 Well, good morning, everyone. Can I welcome you to the 19th meeting in 2014 of the Infrastructure and Capital Investment Committee? Can I remind everyone to switch off their mobile phones as they do affect the broadcasting system? I have received apologies from Gordon MacDonald and Gil Paterson is in attendance as committee substitute. Agenda item one is item in private. Can I seek the agreement of the committee to I have taken item 4 in private to allow the committee to consider its approach to the scrutiny of the Scottish Government's draft budget 2015-16. Is that agreed? Agenda item 2 is a broadband update. We are going to hear evidence from the Cabinet Secretary for infrastructure, investment and cities on broadband infrastructure. I welcome Nicola Sturgeon, Cabinet Secretary for Infrastructure and Cities, and Colin Cook, Deputy Director of Digital Strategy and Programs from the Scottish Government. Can I welcome you both? Cabinet Secretary, would you like to make an opening statement? Yes, thanks, convener. I'm glad to be here for inviting me along today to provide an update on the progress that's been made in providing Scotland with a world-class digital infrastructure. In July 2013, which was shortly after my last update to the committee on this topic, the Government signed the second of two contracts, which comprise the Digital Scotland Superfast Broadband programme, which was previously called the Step Change programme. That contract covered the rest of Scotland and sits alongside a contract for the Highlands and Islands, and that was signed last March by Highlands and Islands Enterprise. Both projects are making very good progress. The first Cabinet in the Highlands and Islands project went live early this year in Vucky, in Murray. By the end of the first quarter, around 8,000 homes and businesses across Highlands and Murray were able to access services. That's significantly more than BT's contractual commitment for this stage. The first publicly funded Cabinet in the rest of Scotland project area went live in April in the Aberdeenshire village of Kirkton-of-Skeen. Members will be aware that a dedicated website, www.scotlandsuperfast.com, has been established so that the public are able to access information about the rollout and the coverage of the programme. So all of that represents a major step towards our digital ambitions, and we remain very focused on achieving our target of 85% of premises with access to fibre broadband by 2015-16 and 95% by 2017-18. We've also established Community Broadband Scotland to support those communities that are least likely to get next generation access as a result of the Superfast Broadband programme. Community Broadband Scotland aims to transform the way in which communities are living, working and learning by empowering them to acquire the assets that they need to access faster broadband. It's making steady progress as well. To date, around 650 premises have been connected in Apple Cross, Loch Ale and Blair Logie, and, encouragingly, the programme is engaged with a further 67 communities across Scotland, 32 of which have developed a broadband solution and are in the process of formally applying for capital grant assistance. We remain very committed to supporting rural communities to develop and deliver these solutions through Community Broadband Scotland because we want to ensure that no communities are left behind. One small but very significant example that's worth mentioning, because it does demonstrate the significance of connectivity in our more remote communities, is a project that we've supported on the Isle of Coal through a partnership with the Government Development Call and Vodafone. The island is going to be getting good quality 2, 3 and 4G mobile phone coverage for the first time. It will also test the concept of an alternative model of community ownership of a mobile mast in an area that's not previously been seen as commercially valuable by mobile operators. Construction of the phone mast is already commenced, and the project is expected to be operational this summer, so that's just one example of the innovative approaches that are being taken in some of these harder to reach areas. Since I spoke to the committee on the last occasion, we've also begun to make significant progress in ensuring that we secure the long term benefits of the investment in infrastructure. The digital participation strategy was published on 24 April. It sets out a framework for action in communities and in workplaces up and down the country, which is going to seek to use the power of the internet to break down inequalities and help people to become more confident and creative users of digital technology. We've appointed a director of digital participation at the Scottish Council for Voluntary Organisations to lead some of this work. One of his key tasks will be to promote the digital participation charter, which is intended to act as something of a matchmaker between organisations that recognise the need for digital inclusion and want to use their expertise to play their part, and community groups who need some support to help people get online. Before finishing, I also mentioned in the context of the digital economy that Skills Development Scotland published the ICT in digital technologies, which is a digital investment plan. The First Minister was able to announce investment of an additional £6.6 million in order to deliver many of the key recommendations of that plan. The plan sets out a series of specific actions designed to meet some of the challenges we face through a partnership with Scottish businesses. There will be an industry-led skills academy, 750 work placements for further and higher education students by 2016, and support for employer engagement with our schools. To conclude, I think we have and continue to make significant progress in moving towards the 2020 world class vision that we set ourselves. We're doing that through a suite of multiple but very interlinked work streams. I think we are very much on the front foot in delivering this vision, but there's a lot of hard work being done and remains to be done. I'm confident that we are on track to meet the 2020 vision that we set. With those, I was going to say brief, but they weren't so brief. Opening comments, I'm happy to take questions. Thank you very much. Adam, would you like to start the question, please? Thanks very much, convener. Good morning, Cabinet Secretary. How far away from our target of 85% of premises by 2015 are we? Well, we're on track to meet that. The information I gave there about Highlands and Islands suggests that at this stage in the game there's slightly ahead of schedule. As I said, the first Cabinet went live in the Highlands and Islands in February, and BT has surpassed its first contractual commitment of just under 5,000 premises in the first quarter. There's now over 10,000 premises, at least 5,000 more expected by the end of this month. In the rest of Scotland, as I said, the first Cabinet went live in April, and today over 140 exchange locations have been announced within the first two phases. The rest of Scotland project commenced later, so we don't yet have quite the same level of connections information as we do for the Highlands and Islands. We're currently verifying some of the early survey information, and reporting on the first quarter's progress is expected at the end of this month. So this was always a rolling programme, and we're on track. I mentioned earlier on the website that's been set up, which gives the public access to roll-out information, and I think as we go further into this project, the website will be updated regular, but that information is going to become more detailed and more granular as we move through the months ahead. So in terms of your own overview of progress, do you have a detailed schedule or do your civil servants have a detailed schedule that sort of lays out, and just for my own information, when in 2015 would that target be met? Sorry, the target will be met at the end of 2015, or the first target that we set, which was to give access to 85% of premises in Scotland. We do have a detailed milestone plan for both of the programmes, for both of the projects that the Cabinet Secretary explained in the Highlands, Islands and the rest of Scotland. Many of the premises do come, have that access enabled in 2015 because Highlands and Islands contract in particular. There's a major investment over this summer in subsea cabling to the islands, so that needs to be put in place. The tree, if I can call it that, rather than the twigs and the branches need to be in place in order to enable the fibre to work, so that's one of the reasons that it's a slow ramp-up. The Cabinet Secretary said we're on track in Highlands and Islands marginally ahead of schedule. Can I ask about progress in my own constituency when exchanges will be upgraded? I get very vague answers, Cabinet Secretary, with many being told by the BT people that they're under evaluation. So, when I'm asked by constituents in various parts of my constituency, I'm unable to give them hard and fast information. Clearly, that can be a constraint on communities themselves actually taking forward alternatives or bidding, say, to community broadband Scotland. Can we do something about clarifying things? We're trying to be as transparent as possible and make sure that the information that's being provided for public access is as full as possible, but also that, by the time communities have been given that detailed information about roll-out and about timescale, the work has been done to ensure that that information is reliable and there is a balance to be stuck there between getting as much information out as quickly as possible and taking about a time to make sure the work to properly inform the roll-out schedule has been done so that communities have been given information that they can then rely on. The website, as I say, is there just now for the public to go to. The information on that will become more detailed and more granular the further into this project we go. The absolute commitment there is to be as open and transparent as possible. Just to put some of this in context, what these projects, the Highlands and Islands in the rest of Scotland contracts are doing is providing next generation broadband access to these parts of Scotland where, if it was being left to commercial deployment, it wouldn't be happening at all. So in a sense we're filling in the gaps where the market simply won't go. If it wasn't for these contracts with the public funding that is delivering these contracts then commercial roll-out would only reach something like two thirds of Scotland. I appreciate that communities want as much information as possible, as quickly as possible, and we're certainly determined to deliver that, but I also think it's important just for context to understand the purpose of this. It's a massive public sector investment to make sure that communities who wouldn't be catered for by the market are not being left behind. I appreciate that Cabinet Secretary, but there is obviously a concern that, as I would have a concern as a constituency MSP, that some of my area might not be covered. It might be the 15% who are not covered. So I need to know in order to help local communities if they want to start alternative plans. Absolutely, but you need to know a point where that information is reliable. There's no point in right now being told a particular community is not going to be included when actually there is a prospect that it may be or vice versa. So there is a balance here between speed of information, which is politicians we always like, and reliability of information, and I think it's important we get that balance right. It's also important to stress that we are operating on a basis here where we don't want any community left behind, and that's why we are investing in community broadband Scotland. It's why, and no doubt we'll come on to some of these issues later on, there's a whole range of other work streams around the world-class digital ambition vision in order that, as we go through this programme, we're also looking ahead in terms of the quality and the capacity of the network and the infrastructure that we're putting in place that will serve Scotland well for lots of years to come. I mean, there are a number of here that you don't know until quite late in the process, particularly around surveying, and another factor is that there's more money coming on stream, and that may allow the BT project to go to areas if we choose to invest it in that way that weren't originally on the schedule. But what I would point to is that there are protocols in place for working between the programme team that are leading the BT contracts and the team that are leading community broadband Scotland. So if there are areas where the two programmes might, but up against each other, there are protocols in place to exploring how far the BT contract is likely to go, and then defining the area in which community broadband Scotland can concentrate. And they've taken some time to put in place, but those are now working. Something I can follow up. About community broadband Scotland, a note that the Cabinet Secretary mentioned, there are 67 projects signed off. I said they were working with 67 community, I didn't say there were 67 projects signed off. Well again, I'm being a bit parochial here. I'm actually looking for some projects in the south west of Scotland. It seems that most of the projects that I've heard about are in the Highlands and Islands, but we've got our own peripheral and remote areas too. So like the rural Ayrshire hinterland, it does need some investment. So can I ask where we're at with community broadband Scotland and how well it's being, the rest of Scotland is being covered by that? Just for clarity so that I didn't inadvertently give any of the wrong impression in my opening statement. I don't think I did. Community broadband Scotland is actively engaged with 67 communities across Scotland. They're all at different stages in the project development process. 