. However, as the chair has just pointed out, that is not an issue that has emerged in the past couple of years. It has emerged probably over the past couple of decades. The retained duty system, as we know it, was designed for the 1950s. Society would be unrecognisable in the 50s compared to how it is now. We need to design a retained system, if that is what we are going to call it, that is fit for purpose for the 21st century. We are looking at the current duty system, which includes that commitment to 120 others. How do we make that as effective as we possibly can? I will give you a little example. We were up at Buley in Highland recently, and we were speaking to staff up there, and they were telling us about the unavailability of their pump during the day. They were telling us that there used to be a number of shops in the village, and everybody in each of the shops would commit to come and crew that fire appliance. There is now one national chain that has a shop, and they cannot release the staff. There are quite a few other shops in Buley. Yes, they cannot release their staff to crew that fire appliance, and most of the people now work out with the town. They told me of an example of where they had a couple of people that were interested in joining the service, but the whole recruitment process, which was prior to the reform, took more than 12 months. By the time they got to that point, people had lost interest. One of the things that we have done to make the current system as effective as possible is to streamline all the processes. You will know whether you are getting into the fire service and are retained within a period of two months. We have done that. We are making it as effective as possible, but what we are also doing is making sure that we are looking at what are the options for the future. How would we design a new service if we had a blank piece of paper that would be fit for purpose for now? That will report by the end of this year. Colin Beattie, do you want to keep more questions and answers as succ to as possible? Mary Scowll has not shown us exactly how to do that, but I am sure that I have always come. Looking at page 29, I am looking at false alarms. 57 per cent are false alarms, which seems a huge percentage, although I must confess that I have contributed a couple of times to that myself. However, the number of equipment malfunction elements in there has risen by 5 per cent, although overall, in the birth of the same period, it has dropped by 12 per cent the number of false alarms. I am concerned about the equipment malfunctions increasing as a percentage. I am concerned about the 57 per cent that are false alarms. Are we making real progress in sorting that out? It is a huge cost, especially when you are going through those cost constraints and reductions that we are all suffering from. Clearly, the number of false alarms that occur is something that we want to reduce. Most of the cost is the anticipatory cost, because most of the stations that are attending those false alarms are in our big cities—Glasgow, Edinburgh, Dundee, Aberdeen—that occur across the rest of the country. We have the appliances and the crews at the stations in the attendee's incidents. There is potential to reduce costs there, but it is not so much about reducing direct costs and making financial savings. It is about the opportunity costs, because those crews could be engaged in much more meaningful work to drive down risk even further across Scotland. We have a big focus on that. We have recently done a piece of research in Glasgow on all the false alarms. We have a business engagement forum in the Scottish Fire and Rescue Service, and we have also invited some other key stakeholders into the research that we are doing, so we are examining why we are getting so many false alarms. Bear in mind that a fire alarm system is an essential piece of safety equipment. It saves many lives. If I say to you that the first alert to the Glasgow School of Art fire came from an automatic fire alarm system, I would strongly encourage early detection and alert to the fire and rescue service. However, some early findings from the research are that many of the systems are perhaps not maintained or managed as effectively as they can be, so we are working with the industry on that. There is a predominance of false alarms occurring on systems that are more than a decade old. What we would be doing is looking to work with the industry and perhaps work with the regulators to look at ways in which those systems can be refreshed so that they do not give unnecessary calls to the fire and rescue service and thereby not allowing us to make best use of what is an essential public resource, which is our firefighters on our fire stations. It would appear that the estimated costs of false alarms are based on a 2002 figure, so the likely cost is going to be much higher. Would you agree to that? Those figures are based on the economic cost of fire. Those are figures that are put out by the CLG. I do not know when the CLG will update that. I hear that there is work in progress to do that, but, of course, since those figures were produced, inflation has had an impact on costs, so you would anticipate that it would be higher. It is not going to be 19, but it is probably at least a third more. Bear in mind that, although it is saying £19 million, those are not necessarily cashable savings that we can make because the anticipatory costs, i.e. having the fire station, having the fire appliances and having the staff to respond, would predominantly be there anyway. It is the non-cashable savings that is actually deploying new resources to better effect is where you would make a real difference. Is there any capability where we have a situation where there are multiple false alarms at the same address to actually get reimbursed for these costs? Is there any mechanism to do that? For example, if it is an alarm system and someone fails to maintain or fails to get rectified and you are called out on multiple occasions, I would have said that there is a justification