 I welcome everyone to the 20th meeting of 2014 of the Public Audit Committee. Can I remind members to set any electronic devices to silent their flight mode so that it doesn't interfere with the recording equipment? Sandra White is replacing David Torrance today. David is giving his apologies. Sandra White is here as a substitute. Sandra, can I invite you to declare any interests? Ken Macintosh will be joining us later, and I know that Nigel Don has another meeting to go to at some point, but he will be back. The first item on our agenda is, can we agree to take item 5 in private? Second item, we have a section 23 report, preparations for the implementation of the Scotland Act 2012. The Auditor General is today joined by Gordon Smaill, who is senior manager, Rebecca Seidel, who is the project manager, and Mark Taylor, the assistant director of Audit Scotland. Auditor General, can I invite you to make some comments? The report that I am bringing to the committee today looks at the Scottish Government's progress in preparing for the financial measures in the Scotland Act 2012. The report includes the introduction of the two new devolved taxes, new borrowing and cash management powers, and a Scottish rate of income tax. Before I set out what we found, I would like to highlight two important points. First, establishing the arrangements for the new powers is a large and complex task. It includes developing an overall approach to devolved tax and the legislative framework to implement it. The Scottish Government has successfully developed a legislative framework for the devolved taxes through three bills that have been passed by the Scottish Parliament. Second, the changes that come into force next year through the Scotland Act 2012 are even more significant when set within the context of the recent report by the Smith Commission and the heads of agreement on further financial powers for the Scottish Parliament. My report focuses on the preparations for administering the two new devolved taxes, the land and building transaction tax and the Scottish landfill tax, which come into effect from April next year. It also provides some initial observations on progress towards introducing the Scottish rate of income tax. It is important to note that the audit was carried out while preparations for the implementation of the Act are on-going. Given the scale and the importance of the changes, I felt that it was important to review progress at this stage before the new powers come into effect next year. The report acknowledges that substantial activity is continuing within the Scottish Government. I will now briefly summarise my findings under three headings. First of all, on the devolved taxes, we found that the Scottish Government has established clear structures for managing the set-up of the new tax authority, Revenue Scotland, and now has well-developed plans for implementing the devolved taxes. However, the staff needed to manage the overall programme were not in place early enough and there were also delays in procuring the IT system to administer the devolved taxes. That has reduced the time available to develop the IT system and to appoint staff to Revenue Scotland's operational team. As a result, there is increased risk that the IT system may not be fully operational by 1 April and that Revenue Scotland may not have the required expertise fully in place to manage the devolved taxes effectively when they come into force. That could result in tax payments taking longer to process and lead to an increase in processing costs. To be clear, convener, I am not saying that nothing will be ready in time but that there is more risk of things not being fully in place, resulting in the need for short-term alternative arrangements with potential implications for costs and performance. Revenue Scotland is fully aware of those issues and is taking steps to manage them. The report makes some short-term recommendations for Revenue Scotland and, in particular, we would like to see it closely monitoring the development of the IT system and recruitment to its operational team. That will help it to decide whether to implement its contingency plans to ensure that it is in a position to manage the devolved taxes effectively from April next year. Second, on the Scottish Rate of Income tax, we found that the Scottish Government is working closely with Her Majesty's Revenue and Customs to prepare for the Scottish Rate of Income tax's introduction in April 2016. We have highlighted that the Scottish Government needs to make sure that it has enough appropriately skilled people in place to support the successful implementation of the new responsibilities in 2016. Finally, on financial management, we found that the Scottish Government is working to incorporate the financial aspects of the Scotland Act powers within its financial management arrangements. The new financial powers that the Scotland Act 2012 introduces and the prospect of further powers following the Smith commission's report have got significant implications for Scotland's public finances. All that makes the need for comprehensive, transparent, reliable and timely financial reporting even more important. I plan to publish an update report on the progress that the Scottish Government is making in developing its financial reporting early next year and will continue to keep this area under close review. As always, convener, my colleagues and I are happy to answer the committee's questions. I do not think that we can underestimate some of the complexities involved in setting up a completely new tax collection system. We should not underestimate the historical and political significance of this, particularly when we look at what lies ahead. We all need to get this right. We need to prove that the Scottish Government and the Scottish Parliament are competent in handling tax collection. Auditor General, do you think that your report is now dated or does it have continued relevance? The audit work on which the report is based, as we say in the report, was completed in early November. We have been looking at it throughout the period of 2014 and the team can give you more detail about that. With any report, there comes a point where we have to draw a line and draw our conclusions and go into the process of agreeing it for factual accuracy. As that early November, the report is fully up to date. In those circumstances, we know that Revenue Scotland and the Government have been working very hard since then to overcome some of the problems that are identified in the report. I am sure that there will be more progress that they can report to you later on. When you completed your report in early November, you published it on 11 December. The normal process is that you give a private copy to those concerned to make comments, so in this case, presumably, Scottish Government, Revenue Scotland. They were issued with the opportunity to make private comment. We always make sure that our reports are agreed for factual accuracy to avoid this committee having to arbitrate in disagreements between us and the people that we are auditing. The team will keep me straight, but in this case, it was agreed for factual accuracy fully with Scottish Government and Revenue Scotland, and sections were cleared with SEPA, Registers Scotland and the Scottish Fiscal Commission. In early November and 11 December, those concerned had the opportunity to challenge the accuracy of anything that you said or whether it gave a wrong interpretation or analysis. Was the wording of the final report challenged by any of those concerned? It is very normal for us to make minor changes to the wording to make sure that we are fully reflecting the situation at the point that the report is agreed to, and that was the case with this report, as it is with this. When you reached that final wording, there was no further challenge to those final words? No. I think that it is important to distinguish between factual accuracy and the conclusions that I draw from them, but in terms of factual accuracy, yes, the report was fully agreed. So, would you say that your comments about readiness and being a risk that the full IT system would not be in place in time? Would that be a positive comment or a negative comment or a comment of concern? Or, if I was asking you to say in terms of red, green and amber, how would you assess the readiness of the IT system at that point? I think that, as we say in the report, convener, the progress that was made on developing and testing the IT system and on appointing the staff who will be needed to administer the new taxes, progress at that point was behind where the Scottish Government and Revenue Scotland had planned it to be. We do know that there is a significant amount of work going on to remedy those delays, and the Government has told us that they are confident that things will be in place at 1 April. That is why I have reported in the terms that I have that there is an increased risk that things may not be fully in place, but also reflecting the fact that contingency plans are there to make sure that the taxes will be able to be collected come 1 April. Things being behind schedule, progress not being made and there being a risk. If I was asking you to assess that as I had been a positive or a negative, how would you assess that? I think that it is clear that the Government and Revenue Scotland would prefer to have been able to fulfil the plans as they were originally set out. We all want to see these new taxes working on 31 March, but, as I said in my introductory remarks, what I am not saying at this point is that it will not be possible to collect them. Simply that there is a risk that contingency plans will need to be put in place and that that could have cost and performance implications. The date that you produced your report and then sent it to the parties concerned, could you say to this committee this morning that at that point you would have nothing negative to comment on, that it was all positive? No, I think that as my report says, what I have reported is that there is an increased risk that the system may not be fully in place as planned come 1 April, but I am certainly not saying that the Government and Revenue Scotland won't be in a position to collect the taxes at that point. So at that point there were some concerns. At that point you were worried that there was a lot of work to be done and would it be fair to say that things weren't necessarily on track at that time? I think it might be helpful for me to refer the committee to Exhibit 3 on page 14 of the report convener, which shows in an Exhibit the progress made in implementing the IT system to deliver the vol taxes. On the left hand side you can see what the Government originally planned and on the right hand side you can see what actually happened in practice. It's clear from that that progress was slower than planned and, as we say in the report, as a result of those delays, Revenue Scotland and the Government have been developing contingency plans that they hope, first of all, they hope they won't need to use, but secondly that they believe will be able to deliver the devolved taxes on 1 April if needed. However, if there's nothing negative to report between early November and when your report was published, how can you then say in the report that the delays have increased the risk that the IT system may not be fully functioning by 1 April and that Revenue Scotland won't have the required operational expertise in place by then? Either that statement is wrong or the statement that there is nothing negative to report is wrong? What I need to make clear is that the audit work was completed in early November. I don't have evidence that I can bring to this committee in the way that I normally would about what's happened since then. You may well want to explore that with your next panel of witnesses, but my evidence tells you that as at the beginning of November, those delays had materialised and they led to an increased risk. Between that point in November and the publication of your report, none of the agencies or organisations concerned came back to you with further evidence to say that events have now changed and everything is now back in track, fully functioning. They have accepted, after comment, the details of your report. They accept that the report is factually accurate as at the date that we sent it to them for clearance. Can I follow that line of questions for a second? Between the first week in November and the Audit Scotland report on 11 December, we had Eleanor Emberson and John King at the Finance Committee. Eleanor Emberson has a small number of amber indicators out of two dozen, but we've been working hard to turn them to green. We've got nothing at red. Ross is confident that we have everything in place that will support effective delivery, and John King has already been delivered and tested, and it's available to Revenue Scotland IT team to use. That was to the Finance Committee, and I know that they'll be asking questions later today. That's a very confident delivery to the Finance Committee, given that Auditor General, if I may say, your report is telling us of an increased risk. Between, say, the 7th of November and 11 December, between those two dates, we have confidence and assurance to this Parliament's Finance Committee that everything is wonderful. What happened, given what the convener has been asking, is that those organisations agreed to your report, which is highly critical and is very concerning to both Finance and Audit Committees in this Parliament. Why was such a glorified, confident pitch given to the Finance Committee, everything was in order, and then we received it today? I think that all I can do, Mrs Scanlon, is to repeat that the conclusions in my report are based on the audit work that we carried out up until early November. I'm confident that the conclusions that I've drawn in it about the increased risks to successful delivery of the new taxes reflect all of the evidence that was available to us. I think that, for development since then, you will need to ask colleagues from the Scottish Government and Revenue Scotland about the work that they're doing and the basis for their confidence from there. If I may say, I have absolutely no doubt and I do not lack confidence in any way of the accuracy of the Audit Scotland report. As a member of the committee charged with the duties that we are charged with, I have to say that I was shocked to read your report two weeks after the confident delivery that everything was in order and you are saying increased risks. I think that that is perhaps for the next panel. Can I perhaps go back to the report that you gave us in 2012 managing ICT