32 of these are at formal application stage for capital grant assistance, so the others will be at an earlier stage in that process. I don't have a list of the 67 in front of me. I'm more than happy to send Adam Ingram any details of any projects that are relevant in his area. I'm also happy to provide the contact details for community broadband Scotland so that if there are communities, and obviously some of the impetus for this comes from communities themselves getting in touch with community broadband Scotland to investigate whether there is potential in areas, I'll provide the contact details so that if there are particular communities, as there will be, that you represent, then they know how to go about that engagement. Thank you very much, Cabinet Secretary. I can move on and ask ask you really to comment on the concerns raised by the Royal Society of Edinburgh who were essentially saying that it was hard to see how current plans would actually reach the 85% and 95% target, particularly delivering superfast speeds to 95% of Scottish households and businesses by 2017. Can we get some assurances from you today that we're still on track for that, and that will be delivered? I think I've given those assurances in terms of the update around the superfast broadband programme. I think the research you're referring to is a piece of work done by two professors at Edinburgh University for the Royal Society. As you would expect, Government officials have looked at that research and the conclusions it reached and the assertions it's making very carefully. We think that the modelling that they have used is using some incorrect assumptions and the analysis misrepresents some key aspects of our policy, the targets and the programme measurements. It might be helpful if I can just summarise really. The research makes three key assertions and we would contest each of these. Firstly, it asserts that the programme won't deliver its targets. Now, as I've just indicated in previous answers I've given, our programme's current deployment and the forward planning indicates that the final deployed infrastructure will actually exceed our targets and we are confident. This is the reassurance you're looking for that will achieve the levels of coverage that we're contracted to achieve. As I've already indicated, early roll-out indicates an increase on the contracted number of premises. The second assertion is that we have no plans for the final 20%. Now, the first point I would make is that we don't agree that there will be a final 20%. The programme is going to deliver significantly beyond 80% coverage and, as I've already been outlining, for the most hard-to-reach areas we've established community broadband Scotland, which is, as we've just been talking about, intended to work with communities that will not be covered in our main programmes to find solutions that would be fit for their purposes. Colin just mentioned some extra money. There has been just over £20 million, £21 million recently allocated to Scotland as part of the superfast extension programme. That's money that will be match-funded by the Scottish Government and we'll be, we're still taking decisions about how to target that investment but, again, we'll be looking to target that to extend the reach of our programmes even further. The third assertion that the research makes is around compliance with state aid requirements in terms of speed or transparency. This is a bit technical, so forgive me for this in advance, but the state aid ratified next-generation broadband speed for the programme is 24 megabits per second and above. The research states that it's 30 megabits per second or above, so that fact alone, that kind of discrepancy in itself would increase the number of premises that will receive the speed. So, I think we're fairly confident in our projections and in the assumptions underpinning our programme here in a number of key areas, feel confident that the research has, I'm not saying deliberately, but misrepresented some of the key aspects of what we're doing. I don't know if you want to add. Yes, I mean, the, um, the Royal Society of Edinburgh's report, which actually we were one of the co-funders of, you know, has made a huge and valuable contribution to the issue of digital participation, which was actually the main thrust of the report. What the professors, Professor Forman and Professor Boonaman have done is look at publicly available information. There's no secret about this, about the performance of copper as a vehicle for transmitting, for delivering broadband. And they've raised questions that everybody knows about, that the further away from the fibre that one is, that the speed degregates. We know that. We've known that from the beginning. What we have however done is built into the contract, an innovation fund which allows us to find new and better ways of improving the performance of copper. And we're bringing on new technologies, again, with risk of getting a technology called fibre to the remote node, which will change the sort of infrastructure that's going to be put into the ground and will change some of those assumptions. Now, of course, that information is not yet publicly available because we're working through the best way in which to deploy it. So some of those assumptions that underpin the evidence will change. And that's why we're confident that we will deliver on the targets that we've published. Very much for the comprehensive answer. My final question is in programme two of Scotland's digital future infrastructure action plan. It was stated that a full plan outlining the options for delivering the Scottish government's world-class ambition would be developed by December 2012. We understand that this hasn't been taken forward, but that in its place the Scotland's digital dialogue has been developed to help the government communicate and refine its plans to achieve that vision. Can the cabinet secretary comment on the reasons for this decision having been taken? And can the cabinet secretary explain how the government plans to use the data to inform its future plans and when it expects to outline what these plans are? I certainly can do that. In early 2013, as the committee is probably aware, we published a report on digital Scotland 2020 achieving world-class digital infrastructure, and that research was what helped inform the 2020 vision that we set out. We didn't publish a full plan at that time, as you rightly say, and that was a deliberate decision because we decided at that point that it would be more productive and would be more beneficial if we encouraged more productive stakeholder engagement and that we would get greater long-term buy-in from that if we set about a process that was about consulting and trying to achieve commitment early on in the process rather than presenting stakeholders with a final plan, and I can take it or leave it basis. That's why we went down the road of the digital dialogue route. That was very deliberately established to get stakeholders' input and views on the kind of world-class digital Scotland they wanted to see by 2020, and it was designed to stimulate debate on the options for getting there, which is obviously very important. In terms of how we're moving forward on that, we've recently appointed the Scottish Futures Trust to lead the world-class infrastructure work stream. What's very clear, too, is that we need to understand and we need to have a very developed and detailed understanding of how far current projects are going to take us in terms of delivering on the infrastructure elements of the 2020 vision. We need to understand what the gaps are, and then we need to understand how we're going to set about addressing those gaps. Key to all of that is an assessment of the financing and delivery structures that would allow the public sector to stimulate the market and do so in a way that's more sustainable than the gap funding approach that we're taking just now. That could involve joint ventures, it could involve public-private partnerships or maybe financial instruments like project bonds, which are often favoured by the European Commission. By next year, the intention is that the SFT and the Scottish Government will have developed a route map, and that route map will set out the infrastructure requirements to achieve the 2020 vision, but it will also set out what the commercial options are to deliver on those requirements. The work's underway, there's discussion on going with key partners, including key partners in telecoms and financial sectors. In summary, we decided a better way to go about it was almost a bottom-up approach of dialogue to inform the vision with then very detailed work flowing from that in terms of some of the practicalities, often very challenging practicalities, in delivering that vision, which will result in the route map next year that I've spoken about. In response to the committee's report on the national planning framework, the minister for government and planning stated that the impact of digital Scotland's fast broadband programme will be most significant in rural areas, with some semi-rural and suburban areas also benefiting further to Adam Ingram's question, just to ask how far along the government are to identifying those semi-rural and suburban areas that won't benefit from the commercial or government sponsored improvement programme. I have an indication of when communities will be given a final notice of whether they'll be covered or not. I think the final part of your question relates back to the answers we gave to Adam Ingram in terms of the work that requires to be done, quite complex surveying work, some of the variables that play here in terms of making sure that as information is given about the communities to be covered and the communities that will not be covered by this programme, that information is reliable. I would point again to the website that's giving you know as much detailed information and more and more granular information to communities. In terms of the first part of your question, I've obviously read the evidence that the planning minister gave around this and, while he's absolutely right to say that, you know, the impact of these programmes will be more pronounced in rural areas, I think it would be a mistake, in fact I know it would be a mistake for anybody to describe the programmes as specifically rural. The whole purpose of the Superfast Broadband programme is to improve coverage across all of Scotland, so that will include rural, semi-rural, suburban and indeed urban areas as well. The targets we've set, the connectivity targets we've set relate to all premises in Scotland regardless of where they are, so it's not the case that this should be seen as a rural programme with non-rural areas not being covered or not benefiting from it. In fact, you know, if you look at perhaps the most urban part of Scotland, Glasgow city I represent, the investment even in Glasgow will bring significant coverage improvements compared to what you would see in Glasgow if it was left solely to commercial deployment, so Glasgow, as a result of these programmes, will get 97.9% coverage by 2017. If that was being left to commercial roll-out only, that coverage would only be 75.5%. It's a programme that is benefiting all of Scotland, but for reasons that are very obvious, some of the most significant impacts will be in rural areas because that's where the starting point is lowest and the challenges of commercial roll-out are most acute. Thanks for that. I've pointed out that Glasgow, between the commercial roll-out and the Government assisted programme, will get 97.9%. Are you able to provide the committee information on the other regions across Scotland and point out if there are any other programmes aside from community broadband Scotland, as to how that will in Glasgow last 2.1% in that variable figure across Scotland? How they might go ahead accessing superfast broadband? In terms of information, I mean, I'm happy to provide the committee, I mean, I can have a look after this to see if there's comparable figures for other parts of the country that we're able to give. Some of that will be dependent on some of the work that's still underway and, as I say, we're going to be as transparent as possible around all of this, but I'm certainly happy to see if there's similar figures we can provide for other parts of Scotland. I mean, it's worth pointing out that if you look at the exchanges that have already been announced in the programme, many of them are in semi-rural suburban areas, you know, Aberdeen City, Dumfries, Glenrothes, Dingwall, Perth, Aire, East Kilbride, Stirling, I'm just looking at some of them, which just underlines the point that it's not just a rural focused programme. In terms of your question about how we cater for, you know, the percentage that will not be covered, it's a good question. Community Broadband Scotland is the key part of the programme that is designed to do that and, you know, I'm happy again, I'm sure the committee's got it, but to provide the information I said I provide to Adam Ingram about how communities can engage with Community Broadband Scotland to every member of the committee. I've already also mentioned the £21 million, as a result of the extension programme, so that will also give us a bit more flexibility to look at some of the areas that, you know, without that might not have been possible to reach within this programme. And then generally, you know, looking forward, the world class infrastructure programme that I've just spoken about that SFT is now leading, you know, is able to kind of look at, you know, where some of the gaps are over the next number of years. So, you know, the clear objective here is, and, you know, we all, you know, I'm not going to sit here and go into all the technicalities of some of the challenges here. We all know that, you know, Scotland is a country where one in five of our population lives in rural and remote communities and the Highlands and Islands project with the subsea cabling that is required for that is perhaps one of the most complex programmes of its type anywhere. You know, this is challenging technical work, but the clear objective is that we don't want any community left behind. So, we need to find the innovative ways of providing broadband access even if you happen to live in a very, very far-flung part of the country. I think it's worth saying that this project has always been seen as a partnership between national and local government. And many local authorities have invested additional money into the programme to make sure that their local priorities are met. So, there is definitely an available breakdown of the likely coverage that is going to be achieved in each local authority area, which we're happy to provide. Thanks for that. Finally, the discussions that we've had with local government and planning minister were spoken about how broadband connectivity could be improved through the planning process in terms of new developments coming online. I wonder if there has been any assessment of the provision of broadband connectivity and new housing developments and whether those new housing developments are then adding to the work that has to be done in terms instead of being a solution in providing that broadband connectivity as a standard. I think you're absolutely right to point to the important connections between the work we're doing here in the planning system, and you're certainly right to talk about the importance of making sure as we have new housing developments that this kind of infrastructure is built in from the word go, so that we're not having to go back later and put it in. It's been identified through the Scottish Government's Building Standards Division that new housing developments, as a matter of course now, are being provided with broadband cabling and ducting at the outset of the developments. In some cases, BT OpenReach, for example, the broadband network is designed for the developers, the equipment is then provided, and the developers install and are then reimbursed after installation, but that is all happening now in new developments as a matter of course. As you'll also be aware more widely in terms of the planning system supporting digital connectivity has been one of the considerations in the review of the Scottish planning policy and the national planning framework 3, and the new versions of these documents are about to be published in the very near future next week, I think. Beyond that, we are implementing additional permitted development rights to favour the deployment of telecoms infrastructure, and that would cover both fixed line and mobile. There are proposals currently before Parliament, as you'll be aware on that, and they are due to come into force at the end of June. In all of these key areas, that close relationship between what we're trying to achieve and making sure that the planning system is aligned to help us to achieve it is all good work in progress. Neil? Thanks for this, convener. Cabinet Secretary, in your opening statement and in your evidence so far, you've made quite a lot of references to the hard to reach areas. You've answered most of what I was going to ask you in any case, but I wonder if there's any particular technical blocks that are in the way and challenges that are still to be overcome to really roll the programme out throughout Scotland? Colin, kick off on the technicalities, and then I'll add in the lesser technical stuff. Thank you. Yes, there are many technical challenges, but most of the technical challenges relate to geography and distance and the requirement for fibre to be laid across fast tracks of ground, some of which are not overly hospitable to being dug up. I mean, there are other technologies that are available and we are exploring other technologies, and we hope to make some announcements about the use of other technologies. Community Broadband Scotland is obviously exploring the use of other technology in those areas where fibre is not appropriate, but our starting assumption is that we will take as far as we possibly can because we think it provides the best infrastructure on which to build future world-class connectivity. The demonstrating digital programme that we have as well is a good illustration of the work we're doing here. There's planned pilots around that, and the purpose of that is to try to test new delivery services that could extend mobile services. I talked to my opening remarks about the I'll Call work there as the key example of that. So, yes, there