for making a charge. We have looked at that and my understanding is that we do not have the power to charge for that. I am not convinced that it is entirely the right thing to do. It sounds punitive. What we have done—I can give you an example from where I live in Dundee—often when new students come into the halls of residence get multiple false alarms. That is something that we experience every year. We recognise that pattern and look at those multiple false alarms. We are working with the university authorities on an education and management process. We have seen the number of false alarms being reduced dramatically. Working in partnership—the whole thinking behind the project that we are undertaking in Glasgow at the moment—is perhaps a better way to address this challenge. My second question relates to paragraph 55, in fact, that the number of actual fires has gone down fairly substantially, possibly as a result of home safety visits. I was quite interested in this document here where you are talking about alternative functions for the fire brigade in relation to that. Recently, I have been to two of the fire stations in my own area. They were talking about incorporating visits to vulnerable people and so forth, working with NHS and local health boards. Is that a viable way forward? Is that how you are going to weigh the fire brigade in the future? Can I have a bit more first? Obviously, the chief will have a much more detailed answer. The short answer to that is absolutely yes. I think that the fire brigade because of its brand, its trusted brand, can play a far higher role in a different role in many communities throughout Scotland. Remember that we are a fire and rescue service. We are not just a fire service. Fire plays a relatively—although it is a big impact and a tragedy for people who are suffering it, in terms of a day-to-day operation of firefighters, it is not their main function. It is part of the function and part of the role that they play. When it is absolutely needed, it is vital that they have the expertise to deal with it. However, we have a wider role that we can play. We have a badge that gets us in where many other badges will not get in. I am talking about whether it is police, ambulance, health or social work. We can play a role as a partner with other partnership organisations to actually improve the library and improve outcomes for communities. I will hand over to the chief. I am sorry, it is a hobby horse. I think that one of the challenges of Christie is that what we all want to do is shift much more to a preventative model. One of the keys to doing that is through partnership, so we are across the whole of the republic sector incorporating the voluntary sector and others. Where can we work in partnership to improve outcomes? It is not necessarily what your direct responsibility is to driving the risk in relation to fires and other emergencies and to respond to those things. However, if, through that brand or the skillsets that we have, we can deploy that to the best effect to help other partners to meet their outcomes, we really want to be doing that. Equally, though the fire service has to take incredible credit for what is a great success story in terms of driving down risk, reducing the number of fire deaths and injuries that are occurring in Scotland, we have to recognise that other partners have made a significant contribution to that. Some of the health education campaigns around health eating and stopping smoking have a big impact on our outcomes. That partnership working, joining up the resources of the republic sector to improve outcomes and not necessarily looking at the obvious ones, is something that we, in the fire and rescue service, are absolutely committed to. Sounds great. Thank you very much. I wonder if I could just go back to the questions that Mary Scanlon was asking about the retained service and link them to the convenience points about funding. You were very open about the cost pressures that you faced. Does that have implications as well for the redesign of the retained service that you were describing in an earlier answer to Mary Scanlon? I mean, what we need to do when we look at the resources that are available to us is deploy them to best effect and the retained duty system has been cost effective. But one of the perverse things about the retained duty system is that people are paid on activity. The more fires you go to, the more emergencies you go to, the more you reward you. Up there, probably our number one aim is prevention within the organisation. Who designs a system that rewards against your number one aim? Paying reward systems are surely there to ensure that the organisation meets its aims. When we look at the retained duty system, one of the things that we will have to look at is how do we reward in the wider sense, but financially as well, how do we reward our retained duty staff for what they do within their communities? We have to try and look at availability, making sure that when they are needed they are available. What we also have to look at is how do they commit to doing those community safety type activities? They are the local people within those communities. There is a big challenge around competence within the retained. I reflect back on a report that was done by the health and safety executive that said that the biggest single safety issue facing the UK fire and rescue service is the competence of retained duty firefighters. It is a great thing that there are less operational incidents, but if we have a competence-based training framework, what that means is that we need to train people more, because they are not getting that on-the-job experience that they may have got previously. We have to make sure that we focus on the competence of our retained duty firefighters. Those three things will obviously link to a pay and reward, which will link to the financial resources that we have available to us to protect people in Scotland. Is it difficult to balance, chief officer, in the sense of competence and then experience, based on what you