contracts, which looked at ROS. You did highlight August 2012. You highlighted—it's an old report, but it's page 9—that the Scottish Government provided limited support. You were quite critical that the Scottish Government had failed to support the organisations, including ROS. It's quite shocking that, again, today we have your report, 11 December 2014, and I quote from paragraph 30. It explored the option to develop the IT system fully within the Scottish Government. That was rejected at the end of April 2014, as the Scottish Government didn't have the staff or expertise available to develop the system within the timescales due to other commitments. What was the Scottish Government doing that was more important than preparing to collect taxes, more devolved taxes in Scotland? What was more important? Can you tell us what those other commitments were? That was flagged up two years earlier. We are currently carrying out work that will be reported in 2015 following up the report that you are referring to there. Looking at the overall progress that the Government is making with its management of large IT systems, the committee will be aware that I have brought a couple of other reports to the committee recently looking at the challenges that the Government is still facing in that area, the agricultural futures programme and NHS 24. It's fair to say that the Government as a whole, not just in Scotland but much more widely, does face problems in having the appropriate skills and resources to develop these big systems. What we have seen here in relation to the new tax powers has been a detailed process of making the decision about whether the best course of action is to develop it in-house or to go externally. That decision was taken later than originally planned, but at this stage we have no concerns that the decision to go externally wasn't the right one to make sure that the system could be in place quickly given the other competing demands that are around. The committee will be aware that, for example, the agricultural futures system is also one that brings with it a great deal of financial risk, and there is always a prioritising process going on to decide what is the best approach given the competing demands that exist. I am sorry to be a little bit boring and I appreciate that. I am now becoming one of the older members of this committee, so I have a bit of a bulky filing system in my office. I have something here from Paul Gray, and it was in response to your managing ICT contracts. It is dated October 2012. It is setting up delivery of public services, an organisation called SWAN, and an action plan in central government ICT workforce to be available for consultation across the sector, gateway reviews every six months. Here we are, the Scottish Wide Area Network ICT programme. We were told on this committee that we would never again—the smaller organisations such as ROS, Disclosure Scotland, Crown Office Procurator—been left to languish on their own. We were told that the Government would take charge of that. That was two years ago, and all those wonderful systems and help and advice were all going to be available. Naively, we actually took all that at face value. More than two years later, we were sitting back saying that the Government did not have time to sort it out, despite everything that we were told. What has happened to this big Government advisory service to help organisations such as ROS? I think that the decision that was taken in January of this year to give Revenue Scotland a more central role in collecting the two new taxes that are due next year was very much a reflection and a recognition of the fact that the resources that were available in registers of Scotland and in SEPA were limited and that it might be difficult for them to do what was required. That decision to give Revenue Scotland a more central role reflected those challenges. Was then the decision to be made about whether the IT system should be developed in-house or procured externally? Mark, what might you say more about the way in which that decision was taken? If I could just pick up on the starting point for the decision to have a single IT system largely based on Revenue Scotland, that was a move from initial thinking that was to have a number of systems, one in SEPA, one in registers of Scotland, instead to bring those systems together. Although the assessment of capacity was something that was taken into account, the main driver for that, as we understand, was a look to the future and a look to the fact that, in the event that there may be further taxis that are devolved to Scotland—and the Smith commission, of course, has proposed that having a single centralised IT system that would be able to accommodate those taxes in the future was the way to go. That was the core of that decision and we certainly don't have any concerns with the nature of that decision. It was subsequent to that in terms of the timing to get from that decision. The initial plan was, can we build that system ourselves? I think we can. Then an understanding that, given the range of IT activity that was on in the Government, I needed to go outside to procure that resource. The issue that we raised in the report is in relation to the time between understanding that there wasn't sufficient capacity in-house to the procurement decision being taken and the procurement arrangements being put in place, and that that has squeezed the time available for development of the system. I think that, in comparison to, as the minister general said, we will have a more rounded look at IT and how Government is managing IT in the new year. In relation to this particular project, I think that the issue that we flag in the report in relation to this particular project is about that time delay between understanding the need to get that external resource in and the decision to get the external resource in, and that has squeezed the time available. I have just got one more question, but I would like to say that twice you have highlighted that Registers of Scotland have asked the Government for help. October 2012, they chapped on the door, and there was nothing limited support. Again, they go and chap on the door. Please can you help us? We have been given an assurance that all the expertise and support is there. They chap on the door, and this time the Government says, sorry, but we have got other commitments. My final question, convener, is, why has the cost of setting up Revenue Scotland risen from £16,000 to £21,000? I will ask Gordon to talk you through the figures to keep us straight. The explanations in paragraph 37 and 38 of the report. There was an initial amount of £16.7 million over the seven years, but as you can see through the story there in the report, what happened was that over time there were reassessments of what would be involved in the job of collecting the taxes and supporting the new tax administration over time. That gave rise to an increase. If we then move to 38, there is some detail in there about how amounts have increased over the period. The bottom line, if you like, is the rise set-up cost totaling £4.3 million as opposed to the £3.2 million that we expected over those two years, but the set-up costs are now over three years. There is explanation in there as to why the amounts have gone up. Right. Again, I was boringly sitting in the Parliament to hear our finance secretary say that the operational costs doing it through the Scottish Government will be at least 25 per cent lower than there would be had I asked HMRC to deliver the status quo. Through Revenue Scotland, we will serve the needs of the people of Scotland at a lower cost than the UK set-up. The costs have now risen 16.7 per cent to 21 per cent. Instead of 25 per cent less, it is almost just about a million less than the 22 per cent from HMRC. Why did the finance secretary say that the set-up costs would be 25 per cent less than HMRC? We are now less than a million. By the time that it is set-up, we are actually very close to what HMRC is. I cannot imagine that he would wish to mislead the Parliament, so why was this commitment given and it has changed so much? Our understanding is that the finance secretary statement was based on the original estimates provided by both the Scottish Government and HMRC for administering the devolved taxes. That is a 22 million, but he was going to do it cheaper, 25 per cent cheaper. At that point, I think that both the Scottish Government and HMRC produced estimates of what the costs would be for which the Scottish Government costs were lower. We have now seen the increase that you have highlighted in the Scottish Government's costs. What we do not know, of course, is what would have happened to HMRC's costs over the same period. I am not in a position to comment further on whether there is still a difference between them. The Scottish Government is realistic in its estimate of 25 per cent less than HMRC. It is now 5 per cent less than HMRC. It is very clear that the changes have come from the Government's experience of going through the process of establishing a tax authority for the first time. We simply do not know what the counterfactual would have been had HMRC been asked to do the work. I am afraid. Can I just say to members that we might have to squeeze their contributions because the next panel of witnesses has to be at the finance committee for 11.30, so we will need to work within those times. It seems to me that, in terms of what has been said about the report, it has been overtaken by events to a certain extent. There is quite a lot of good stuff in it. I see it as a fairly positive report. The two issues are staffing and IT. There are perhaps on-going difficulties that we will have with the audit function in terms of the rate of income tax that we have already, as a committee, been talking about over a period of months due to the fact that it is not Audit Scotland who are the main functionary here, but, if I can say, heading back to page 13, Exhibit 3, there is something in terms of the fact that we have heard from the First Minister in an answer to Mr Rennie last week and what we have heard so far. Looking at this very helpful graph here, I think that it is quite illuminating that between the January and April period whereby the decision initially had been to keep it in house before realising, for whatever reason, it was actually better to go external. That has been made. The revision and the plans appear to be moving forward at the point, obviously, that you have taken in your report. You have some concerns, which I think, in terms of what has been said recently, are allaying these concerns, but it is heartening to see that we have not gone down a situation in perhaps some of the other IT projects, particularly some of the major ones that have gone way over budget, where they have plowed on regardlessly at the beginning just to realise later on what the cost implications have subsequently occurred. There is something heartening here about the fact that the revised plan would appear to be more or less on track. Every IT system, as we know, has a risk somewhere along the lines. I am actually very heartened by a lot of what is in here, because it is identified and it is taking forward. Given the fact that we are looking retrospectively, we have the issues of staff, which I think is a very clear answer from the First Minister on Thursday on that. You say that there is a risk, how perhaps taking off the report at the moment, at this moment in time, from what you have heard in the past few weeks and the various answers, would you say that the risk is the same as perhaps it was at the point where you were writing the report, or do you see a lightning of that load? The First Minister was fairly clear that, although there are contingencies, there is no intention of using it at this time because of the work that has been done. I do not think that I can answer that question. We stake our reputation on credible work that is grounded in the audit evidence that we have, and that is what you have in the report in front of you. That report is very clear that some things have been achieved well, including establishing the overall framework for taxes, the bills that have been passed, the progress that is being made on other areas. Equally, at the time, we concluded the audit work and I made my audit judgment. I felt that there was a risk that both the staffing and the IT might not be fully in place at the end of March. We hear, as you have done, that there are significant amounts of work going on to make sure that everything is in place as required, but without auditing that, I do not feel that I can take my conclusions further than I have done at the moment. We all want this to work and we very much recognise the amount of commitment and investment that both the Scottish Government and Revenue Scotland are making towards that, but I need to reserve my position until I have got audit evidence to work with, I think. At the time, if we are talking in terms of the point that it was written, I am certainly not having a go at you over that, obviously. At the point that it was written, there were concerns. I think that a lot of us are feeling a bit happier simply because of what has been heard after that. To me, the first thing in the Exhibit 3 that was really enlightening was the decision relatively quickly to say that this is either beyond us for whatever reason and to move it to an external source, which I think is commendable and good that it has been highlighted there. As we have said, that looks to us like a sound decision. We also say in the report that Revenue Scotland now has detailed plans in place. I think that our finding alongside that is that had the scale of the programme been recognised and staffed for earlier, some of those delays may not have happened. However, in terms of the response that is being made at this stage, it is clear that there is a significant commitment and investment being made. Since we are pressed for time, I will leave it there just now. Tavish Scott and then Colin Beattie. Can I just deal with the dates because they really matter in this particular report? Auditor General said that the Audit Scotland report was completed in early November. Can you give us a date on that, when the actual date? I will ask Mark to talk you through the final stages. This was fast-moving all the way through, as you can imagine. Mark? I think that it is worth saying to start off with it that because of the nature of the fast moving environment, we did everything we could to try and get an understanding of the position up to when we needed to go to press effectively. The effective date for that was in terms of field work when we were