are some significant challenges that just comes with the terrain in Scotland, but so too is there some quite innovative thinking and testing and piloting to try to find the best ways of overcoming them. I get the idea from the reaction that my question was a bit of an understatement then, with regards to challenges for Scotland. It leads on to another hard-to-reach question, and it's in his oral evidence to the committee Robert Madeleine from the European Commission described the communications infrastructure as a utility and crucial public good. That's a very strong statement. Does the cabinet secretary agree with this description, and if she does, how does it sit with the fact that some Scottish residents will have to purchase special satellite equipment in order to have access to broadband services? That probably describes the question before how challenging some areas may well be for us, and maybe it will be impossible to provide the service other than through this. Risk of sound as if I'm trying to butter the committee up, which is never a bad idea. I met Robert Madeleine just after he'd been to give evidence to the committee, and he was incredibly complementary about how well informed the committee was on some of these technical issues, so there you go. I'm passing on that praise and the hope that you'll be nice to me for the rest of this session. This was some of the stuff that I discussed with him. In terms of his description of communication, digital communication infrastructure as a utility, I would broadly concur with that. I mean, we all know from our own experiences of how we live our lives these days that it is, you know, it's maybe a slight exaggeration, but not a huge exaggeration to say that the ability to get on line and connect to the internet is as crucial as the gas and electricity supply into our houses. So, yes, I think we do need to see it in those terms as a utility, and I think that agreement, that broad concurrence with that description is reflected in some of our own vision and the documents that underpin what we're trying to do here. The investment we're making in the superfast broadband programme, alongside the commercial rollout, alongside some of the work that's been done around mobile connectivity, it is all part of trying to achieve the progress and the improvement that would allow us to live up to that objective of having provision of these services as, you know, important as other utilities. Fibre is very much the key delivery technology for that, but it's not the only delivery technology. There will continue to be other satellite mobile wireless technologies will all have their part to play, but, you know, Fibre in terms of the programmes we're involved in is absolutely key. So, overall, I would agree, I would agree with Robert Madeleine, and, you know, I think the work he's doing in a European Commission context is also, you know, potentially very helpful in terms of trying to ensure that we're best equipped to deliver what we're trying to deliver here. My follow-up question is that since the funding streams are there as a sort of a general population subsidy, I would regard that, you know, putting this infrastructure in place, you know, the vast numbers of the population will benefit from this investment, and I wonder if the Government, or as far as the European Commission, might need to think somewhere down the line where there's any areas in Europe, in particular in Scotland, where it's going to be impossible, other than to deliver it, you know, one-house solution, and the cost of that might be quite prohibitive. I wonder if some consideration at some point, it's not, at this time, might be given to individual subsidy in that case. Is that something that's maybe a user definition radar? Maybe a radar compared to this is old-fashioned, I don't think so. I'll add here if you want. I mean, I think we have to be prepared to, you know, think to use that horrible cliché outside the box in all of this, because, you know, it's going to become increasingly unacceptable in our society for anybody not to have decent access to digital services, and that's just a fact of life. So, you know, we're going to have to continue to think how we reach, you know, everybody regardless of how far-flung they are. Obviously, you know, we have to be compliant to go back to the European context of your question here. We have to be compliant with state-aid rules and regulations, and, you know, in the context of the Superfast Broadband programme, that's, you know, very much delivered, more complicated than this, but in broad terms, delivered through being a programme that is geared towards those areas where the market will not go, because we can't, you know, use the subsidy to deliver it in areas that would otherwise be catered for from commercial deployment. There is an ongoing kind of debate within a European Union context about use of structural funds in the next programme, and, you know, the extent to which they'll be able to be used for digital infrastructure. We're very much of the view that they should be able to be, but that's still the subject of discussion. But, yes, I mean, I think we have to be as innovative and as creative as we can be to try and deliver what we are seeking to, which is that everybody has access to technology, that those of us who live in urban areas increasingly just take for granted. I mean, sorry, I was going to say, I mean, there is a very pronounced, I think, the hockey stick effect in terms of the cost per premises as one gets beyond the sort of, you know, the early 90s percent of coverage, and we monitor that, and we monitor it within the rollout programmes that we're currently delivering. We look at the cost per premise and what that counts, and it may be that it's, certainly it will be, that at certain levels different types of technology are more appropriate. In terms of individual subsidy, and I think it's worth pointing out, there's already a programme for businesses operating in Edinburgh, Aberdeen and Perth, are available in it, where that provides a subsidy to business to get online for the first time. So those kind of things are within the group of options that are available to us. Just just finally, I mean, one of my concerns, I'm very much a townie, but I've spent my, not so much years, but quite a long time in my life from youth until quite old, climbing all over Scotland, and I'm certainly conscious of what the benefit to community schools and post offices and such things are, but this is a new thing that I think we need to measure the cost to the community and young families staying in place in rural areas, and the real cost of that to the overall economy by provision. I couldn't agree more. As you know, I used to be health secretary in the discussions that we would often have about the sustainability of local communities being hugely often disproportionately impacted by decisions around local GP services or pharmacy services or whatever. The same is true here. Increasingly, whether we like it or not, it's a fact of life that people will expect to have access to digital infrastructure in order that they can access services digitally and live their lives the way the rest of us do, and so it does become very closely linked to the future sustainability and health of some of our more rural communities, and we've absolutely got to measure it in terms of the cost of the investment versus the cost of not investing in these areas. I think the point you make is a very important one. Before we leave the issues of connectivity, I never want to pass the opportunity to raise a personal problem. It's not really what I'm doing. The superfast broadband arrived on my doorstep a year ago in a blaze of publicity. That's the problem. When I tried to get the service connected, I was told that I couldn't have it. The reason was that I was too close to the exchange. Apparently, I'm connected directly to the exchange rather than through a cabinet. There are a lot of businesses in my immediate area affected by that. There's a local newspaper, solicitor, an architect, that kind of thing, the type of businesses that could benefit from that kind of provision. In these small areas, in the centre of areas that have already been supplied with broadband, what's the prospect? After I've assured you that, in fact, you weren't able to get it, it was not deliberate. I'll be sure it wasn't. It wasn't because you'd asked me a hard question at the last committee or anything like that. Colin, can we go to the technicalities of that? If we can't completely answer that question from a technical perspective, I'm happy that we'll come back to you. Indeed, but it's not just the technical, perhaps it's more important like where it fits in within the structure. I'm not familiar with your living arrangement, so I don't know precisely where that is. There are some issues like that. You will have been connected as part of the commercial roll-out, and it may be that the superfast broadband project itself will address that particular issue for your area. I don't know. I think with permission, I think we should just come back on the precise area. If you can, not your personal address, but if you can give us the detail of the precise area you're talking about, we'll come back with an explanation of why that situation is the case and what the solutions to it are likely to be in the overall context of this. I think we'd need to understand exactly what the problem is before I can see how. There are a number of areas in rural Scotland that are connected directly to exchanges where this is an issue, but we'll come back perhaps with the plans to look at this whole issue. Thank you. Thank you. Can we make a trust publish the report last year across the wide tackling digital exclusion in Glasgow? A couple of the findings from that were that 62% of people cited that one of the main reasons for not having a broadband connection was that they preferred to deal with people face to face. Over 90% of some people in specific groups, including older people, socialising tenants and the unemployed, are least likely to be online. So what alternatives can the cabinet secretary tell me about that there will be for people who cannot or do not want to be digital in their dealings with public services to make sure that they still have the same level of service? Nobody should be forced to go down the digital route for accessing public services, and all public services have got an obligation to ensure that their services are accessible to people however they want to access them. I think the reality is, and I'm aware of the generalities of the research you're talking about, I think the reality is that many people who don't access public services digitally to the extent that it is already possible to do so, they will not be doing that because they don't have access to either the technology that enables them to do it or the digital ability in terms of the know how to do that. So I think what is also really important is that as we move forward nobody's been denied access to the services they need on a digital basis because they don't have access to the technology. I think I mentioned in my opening remarks the digital charter which sets out the commitment we've got with the ICT industry to increase participation because we've been talking so far about infrastructure, and infrastructure is obviously important if you don't have the infrastructure, the rest of this discussion is academic, but we also need to make sure that it's not just the infrastructure that we're talking about, we've then got to enable people to use the infrastructure, and so through that digital charter which I can make available to the committee, the work on digital participation is very important. For people who don't want to use digital, whether it's the health service or any other public service, they have to cater for that and make sure that their services are accessible regardless. Okay, thank you. Does the cabinet secretary agree with Mr Maud's estimate of the amount of money being spent through the G-Cloud funding SMEs in Scotland, which is £1.4 million? I'm assuming you're talking about Francis Maud here. We do broadly agree with that, not sure if everybody's completely familiar with G-Cloud in terms of the system Colin can describe it in more technical detail than I can that allows SMEs to make themselves available for some of the digital contracting work. The information we've got from the Crown Commercial Service is that reported Scottish SMEs spend today via G-Cloud is £1.4 million, and I think that's information that Francis Maud gave at a conference in Edinburgh just recently. It's also worth noting that in addition to G-Cloud, Scottish SMEs have gained about approximately 29% of Scottish public sector ICT spend, and when you look specifically at the services market that goes up to 40%. So I don't think there's any room to be complacent around any of this. We want to see a SMEs benefit from the digital revolution if you like, but these figures would suggest that things are going in the right direction. Okay, thank you. My final question to a degree links back to the first question I asked you, and again it's around SMEs. Does the cabinet secretary have any estimate of the number of SMEs in Scotland which will benefit from the Scottish Government's funding of the move to digital public services? I suppose if you think about SMEs and voluntary organisations in particular, they often provide support for the groups that are most likely to be offline, so they have almost a pivotal role in both accessing the service but also helping people to come online. It's an important question. I'm happy to look to see whether there's more detailed information around the estimates of numbers of companies that are likely to benefit that we can provide to the committee. It was estimated back in 2012-13, so this figure is not bang up to date, but I don't think it will have changed substantially, that there was around 2,000 ICT suppliers in Scotland classified as an SME, so that gives you some idea of the number of companies that can potentially benefit here. I said a moment ago approximately 29% of our public sector ICT spend is with SMEs. You've got to remove products and networks from that spend because those services tend to be dominated by big global companies, so when you look at service spend, that 29% goes up to 40%. I feel very strongly that through our procurement, through the general work we're doing on digital, yes, it's about providing what we described previously as a utility-type service to households, to businesses as consumers across Scotland, but we've also got to be doing everything we can to ensure that our Indigenous businesses here are benefiting to the maximum from the economic opportunity. Can I just, and cabinet secretary said in her opening remarks that we were supporting, we have supported the appointment of director of digital participation in SCVO and to pick up on your final comments, and the logic of that is twofold. I mean firstly that individual and that team is helping third sector organisations themselves to become more digitally aware and understand the potential of digital technology to transform how they support people, and secondly it's about helping those organisations then because they happen to enjoy that trust with many of the people who are offline to engage more directly with communities and supporting them to do that, and we think that that sort of double-headed approach is absolutely vital, help, develop the organisations and then work with those organisations to talk to and support the people they trust. Jim. Thank you. Good morning cabinet secretary and Mr Cook. Inevitably a lot of our discussion has focused on the investment in infrastructure in order to develop and deliver the roll-out of superfast broadband. I'd like to ask about another area of investment and that is in digital skills for employees, digital skills and upskilling for employees, because clearly that has an important contribution to make in the development of the digital economy. Cabinet secretary you mentioned in your opening remarks I think you called it a skills academy and also talked about the opportunities for placements in the further education and higher education sectors, so I'm just be interested to know more about those and