have actually seen, if there are less incidents that Colin Beattie has been driving at, which is by definition a good thing, you have less experience? It strikes me as a difficult balance to reach in terms of putting experience staff to an incident, but it is therefore competent to deal with. It really is one of the challenges that we are trying to address here within the Scottish Fire and Rescue Service, and we have the economies of scale and scope to do that in a way that perhaps some of the anti-scene services did not have. The type of training that we give to our retained firefighters really does need to be focused on risk. We have a system in Scotland where there are 46 generic risks. If you are a whole-time firefighter, we can train you in all 46 over a period of three years, but for our retained firefighters, there are 11 that are common to everybody, but there are eight that are optional and, depending on the risks that you are likely to attend within your locality, those are the eight that we will focus on to make sure that you are competent and the type of activities that we are going to ask you to engage in on behalf of your communities. In allied to that, because we are not getting the experiential learning that they may have got previously, we have to provide realistic training facilities. There is no reason at all why you cannot develop those competencies if you have an appropriate training programme, so we have a substantial investment programme across Scotland to make sure that those facilities are accessible to retained firefighters. That means as close as possible to their communities. The summer training facility is very realistic. I have done it, and it is frighteningly realistic. Can I ask two questions on this? Firstly, I take it that staff have been involved in that process in the review that you are carrying out. Secondly, you said earlier to Mary Scanlon that it was due to finish in December. Can we assume therefore that, in 2016, the fire and rescue service will be rolling this new model, as you said earlier, out whatever it is going to be called and however it will be configured? In other words, will staff have certainty in next year, 2016, as to how you envisage the new service being structured? Staff have absolutely been involved in this. Although I have been in a fire service for 32 years, I have never worked to retain duty system. I have always lived in big cities, being a whole-time firefighter. Those who work that system and have all those pressures and challenges of balancing their commitment to the fire service, their other employment or their business, their family lives, they know what it actually means, so we really have to listen to them. Many of the solutions that we seek will lie within their experience, their knowledge and their ideas, so the way that we have set the project up is that we have RDS staff in the project, but we also have a wider range of RDS staff that act as a sounding board for the whole project, so listening to them, getting their experiences is absolutely crucial. We are working very closely at the moment in relation to what a redesigned service might look like with some of our local authority colleagues, so we are very hopeful that shortly we will be running a pilot in Aberdeenshire, East Lothian and also Scottish Borders. Obviously, there are a lot of rural areas there that we might test some of our thinking within those areas, so we are hopeful that that pilot will be up and running towards the end of this year. In the findings of that, we will feed into our wider thinking, where we have not just looked at what happens in the UK, we have looked at some of the Scandinavian models, what is happening in Sweden, in Finland in particular, and we have also done a literature review from around the world, particularly focusing on New Zealand, who nationalised their fair service in the 90s. It was previously set up like the UK, had RDS and they have taken a particular route increasing volunteers, so learning all those lessons, running some pilots, will hopefully then be in a place next year to begin reforming it and begin an action plan to deliver a new look RDS system. That is what we are aspiring to. Thank you for that. Can I ask one final question? You mentioned, chief officer, the Christie report earlier on in the context of efficiencies in saving money. Presumably, that includes co-location, so the one that I am obviously thinking about is Lerwick, where you have a very sensible plan to co-locate with the Ambulance Service. That presumably saves money for both organisations. Do I take it that is part of a wider plan? I take it that Lerwick is going ahead and that is part of a wider plan that you have across Scotland. Certainly, there are some excellent examples on the ground right now where it is co-location. The one that you are talking about is co-location with the Ambulance Service, triple location with Police, Fire and Ambulance. We have got a committee set up of the chairs of myself from the Scottish Fire and Rescue Service, the chair of Police and the chair of Ambulance Service, where we meet on a regular basis to discuss how we move forward together. We have got several projects on the ground at the present time. We are looking at different options where we can work together and do that at early intervention to see where we get major projects, who has got the major projects, can we all fit into that, can we do something differently that delivers better on the ground and actually is more efficient than what we are doing at the present time. That is an on-going process and that committee meets every three months to actually update each other. We have regular meetings with our officers to talk us through how we are going to take that forward. I will assume my other examples. Like Alasam, I congratulate the chair and the former chief officer on the success that is demonstrated in the report. In relation to where we started on this, towards £43 million, I figure that Audit Scotland identifies as a potential funding gap. Is that a wake-up call to the Fire Service