gathering evidence and looking at that evidence. I think that at the end of October was when we had final pieces of evidence that were put in front of us. We then had a bit of reflection of that and a bit of discussion about what some of that meant, and that is where we came up with the date of early October. In terms of our field work, bits of evidence up to the end of October and then some further discussion in the early days of November. Then when was the final report cleared by the Government and by Revenue Scotland in terms of factual accuracy? What date was that cleared on? We must have emails that say exactly when that was cleared. Broadly, and then we can get back to you on the specifics. Broadly, that would be about a week into November in broad sense in the first half of November, but rather than me trying to have a stab of colleagues do not know at the exact date if we can get back to you on a specific date. First half of November, and then it took from the middle of November to the 11th of December before publication. In that period, nothing happened. The report was being sent to the printers and all the rest of it. Goddard Jen, you said in your opening remarks that staff were not in place early enough. Did you discover why not? I think that the team will want to add to what I am about to say. I think that there are two dimensions to that. In paragraph 14, I make the comment that Revenue Scotland did not, early enough, have in place the staff needed to manage a programme of this scale and complexity. I think that the staffing required in the tax administration programme element of thinking through the whole way in which this would work was slower in coming together than with hindsight was needed. Beyond that, I think that there is the evidence that we have seen coming through both in the findings that we make about why costs have risen and in the evidence given to the finance committee about the growing understanding of what is involved in putting together a new tax administration authority of this scale for the first time where it has not been in place before. There is an element of underestimating the scale of it early on and then an unavoidable element of simply learning from experience as the process goes on. Did the Government bring in external expertise from people who actually have run tax systems from other parts of the UK or anywhere else in the world? I think that there has been close working through the tax administration programme board with a range of people around Scotland and further afield. I will ask Mark and Gordon to talk you through how that has worked in detail to avoid it. If they have brought in expertise from wherever else to help them to do this work. I think that it is important to distinguish between putting the project team together and putting the operational team in place. The project team is very much focused on the project of getting the IT systems and the organisation established and that the operational team then administers taxes. In terms of the operational team, the approach that the Scottish Government has taken is to identify its own staff but to look to draw on a pool of expertise to bring those staff into place and to prioritise those technical posts. At the time of writing the report, you will see that we recognise the progress that we have made. I think that there are 10 positions that are filled at that point. What was that expertise that you found? What expertise did they bring in that you found? It is probably worth noting that the Tax Administration programme board, which is overseeing the project to implement the devolved taxes, has representation from HMRC, who is sitting on the board. There were expertise coming in through those governance arrangements. We do not have details to hand on the staff who are employed as part of the programme team and what their background is, but our understanding is that some of those staff have a background in tax administration. You can do a bit more than our understanding is. I do not mean to be pushy or anything, but it is just really important to understand whether the expertise was brought in or whether civil servants moved from a completely different department running ag or something, suddenly to set up a tax system. Is that not what I mean? I am trying to discover that you did not find that. It was rather better than that, is what I am driving at, but I would like to know for sure that that was not the case. I think that we were content in terms of the oversight of the project and the arrangements, as Rebecca has talked about, that the right people were involved in that and that was an understanding of what the job was to answer that question. I think that I am reassured by that. You also said to the general that the IT system may not be fully operational by go-date in April. Your Exhibit 3 shows that we are running two months behind schedule, according to the time plan. I guess that is the cause of your concern about the risk. It is. As you say, the decision to purchase rather than to develop the system was taken later and then the procurement itself took longer. The system is now in place, is being developed and tested, but, as I say in paragraph 32 of the report, those delays reduce the time that is available to implement the full IT system and make sure that all of the pieces act together, that it is compatible with the Government's accounting system so that the money can be transferred into the Government's accounts smoothly to do user development and training and testing, and then to make sure that all of the various bits of the process work together as planned. To be clearer, I am not saying that there is not time for that to happen. I am saying that the time for it to happen has been reduced and that that assurance is not yet in place. Okay, that is fine. Thank you very much. I share some of the confusion that has been expressed in terms of this report. Overall, the report seems to indicate a well-managed project that, overall, is progressing well. Two areas have been highlighted in terms of human resources and IT. When you were carrying out the audit, did you look at the robustness of the contingency plans behind it? When we were carrying out the audit work, the contingency plans were still being developed, so it was not possible to look at them in detail. We do know that they focus on making sure that the taxes can be collected come 1 April, but that there may be more paperwork, more manual processing required to do that than was originally planned. At the time that we completed the audit work, those contingency plans were not developed enough to be audited. Looking at the IT system, there are a couple of things that jump out. On paragraph 36 on page 15, comments made about the Government's accounting system to record an account for the devolved taxes. You say that this work has not been effective by the delays in developing the central tax collection IT system. I am just a layman, but that looks to me as if the core system there for recording the taxation and so forth is already there so that it can record an account for it. That is in place. The core C system has been there for a number of years now. It is a long-standing and stable system. The challenge is to make sure that the IT system that will be processing the payments, particularly for the London building transaction tax, can talk smoothly to the C system, the financial system, and that the appropriate controls are in place given the importance of those transactions. Is there a piece of the IT system that looks like it may be running behind? No, that is the interface with Cs, which has not yet been tested. The implementation of the whole system for administering the taxes is the system where the decision was taken late, the procurement was late and the testing is still under way to make sure that it can do what is required to come the 1st of April. Clearly, you have highlighted the decision to move to a central IT system and you have said that you agreed with that decision in terms of the wisdom of doing so. What sort of delay did that actually contribute? I think that you are probably talking about seven or eight weeks delay in total to the IT system. What proportion of that was caused by the decision to move to a different outcome? We have tried to lay it out as clearly as we can in Exhibit 3. Gordon, do you want to talk, Mr Beattie, through the timeline in a bit more detail? If it would help. In January, it is quite a substantial and important decision there at that point that the Revenue Scotland will take on more of the responsibility in the original that we had planned. We say in the report that it is important to realise that, at that point in the decision, that account was taken of preliminary work that both happened in SEPA and Regislo of Scotland. That was that point. Through there to April was when the IT supplier had to be identified. I think that it is over that period if this is about the amount of time that the Government now has to deliver the system, Revenue Scotland, put the system in place. Around about that time, probably with hindsight, more could have been done over that period. What was happening within the Scottish Government was that they were looking at the options for how that system might be delivered. That then tied in with the conversation that we had earlier this morning about the decision that they would externalise that rather than use in-house provision. There were good reasons why they did not decide to go down the in-house route. Having decided to go down that road, they then put in place, as we see in this Exhibit 3, the process that they would go around seeking an external supplier. If you are asking where the delays were, I think that there was a delay between the decision in January to go ahead with a revised system involving more work for Revenue Scotland and the decision ultimately to get an external supplier in. That was over quite a few periods or quite a few months. You are saying really between January and April when they were identifying an external supplier? I think that the decision was made there about how that was going to be implemented. As we say in this Exhibit 3, the option to develop the system, the in-house system, was rejected at the end of April. There was that period between January and April when there were discussions on going about how best to deliver. It took three months to decide which way to go. That is my understanding. That is what our report says. Does that seem unreasonable? It is difficult to know. We can only go in the base of the evidence and we have available. Presumably there were discussions on going. We have certainly seen through the paperwork. That is the evidence base that we have of the various boards and teams within Scottish Government Revenue Scotland looking at the options over that period. Big decisions to be made. I think that you would have to speak to the panel afterwards about what was actually happening in that period. I have to say to a layman who has been involved in IT systems, taking the decision over three months on that does not seem too out of order. On page 12, paragraph 23, we are talking about jobs. We are talking about 40 posts in total. You say that phase 2, which is 20 posts, was on schedule as per the original estimate. Is that correct? For phase 2, we are saying that the confirmation of job descriptions and grades happened a little later than planned. Originally September was completed in mid-October and the staff would used to be imposed by February of next year. Clearly, we do not know whether they will be imposed by that date or not. But there was no reason to think that they would not be at that point, otherwise you would not have said as originally estimated. Which is the estimate, but as I say, we are working with the audit evidence that is available to us at that point. We have not drawn a conclusion about it other than to know that the confirmation of job descriptions was a bit later than originally planned. But there was no indications at that point that these 20 posts were necessarily going to be outside the estimate given? No indication that they would be outside but also no confirmation that they would be inside, given that the concerns there can be in recruiting two specialist posts of this nature. I think that all I can do, Mr Beattie, is refer you to the evidence that we have used in the report. It sounds a bit like damned if you do, damned if you don't. I think that one of the values that we can provide to the Parliament is providing assurance about the process of these big and complex programmes and highlighting where the risks remain. That is the remaining risk that needs to be managed, that is all we are saying. Clearly, on the staffing side, the First Minister, last Thursday there gave a clear response on the posts and where recruitment was on it, and there seems to be every reassurance that that is going to be on schedule. When are you going to be looking at all this again? We keep an end of review routinely as part of our audit off Scottish Government, and we will keep in touch with colleagues in Government and Revenue Scotland responsible for it. We are not planning to keep going in and checking the progress that they are making when we all hope that the focus will be on getting the IT system up and running and people in place. We are reassured by the commitment that is evident to taking the plans that are now in place and delivering them effectively for the 1st of April. What we are doing at this stage is providing evidence to the Parliament about the progress that has been made. Again, just a small point, on page 16, paragraph 41, you refer to given Revenue Scotland's difficulties in recruiting to their operational team, which is slightly different from saying that they were delayed in recruiting. You are saying that they have difficulties in recruiting. Where does that come from? I will ask Gordon and Mark to talk you through the background to that, given the sensitivity of it. I think that what we are trying to say there, Mr Beathie, is looking at the track record that we had so far. There were delays in coming to decision about the actual number of staff. I think that there are good reasons for that. I do not want to understate that. I think that there is an important thing job to do to understand with the gift of, if you like, a better understanding of what is needed in terms of staffing that a decision has made. All that we are saying in the report is based on the evidence that we have available to us that some of those timescales have slipped. I think that we said a few times this morning our concern. The risks that we flag are to do with the period of time between when these important