also about how you are delivering the digital skills that are required and addressing that need to develop different levels of skills from the most basic to the more specialised requirements that will be necessary to deliver the digital economy. I think it's a crucial question. You started by saying much of the discussion is around infrastructure and that's correct and that is necessary for too long. The key constraints in Scotland have been lack of infrastructure and lack of access. We're fixing that, it's going to take time to fix it, there are a multitude of challenges along the way there but increasingly we want to get to a position where people can take the infrastructure bit for granted, that will not be the case for everybody overnight but that's what we want to get to. But that does mean that the focus then should become more on the kind of questions Mary Fee was raising there about digital participation, whether our companies are poised to and unable to take advantage of the economic opportunity and absolutely digital skills. You can look at digital skills in a number of different ways in terms of the skills that companies operating in this sector are going to need if they're going to be competitive and able to take advantage and then there's digital skills of the population that feeds very much into digital participation. I think you were probably talking more about the former rather than the latter. In modern remarks I did talk about the ICT and digital technology skills investment plan, which is quite a wordy title that Skills Development Scotland published earlier this year that is accompanied by £6.6 million of additional funding to help us implement some of its key recommendations. The digital and ICT sector is very much at the top table of the industries that are powering Scotland's success, so we've got to get this right. It employs 73,000 people, it's contributing £3 billion in GVA and the wages that it pays tend to be a lot higher than the Scottish average, so I'm just really underlining the importance of the question you're asking. The Skills Investment Plan is there for the committee to look at in detail and I'm happy to provide any further information on it that people want, but the key strands of it were very much the industry-led Skills Academy model that will support transition training to meet the immediate skills needs of some of the companies that are involved in this sector. Work placements, by 2016 it's planned that there'll be 750 work placements for the education and higher education students and I suppose that's trying to do at least two things, generate the interest in these kind of posts as a career option for young people in further or higher education, but also make sure that the skills that the companies need are actually in the pipeline and that work placement approach will help with that and then helping to improve employer engagement in schools so it's further downstream to make sure that we're engaging the interest of young people whether still at school in ICT and digital technology as a career option and educating them as to what those options are. On that scale of the government's investment and also the extent to which you're able to factor in additional resource from the private sector matches the scale of the ambition that we have. Well you know we have to keep these things obviously under closed review and Skills Development Scotland is in a well place to be doing that, but yes we are making a substantial investment and you know there is a very rigorous focus through the Skills Development Plan to make sure that we're taking the action that means that we're going to have the supply of skills that will be necessary if we're to fulfil the potential that we have here. I mean the business case for the for the talent academy or the Skills Academy is just being finalised and I think we'll soon be able to assuming that it is robust as I believe it will be able to talk about how it will help industry and I think the critical thing is that it is being led by Scotland IS and members of the IT industry. I think the other thing to bear in mind is that Scotland's not unique here when it comes to the challenges of finding people with the digital skills we need to support our industry. I mean this is a deficit right across Europe and we have to do things. I'd like to come on to measurements and how we compare Scotland's position with other countries. Right but I think from a skills point of view and therefore it has to be tackled on two levels working with industry to close some of the immediate gaps but also work within the education system and others to look at the ways in which computing and ICT skills are taught in schools and the ways in which teachers are kept up to speed with the way in which those markets are developing and we're doing both of those within the context of the Skills Plan. Okay cabinet secretary can you tell the committee in the context of the digital economy strategy which sets out the need to establish a robust measurement framework? What are the high level indicators which have been developed against which we can measure the progress that is being made in delivering our objectives in this area and also does anything you or Mr Cook can tell us about how we measure Scotland's progress in comparison to our competitor nations? Okay I'll take the first part of the question then hand over to Colin for the second part. I mean we're working with partners particularly in the economic development agencies and you know through that work we've developed as you've indicated a draft set of high level indicators and these are the indicators that we'll measure progress against in terms of our objectives in the digital economy. The indicators are designed to identify and measure over time what technologies Scottish businesses are using how they're using them and what the benefits to them of use are so the indicators are grouped under four key themes adoption usage benefits and skills adoption is meant as you would it's pretty obvious reflects what digital technologies businesses are subscribing to to give us a clearer picture of that usage is intended to capture how businesses are using the various digital technologies and also the intensity of their use and to measure over time how that's changing benefits the indicators they relate to improvements in business performance as a result of exploiting digital technology and that could relate to increased turnover improved efficiency you know their ability to reach new markets increased innovation and skills will assess the digital skills that are both being used by and demanded by businesses and that will help us to identify any skills gaps that are prevalent in the workforce and I suppose that relates back to your earlier question about are we confident that what we're doing around skills is is sufficient some of these indicators will allow us you know not not quite in real time but in fairly close to that to measure whether the skills provision is sufficient or whether gaps that we need to address there's question there are questions that have been developed to be included in the digital economy business survey and that's what will allow this information to be captured the fieldwork for the survey is ongoing and the first results of that are due to be published I think by the end of this year and that will give us the first kind of suite of information that we then will measure progress against in the years to come to pick up on yes and I think in each element of the digital strategy we try and position or understand the progress that Scotland's been making against other European countries and part of that is implicit in the world class ambition in fact I think in our recent digital participation strategy we said this explicitly that we needed to aim at the kind of rates that are of participation from from Iceland and Norway and not some of the countries closer to home that where we traditionally phrased our ambition so right across each element um well I think on infrastructure that if we deliver the plans that we have in place over the next few years we'll be ahead of many European countries on participation we are not at the levels we need to be as I said we're behind places like Norway and Iceland with sort of 96% people online already so so that is a big and huge challenge for us the intensity index of businesses is something that we'll be able to make a much better judgment on when we get the results of the fieldwork um my instincts are that again I think there's parts of Scottish businesses that we are going to need to support and help to drive forward although as an ICT sector we have some of the most successful companies in in Europe so it's a mixed picture thank you yeah Alex sort of the same area we've talked a little lot about infrastructure and we've talked a lot about training but there are still areas of digital exclusion that could be dealt with and specifically you know there are people out there who will need help in order to access digital services I think for example the the drive at the moment to move the benefit payments onto that it obviously has enormous advantages but the extent to which people engage at that level remains a concern so what can we do to get people right through the scale to engage more with the available access that there is? Again you know that that's a question that very much goes to the route of you know whether all this investment in infrastructure is going to be you know worthwhile it's we need to get the maximum number of people using it that's where I've referred a couple of times to the digital participation strategy which was published in April and endorses a definition of basic digital literacy and that includes essential online skills like sending and receiving emails using a search engine to browse the internet you know evaluating how you trust a website or or not how you deal with privacy settings it also looks at a person's ability to share their personal information by filling in online application forms or accessing government services and you say the trend is more towards that so that becomes more important so that in a sense is the baseline for that we're trying to achieve for everyone that's able to kind of so that everyone is able to access basic online services and the digital participation strategy sets out you know how we intend to take that forward. You know basic digital literacy though should not be seen as the end goal you know if we want to become you know a world leader by 2020 then we've got to be striving to go beyond that and you know we're working closely with the Scottish qualifications authority I've already mentioned skills development Scotland to create a much clearer pathway for people who want to go beyond the basic to a much more sophisticated training perhaps achieving qualifications that are recognised by employers and that they would need to get into further and higher education so it's very much about seeing this as a journey from the basic to the more sophisticated but the absolute bottom line is we need to ensure that everybody has that basic level of literacy that allows them to do the basic things online that all of us increasingly take for granted in our everyday lives. I hear what you're saying about a criteria for assessing a basic level of digital literacy but how can that be used effectively to identify those who don't have that skill and who need their skills to be upgraded? Well I've talked about the digital participation strategy I also mentioned and Colin's mentioned that we've appointed somebody who worked within the SCVO on this and the idea around this is the development of you know community digital hubs it's about having people active in different community organisations that you know is about identifying I talked about a matchmaking service between people who are able to offer skills in community groups who need help in getting people there engaging with up to that basic level of literacy so there's a huge programme of work needing done around here which is as you say you've got to identify the people who needs the help before you can give them that help and that's why all of that work which has to be very community based is going to be so important. I think from the introduction of digital public services the idea would be to or the aim is to approach from both ends firstly those services need to be designed in the most accessible way possible so that they are designed with a focus on making it easy to use and making it attractive to use and that's very much the thinking that's underpinning our own digital public services in in the Scottish Government. Secondly as the cabinet secretary mentioned working with SCVO and other partners and industries playing an important role here we're building a network of centres and a network of volunteers across Scotland who will be in a position to support people and as people need support whether it's to use digital public services or for other aspects of their health or education or whatever it might be there'll be a support infrastructure in place that can help them so we want to use the opportunity of the greater introduction to digital public services to actually build skills levels and not just to increase the penetration of the services per se. Just in terms of digital participation cabinet secretary you know it's always said that large parts of Glasgow have an issue of digital exclusion in terms of the work being done through SCVO are we beginning to see fruits of the labours if you like. The answer to that is yes. There's a lot of obviously know the landscaping Glasgow very well there's there's a lot of quite innovative work being done in Glasgow and we're you know working closely with Glasgow City Council the weekly group which includes the Glasgow Housing Association to support digitally excluded groups getting digitally included. Digital Glasgow has citizen participation as you know one of its key priorities and you know the aim is for the most disconnected groups in the city you know disabled elderly unemployed people living in social housing to become more confident in the use of of the internet you know that there's some projects you know very innovative projects and I'm thinking particularly project that is around the low cost a low cost broadband pilot in a multi-storey block which is providing access to you know 79 tenants these are quite cutting edge projects and you know that's what we need not just in Glasgow but given the levels of participation in Glasgow they're particularly important there so I'm not by any stretch in imagination saying that we're we're there yet but I think there's a lot of good work that is taken as in the right direction in Glasgow. We mentioned the Royal Society of Edinburgh's report earlier and one of the things they identify is a thing they described as the network effect which fundamentally comes down to if you're if the people that you socialise with your friends and your neighbours aren't online you don't see why you should be and we've tried to address that in the plan that the Scottish Government and SCVO put together by making a fund available for community groups more generally to take their content online so not not just ICT type issues but community group whatever it might be to say actually um in pursuing this hobby or in pursuing this interest I can get more out of it by building a network online or putting my content online or encouraging other people to go online and there will be a fund launched to support that kind of progress and we hope that people in Glasgow and elsewhere will will bid into that. So are we already seeing the figures I mean presumably there are figures for digital exclusion are we seeing those we do track those I mean this is a long term this is going to be a long term issue and Glasgow City Council itself is putting an awful lot of effort into this and we're working with them. I said some as the cabinet secretary said some of those projects that we put in like the the Glasgow housing association the weekly group project are attracting national international attention but it will take time for the findings of those to come out for us to learn the lessons and to distribute them more widely. Does anyone else have any final questions? Okay thank you very much for that cabinet