in Scotland about the degree of challenge that you may face in the future? No. It is not comfortable knowing the possibility of that. As you say, it is a projection and we need to be aware of that and we need to get the scenarios in place so that we can actually deal with that. We should plan for the worst and vote for the best. Is it comfortable to know the possibility that it has? No, it is not. Was that a figure that was in your own heads before Audit Scotland presented it to you? No, it was not. No. Why was that? We had done the projections, as I think the chief officer indicated earlier on. When we were doing our initial projections, we were looking at, as has been indicated, that we were getting a flat cash settlement. We then looked at what would happen if we had a 5 per cent reduction in your cash and we have the critical savings plan to develop into that. That would take us to £20 million of a shortfall. If we look at the projection that is now being made by Audit Scotland, we will then have to look at how we get that. However, we have got a long-term savings plan in place—a long-term projection in place—that is not taking into account that high or some. Obviously, we will have to sit down and look at that and see what that would deliver for us in the future. Presumably, I appreciate that it is not a figure that you would want to accept, but it is a figure that you do accept. In terms of a report that you produce for March next year, you will set out in that report how you would seek to address a funding gap of that level. That would probably be among one of the options that you present. You can give us that assurance that you would contain that in March 2016 yet. I would not use the language of a wake-up call for the fire and rescue service, but I think that it is a very important recommendation by the Auditor General, and I think that it is timely. I hope that you would understand that. In bringing about the single fire and rescue service, our biggest focus was on business continuity, making sure that we continue to deliver our prevention and emergency response services. It is not an insignificant challenge to merge effectively nine organisations because also the college became part of the Scottish Fire and Rescue Service into one, and that has taken a significant amount of time, effort and energy and focus off of our staff. We had done some long-term financial forecasting using our critical savings pathway where we feed in all the ways in which we can potentially reduce the cost-based of the organisation whilst at the same time protecting front-line service delivery. However, the robustness with which you need to do that has been pointed out extremely well by the Auditor General. Although we have all the components to do that, to feed into our critical savings pathway, to do it in the way that it is suggested in here will be extremely important to ensure the long-term success of the fire and rescue service. I think that you responded to what the Auditor General said in a very honest way that makes clear that the focus is on all of us to think about what the impact of that would be in terms of the public's expectations of the service and the other pressures that are on you. I suppose that I will leave that point there. I will maybe just return briefly Paul to the question that Mary Scanlon was asking around absence levels. If I understood the chief officer correctly, you were saying that that was a function of different levels within the previous eight services, and you were driven by the best performance in terms of where you then put the national target. What is the degree of difference across the predecessor authorities? How close together are they, what are the outliers, and are they continuing in the new service? The variation was quite marked between the different services. It is also quite marked in different staff groups in the organisation. Clearly, we seek to understand why there was a variation and why there are differences in different staff groups. That has been the basis on which we have produced our new attendance management policy looking at best practice, not just within the service but also outwith and sympathetic and supportive procedures that would enable that policy to improve attendance within the service. There has been some considerable variety previously. We have sought to understand why that is and to learn the lessons so that we can improve attendance in a supportive way going forward. Do you remember what some of those drivers might be? Are there areas that might be more dependent on RDS than others? Are there areas in rural versus urban areas? Are there other management issues in that particular service? What are those drivers? The difference is not based on rurality or urban. That is not one of the major factors. Some of the major factors have been around how much priority has been put on good attendance by the fire and rescue service. What types of supportive mechanisms such as occupational health have underpinned a successful return to work? It is all that type of stuff. That is where the variety lies within the antecedent services. Those are the things that we have looked at where that has been working well in a cost-effective way. We have brought that into the new policies and procedures of the new service. It has been reported that, in July, there will be an emergency budget by the UK Government. There will be, I would imagine, some consequences to the Scottish budget, whether positive or negative. I would assume, therefore, that the cells would certainly look at that particular budget and, potentially, reassess their own financial implications for the coming year and, potentially, the following years. We take a keen interest in all the decisions that are made both within the UK Parliament and the Scottish Parliament in relation to what budgets are and the priorities within those budgets. We, of course, would put over a strong case for effectiveness of the fire and rescue service and the wider contribution that it makes, but we recognise the importance of things such as