decisions are made and then when actions are taken and the time at which the taxes are due to start and be collected from 1 April. That is why we are coming from there. What we are saying in terms of your specific point about difficulties, I think that it is about the extent to which staff have actually been brought through the door, in accordance with those revised timescales. I think that it is reasonable for us in a report that reflects on the risks that are available, the risks that we see at that point of time that we use language like this in the report. Again, on page 25, paragraph 69, there is reference to work between yourself and NAO. You are talking about here reporting annually on this assurance work. There is no indication given here of cost? In other words, your cost on top of NAO. We have given evidence to the committee on this previously. The real challenge with the Scottish rate of income tax and potentially with further devolved taxes under the Smith commission is that those taxes will continue to be collected by HMRC and assigned to the Scottish Parliament. HMRC is a UK-wide body that under statute is audited by the NAO and will continue to be so. There is no question about that. They already do that very effectively and report to the UK Parliament about it. The Scottish taxes that are collected on behalf of the Scottish Parliament by HMRC will only be a small part of the audit responsibilities of NAO because there are a relatively small amount of the overall tax that HMRC collects. We are working on the basis that in order to give this Parliament the assurance that it needs about the taxes collected and the resource available to the Parliament for its own purposes, we will carry out some work to review the work that is planned by the NAO, to review the findings of that work and to report to the Parliament if we think that it is appropriate to highlight any issues that are significant in the context of the Scottish budget but insignificant in the context of HMRC's tax collection overall. At this stage, we are not expecting that to have significant additional costs but we have flagged previously in our budget submissions that at this stage we are making no provision for new responsibilities that we may take on as a result of either the Scottish rate of income tax or more significantly the proposals that are coming out of the Smith commission. As those developed, we may well need to do that as other public bodies will as well. As well, the only good news to note on costs is that the overall cost of implementing the SRIT is coming in below a budget, £35 million to £40 million instead of £45 million. Absolutely. We recognise in the report that the Scottish Government is working very closely with HMRC to bring that about. I thank you, convener. I have to go in about five minutes to another committee on a constituency issue. A couple of quick points if I may pick up. First of all, could I pick up with the issue of risk? I understand from running a few small projects in my time that there is a risk and there always is a risk. Therefore, can I just reflect with you in order to general that whether or not the risk is 50-50 that something will go wrong or half of 1 per cent that something will go wrong? You would still describe that as a risk. There is a risk in the other sense that the rest of the world will believe that the world is about to fall down, but actually the risk is minute, but you would still describe it as a risk. You are absolutely right. Any project of this scale would bring risks with it, and we would try hard to recognise that in the report. What we are saying in this report, and after careful consideration, is that because of the delays that have been experienced against the Scottish Government's own plans, that risk is increased from where it previously would have been. That is not to say that it cannot be recovered. We are very aware of the scale of effort that is going on to make sure that the arrangements are in place as they need to be on 1 April, but the risk is increased from the state of play earlier in the process because of the delays that have been experienced. Could I then put that in the context of what I would describe from previous experiences as the critical path, which I am sure is a familiar term to you? I am looking again at page 14 on Exhibit 3, but I am thinking that if the Scottish Government's plans had put everything two months later, you would have had nothing to say other than that it was on the plan. I am not suggesting that they should have put things two months later, but I am reflecting that if they could still have got to the end point, in other words the critical path would have allowed those points to be two months later, we would not be here talking about this because actually it would appear that everything was on target. So my question then becomes, Auditor General, where is the critical path in all this, please? Are those milestones now in the right place, or are we actually passing them? It's a very good question, and we've tried to answer it in the way we've worded the report, which has taken a good deal of care, as you can imagine. We say that we think that the detailed plans that are now in place could have been developed earlier, and had they been developed earlier, then there would have been a lower risk of these milestones being missed. That's not to say that they wouldn't have been, or indeed that the plans may not have recognised that the critical path came later. I think that the central point is that that detailed planning didn't happen early enough, and therefore we are now in a position where the investment that's needed to hit the end point, and it is a fixed and important end point on the 1st of April, is more significant than it otherwise might have been. I think that you have said yourself, Auditor General, and the convener, also in regard of that it's a very large and complex issue that we shouldn't pretend. Otherwise, it's also a very moving feast with the Smith commission, and Mr Taylor has already mentioned that with extra taxes coming in. In your opening statement, you said that you were auditing this while inflammation was still taking place. Is that a normal process for Audit Scotland while implementation and changes—obviously, Smith commission was just coming forward—and how difficult is that to audit when it is a moving feast? Things are changing all the time and new legislation is coming forward. That actually is something that we do very frequently. My strong view is that for large and complex projects or programmes like that, it's entirely appropriate for us to use our powers to provide assurance to the Parliament about progress rather than waiting for the end point and then reporting on what went wrong, if that's the case. It clearly doesn't always happen that way. We've reported over the last few years on things like the Commonwealth Games at key points in their development on major transport infrastructure such as the Second Fourth Crossing, a number of other things that are large projects, lots of money involved and significant implications for public services. I hold to the belief that that's an important part of our role on behalf of Parliament. You're right, though. It does bring additional challenges with it, not least because the fact that we're auditing tends to change things. People recognise that we're doing the work that we are. Very often, we will either highlight things that hadn't been noticed or provide extra impetus to people to say that we need more resource to get this delivered on time. We work very hard to mitigate those risks and to maintain good engagement with the people that we're auditing. It is more challenging and I still feel that it's an important part of our role on behalf of Parliament. The point that I was trying to get at is just how accurate it is. You mentioned the Commonwealth Games. They actually came in very much below budget. We actually saved money on that particular one. The point that I'm trying to make is how accurate is this auditing while it's an on-going feast when we have the evidence from the Commonwealth Games that we actually did save money and things worked absolutely fantastically during the Commonwealth Games? That's a great example of how this auditing can work. The prior reports that we did on the Commonwealth Games both highlighted that progress was in line with the milestones and highlighted a couple of areas, particularly security, where there may be a need for more investment to deliver what was required. We're publishing a final report early in 2015, which will show exactly that, but while I wouldn't say that we always are able to forecast the future with absolute 2020 vision, nobody can. We've got a pretty good track record of saying that this is what's happening entirely satisfactorily. This is what's a real problem and here's where the risks lie and we've tried to do that in a balanced way in this report. Thank you very much. It doesn't necessarily prove my point, but it does say that it is very difficult to be accurate in what a report is. While you have the report and you mentioned the fact final accuracy of the report, which we have before us, you also mentioned the conclusions that I draw from them. It was raised by various members if the parties involved government, etc, had saw the final report and had raised any issues, but that's the final report and the accuracy. The conclusions that you have drawn from them are an entirely different issue. That's very much why I phrased my findings in the report and in discussion with the commission today about the fact that I think that there is an increased risk because of the delays that have been experienced in staffing and IT systems, not in any sense as a red flag or a warning that they won't be in place. I'm reporting to you, my professional judgment, based on the evidence that my colleagues have collected and analysed that that risk is greater and also acknowledge the significant work that's going on to overcome those delays and get to where we all want to be on 1 April next year. I absolutely take on board what you say, but to go back again, you cannot see into the future. Through the report, there are many aspects where you say may happen, not definitely happen. I welcome the report and I think that it's right that you should be highlighting issues that you draw from your conclusions, but they are not necessarily in the final report, as we have here. The point that I'm trying to make is that you mentioned the fact that you're here about the IT system. I think that Mr Taylor said that you can say yes or no. That is probably the right way to go forward in the long term to save money and, obviously, more transparency for not just the Parliament but the people of Scotland as well. I just want to be really clear that there are some areas here where what we're able to conclude is, for example, that there is an increased risk and that there may be implications for cost and performance. Equally, there are a number of points in the report and significant ones where we find that there have already been delays that have led to that increased risk. It's not a speculative report. It's drawing conclusions on the basis of the evidence available to us, which has been agreed to for factual accuracy with colleagues in Government and Revenue Scotland. Yes, factual accuracy but not your conclusions from it, which, obviously, we see the same as the Government that they haven't agreed to the conclusions. Perhaps they will when we can't be asked them for evidence. I must bring you back to the mention that you said maybe—I think that we've got to keep that in mind—maybe. You said it earlier. It's also in the report as well. I'm very happy to confirm that what I've concluded here is that there is an increased risk, which is clearly a future-looking dimension, but my conclusion is based on the delays that have happened in the past. There's an important balance to strike there between the evidence that we're working with and the conclusions that I've drawn. I don't think that we're disagreeing. I think that it's the balance between the two that's important. That's fine, convener. Thank you. Three short questions before I invite the next panel of candidates. Is it possible in public sector contracts to show that you come in under budget by overstating the original estimate? I think it's possible in any contract to do that. I don't want to speculate about any particular circumstances that you may be referring to, convener. Okay. Have you been notified of any intention to use contingency? At this stage, we understand that the contingency plans are being developed, but the revenue Scotland and the Scottish Government hope to make enough progress between now and the end of the year for those not to be required. The third question is a strange comment. Is it page 16, paragraph 41? I just wonder if you could give some clarification. The Scottish Government's current assessment is that while it currently has enough skilled people in place to fulfil its responsibilities, it is dependent on a single member of staff. Does that mean that the absence of one person could have brought the project crashing? This is in relation to the development of the Scottish Rate of Income tax for April 2016, rather than the two new devolved taxes from 1 April 2015. Gordon, do you want to amplify the comment that we make there? I think that it's just an observation that we had. This is obviously a longer-term point, an important point as well, and I think that it is linked to this issue about just having the necessary capacity for the delivery. I think that this part of the report is certainly a longer-term view, but we're very much focusing on the devolved taxes. No, I understand that, but does that mean that the plans for the Scottish Rate of Income tax are dependent on one person? Not quite, but I think that Mark can give you a bit more detail on the background of that. I think that the two points that we make. One is that, based on the workload that there's been at the moment, that's the right capacity to deal with that workload. The two points that we made in the report are that the workload is bound to grow in the future and that needs to be kept under review and also that there's a resilience question that the dependence on that one person who has those skills, the organisation needs to understand if that person is not around how they backfill for that. Okay, thank you. I was intended not to say anything that you raised a question from a business perspective, and the answer that you gave, in general, is that there is a possibility that folk would over-tender and it would be agreed by the Government. No, I'm sorry, if that's the