secretary and Mr Cooke and I will suspend the meeting briefly to allow your officials to swap over. Did you want to say? The third item on the agenda is to hear evidence from the cabinet secretary once again but this time on Prestwick airport this update was offered by the cabinet secretary when she previously gave evidence on this matter in March of this year. So can I again welcome Nicola Sturgeon cabinet secretary for infrastructure investment and cities Sharon Fairweather director of finance and John Nicholls director of aviation maritime freight and canals from Transport Scotland can I also welcome John Scott and James Kelly who are attending for this item cabinet secretary would you like to make an opening statement? I would convener and I should say the outset that with your permission my opening statement will be a little bit longer than would normally be the case at these committee sessions but I'm anxious that I cover a number of salient points before going into question and answers. As members will appreciate we've undertaken a very substantial amount of work since we acquired Prestwick airport to review the long-term development options to return it to profitability so today I want to give the committee an update on this work and an overview of some of the proposed changes required to take the airport forward as members will appreciate further work is underway and ongoing and I'll certainly be very happy to discuss with the committee what an appropriate arrangement might be for regular updates in future because obviously the committee will continue to have a very close interest in developments at the airport. I'm accompanied today by Sharon Fairweather and John Nicholls who are part of the senior management team at Transport Scotland but more pertinently for the purposes of today they are also board members of TS Prestwick Hold Co Ltd which is the company that we established for the purposes of acquiring the airport. As I've indicated and I should stress this point straight away that while we've taken receipt of an extensive report from the senior adviser that we appointed to do this work, Roman Pie, there is still some further work to do before we can make certain further decisions on the way forward but there are a number of practical steps which we can take immediately and I want to update the committee on those this morning. As colleagues will be aware the government acquired the airport to prevent its closure and the choice that we faced at that time was that stark. Had we not acquired the airport I think it is fairly confident assumption that the airport today would not be open. The airport will now operate as a public corporation on a commercial basis and at arms length from the Scottish Government and that is important and the significance of that point may be something we come back to in the context of some further discussions later on. The Scottish Government is making an investment in the airport. That investment will be in the form of loan funding and we require to generate a long term return for taxpayers' money so that is the first important point to stress. The airport will be run on a commercial basis. To assist us in the process, as I have already said, our senior adviser undertook a three month review of the long term strategic options for future business development and for the repositioning of the airport. He also looked at the options for ownership and the optimum operating structure required to take the airport forward. All of the work that has been undertaken by the adviser is what you would expect any commercial business to undertake as part of its on-going business planning activities. That has delivered a stage 2 business plan, which builds on the earlier work that was prepared to inform the decision to acquire the airport and sets out the commercial opportunities available to the airport over the next few years. If I can just at this stage give an overview of some of the key messages coming out of that report. Glasgow Press with the airport is what is described as a non-typical airport. What that means is that its success is not predicated on passenger traffic or on any one business area alone. That means that there are opportunities to capitalise on its other assets and its related businesses, such as freight, maintenance repair and overhaul, fixed base operations and property. Doing so, making sure that we are working to improve the position across all of these different strands of the airport's business, will be important to the airport's long term success. We will be looking to make steady improvements across all of the airport's business activities. As I have previously advised the committee and I think it bears repetition, there is no quick fix solution for Presswick. It will require a sustained effort over a number of years and crucially across more than just one of the airport's areas of activity. I will turn now to issues around patronage. The business plan confirms that the airport can be returned to profit, although that will be challenging—that is something that I have said often before. The repositioning that will be required to achieve that will take a long-term investment. The business plan includes an assessment of the reduced Ryanair schedule for summer 2014, which was not known at the time of acquisition. However, it does not take account of the final position for the 2014-15 winter schedule, as this is not yet known. Members will be aware that airlines generally work to two seasons and regularly change capacity and frequency across the entire networks. Given the highly competitive nature of the aviation market, not just in the UK but across the whole of Europe, we cannot assume that there will be no further reduction in the short term. That means that the impact of any further changes in the passenger market will need to be closely monitored on an on-going basis, as it is difficult to predict patronage levels too far in the future. If I turn to route development, as I have already mentioned, Presswick does not rely solely on passenger traffic to generate revenue. Indeed, it is worth pointing out that the revenue that comes direct from aviation, passenger free and other aviation, represents less than half of the total revenue of the airport. Passanger route development will clearly remain an important part of the business. As committee members will be aware, recent changes in the EU commission guidance on support to regional airports might provide an opportunity to develop routes at airports in Scotland so long as support does not impact on neighbouring airports. As members are aware, our Team Scotland approach is geared to ensuring that we support airports ambitions fairly and without detriment to existing services. I have asked officials to do some additional work on how Presswick may be able to benefit from the revised guidelines, and that is something that I am happy to update the committee further on in due course. Based on current traffic projections, we do not anticipate that the airport becoming profitable and cash positive for several years investment by the Scottish Government, which will be required until then. It will be, as I have said earlier, in the form of loan funding. Much of this expenditure will require detailed analysis and will be supported by a robust business case prior to the necessary funding being committed. It is envisaged that the repositioning capital that I will say a bit more about shortly expenditure will include a range of projects to improve the airport's facilities and the overall passenger experience. For example, refurbishment of the duty-free area, improvements to the visual appearance of the existing terminal building. If I can turn now to funding requirements. When I spoke to the committee in March, I indicated that the airport had to that point received £5 million in funding support. £4.5 million of that, it should be pointed out, was spent in the previous financial year 2013-14. The latest position is that since acquisition we have now provided £5.5 million in the form of loan funding. I also indicated in March that we intended to provide repositioning capital for this financial year and can confirm today that that will be £2.4 million, which is broadly, not quite but broadly, as confirmed in March. As I have indicated already, that will be associated with improvements to the terminal building, refit of duty-free, other changes to improve the passenger experience. Our current projections are that in this financial year, 2014-15, we will require to provide an additional £3 million in operating support. Finally, as you know and as everybody knows, and this is part of the problem, there has been historic under-investment in the fabric of the airport. We now have a much more detailed assessment of the backlog of essential maintenance that we require to undertake in the short term to ensure that the airport remains operational, and we are projecting costs of approximately £4.3 million in the current year. In addition to the total investment, the cost of Raman Pai's work has been approximately £100,000. I have already said that there remains some work to be done before we can properly complete the stage 2 business planning process. Part of that work will be to assess the likely impact on the business of the reduction and, indeed, eventual abolition of air passenger duty, and there is no doubt that mitigation of air passenger duty at Presswick would be enormously beneficial in terms of trying to increase passenger growth. I have asked for some further modelling work to be undertaken around that. It is probable that the results of that modelling will have a material impact on potential future growth of the business, and I will provide the committee with a further update when it is completed. That work is in addition to the detailed economic analysis that is relevant to all of Scottish airports, which will be developed when control of APD comes to Scotland, as I hope it will in the not-too-distant future. If I can turn now, convener, to corporate governance and say a few words on our plans for the future corporate governance of the airport, we intend to establish a two-tier board structure with a holding company board being responsible for long-term strategy for developing the airport and an operations company board empowering management to deliver the strategy. That is what will give form to the arms-length relationship to government that I spoke about earlier on. I can confirm that a non-executive chair who will chair both boards and a number of non-executive directors will now be recruited. These directors will oversee the operation of the airport, support the senior management team to implement the repositioning of the airport and provide appropriate corporate governance of all of its activities. The senior management team is being restructured and that will be confirmed on completion of discussions with the various existing members of that team. The executive directors will be tasked with delivering the business plan, maintaining a lean cost base and developing the commercial opportunities of the airport. I want to finally address the issue of branding and the name of the airport, which has been raised with me by a large number of people. I know that it is the subject of much interest. Somebody who hails from Ayrshire recognises the strength of feeling over the issue of the airport's name and I very much welcome the engagement that the senior adviser had with the Robert Burns world federation. We have considered the issue very carefully, but on balance I have concluded that there are strong commercial reasons to retain the Glasgow Presswick airport name rather than looking to rename the airport. We need to keep in mind that changing the name would undoubtedly be a welcome move locally, but we need to promote and market Glasgow Presswick airport to airlines and passengers across the world. Glasgow and Presswick are both strong names, as you would expect from an airport that has been operating for such a long time, and we do not want to risk creating confusion that would make it more difficult to grow the business. However, the importance of recognising Robert Burns is not lost on anybody, and we will commission work to develop a Burns-related theme for the terminal and to consider other ways in which the rich legacy of Burns can contribute to the promotion and the marketing of the airport, and we will consider how best to involve the local community and local Burns groups in taking that forward. In conclusion, I am very conscious that there is a great deal of interest in Presswick airport's future, and there is a genuine desire, both in Ayrshire and, I think, more widely to see that airports succeed. To reflect that interest and to mark the start of what we all hope will be a renaissance for the business, we intend to publish a document setting out a strategic vision for the long-term future of the airport, our plans for investment, business development and the optimum operating structure required to take the airport forward, much of the content of that I have already alluded to. The document will also contain the main findings of the additional work that I have commissioned, which I referred to earlier. I know that colleagues will appreciate that, as I said earlier on, this airport is going to be operating commercially, and much of the work that has been done is commercially sensitive, and if it was all released, it would hinder Presswick's ability to grow its business. Nevertheless, given the high degree of interest and the significant public funding involved, we will operate on the basis that is as open and transparent as possible, as I hope my rather extensive comments this morning have already demonstrated. My apologies for the length of time it has taken to give that overview, but I thought it important to give an overview across the key areas that I want to cover today. I am now happy to answer questions from the committee. Thank you, convener. Could you just sort of detail for me what the key findings that remain pi came up with in terms of the future viability of the airport and the recommendations? Could you summarise those for us? I know that you have covered a lot of ground with your opening remarks, but in terms of the commercial viability of the airport, can you distill that for us, please? I will do my best to summarise it as briefly as I can. I think that if I was to say what the key message of Roman Pai's work has been is that, in going forward, we should be seeking to take advantage of the diversity of what the airport currently does and what it potentially has to offer. As I said in my opening remarks, it is described as a non-typical airport, and that means that its success is not just predicated on one area of its business activity, not simply on passenger traffic. I mentioned in my opening remarks that when you look at the various revenue streams of the airport, the direct revenue from aviation, passenger free, and the other kind of aviation activities that are associated with press week is half of the revenue. Of course, other revenue streams such as retail and car parking have a link to aviation revenue, but I think that that helps to put it in context. The key message is that there is no quick fix, there is no single pronged approach that we should take. We should be looking to make steady improvements across all of the airport's business activities. We cannot assume as we go forward, particularly around the passenger market, that those improvements will always be in a linear fashion. There may be reductions as well as increases, but looking at it over the medium to long term, we have to be aiming to make steady improvements across passenger, across freight, looking to enhance the MRO business, the fixed base operations that are there. As we have talked about before, the airport has a large property portfolio, and there is a number of things that have to be done to try to increase the worth and the value of that to the airport. Some of the initial capital investment plans that will be taken forward are designed to have some quick wins around revenue increase, so money that will be spent on refitting the duty-free area is designed to try to increase the retail income from the airport. Changes around car parking is designed to try to increase the car parking. There will also