the budget that is set by the chancellor at a UK level. We will try to see what the implications are in terms of the decisions that are made there for the Scottish fire and rescue service and feed that into our financial planning and strategies. I would assume that you would be making some contact without the Scottish Government to potentially raise your issues or thoughts or concerns as a consequence of that budget. We meet the minister on a regular basis. We meet the minister once a month to discuss issues and we will get an agenda for that. Through those meetings, we would raise any concerns that we had or any support that we were looking for from the Government. The minister today has been very supportive. Paragraph 69 of the report touches upon the example of the discussions with the Scottish ambulance service. Across Scotland, I know that some of that was touched upon earlier, what other challenges or opportunities are there in working with other parts of the public sector, not just the ambulance service but the whole range of the public sector to develop potentially further shared approaches to responding to emergencies? I am not with an handle with the chief officer who is probably going to more and overall look at this. Certainly, there are opportunities for us undoubtedly across the whole of the public sector to work better with partner organisations to develop it. If we look at, for instance, our stats at the present time, I know that in a recent committee that we reported that out of the deaths that have happened in Scotland, I think that it is 10 or 11 has been fire suicides. That would indicate that we need to work better, we are healthy to understand why that is happening, to try to prevent that if it is possible in the future to look about various areas. If we look at the rest of the fire statistics, it has changed dramatically in the sense that more and more elderly people are living at home on their own, when they come out of care, when they get support from other care organisations, but they are the most vulnerable people in the community at the present time. We need to be working better with our partners in local government and in the care sector to ensure and ensure health as well, to know where people are vulnerable that we are aware of and can lend their support to ensure that they are best protected as possible. So there are areas that we can work on, areas that we need to do in partnership. If one service could do this all on their own, you would like it to be done, but it takes partnership working and to do that early intervention and protection of people, but I will handle it with the chief officer. As a national service, it does give us the opportunity to deliver economies' scale and economies' scope, but we can never forget that the vast majority of our services, where we make a difference, are delivered at a local level and are delivered often in partnership with other public agencies and the third sector and the private sector. I would not limit the type of partnership activities that we could get involved in. We have a lot of core skills. We know what our core responsibilities are, but those skills that we have are very transferable to help partners to achieve their outcomes. We have focused on making a contribution in the most effective way that we can to all 16 national outcomes. Maybe just to highlight this out-of-hospital cardiac arrest strategy that has been developed here in Scotland at the end of the report, Scotland has the unenviable record of being amongst the lowest in terms of survival rates in Europe. It is around about 4 per cent. The best in Europe are up at 34 per cent, 35 per cent. We have examples from North America where it is pushing 40 per cent. The ambition is to save 1,000 lives. In that report that we spoke about earlier, the economic cost to fire, it puts the cost of a fire death at £1.6 million. That is the societal cost. If you can put a cost against such things, it seems crass at times, but people do. So, £1.6 million saves 1,000 lives. That is a significant saving to the Scottish economy that the fire and rescue service can make a difference to. We attended a very successful launch of this strategy, a symposium just along the road there in George Street in Edinburgh. There was a presentation done by the Seattle Fire Service that was invited over by the Scottish Government because it has a survival rate of 40 per cent. The title of the presentation was The Fire and Rescue Service and Game Changer. If you can harness the capacity of an organisation like ours that has a network of stations and an ability to put people on the ground quicker than any other organisation in significant numbers, you can make a difference that could mean that, in Scotland, we can save 1,000 lives. If you want to put a cost on that, 1,000 times £1.6 million is a significant saving, not just the moral responsibility we have to save lives. So, partnership work and proven outcomes do not limit the opportunities, but there are some obvious ones that we will focus on such as this out-of-hospital cardiac arrests. We can keep focused on questions and answers. The examples that you just provided sound like yet another reason to justify what has happened, and certainly in paragraph 13 of the report that we heard earlier on regarding the previous joint boards. The wording that was used at the time was that the joint boards were poorly supported. Now, after what you just said there, it sounds like the decision that has happened, the changes that have happened, are certainly going to provide yourselves with an even greater opportunity to actually have that joint working, even though the joint boards were there beforehand but clearly weren't working and weren't actually delivering these wider opportunities that you just highlighted. I mean, I mean, 30 years, an elected member at local level was never a great fan of joint boards. I think it watered down the effect on this and how you delivered. Did I have the answer and what should replace it? No, it didn't. Are we better placed to have more people