impression that I gave, that wasn't what I intended at all. No, I think that the question was, is it possible to overestimate a tender, overestimate a budget? The way that I interpreted it was that it would be possible to set a budget which has, no, so that's a budget which is more generous. Is that not related to the terming process? That, in effect, would be happening. No, no, no, what can I ask the question? Well, if I could just clarify, because, you know, maybe, I hope I didn't mislead the auditor general, the question I was asking is in indicating potential costs for projects, is it possible to show that projects come in under budget by overstating what the potential costs are? So, it's clear that I'm not talking auditor general about the tender process. And that's how I interpreted the question. And then can I come back in? Again, from a business perspective, is that possible to happen because of the tender process that's involved? If the tender process works properly, then no, the tender process should be the composition which brings a true cost into it. So, in other words, when it comes to public sector contracts, what actually happened is there is a tender made and because of the efficiency of the work carried out, that's where you get the cost savings. In this work, this is clearly a theoretical discussion. Not for me, not in a business, I do it all the time. And I understand that entirely, Mr Pastan, but I can't, what I'm trying to avoid is the implication that I'm talking about any particular project or contract. There's clearly the scope between setting a budget for a big project or a big programme and the final cost coming in room for an awful lot of movement. That if there is true competition for a contract as part of that budget, then that ought to be driving out any overstatement in that part of the budget. And there may be many other things that happen between the initial budget and the final estimate that would also have impact. Okay, thanks very much. Thank you, Mr Gerald. Can I thank you and your team for your contribution? Well, I'll briefly suspend, but we'll only be a short suspension until we get the next panel of witnesses in, because they do need to be away. If I can reconvene the meeting and welcome our next panel of candidates, Eleanor, sorry, with Alice and Stafford, the director of general finance of the Scottish Government, Eleanor Emberson, the head of revenue Scotland, John King, business development director, registers of Scotland and John Kenny, head of operations at SIPA. I believe that Alison Ewing would like to make an opening statement. That's right. Yes, thank you. Good morning, convener and members of the committee. We are pleased to be here to help the committee with its examination of the considerable work done and in training to implement the Scotland Act 2012. Revenue Scotland, obviously established by the Revenue Scotland and Tax Power Act, has an important part to play in the implementation of the 2012 act. In January 2015, it will become a separate body within the Scottish administration. Unlike bodies such as the Scottish Court Service and Registers of Scotland, revenue Scotland will be operationally independent of Scottish ministers and will be directly accountable to the Scottish Parliament. Revenue Scotland will be ready to administer the assessment and collection of the devolved taxes from April 2015 and the subsequent compliance regime. The effective collection of devolved taxes in Scotland relies on the right conditions to be created, so these conditions include a principle-based approach to taxation, where the spirit, as well as the letter of the law, must be upheld by taxpayers and their agents. The Cabinet Secretary set out in June 2012 his approach based upon Adam Smith's four maxims. Those have underpinned all the work to establish the devolved taxes in Scotland. A further condition is obviously the programme of robust legislation, which commands a high degree of consensus. For example, the Revenue Scotland and Tax Power Act received unanimous approval at each stage by the Finance Committee and by the whole of Parliament. The conditions also include active engagement with the appropriate stakeholder communities. In the case of the two devolved taxes, agents of land and buildings transaction taxpayers, landfill site operators and a range of professional bodies, those people continue to participate to inform policy formulation and to guide operational implementation. That means that operational processes will be user-friendly to those who need to use them. At the heart of the activity in Scotland is the Tax Consultation Forum and the Devolved Tax Collaborative, unique to the Scottish approach, accessible, broad-based, issue-specific working groups. Good governance of the processes that administer tax is the final key condition. The Tax Administration programme and Revenue Scotland have been established to deliver these and will. What we are now seeing is the final stages of a journey that began in June 2012, when the Cabinet Secretary announced his decision in Parliament to establish a tax authority for Scotland. To use the words of the Auditor General, there are now well-developed project plans for implementing the devolved taxes. Using these plans, Revenue Scotland has provided online tax calculators so that people can work out the tax due based on the proposed rates and bans. It has launched its website, has developed a core IT system to process tax returns and the associated case management, currently subject to internal testing. It has finalised payment systems and banking arrangements, is currently consulting with users on the drafting of technical guidance for taxpayers for both of the taxes and has a fully staffed programme team to continue its programme delivery and is recruiting staff for its operational delivery as and when they are needed. So there are positive actions being delivered thick and fast. My colleagues and I are well placed to help the committee with your exploration of the opportunities and risks and to set out the robust actions that are in place to manage and mitigate them. All of us and our teams are highly motivated and committed to deliver the effective collection and administration of taxation from 1 April next year. With me are Eleanor Emberson, Head of Revenue Scotland, since October 2012. She is the chair of the Tax Administration programme board and former chief executive of the Scottish Court Service, John King, the business development director and registers of Scotland, and lead four roles on the Tax Administration programme board. John has been with roles for 30 years. John Kenny, Head of National Operations at SEPA and lead four SEPA on the Tax Administration programme board. John has been with SEPA since his inception 18 years ago. Unless you know, I am the director general finance of the Scottish Government. I chair the fiscal responsibility programme board and I am happy to cover the other aspects of the implementation of the Scotland Act that sits outside the scope of Revenue Scotland. Thank you very much for that, Alison. Two questions to start. Very complicated finance systems being set up and one in which we all depend on being done effectively and efficiently. In terms, you have highlighted the range of experience of the people involved, but particularly for the Scottish Government and Revenue Scotland, which would be yourself and Elena. Can you tell me what accounting qualifications you have and what revenue experience you have? I am qualified as a chartered accountant and also recognised as a SEPA accountant, so private and public sector. My qualification includes taxation. That covers that particular span of your question. I do not have an accounting qualification. I have undertaken two of the exams within the ICAS tax professional qualification that they have introduced. I have passed both of those. I have gone out of my way, however, to hire people from HMRC who have expertise in tax. Obviously, I have considerable expertise in running programmes and in running a public body. I do not know whether it is Alison or Elena. Paragraph 30. The delays in the IT system, the option to develop the IT system fully within the Scottish Government, were explored. That was rejected at the end of April 2014, as the Scottish Government did not have the staff or expertise available to develop the system within the timescales due to other commitments. Did the other commitments include preparations for the referendum? I am afraid that I did not explore the range of other commitments that the Scottish Government IT team was facing, but they included things such as the Commonwealth Games and the Ryder Cup. As has already been noted by the Auditor General, at least one other very major IT project is already under way. The point when we took that decision was that it was about taking the lowest risk option. Tell me what the other commitments were that the staff were involved in. I presume that colleagues who line manage the IT team would deal with that. Who would put that department in? Would it be the Scottish Government or Revenue Scotland? Would it be yourself, Alison? The director of digital would be the best person. Perhaps you could find out for me what other commitments they were engaged in and whether that included the referendum. Eleanor, you indicated on 26 November that to Parliament, the committee of the Parliament, there is nothing negative that I need to report, yet we have a number of warnings from Audit Scotland repeated in their press release issued on 11 December 2014 that the delays have increased the risk that the IT system may not be fully functioning by 1 April 2015 and that Revenue Scotland will not have the required operational expertise in place by then. Do you not think that that is a negative? Two things about that. I reported fully to the finance committee that we had a number of areas that were at amber that we were managing back to green. That is a reflection of managing risk because that is what you do in project management. My specific words about nothing negative were in response to a question from Gavin Brown, who noted that my written report to the finance committee had gone in mid-October, as had been agreed. Because of other committee business, they were not seeing me until the end of November. He noted that, as he put it, there has been a slight time gap. Could I tell him if anything material had changed between my written report in mid-October and my appearance at the end of November? I have responded. There has been a lot of progress, but there is nothing negative that I need to report. We are still on track on all areas. The Audit Scotland press release indicates that the IT system may not be fully functioning by 1 April. Which is right? Audit Scotland or your comment that we are still on track on all areas? We are on track on all areas. The Audit Scotland report is wrong. I am not saying that. Sorry, it is either right or wrong. If you are not saying that it is wrong, you are not saying that it is right. You are saying that it is wrong. It is managing programmes and managing projects about managing risk. We are on track because we are managing the risks that Audit Scotland has highlighted. Yes. There is no contradiction in those two statements. There is not. We can say that you are on target, but the system may not be fully functioning by 1 April 2015. Why is there no contradiction in that? The Auditor General has just highlighted that there is a risk, but, as has been discussed in front of the committee, there are always risks. We manage risks. We are confident that we have managed this one. Life has moved on a long way since the Auditor General's staff did their fieldwork. We have an IT system currently in testing. I have seen it. It is being tested internally at the moment. We will bring in external users to test it in January. That is how I can be confident that we are on track. Okay. Did you challenge the statement that the IT system may not be fully functioning by 1 April 2015, when you were given the draft report? I challenged a number of statements in the report. Did you challenge that one? I challenged the perception of risk. Did you tell Audit Scotland that that was wrong because you are still in track? Audit Scotland's response to me, when I discussed all this with them, was that they still saw a risk and they felt that they had to highlight the risk. The fact that I am managing the risk was not... I see it that we are on track. They note that there is a risk. I think that I am managing it. They have to draw their own conclusions from the evidence in front of them. The report also says that there is a risk that Revenue Scotland will not fill all of its operational posts in line with its plans. Is that wrong as well? Again, I think that the risk that Audit Scotland perceived has reduced dramatically. The First Minister gave an update in the chamber last week, but even since then, life has moved on. Audit Scotland was noting that we had recruited 10 of the operational staff. As of today, it is 21. I have eight more in the process of recruitment, three of them with interviews scheduled and five more just not quite at that stage yet. Will you fill all your operational posts in line with your plans? We will have everything, all the operational staff that we need in time for April. Were ministers alerted to the warning that not enough staff were in place? The programme staff. It is important to distinguish between the programme staff who have worked on set-up and the operational staff who will manage live running. In the programme staffing, Audit Scotland has indicated that they have concluded that the staff that they consider were required were not in place. I do not accept the word required. If it were possible to have the time over again, I would seek to have more of the set-up staff in earlier, but I do not believe that it was necessary. I do not think that it would have materially changed where we are right now. Why would you have done it differently if it was not necessary? It would have been helpful. As the Auditor General has pointed out, as you work through a programme like this, you iterate planning. When you start, you have a very high-level plan. Particularly in a programme like this, when you are working alongside legislation, you match the level of detail of the programme planning to the development of the policy in the legislation, so you cannot have completely detailed plans for implementation until you understand exactly what you are going to implement. It would have been unhelpful to have 40 staff in place two years ago. I think that we have the right level of staffing in now. I think that if I could go back and do it again, I might have