be efforts made to ensure that the cost base of the airport is as low as possible while delivering a high-quality service. That is the overall message that there are a number of different areas of activity for the airport, and they are all as important as each other as we take the plans forward. So, in terms, we know that the aerospace part, for example, is being designated as an enterprise area. Now, would the airport be included in that as an option? Is that one option in terms of trying to encourage further economic? I said that the land around the airport is part of its value and making sure, for example, that there are plans in place to try to not have vacant land or properties that we are encouraging businesses, looking to try to grow the MRO base at the airport, and seeing that. One of the reasons that Presswick has seen as strategically important is because of the aerospace cluster. Now, as you well know from your local knowledge, the aerospace cluster is not directly dependent on the airport, but there is no doubt that having an operational airport next to it helps to make that attractive as a cluster. So, the very clear message is that we have got to be looking not just at passenger traffic, but at the broader span of activities that the airport has historically been engaged in and looking to grow all of them in the time to come. One inference from what you are saying is that the scope for increasing passenger traffic might be limited given this need that you are expressing to develop other types of activity at the airport, and clearly Presswick has been dependent for many years on Ryanair and in terms of its passenger traffic. Do we have any sort of commitment from Ryanair, or have you got any concerns in that direction in terms of how to develop the passenger traffic aspect of the airport? In terms of the passenger market, we are operating in a very competitive market. Presswick is operating in a very competitive market, and it is competitive not just in a UK context, but across a European context. Now, as I said in my opening remarks, trying to grow the passenger business at Presswick and trying to encourage new routes and new airlines and growing passenger numbers, of course, is a part of that, but we shouldn't see that in terms of being the only strand here. I am stressing very deliberately the importance of looking at this airport in the round. I said, obviously, that the business plan factors in the changes to Ryanair's schedule for the summer this year, but not any finalisation of winter schedules. We are going to have to keep looking at all of that on an ongoing basis because of the nature of the market that we are working on. Equally, we have to make sure that we are doing everything we can to take advantage of opportunities, which is why I refer to the additional work that I have asked to be done around the changed European Commission guidelines on route development, for example, so that the management team that will be operating the airport is able to take advantage of all opportunities that exist. I also highlighted the need, perhaps, to rebrand Presswick airports. Obviously, I am disappointed as a local elected representative that you are choosing not to go down the Robert Bruns international route. I know and my colleague John Scott knows that that has been considered for a good many years, and we could never persuade him to tell the previous owners to go down that road, largely because of this notion of Presswick as a feeder to Glasgow. It was marketed internationally as a Glasgow airport. I presume that that Remain Pies recommendation was to confirm that approach. The recommendation is not to rename the airport to continue with the Glasgow Presswick name. As I have said, I am not blind at all to the local strength of feeling around what the airport should be called. I have probably had more emails and letters on this point than on any other point since we acquired the airport. You need to bring a pretty hard-headed analysis to these kinds of things. This is an airport that has to stand on its own two feet commercially, that is the objective of this. It has to win business, it has to sell itself. One of the great advantages that Presswick airport has is that we should not be complacent about it, but we can take for granted the local support for the airport. If you are trying to market the airport locally, when local support is calling at Robert Bruns international, we might be the thing to do. However, we have to market the airport and win support for the airport in a much broader international context. To change the name, I think risks confusion. Obviously, Robert Bruns is a strong, powerful international brand, but not everybody would necessarily know of his connections with Presswick. You need to send a very clear statement of where the airport is, where it is positioned in Scotland and sticking with the current name, is the way to do that. I have been persuaded of that argument. I know that it is perhaps not the sentimental approach to take, but I do think that it is the hard-headed, pragmatic thing to do. Do not underplay what I am saying, though, about a serious determination to use the Robert Bruns branding as part of the marketing strategy. Roman Pai had very good input from the Robert Bruns Federation on how that could be taken forward. We want to commission some work to look at how that is put into practice. Clearly, rebranding an airport is going to cost some money in terms of marketing, but also in terms of the refurbishment of the building as well. You have mentioned a series of figures there for the current year for moneys going into Presswick. Can you give me a global total, as it were, for the current financial year and the previous financial year? The previous financial year was £4.5 million. The operational support this year will be added to the projection of another £3 million in operating support for this financial year. That is the total there. In terms of capital investment, I have split the capital investment into two strands. Everybody knows the backlog maintenance that just has to be done, but I have projected costs of £4.3 million this year to try to bring some of that backlog maintenance up to scratch. Some of that is very basic. It is about making sure that the airport can remain operational. Then, and I did give an indication of this, the last one, I think it is going to need to invest capital in trying to reposition the airport, and that is the £2.4 million I spoke about. That will be on things like improving the appearance of the airport and there will be some work around the branding and the theming that I am talking about. clywed o'r dynch. Felly yn wirgyn nhw'n meddi Advilwyr i'wch iawn, a mae'rしyfniad sydd gael rhai o'r ymddangos cyfath i Gwyddoedd sydd gennym iawn i gyd. Mae'r pasodau hynny yn gallu gallu'n gyffredinol ar y Gwyddoedd ond mae hi'n meddiwio i'r orau yn colli gyda'r eisiau oedd mae'n meddwl ym miliol ymduddiad yn gwybod fod yn cynnyddol. Felly mae'n gwybod i'r dynnutrau amdanoedd i'r eisiau ar gyfer y gyd, The aim is changing that with a view to that being an increasing revenue stream and just generally anybody I don't knowขo os y tanreddau ty applicant trw ystod Aift e momenti I have and you know it just generally needs improvements to make the passenger experience a better one if we're trying to encourage passengers to fly from there so that 2.4 million is very much about that work that is yng Ngwyl, yn ystod o bwysig ar gyfer y cyfnodiaeth, mae'n eich cyfnod o'r cyfnodau'n amser. Mae'n gweithio'n mynd i'r ffwlltio, mae'n gwneud ei fod yn ymddangosio ar y romein pi—cymdeithasio ar gyfer y romein pi, oherwydd mae'n dweud ar yr wych yn ei fod yn ei fod yn ei fod yn ei fod yn ei fod yn ymddangosio ar y peth. Mae'n amser yn ymddangosio ar yr romein pi, ond mae'n cyfnodio yn Ysgrifenniddol, ac wrth gwrs, yn y Dflwynoedd yma yn ei gynhwyr i bach o'r newydd. Enw, rydyn ni i ddweud y llawddio iawn i gyd, i'w wahanol, ac y pwysigio'r numerau yn sgw Coronavirus. Rydyn ni i'r gwneud yn ddyliau bod yn rhesweddau yn gweithio hefyd yn y cyfrifol. Aps amazing, a oedd sy'n fawr i dweud ar gweithio'r numerau a'r gwahod am gweithio'r numerau. I know that other Scottish airports think that, similarly, it would be hugely improved if we had the ability to do something about APD. So that whole picture has to be kept under regular review. I've, as I said, asked for some specific work to be done around APD and what the modelling would show if we were able to do something about APD as well as further work around route development options. So that's work that my officials in Transport Scotland and the Government will be centring involved in. My final question is, I understand the commercial confidentiality issues here, but in terms of publication of future plans, you mentioned something about a publication of plans in your opening remarks, could you just confirm that? We intend to publish as soon as we're able to do this a strategic vision for the airport which will incorporate as much of the information out of the work that's being done by Rymwn Pai as we're able to do, but I'm going to be pretty unapologetic on this point because this is an airport that is going to be expected, is expected to operate commercially. Now, that is a different situation to the Highlands and Islands airports that are subsidised and, you know, openly subsidised by the Government. The Government investment in Presswick Airport is on a different basis. It will be in the form of loan funding that will be expected to generate a long term return on taxpayers' investment, so we cannot expect the airport to run on a commercial basis and be successful on a commercial basis if we are then expecting information that other commercial airports wouldn't put in the public domain to be put in the public domain by Presswick. So, you know, we, as in the owners of the airport, will be as open and transparent as possible, but we're not going to hinder the airport's ability to do the job that we're asking it to do, so there will be strategic vision published that incorporates as much information as possible, but some of the contents of the work that's being done is commercially confidential, and to put it into the public domain would hinder the airport's ability to do the work that it's going to be expected to do in the years to come. Thank you. Do you want to come in on this specifically? Just to come in on a supplementary to one of the questions that Adam Magnum raised on the area surrounding the airport itself in an enterprise zone, just to ask if the Cabinet Secretary is aware of what's being carried out by Scottish Enterprise and to encourage Scottish companies to relocate to Presswick Airport in the surrounding area, and if the Scottish Government is supporting those activities? The Scottish Government wants to work with our agencies to ensure through the work that predates our acquisition of Presswick Airport around the enterprise zone there that that is successful. The aerospace cluster around there is important, and it's important that Scottish Enterprise, with the appropriate support from the Scottish Government, works to do that. But again, going back to an earlier point I made, it's not the only strand of what we need to try to do to make Presswick a success. There are also other issues around the property portfolio, if I can call it that, of Presswick. It may be that the management team thinks that our decision is to be made about disposal of some property in order to bring in a capital asset. There may be issues around vacant property there that there needs to be a strategy to try to fill that. So yes, the aerospace cluster and the work around that is important, but there's a wider property issue around the airport as well. Support Presswick, and the viability that's going forward, but there's been a bit of concern in my own region that a company in Lanarkshire has been encouraged to relocate to Presswick and it's a caveat that I've already set out that if they need to support Presswick, will have an impact on the non-domestic rates of local authority, the impact on local jobs in Lanarkshire also be taken into account when Scottish Enterprise are encouraging companies to relocate to Presswick. You're talking about, if you want to provide me with details afterwards, I'm more than happy to have a conversation based on the specifics of that. Scottish Enterprise is there to help the Scottish economy to do that in the best way possible, engaging with companies in their best interests. Similarly, although the Scottish Government owns Glasgow Presswick Airport, in terms of the airport business, if you like, the aviation and associated business at the airport, it's not for the Scottish Government to favour Presswick over Glasgow or Edinburgh or any of our other airports. That's why the arms length operation of the airport vis-a-vis the Government is so important. The airport will be operating commercially. If it's going to win business, it will have to do it on merit. The arrangements in terms of the Government funding, the long-term return on taxpayers' investment is a key part of that. We all want Presswick to succeed, but Presswick is going to succeed in the long-term if it's able to make a success on that commercial basis, not because people are doing it favours along the way. That's the key point that has to be stressed here. Alex Thank you. The Cabinet Secretary was talking about the various streams of funding that will go into the airport. I was trying to add them up and I'm afraid I got lost at one point when I realised we were talking about the same numbers we talked about earlier. Are you able to put a simple figure on the total amount of Government money that will be put into Presswick in the current financial year? The current financial year will be around £11 million, with £4.5 million in the last financial year. The figure is just to be clear. The £5.5 million that is half a million more than the £5 million I said at the last committee, £2.4 million of repositioning capital for some of the early works that are designed to raise revenue, streams £3 million of further operating support in this financial year, and £4.3 million of backlog capital maintenance in this financial year. So, £4.5 million of that total was in the last financial year and the rest. So, it's roughly, it's about £15 million, broadly speaking, in total with £4.5 million in the last financial year, and the remainder of it in this year. Rwy'n gael i'r Remain Pie work that was done, the Minister has already gone into some length to explain that it largely will not be published because of reasons of commercial sensitivity. Is there anything you can tell me at this point that would help me better understand the nature of the commercial sensitivity that prevents you from publishing much of it? In terms of what the airport might be planning to do in terms of trying to grow its business in one particular area, freight or passenger or anything, clearly in terms of how it's going to engage with other businesses' airlines or whatever, then obviously some of that is commercially confidential. Now, what I want to stress is that our starting point here is not to publish information. I'm a politician. My starting point in trying to make it easier for me to sit and answer questions from the committee is to have as much of this information as possible in the public domain. So, we will publish a document that does that. But some of the detailed financial projections predicated on what happens if they succeed in this particular line of their business or in that particular line of the business, there is a degree of commercial confidentiality about that that would hinder Presswick and the management team at Presswick if all of that was published in the public domain. If we were operating Presswick similar to our Highlands and Islands airports on an openly subsidised basis, that would be very different, but we're expecting the airport to run commercially on the same basis as Glasgow or Presswick run, and therefore they need to be able to do that on the same commercial basis. I think what you're saying about the running the airport on a commercial basis. We've spoken before about the long-term plan to return the airport to private ownership. Would that still be your intention? Yes, that is still the intention. The