involved and to see more elected representatives involved in what we're doing? Absolutely we are. Can I tell you that, since local government reorganisation happened, it took place in 1996. I stepped down from local government in 2012. I was yet to hear a report from where representatives and either police or fire at my authority. Between being appointed the chair of the Scottish Fire and Rescue Service in September 2012 and to be took over in April 2013, I made inquiries against other authorities that had joined the partner joint board. There were two that weren't joined board that was fighting to Breece and Galloway. Very few had the report back from Scottish Fire and Rescue Service, which means that the people involved in it were very limited. For instance, if I take you to North Lanarkshire today, our LSO and our member, if we go there, reports to 16 elected members. They had five on the board. That's 16 report directly to the council on what the interaction has been. We have a much wider involvement from elected members at the present time. They have the right to scrutinise the delivery of service in their area and to ensure that we are delivered on the joint plan that we have jointly agreed on for delivery within their area. That's just one example. There are many examples. We cannot tell authorities how they are going to do that scrutiny. They have adopted it to suit their purpose, but have we got a better system just now? We have met every single authority over the past two years in many of them more than once. Not one has told us that the interaction today with the Scottish Fire and Rescue Service is worse than it was before. It has improved a lot of that down to the legislation and the LSOs working on the ground with that authority individually, but also board members and other officers being committed to making sure that it does work. There is a real commitment to making sure that this works, and a lot of it is down to the commitment of our staff, right from the chief officer down to cleaners and stations and everyone in between. I think that most of the questions that I wanted to ask as follow-ups have actually been asked, but I would just like to put on record that, as it happens last Friday, I came across a very serious accident in my constituency and took the opportunity of stopping and talking to some of the staff. However, the point that I would simply make is that I was sufficiently affected by what I saw, that I actually changed what I did that morning. On the basis that the meeting I thought I was going to, I probably was not going to contribute to as I might have done. I merely reflect that, if that is the experience of your staff every day of the week, we actually have to bear in mind that they work in quite trying circumstances. I think that your comments earlier were much appreciated. Just really one question that I would really like to ask, and I do not think that you have been asked that, I hope it is not any, but I must have missed it otherwise. However, it is dealing with the issues around paragraph 26 and the control room closures. I know that we have a couple of paragraphs here that are talking about it, but perhaps you could just expand a little bit to maybe a review of how far you have got, what you have actually found so far and the judgment on the actual closures as well as the performance rates of these offices. I will round the chief officer in. Certainly we have reflected on what we have done. At the present time, there has been one closure of a control room and merged into another control room. That was in Dumfries and Galloway. It was closed quicker than the rest because of the condition of the equipment in the control room. The manufacturers have told us that they could not guarantee repair. They actually normally told us that, but they told the previous authority that as well, that they could not guarantee repair because it was so outdated and so old. So we had to do something to ensure that that was working properly. If I was looking back on what we had done, probably when we took the initial decision, I was in September 2013, about how we took forward our control room programme. I think that the major fault that we had in that was that we did not maybe have enough discussion with the authorities that were going to be affected by that change that was going to be made. I freely admit that. We have tried to take steps to ensure that that happens. The merger of Dumfries and Galloway control room with the Johnson control room, which was the former Strachlade control room, went absolutely seamlessly. It was a fantastic exercise myself and the chief officer met all the staff in Dumfries and Galloway on more than one occasion to explain through what the options are, what we could try and do, how we would try and manage that process, how we would get the knowledge transferred and how we would manage it. I think that in this year we have probably got two further control rooms. One at Madison and Thornton will be merged into. We have just refurbished the Edinburgh control room, which, when that is completed, we will merge the Madison and Thornton control rooms into the Edinburgh control room. We would hope that that would be absolutely seamlessly as well. The transfer will not happen if we are not confident that that will happen. If you are asked to look back in what we could have done better, initially we took the decision that we could have been more in contact with the organisation but with the impact of that, particularly with local authorities, but the transfer itself went absolutely seamlessly. We have no indication that what we are doing in the future will make it happen, but we will have further discussions with organisations. I thank Mr Waters and Mr Hayford for your time this morning. I move to agenda item number five, which is a further response from the Scottish Government to the committee's report entitled, Report on reshaping care for older people. Can I ask members for comments? I ask colleagues if they would wish to note the report. Is that agreed? Agree. Agree. Agree. Agree.