built the team up about two months faster or so than I actually did, with the benefit of hindsight. At various times, posts were not filled. Did ministers agree that there should be non-recruitment of staff at any time? I did not go to ministers at any point over the recruitment of set-up staff. Costs have risen by £2 million. £1.7 million? Well, nearly £2 million. Is this the end of the rise? Is that the final figure? I believe so. Right, so you will be able to report that that is the end of it. That is those are my current best estimates. Right. Okay, Colin Beattie. I mean, just to be absolutely clear, you are telling us that as far as IT systems are concerned are now on track and that staff recruitment is on track, and that as of the 1 April, we are not going to have any surprises. Well, I am not in control of whether there will be any surprises, but I am confident that we will have a full IT system and the operational staff required to run the organisation. Now, there were three recommendations for revenue Scotland in the summary to the report, and one for the Scottish Government. Have those recommendations been implemented? There are indeed all things that we were doing anyway, but we recognise them as things that need to be done and we are doing them. Contingency planning. Now, or is Scotland the opinion that back in October contingency plans were being developed? Are they now in place to cover key eventualities? Yes, we have a full contingency plan now. We are finalising the last details of elements of it, but we have a full contingency plan now. So we have a backup if there is a problem with the IT system that is unforeseen. As you would expect me to have, yes. In paragraph 41 of the report, references made to difficulties in recruiting operational staff. Have there been any difficulties or has it just been timing? I think you need to understand on operational staff that we deliberately changed our plans around the recruitment. As we looked at it in more detail, we realised that we didn't need people as early as we had originally thought. We haven't so far had any difficulties. It would appear that people want to come and work for us. So compared to the original schedule for taking staff on board, you modified that in the light of experience to reflect the fact that you didn't need the staff at that particular key point. Yes, and indeed to reflect value for money as this committee would expect me to do. The decision to move to a central IT system, references made here in paragraph 30 of a four month delay in making that decision between January and April. Is that an unusually long period in making that decision? That was the period in which we were looking at the in-house option. We had to work it through in a lot of detail with our colleagues in Scottish Government IT. It's not a decision that one takes on the basis of a casual conversation. There needs to be a very full understanding of requirements on both sides. I don't think that it was an unreasonable length of time to spend looking at that option. If Orrith Scotland went in tomorrow and did this report again, do you think that they would come up with the same result? I'd be very surprised if they did. They could, for instance, now have a demo of the IT system and they would be able to meet the operational staff. Things would look materially different to the position in October when a lot of the fieldwork is being done. Can I just ask a question? The contingency plan, if the IT system fails and the Auditor General has not just said that it's a risk, but it's an increased risk in paragraph 1. Could you confirm to me that the contingency plan is manually written pen and paper of between 450 and 600 transactions, for example at the Registers of Scotland, every day? It would involve solicitors sending in manual paper tax returns. That's an option that we're going to offer them anyway, even when the IT system is live. The contingency plan is pen and paper. For solicitors to send in their returns, we, however, would have a way of processing those behind the scenes. There are 450 to 600 transactions a day at Ross. There's something like 40 at SEPA. For everyone who has a transaction, is the contingency plan pen and paper? The contingency plan is for everyone who would be submitting a land and buildings transaction tax return to submit paper. Can I just ask Alison Stafford? Obviously, we're constrained by time this morning, but I have two papers here from your predecessor, Paul Gray, who gave a category assurance to the committee in October 2012 that everything was totally on course for the land, buildings and transactions tax. I have it all written here. What happened between October 2012 and October 2014, and the first week in November when the Auditor General and her staff collected the information about your progress and highlighted to the Parliament that there was an increased risk that Scotland would not be able to collect the taxes on 1 April. What happened? Mr Scanlon, if I can just say, in terms of whether I've had a predecessor, I have actually been in this post as director general since 2010 and been the principal financial adviser to the Government since— He responded to the managing ICT contracts. He was the person in charge at that time. Yes, and so the ICT digital leadership sits with other parts within the Government, so it actually isn't something that comes under my direct responsibility as director general for finance. But you were asking about, obviously, how this programme is going for revenue Scotland. What happened between the category assurance and increased risk? The category assurance of success and the increased risk, that's what I'm asking about. So, as Alarra has already said, there are risks in any project and any programme, and the elements and the actions that are in place now are to manage those risks, to manage them actively between now and the end of April. Two years to manage the risk that was confidently on course for collection, and two years, two months later, auditor general says that there's an increased risk. You're categorically confident, you're ready to collect this tax on course. Two years, two months ago, December 2014, you've got an increased risk. I'm asking what's happened in between. To be fair, I would need to check exactly the record of what Paul was saying at that point in time. Here, I'm happy to pass it on. Okay, and— I need to fold it back, I like to refer to it. That's fine, I understand about your pile of paper. So, in terms of this particular programme of activity, there's obviously been a series of actions that have taken place. That's included having legislation in place. So, a number of the actions in terms of legislation have been running during that timeframe that you've been referring to. So, the Land and Buildings Transaction Tax, Scottish Landfill Tax and the Rev. Scotland and Tax Powers Bill, so all of that legislation has taken place. Is legislation led to the delay? No, it's not led to the delay, it's been an integral part of actually having the right conditions so that Rev. Scotland can specify an actual IT element within the whole programme of delivery to take place. That work on that specification was actually started over a year ago, working with business analysts, and I know Eleanor can say more about this, to actually specify what's required, to have the discussions about whether that's appropriate to be an in-house or an externally supplied activity. The contract having been agreed from a supplier that's off a framework agreement where there is knowledge and experience of working with this supplier that have credibility and a track record with the Scottish Government, that supplier has actually been delivering on time and on budget since that contract has been established. And that's why Eleanor is able to say that, yes, there are risks that have to be managed, but there is confidence in the actions that are being taken, the collaboration that's happening across Revenue Scotland, Registers Scotland and SEPA, and with the suppliers and all the various experts that have been involved in this to actually enable that taxes can be collected from the 1st of April next year. I was a member of this committee, I don't really like being given assurances, which I accept, and then being told of increased risks, but we will move on. The setting up of Revenue Scotland, we will serve the needs of the people of Scotland at a lower cost than the UK according to John Swinney, the finance secretary, and I, you know, well done. So the original cost of setting up Registers Scotland, £22 million, and the finance secretary was bringing it in at a lower price, 25 per cent lower than the UK. It's now less than 5 per cent lower, so what's happened there? Why have the costs increased so much for the setting up of Revenue Scotland? Why did the finance secretary give a commitment, which I understand would have been discussed with yourselves? He's given a commitment of £22 million, 25 per cent less than the UK. It's now less than 5 per cent. What happened there? There are two elements to that. One of which was reported fully to Parliament with the financial memorandum of the Revenue Scotland and Tax Powers Bill. If I can use language of project management, there are changes to scope and there are changes to estimates. So the changes to scope are the bits that were reported fully in the financial memorandum of the Revenue Scotland and Tax Powers Bill a year ago, where Revenue Scotland is now investing in developing one central IT system and we're putting additional resources into compliance for both Revenue Scotland and for SIPA to make sure that we are able to use the legislation that Parliament has given us, which for instance includes taxing illegal dumping and wider compliance powers for Revenue Scotland. Those were deliberate changes to meet the requirements of the taxes now put in place by the Parliament. The remaining £1.7 million is changes in estimates, where my original estimates of set-up costs have not turned out to be as accurate as I would have wished and our costs have gone up. Can I just ask? I appreciate that this must be very embarrassing for you and I appreciate that it must be very embarrassing for the finance secretary who made a promise on the information that he had. It would be 25 per cent lower. Given that we've heard there's an increased risk today that will not be ready to collect these taxes and we may be resorting to quill and ink and all sorts of things, so have you ever considered going back to the Westminster Government to ask if they would delay implementation of these taxes, given the huge problems that you've had over years, to ask if they would perhaps delay in order to help you to get your house in order? We are absolutely on track. There's no need for any delay. We've heard that before, but my final question. You mentioned the cannons of taxation now, being an old economist. I do know about Adam Smith's cannons of taxation. I think I'm right in saying that the Registers of Scotland is a self-financing agency. Is that correct? That's correct. Given that I've lost count of the millions and millions of pounds that's been spent on IT, the last time you were here, it was an increase from £67 million to £113 million, but that was a couple of years ago. One of Adam Smith's cannons of taxation is that if it costs more to collect a tax than the revenue gained from that tax, then that's a tax that you don't collect. The example was the dog licence. Given that it's costing you so much to collect this tax, will you now have to increase the cost of stamp duty to homeowners across Scotland, given the difficulties that you've faced and given the assurances that we've had? If I may say to Caroline Gardner, even her predecessor, Bob Black, brought concerns to us of the long history of IT problems in Ross. Given the problems that you've had, given the huge increase in cost, will home buyers and businesses have to pay more in stamp duty in order that you continue to be self-financing? I'd pass that one over to Eleanor Allison. We're not building the collection system. That's Revenue Scotland. It's building the collection system. We have a role to play in supporting that. It's a very limited role. In terms of IT, we have to deliver an authentication server. That's already there. We've delivered that as part of delivery of four new IT systems, which we have introduced to support the Scottish Parliament's New Land Registration Act. That's our main contribution towards the IT. That helps the IT provider because it's something that they don't have to build. It also offers value for money because there's no duplication of cost. In terms of the more general point, I would have to pass over to Eleanor Allison for that. There are two things, I should say. First of all, registers of Scotland will not be self-financing around the work that it does on tax. It will be paid by Revenue Scotland for the work that it does, and that will be therefore transparent to the Parliament. The second thing is that we are looking at annual operating costs for Revenue Scotland, Rose and Sipa, for the taxes of the order of £3.5 million a year against estimates of £550 million or more of the tax revenue that is likely to be collected. I think that we are a long way from the point where you might have to worry about whether it was efficient to collect them. I've heard that before. Have you revised your estimates of payments to Rose? I have not, in fact, revised my estimates of payment to Rose. I think that you are quite content with the cost of the IT systems and the difficulties that they have had in getting to this place. Rose is not developing the IT system here. Revenue Scotland is developing the IT system itself, with your right and costs. I think that there is some degree of paranoia sometimes within our committees due to periodic discussions over other IT systems that have gone pear-shaped. I would probably suspect that the HMRC, £3 billion, mess up, dwarfs most things. I think that at this minute, having looked at Exhibit 3 and the Auditor General's report and the fact that if you can get from the beginning to the end in the manner that you are talking at this moment in time, you would probably be the most successful IT setup that we have seen in many, many years in public service. I would at least, if that happens, I will be the first to commend you. Going back, I said earlier on that one of the things that had actually impressed me, perhaps not others, but had done with me was, and particularly on having the record of wastage that the HMRC had, particularly with the £3 billion lost, is actually the fact that it identified relatively early on that this was better to be an external project