airport is not currently up for sale because we are in it at this stage for the long-term. Our objective is to secure a return on the public investment in the airport in the long-term and market the airport for sale on the basis of the turnaround that happened. So we've not set a date for that. There are too many variables at this stage, and it wouldn't be sensible for me to sit here and give even a guesstimate date of when that might be possible to do. We're clear this is a long-term investment, but yes, a return to the private sector remains the end-point objective of the exercise. I was very clear with Parliament when I announced the acquisition of Presswick Airport that we were not taking over Presswick Airport as any kind of ideological move, or we weren't relishing taking Presswick Airport into public ownership. We were doing it because the only alternative was for the airport to close. So we want to be able to have a situation where the taxpayer gets a return on its investment and that airport goes back into the private sector. I think everybody would want to see that happen, but there are a number of variables along the way that will determine what the timescale of that is, and it would be simply wrong for me to sit here and try and guess at this stage what that would be. In terms of timescale, would it therefore be fair to say that the return on the airport to the private sector would now be a long-term ambition? I've used the term long-term, and it will be several years, but I'm not going to try and narrow it down any further than that. On this particular point, Mark? Just on the particular point of the Roman Pire report, obviously for taxpayers to see the return on that loan investment, that's predicated on the airport coming back into profitability. For us, as parliamentarians, to be able to scrutinise whether that investment is wise or not, I think that's predicated on us understanding the work that Roman Pire has done, is that will there be even a redacted form of that report published to allow us to scrutinise the spending and whether indeed the public purse will ever see any of that back? There has to be, in order for us to make this investment in a way that is consistent with state aid rules and the market economy investor principle, we have to be planning a return on investment. I absolutely understand as a parliamentarian, I understand the importance of proper scrutiny of use of taxpayers' money, which is why I'm sitting here just now, I've gone through in some detail the public investment that will be made this year, why we will translate as much of Roman Pire's work into a published document as we are able to do without hindering the commercial confidentiality and the ability to operate commercially of the airport. In terms of future projections, some of our future projections still depend on work that we still require to do. The work that I've talked about today requires knowledge of our early success in building some of these revenue streams, reducing the cost base of the airport, but the ability for you as parliamentarians and you as a committee and parliament as a whole to publicly scrutinise this is very important, which is why I said at the outset of my opening remarks, I'm very keen to come to an arrangement with the committee that sees a regular reporting mechanism between me and the committee so that you are able to scrutinise that on an on-going and forward planned basis. I'll come in on this point, John. Not on this point. I'll plant several points, if I may. A number of the funding requirements. Am I right in understanding that all of that would be in the form of formal loan funding? I just wanted to clarify that. So essential maintenance, operating support and changes to the building to improve the passenger experience, all loan funding? All of the funding, apart from the money that we had to spend to buy the airport, we bought the airport for £1, but the due diligence work that we did, which is seen as some kind of investment that doesn't come back, all of the investment that we put into the airport will be on the basis of loan funding. Now, in terms of the repayment schedule of that and the terms in which that's repaid, that goes into the discussion around the inability at this stage to see what the timing of that will be, because that is predicated on the success of the business planning in terms of building the different revenue streams of the airport. That's clear, thank you. Can I ask you about the governance arrangements? When you appeared before the committee on 19 March, you said that the press week hold co-limited had been established in order to, for the transfer of ownership to take place, and that the interim measure would be that there would be three board members who would be senior Transport Scotland officials, and that you would then take advice on what the permanent governance arrangements would be. Have you had time to decide what the future looks like? Yeah, I mean that's what I outlined in summary in my opening remarks. I mean I think you'll recall that when I gave evidence to the committee before, I think this, the record will bear me out here, that I was suggesting that the model we might decide is to get an outside operating company in to run the airport. The recommendation that has come from the work is that that is probably not the best route to go down, that having an outsourced management team on a priced contract would not necessarily give us the clear, you know, incentivisation energy and drive that we're going to need from a management team, so we're not going down that road. Now, you know, obviously these things are kept under review, but that's not the road we've decided to go down. We're going to set up a two board structure, which on first reading sounds, you know, a bit bureaucratic, but the reasons for it are very sound. There's going to be a strategic board, which will be the key conduit for, you know, the government to effectively influence the strategic direction of the airport and give us the ability to ensure that we're safeguarding public investment, and that board will set the overall strategic plan for the airport, and the second board will be the day-to-day operational board, and you know, that is important in terms of establishing that arms-length relationship. The government of course has an interest as the owner in the strategic direction of the airport, but when it comes to day-to-day operations in terms of trying to win business, that's not for the government to be directly involved in, and the operational board, as I said, we're going to be recruiting a non-executive chair who will chair both boards, and each board will have non-executive members, but the management team will obviously, the senior management team will be on the operational board as well. So, just to be clear, so that I've understood you correctly, the senior officials from Transport Scotland, they will sit on the strategic board, is that the case? They will not, they will probably be Transport Scotland officials in an observing capacity, but we will recruit non-executive members to be on that board. They will be appointed by ministers to represent the government's interests, and Transport Scotland will attend on an observation basis. Is my guessing that right? Yes, John Can. The intention is that certainly for the operational company board, that is, as the cabinet secretary describes, to be a non-executive chair person independently appointed, supported by non-executive directors, and that Transport Scotland officials might then attend in an observer capacity. For the holding company, the strategic board, again the non-executive chairman, would be an independent appointment and the same person as the operational company board. At present time, we're envisaging that the other directors of the holding company would be representatives of the Scottish ministers, but obviously that's for review. In terms of what was announced in March, what is permanent and what is into them, can you shed any light on that, Mr Nicholls? The current board of which John and Sharon are will is the board that is overseeing the whole airport operation at the moment. That will, in a sense, cease in its current form and be replaced by this dual board structure. The strategic board will, similar to the current board, have government interests directly represented there in terms of the strategic direction of the airport, but the operational board will be effectively deciding the day-to-day operations and what business opportunities the airport wants to pursue on a particular line of business. The current arrangements effectively will split into those two separate strands. I'm not being deliberately obtuse and I'm trying to understand it. I think you've set that out now in a way that even I can understand. Thank you very much. Can I ask one final question? When you appeared before committee in March, I asked about the potential that there might be to develop preswick, albeit that there are a number of funding constraints given that international development is not currently within the competency of this Parliament, but whether it could be developed as a centre for international disaster relief, an idea that had been suggested by a constituent of mine, Alan McKinney. Is that something in terms of the role that preswick could play in assisting humanitarian assistance and overseas aid, something that you have been in discussions with or had a chance to consider or would be able to update us on? It is something that is recommended in the work that's being done as something we follow up and pursue. Presswick certainly has the infrastructure that would be needed to become a hub for European emergency disaster relief programmes, and as you're probably aware, via your constituent, the Commission's European Community Humanitarian Office is potentially looking at where those kinds of services operate from. I can't say that that is a definite area of potential for the airport, but it has been identified as an area that we should follow up directly with the relevant European bodies, and we will be doing that. I will update the committee as soon as we have anything that is material to update the committee on. Thank you. Do you have already spoken about passenger numbers in relation to a question from a colleague, Adam Ingram? I wonder if you could update us on freight figures and its prospects for the future. I mean, there has been a steady decline at Presswick in freight tonnage. I think it's gone from round about 40,000 tonnes in 2003 to round about 10,000 tonnes in 2013, so there's been a fairly hefty, steady but hefty decline in that. We have seen in April and May of this year quite a substantial increase in freight, but I don't want to sit here and overstate that. That is a two-month period, and that may not be borne out when we get the annual figure, but nevertheless it's been quite a substantial increase in freight compared to the same period last year in those two months of this year. At this stage, there are reasons for optimism around freight business, but that has to come with a very healthy caveat. In relation to that, it's a wider question I've got. I don't know if I should really be declaring an interest because we actually supply one of my businesses supply industrial coatings throughout Scotland, and maybe you'll understand why I might need to declare this when I pose this question to you. It's important that flights are and freight is to Presswick in itself, but my main concern has been for the vibrancy and the well-being of very, very good businesses that are in an industrial setting, that are in and around and out with Presswick Airport, and I heard this morning on the radio someone from, I think, the Glasgow Chamber of Commerce, although this was a recording of a few months ago so it's not updated, and he had raised the questions over Presswick, and my understanding that Presswick's industrial delivery chain is through Central Scotland, so business is impacted adversely or favourably by Presswick, and I'm just wondering about engagement with the business community, particularly locally, the people that are engaged and doing very, very good industrial work, and I'm quite sure John Scott will be able to elaborate on that, but how it impacts on the wider business community who are engaged in industrial business, and I just got the idea that this gentleman was speaking to protect Glasgow Airport when, in fact, I think you used, I can't remember the term, you used special status for Presswick Airport because of its significance in relation to what it delivers to the wider Scottish community, rather than the actual flights that fly in and out of it. I didn't hear the interview and the radio that you're talking about, so I won't respond to something that I didn't hear in case I get it hopelessly wrong. I suppose the first point I'd make there in terms of your comment about Glasgow, this is where the arms line relationship with Presswick becomes very important. I want to see all of our airports succeed. I'm a Glasgow MSP, I clearly want to see Glasgow succeed, and although all of our airports operate in a very competitive market, it's not for the Scottish Government to pick one airport over another, and that's why on that operational basis, when we operate in a Team Scotland approach, trying to encourage airlines to come to Scotland, that's what we're trying to do, encourage them to come to Scotland, it's then a commercial decision as to which airport they go to and our airports have to put forward their best case. It's not for us, and it will not be for us to have a situation that favours Presswick in that part of the process. I hope that as we see more airlines and more routes over time coming to Scotland, then all of our airports will be the beneficiaries of that. Your general point, though, about the importance of Presswick airport to the local economy is one that I myself made when I announced the Government's decision to acquire the airport. Its contribution to GVA locally and nationally is quite significant. It has very strong support in the local business community, Ayrshire Chambers of Commerce, I think I have a base presence in the airport and I've been extremely impressed since we acquired the airport in the number of offers of assistance and willingness to engage and be part of finding the route back to success for the airport from locally based businesses and organisations. It's not something that automatically translates into business for the airport, but it's a really fortunate place for the airport to be, and one of its strengths is that it has such a strong support in the immediate community that it serves, and I think some of the points you may underline that. I want to go beyond that, because I well know how important it is to the local community. I mean, that's a given. I'm sure that local businesses will be very, very aware of it, but I think my main question is, for example, I really don't know if my business supplies that my son now runs, I don't run it now, I've got to say I'm here all the time, but my son now runs a business and we supply into industrial outlets who may very well be supplying somewhere down the line into Presswick, and I know where near Presswick, that I think Presswick in itself and in an industrial basis, not rather than a flying in and out is very important to the wider business industrial community in Scotland, and I don't think a lot of people accept those who are actually supplying, and my headquarters is just quite close to Glasgow and Bishop Briggs, so I'm well away from that, but I may well be, and a lot of people supplying in there, either indirectly like me, and I think I am, and folk are directly into Presswick, but much, much further afield, but very, very important businesses, so it impacts a lot wider than Presswick, and I don't think a lot of people are aware of that and the good work that's been done to try and make Presswick in its entirety available. I think that's a fair point. I mean, I probably do have them somewhere in front of me, but I don't have them immediately to hand, but when I made the statement in Parliament about the acquisition of the airport, I made the point that yes, the airport contributes a lot to the local economy, but it's got an impact on the wider Scottish economy as well, which was one