development than one in-house. This is where, obviously, the delays that are identified in this report at this time has come through. Can you tell us just the evaluation process or why you came to the decision that you did, just to give us a clearer idea of the questions that you were asking at that time so that you could make this evaluation? This is the evaluation that led to us deciding to go to the external contract. We worked very fully through our requirements with the Scottish Government IT team, so they understood that we had been doing the very detailed business analysis work to specify requirements really from the summer of 2013 when we were working on the finalisation of the Revenue, Scotland and Tax Powers Bill, working alongside colleagues. We had done a lot of work on that. We then were working with the Scottish Government IT team to make sure that they understood that fully and we understood whether they were in the best position to take that work on. It was, in the end, a mutual decision that it was better for them to take a role supporting us through procurement and supporting us through working with an external contractor than taking that on directly themselves because of the capacity reasons and the other demands on them. The capacity constraint is about making sure that, if anything requires us to scale up effort at any point during the programme, that it is not just about enough people to do the work but enough people to respond to anything that might come up during the course of the work. It was all done for the best of reasons in terms of cost-effectiveness and reducing risk, of course. It takes you into the risk. Better to be risk-aware than risk-averse, the other way or whatever. The other thing in terms of the timeline, obviously from where the auditor general set this report and when it had to be published or whatever, to a certain extent there's been so much in the way of information that's come out recently, such as the First Minister's statement last Thursday that we're kind of looking at a different scenario right now than we are at that point. There's nothing absolutely wrong with the auditor general's report. It was for a time, but we have to be aware that a lot of these risks that have been put down here are actually being dealt with. As you say, even from the First Minister's statement last week, things have moved on quite quickly. Indeed, the position on risk now is considerably different to the point where the auditor general's staff were doing the work. I would say that the risks are considerably lower at this point than they were when that work was being done. I understand the time. I've got a few other things, but I'll leave it there. Tavis Scott and then Gil Paterson. I wonder if I could start by asking the director general when the Government made an appointment in terms of the head of revenue Scotland. Was that an internal board? Or was that an external recruitment exercise? It was a posting into the role. The head of revenue Scotland was brought in on a proportionate basis across the director of financial strategy and the head of revenue Scotland, recognising that there would be a start point and a ramping up of capacity. So it was getting the balance between the people that were needed and also the costs. Was it an external exercise? Was it internal? Is that what you've just described? It was internal, yes. There was no external recruitment to this post. That's right. Is there a reason for that? Is that normal at this level for a very senior job in the Scottish Civil Service? I think it's about recognising that there are different phases when you're creating... I want to know, is that a normal process in terms of a senior job like this in the civil service? In terms of individual posts, they're assessed according to the actual posts at the particular time. So it's on a case-by-case basis. Okay, thank you, that's very helpful. Can I just go back to the convener's question about the evidence that you gave on the 26th of November head of revenue, Ms Emberson, to the Finance Committee in which you said to Gavin Brown, you've already mentioned it, there's been a lot of progress but there's nothing negative that I need to report. You said that at the same time as knowing there was an Audit Scotland report which showed that risk had increased, didn't you? I knew that there was an Audit Scotland report due to come out and I had some expectations of what it might say. Well, you signed it off, you'd factually signed it off. I didn't factually sign off the Auditor General's assessment of risk. I have agreed the facts of dates and numbers on which all of this is based. The Auditor General, as she's already said, reached her own conclusions. Because you don't agree with? I don't share her perception of risk. You don't agree with her? Yeah. Therefore, you felt quite obliged to tell Parliament that there's nothing negative that you needed to report to the Finance Committee on 26 November. I said that there was nothing negative that I needed to report in terms of what had changed between my written report to the Committee in mid-October and what happened at the end of the meeting. You didn't feel obliged to tell the Finance Committee anything else that might be of interest to them at that time in front of a parliamentary committee of this Parliament? They asked me about levels of... They asked me about progress, they asked me about red amber green. I declared that we had a number of areas at amber. That would indicate active management, active risks and active management of risk. I thought I gave them a fair picture of... Will you think of a fair picture saying that there's nothing negative that I need to report? Do you think that's a fair picture? In terms of the question that I was asked, yes. My, my. Can I ask, in that case, when if you don't think risk has increased and you disagree with that conclusion, how are we meant to make an assessment of what you're saying today? We have audits called in front of us every, every couple of weeks and they don't say these things lightly and you're a senior civil servant basically saying they're wrong. Why should we believe you? Well, you can believe me on staffing because I'm telling you now the numbers of staff that we have in place. And you can believe me on IT because I tell you that I have a system in testing, I have seen it, I've seen a demo of it, we will have external people coming in to test it in January. You will be able to see whether all of that remains on track. So there's nothing to worry about and we can be perfectly clear that it'll all be perfect on the 1st of April. You can be sure that we're on track to deliver for the 1st of April and you can be sure that I am on top of working out if there are any problems and any actions I need to take to deal with it. That's just assertion in terms of today, isn't it? Because the auditor general is saying something different. Who am I meant to believe? Well, I'm asking you to believe me, but I... I have no questions to add to this. Nothing. Okay. Gil Paterson, Sander White. Thanks for your list. Is this the slate? A different direction looking at the auditor general's report and any report she talks about the Scottish and UK ministers are still to agree the adjustments to the block grant for the development of taxes. And then, because I'm to further say that the Scottish Government has assumed that the reduction of the block grant in 2015-16 will allow it to meet the funding requirements of its budget and potentially establish the first payment into the cash reserves. And I wondered if you had any information for the committee if this assumption by the Government wasn't met, if there's implications in what they may well be. So just in terms of the block grant adjustment, I can say that there has been some progress on that. We now can see that, obviously, with the Chancellor making his statement in the autumn statement at the beginning of December about changing the approach by the UK Government, excuse me, to the Scottish, to the the stamp duty land tax set by the UK Government, that that has obviously been a delaying factor in being able to actually agree the block grant adjustment because the data that would be used as a basis for agreeing a block grant adjustment will be sensitive to whatever is the actual forecast of tax from a UK perspective in 2015-16. So I can report that there has been some active progress now since the autumn statement. Officials have followed up and there have been discussions between UK and Scottish ministers. And I would expect there to be an agreement in place by the time that further material has to come forward to Parliament on the budget in January. So it will be at that point that both Scottish ministers and the Parliament will be able to assess the extent to which the block grant adjustment and the assumptions that were being made when we had to set out the draft budget in October this year actually can be can be delivered or adjusted as appropriately. Does that make it cash neutral in a sense that what you've described by using this adjustment or is there a potential for the Scottish Government to lose revenue in this deal? The principles obviously were set out at the time of the draft budget actually looking for that neutral position and also including something that would go into the cash reserve. It will have to be the final analysis of the block grant adjustment that will determine what that actually means in practice. But I think the feedback we are getting is that we're expecting there to be the adjustment for 2015-16 agreed in time for us to be able to deal with the necessary and normal budgetary processes in Parliament in the turn of the year. Okay, thanks so much. That's good, really. Okay, Sandra White. Good morning, ladies and gentlemen. Can we establish what one thing I think everyone has agreed this, that this is a large and complex issue? It's been a moving feast as I said previously and it's a Smith commission and extra powers, et cetera. The implementation of this report was taking place during that process. So that's established, I believe. So I just want to establish that and I want to go forward with what the report has said regarding, I think, Ms Emerson, you mentioned the fact that the figures in the report, the factual accuracy, yes, you'd agreed with that, you'd saw that. It's conclusions which have been come about from the Auditor General which you would say that you wouldn't necessarily, I don't know what you use a word to agree with, but the perception that you have is slightly different. So can I take you through some of the Auditor General's report here? The first one that says there is a risk that the Revenue Scotland will not fill all of its original posts in line with its plans, although it does mention in phase 2, staffing posts by the end of February 2015 as originally estimated. Can you tell the committee will these posts be filled in time for 2015? We will have all the people that we need for the 1st of April in order to collect the taxes. As I mentioned earlier, we are currently have filled 21 of 40 operational posts. We have eight more that are in a recruitment process, three with interviews scheduled, five just slightly earlier in the process than that. That will leave us 11 that we are advertising in the new year. I have no reason to believe that we won't have all the people we need. It might be important to mention that although we have a plan to bring people in by in February, there has already been discussion in front of the committee of critical paths. That second phase of 20 posts, or indeed the last 11, I have mentioned that we have still to recruit, they are not on the critical path. We don't have to have all 40 in order to go live successfully on the 1st of April. I am minded to pick up on, I think it was yourself that said as well, that two, or it may have been even the Auditor General's report. To recruit 40 staff all at the one time would not be beneficial to that particular issue. It would need to be done in phases. Is that correct? That's correct, yes. We move on now to the second part where the Auditor General's report says that there is a risk that the IT system for collecting the devolved taxes will not be fully implemented. Although, in paragraph 27 it says, the Auditor General's report says that this may have consequences. Doesn't it say, well, this may have consequences? Can I ask if you can say to the committee what the situation is with the IT system? Will this be up and running for 2015? So, as I've already mentioned, the IT system is currently in internal testing and in January we'll move to testing with external people. That's people who will eventually be users of the system. We'll come in to help us with the testing. We then we can have a high degree of confidence once all that testing has been done and we've addressed any issues that arise that we will be ready to go live on 1 April. The other one that I wanted to check was that there has been talk about basically revenue costs and the rising costs and the Auditor General, not the Auditor General, but one of the panel with the Auditor General when asked by Mary Scanlon, I think Mary put it up to £4 million, that was in a three-year period so it was £1.1 million over cost. But we also have the fact that HMRC in paragraph 46 of the Auditor General's report, I think it's page 17, is actually a saving. There's a downward cost of between £5 million and £10 million. The question that I wanted to ask to yourself is this money which is going to be saved as the Auditor General mentions it, would that be assumed into the overall running cost of the project that we're looking at just now? That is a saving. The savings that come from the reduction in cost from HMRC are considerably larger than increased costs for revenue Scotland. They will flow back to the Scottish Government to be allocated to other public services as you would expect. Okay. I just wanted to make that point because it is a substantial saving £10 million compared to £1.1 of the rise. I think that is a positive aspect of it but thank you very much for that. Thank you. Sorry. Was that about the Scottish rate of income tax that bit of it? Right. Rather than, yeah, okay. Nigel Dawn and then Mary Scanlon. I apologise for not being there at the very beginning though. I don't think I missed much but if I am repeating my apologies I'm sure people will point this out. I'd just like to go back. You have made comments about the critical path which I did raise earlier. I'd just like to come back to that. I'm grateful for your comments about the staff not being on the critical path. Am I right in thinking and this is implied, I have to say by Exhibit 2 on page 9, that on the 1st of April you will not suddenly find that everybody wants to send you a tax return. That actually what will happen is those who happen to have bought or sold properties whoever it is responsible for doing this will relate to, will send you something relating to that particular transaction and the ones that have happened on that day and so there will be a relatively steady stream of transactions that you have to deal with rather than a pile of them suddenly arriving like the Christmas post. We know from our colleagues and registers of Scotland who have been in this business for many years that there are seasonal fluctuations in the property market. We are expecting somewhere between 450 and 600 tax returns per working day on average during the year but it will vary. We are planning for go live on the possibility that it might be significantly higher just so that we are ready for any possible spike on the 1st of April. We think there could be up to 800 on the first day just due to a combination of factors in the transition between the taxes and the help to buy scheme. Barton, this really is my point. If this is a relatively steady stream albeit there are bound to be fluctuations if it so happens that on the 1st of April this doesn't quite work you can process those manually and then get it running on the 2nd or the 3rd or whatever. In other words that the question really is is this a soft landing as I think it is or is there some genuinely critical date at which frankly it's got to work or we are in trouble. We absolutely have to have a means of collecting the tax and processing the tax returns from the 1st of April. If it had to be a paper based system for a period of time we could certainly make that work and still deliver a good service and still make sure the money was in the door but that's not what we're planning to do. Right, in which case glad to hear that. Can I then come back to the idea of critical paths which are always a bit of a problem when you're having to test stuff because that's part of the process and it is because you never quite get it right it does need to be tweaked but you never know how long that's going to take. How meaningful therefore is some kind of critical path analysis which I'm sure you've got in this case and how where do you derive your confidence from? A whole range of factors I mean the fact that we measure, monitor progress and assess risks regularly, weekly as we have been doing I draw confidence from the fact that if anything were to come up that I haven't foreseen that we're not planning for that we do have a contingency plan I draw confidence from the fact that I've actually seen the IT system which of course is an advantage I have over everyone else in this discussion perhaps so and I draw confidence from the fact that I know where we stand on staff recruitment I work with the staff I know where we are Yeah, okay But it's a computer project It's an IT project It's an IT project, yes until we have completed full testing you're right but that would be the case no matter how much time we had or no matter where we were you can't know until the very end when you've done all the testing and you're sure that the system is ready but we have no reason to believe other than that we will be ready for the first of April I'm not actually doubting that but I wanted you to put that on the record because it's a tendency to believe that an IT system is a bit like a car and once you've put all the bits in the right place and put the petrol in it's going to work actually, it may not be like that and we need to understand that I agree Thank you Okay, thank you Mary Scanlon Right, you've got no reason to believe that it won't be collected on the first of April but we're facing a report with an increased risk of your ability to collect on the first of April Two weeks ago at the audit committee it was just when you responded to Tavys Scott about your testing in January but also, Ms Emberson, you said it is our intention to do in February and March what you would describe as a lay person taking your words, would describe as snagging making absolutely sure that there's no little glitches Now the truth is that you may have little glitches you may have big glitches you don't, the truth is you don't know If you're facing snagging which you tell the finance committee how can you be absolutely sure and totally confident that we won't all be sitting writing out 800 transactions So what I informally described as snagging is formally described as a restricted testing environment so the system when fully tested by through user acceptance testing in January is then made available to a group of people who will eventually be users of the system and they, I'm told, I can use language like play with it and make sure that there isn't anything else that we might have missed anywhere in the testing it's not that we anticipate that there will be it's simply it's good practice it's what you would expect me to do at that stage in an IT project we stop doing system development and we make absolutely sure that the system works so you can sit here today and say that in February and March these people will be playing with the system and you can guarantee with confidence that any snagging any glitches, be it smaller, large will all be overcome and all will be well in the first of April that's what you're saying I believe that that is my belief of what will happen Yes Right, so okay, you know what's coming you know exactly what the glitches may be you know what the snagging may be you know what's going to come forward in the testing but as a lay person as you say here to the Finance Committee you will overcome all that and with confidence will be up and running in the first of April that is what we are working to achieve we have very very thorough plans we have very thorough testing plans we have a good contractor we are on track we heard that two years ago if you'll forgive me I don't think you heard that we had a contractor or we were doing system development two years ago I think we heard that ROS had certain problems that had been highlighted over many years and they are essential to the success as well think about it sorry Ella joining in Alison sorry okay I think just for me to add in terms of ROS, we do appreciate we were in front of this committee some two years ago since then we have very much learned from the managing ICT contract report that Audit Scotland produced I can give you more than assurances that we have taken on board their comments about governance, financial budgeting intelligent client functions over the last two years we have delivered on two major pieces of Scottish Parliament legislation we delivered a crofting register at the end of November 2012 and then a week passed on Monday we delivered a range of new systems to support the new land registration Scotland Act much of the discussion has been around the progress and the planning in terms of delivering new systems for any IT system it is complex it was always subject to some degree of change but what's important is having a plan an action if the plan has to be deviated from a way of managing risks and a way of managing dependencies as well as a member of the tax administration programme board I have a dual role I have a one role as a supplier ROS has to supply certain functions in order for the tax to go live in terms of IT our main piece of equipment that we have to supply is already ready and has been tested by the firm that's producing the eventual IT system so it's in place so I can give you a reassurance around that our other main roles are around the policing of the new tax that's a role that we currently carry out in terms of stamp duty and land tax it's something that we already do and we're already very well prepared for so it's just to give some reassurances ROS has very much learned from its experiences before this committee and we have put that learning into active practice certainly for the benefit of our customers and we hope that the wider Scottish public can I ask a couple of things Alison Stafford, I don't know if it's yourself or Elinor Emberson's response with this but what plans do the various agencies have to report annually on their performance in the various areas of tax compliance? So we're developing at the moment what our performance reporting framework should be we want to make sure that we're as transparent as we can possibly be so we will obviously be producing reports that will explain the volumes of returns that we've, cases that we have dealt with and the amount of money collected but we're keen to ensure that you can understand what return we're getting from the compliance work that we do and also very keen to work with the committee on what kind of reports it would find helpful So there'll be annual returns from each of the agencies on things like tax collection, debt management, debt losses, value of tax, secure, compliance yield, levels of error and fraud and so on that will all be reported annually It will certainly be reported annually we have been working on the assumption that the committee would want information more frequently than annually and that we would need to work with you on what sort of schedule of reporting would be helpful That's helpful Last question What's the last date or the latest date by which you would have to decide to use the contingency plan? As we've now developed it it would be around the end of February And will you notify this committee if there's any intention of using that contingency? If that is what the committee would like us to do then, yes That would be helpful Thank you Okay, thank you very much I know you've got a hectic morning You're now going to the finance committee but that's been very useful Thank you for your time Can I quickly move on to item 4, section 22 reports The committee has written submissions from the Scottish Government and NHS Orkney on the Auditor General for Scotland reports I'm in the hands of committee members You can either note the submissions or you could request further written or oral evidence Now committee members should be aware that we are taking evidence on 2 February in Inverness from NHS Highland and also we're taking evidence from the Scottish Government on the NHS in Scotland on the report on 14 January So you could decide to defer consideration of whether to take any evidence from the Scottish Government until after the evidence sessions or you could indeed highlight any issues or comments to the health and sport committee So it's for members to decide what's your option, Colin The suggestion that you made is very sensible that we defer the decision until after we've actually taken evidence from NHS Grampown and the Government Is that agreed? Yes, I agree Right Well, just before I go into private session can I intimate to committee members that I will be moving on from my post as convener of the Public Audit Committee The inevitable political reshuffles that take place in all parties has occurred and I'm moving to a new role Can I thank the members of the Audit Committee both the present member, some of whom I've recently come to the committee and also the other members that I've served with over the piece As always, the Public Audit Committee is a stimulating and interesting committee It's one that I think usually adds value to the work of the Parliament I've made the comment before that I do think that committees of this Parliament need to watch that they don't become complacent that we have a role to play in holding the Government of the day whatever the political complexion of that Government is to account and committees need to be robust and vigorous Otherwise, we are letting down not only the committee but the Parliament but I think the Public Audit Committee has a commendable track record over the year Can I also thank Jane and her team both the present team and her previous team They have been exceptionally diligent and hardworking and have kept me right on many occasions and that I do appreciate So thank you very much Mary Scanlon I just wonder, convener, if you would allow me to I just to say a few words perhaps as deputy convener on behalf of the committee but can I just say when it came here in 1999 and you were sitting there as the arch socialist on the health committee and I was the token Tory I never actually imagined that would be sitting here working so well It's still an arch socialist and I'm still a token Tory on the audit committee but I just wanted to thank you I mean, I think this committee is very special it's about scrutinising Government of whatever colour and organisations and it's I enjoy it so much because it's all about the money and the effect of spend the value for money and it really doesn't matter that you're the arch socialist and I'm the token Tory because this is not about politics it's about spending taxpayer's money and I just want to say that it's no mistake that you've been nominated and become the politician of the year for several years because I think you have done an excellent job I don't know whether your successor will have the rock filer qualities that you have but I do hope that we will get someone that takes on-board the approach that you've had but I think the whole Parliament respects the job that you've done on this committee and I just want to say from my point of view it's been a tremendous pleasure working for you and I think we have done very good work on this committee and I know it will continue Thank you Mary I'm sure you meant rock filer qualities as a compliment I did I did The one thing that I neglected to mention that I'll bring Colin Beattie in in a moment Sorry The one Thank you Mary for your comments The one thing that I did neglect to mention and I think it underpins all of the work the committee members have a tremendous role to play the staff that support the committee are fantastic but actually we couldn't do any of this work without the quality of reports that come to the committee from Audit Scotland and I think over the years not only myself but other conveners have paid tribute to that work both Caroline Gardner and her team and her predecessor Bob Black The work is exceptional it's of the highest professional quality it's in size and it's concise which I think is always very helpful and frankly we couldn't do our work without that input from Audit Scotland Sorry, Colin Beattie Just a quick congratulations on your elevation and to wish you well on your in your new post we'll miss you but I seem to recall as in my time on the committee this is your second departure Yeah You might be back Well hopefully hopefully I'll stay through that I want the greater things Yeah Okay thank you very much and with that we will move into private session