of the underlying reasons behind our decision to acquire the airport rather than sit back and watch it close, which would have happened last year if we hadn't bought it. Thanks very much for that. Thank you. Can I just ask in freight more generally? I mean, if you look at the table here, overall freight carriage has declined from 65,000 tonnes in 2002 to about 40,000 in 2012, over a 10-year period that's gone down 25,000 tonnes. Is that due to the recession, or do we have any idea of why the freight, air freight, has declined so rapidly, and is it being taken up by rail or...? I think it will be a combination of all of these things. It stands to reason that the economic recession that we've just been through has an impact on businesses, and therefore it will have an impact on freight. Obviously, rail is a factor in that I understand. Many interesting things about aviation have been learning that there is a change in how freight is transported. There's more of a trend towards having freight in the cargo of passenger airlines as opposed to specific freight aeroplanes. There's a whole range of factors that have contributed on your right to point out the overall reduction in freight. Obviously, we hope to see that increasing, and for Presswick to be competitive in that market. I said earlier on, and again, I'm not overstating this. We have seen quite a substantial increase in two months of this year compared to the same period last year, which may be down to economic recovery factors. It's far, far too early to say that that represents a longer-term trend, but nevertheless, I'm always in the market for these signs of good news, so we should take some encouragement from that. I wanted to ask a quite specific question about what's been done to improve passenger numbers, because the new route that's been launched between Glasgow Presswick and Ireland West Airport Nock, which was launched last month, is welcome. The vast majority of travel out of Glasgow Presswick is low-cost airlines, which are more likely to suffer from any financial pressures. Business travel is only about 8 per cent, and Glasgow and Airport both sit around 30 per cent for business travel. What specifically has been done to increase new routes and to improve passenger numbers going through Presswick? I said earlier on that the new management team, the restructured management team that will be in place, will have the specific responsibility of developing the business overall, and part of that, and I stress for reasons I spoke about earlier on, part of that will be to seek to increase passenger numbers, which in turn helps to increase income from car parking, from retail and from the other services that the airport provides. The management team has to work closely. Most of its business is based on low-cost airlines. Actually, low-cost airlines singular would be the accurate way of saying that, and they have to work with that customer of the airport and with other potential customers. I'm not going to sit here though and say anything other than we have to appreciate how challenging that is. We can't predict it will all go in one direction. We may see reductions as well as, I hope, increases over the longer term. This is a very, very competitive marketplace, but that's going to be one of the many objectives that the management team have to focus very, very hard on as they try to return this airport to profitability. I've mentioned APD on a couple of occasions because I think it is really important. I'm very heartened that there is growing agreement that we need control of APD in Scotland. I think you can overstate the importance in the medium to long term of being able to do something about what is a quite crippling rates of APD in terms of our success and, or Presswick's success, in being able to attract greater passenger numbers into Presswick. That is going to be really important. Whether you're talking about Ryanair, in fact, certainly when you're talking about Ryanair, APD is a significant constraint and that's why it is going to be really important that we get the ability to do something about it. I was hoping perhaps for more specifics around exactly what has been done to encourage new routes and additional passengers, but I suppose finally can I then ask, will there be any announcements in the near future of new routes? I can't sit here and say that. I wish I was able to sit here and say that. Partly I'm not the one that's in the position of negotiating with airlines. That will be part of the job of the management team to get out there, to grow the business of the airport across all of its business streams. No, I can't sit here and say and predict when, if and when, those kind of announcements would happen. Can I just ask about the railway station at Glasgow Presswick Airport? Prior to Scottish Minister's purchase of the airport, of course, it was the only Scottish railway station in private ownership. What, if any, plans do you have for the future ownership and the development of the airport railway station? The station is owned and operated by Presswick aviation holdings Ltd, and you're right to say that it's the only independently owned and operated railway station in the whole of Scotland. Glasgow Presswick is also the only airport with that direct rail link, and like the airport itself, it's not up for sale. The work that Roman Pai has done identifies a very significant need for a major upgrade to the rail station, and for the skywalk, those that are familiar with the airport know the skywalk that links the railway station to the airport. There is a significant need for upgrade to improve the facilities generally and to improve the customer experience around that. There is an estimated capital cost of doing that work, which is £4.75 million. That's not included in the capital programme for the airport for a very specific technical reason, and that is to do with the quite unique way that rail projects are funded. The cost of that project would be recovered through an increase in the regulated access charges that the train companies pay for using the station, so what now needs to happen is that there needs to be discussions with the rail industry to assess the viability and the affordability of taking that project forward and what the likely timescales for that might be, but there is no doubt that, in terms of the capital picture at the airport, being able to do a significant improvement to the railway station would be something that was very beneficial. John Scott is the local member. Would you like to ask any questions? Thank you very much, convener. I thank you, Deputy First Minister, for your statement, and I welcome your continuing announcement that this will remain as an arms-length operation and indeed your desire ultimately to turn it after a period of time to the private sector. If I understood the figures correctly, I welcomed the £4.5 million loan funding already invested in the last financial year and a promise of this year £10.5 million, coming to a total of £15 million, if I understood that correctly. What do you see as the on-going financial need for the next financial year and thereafter? Do you have a budget? Do you have a projection, a capital investment in 2015, 2016, 2017 and revenue as well? I have some other questions if I may come back to them in a moment. I am not able to give you precise projections for financial years beyond this one. One of the reasons I am keen that we have a regular reporting arrangement with the committee is so that, as the ability to make those projections becomes more settled, I am able to keep the committee updated. You will appreciate that there are a number of variables that we need to be able to take into account. I have already said that we need to do further work around the work that has led to the stage 2 business plan. We need to keep passenger numbers and flight schedules under review. We need to assess the success of some of the initiatives to try to increase revenue at the airport and keep the cost basis as low as possible. If I am making a broad statement here, capital expenditure in terms of backlog capital maintenance, would we expect to peak in this year and next year? That is understandable given that there is backlog maintenance that has been left for a while. In terms of operating cost, that depends more on the success of implementing a business plan for the airport. The more successful the implementation of that business plan, the requirement for operating cost support will decline over years. However, as I said, I need to be in a position to update the committee on that on a regular basis. Our ability to project forward becomes more definite. If I may convene it, can I also ask—we are all aware of the strategic value of Scotland, Gil Paterson referred to that in financial terms, but also the strategic value to Scotland and other airports, such as Scotland PLC, if you like, when the press rate remains open but other airports perhaps are closed due to frost or snow, as has happened not last winter but has happened in winter's past. Indeed, there is a UK strategic value in that regard as well as a military value for the closed connections for military aircraft from America. Is there any way that a value can be attached to that and indeed a price extracted from those who benefit from that, which, as I have understood, has never paid particularly for that apart from the individual incident when they needed to use press rate airport but did not pay for press rate airport to be open in readiness for that happening? The short answer to that would be yes. I think that that is something that the management team will want to look closely at in terms of trying to leverage a financial benefit for the position that the airport is in. As you rightly say, the airport is a diversion base for weather and for other incidents for the whole of the UK, and part of the big advantage the airport has is both the length of its runway and the fact that it tends not to be affected by wind, et cetera, so it is a very stable airport. Yes, it is one area where I think that there is work to be done in trying both to maximise and perhaps formalise the airport's role in some of these particular aspects but also look to see whether a financial benefit can be leveraged. I cannot say more than that at this stage other than to acknowledge that that is an area of work that the management team will be looking to take forward. As regards the corporate governance structures convener, can I just ask if South Ayrshire council will be represented on the strategic board or the day-to-day running board or both perhaps, or do you have a view or a plan for that because I know they are indeed very keen to be represented? We have discussions to obviously, can I say at this stage, I've said it before but it's worth saying again that all three of the Ayrshire councils and particularly South Ayrshire because of its closer proximity to the airport have been incredibly helpful to us and I'd want to put on record my thanks to them. So we want to make sure that we continue to include the airports very much in our thinking and our planning for the future of the airport. There's potential position for South Ayrshire in terms of help with some root development for example though you know there's as I say further work being done around the potential there and in terms of what form that takes and in terms of how that manifests itself in the corporate governance structure I think we've still got some discussions to have. I'm very keen personally that we find a way and it might sit alongside the corporate governance board structure that I've said of harnessing not just what the council has to offer but what the business community has to offer, what Ayrshire College has to offer because the expressions of support and desire to help from all of these people has been you know breathtaking actually and that's a big advantage so I'm quite keen that you know somewhere in that structure we find some formal mechanism to make sure that everybody that's got a desire to see Presswick succeed and perhaps something to bring to the table and helping us get there have a voice and are able to have that voice heard and I should say as one of the local emitter the constituency MSP I'd be very happy to discuss with you how you thought from a local perspective and Adam indeed how you thought from a yeah I've never been able to work it I think there's a very interesting thing here where I think the one way is in one of their constituencies but the terminal building is in the other constituency which kind of makes it sometimes quite hard to work out who the constituency MSP for the airport is so both of you I'd be very happy for a discussion about how that local interest can be best harness. I think that I think the dividing line may be the white line down the middle of the runway but we may have half of each. I may say nor do I intend to we are by and large speak with one voice in that regard. I would finally say and since Adam did raise this subject the name of Presby Airport and I welcome your decision to retain it as Glasgow Presby Airport I would however suggest perhaps as a way of I think you described it as a sentimentality of it but in terms of marketing I'd suggest that perhaps a strat line might be gateway to Robert Burns country included in it as it were but it would be known as Glasgow Presby Airport for aviation reasons which I believe are the most important reasons of all that it continues with that name so thank you. On that point firstly I just for my own as an Ayrshire girl I want to stress this I wasn't using sentimentalities any kind of pejorative term I I don't I don't just understand that I can assure a lot of sentiment around this but I think it's right to put that to one side for commercial reasons but you know as I said we are going to be commissioning some work about how we we might theme the airport with a burns theme and I think the potential for ideas like that can have come into play there. Mr Kelly. Thank you convener I've got two points. I think when this was first this issue first arose it was clearly cross-party supporting Parliament for the government moving forward attempting to save the jobs and support the economy I think given the magnitude of the investment that's been outlined here it's perhaps surprising that this isn't taking the form of a statement to Parliament as opposed to an update to the committee. Leaving that aside can I just try and understand where we are in terms of the numbers in terms of the 12 13 financial year is I understand that losses were running at 800 000 pounds a month and liabilities at the end of the year were 16 million pounds can I ask the cabinet secretary if that is still the case? I think can I say first of all I'm perfectly happy to make a statement to Parliament I'm here today because I offered to come back to the committee the committee accepted that you know I'm fully cognisanced of the importance of making statements to Parliament I actually suspect we've probably had a longer and more detailed discussion around this table today than we would have had in a statement to Parliament so you know I don't think it would be fair to say that doing it this way has actually reduced the amount of scrutiny that I've been subjected to on the contrary but I'm more than happy to make a statement to Parliament. In terms of the cross-party support there was cross-party support I hope we can continue that. I've never made any bones at all about how challenging this would be nor have I made any pretence that we can guarantee anything on any particular aspect of the the airport's sort of array of different business activities but I've been very clear that when we were faced with a stark choice of acquiring the airport or watching it close we took the decision that acquiring was the right thing to do and you know I hope we can continue with that support through undoubtedly what will be the ups and downs of this I'm sitting here in good faith I want us to be able to return presswick to profitability so that it can stand in its own two feet without government support and the taxpayer gets a return on the support it has to make in the interim will have ups and downs will have setbacks along the way and I hope will have some progress along the way but I hope we can all you know perhaps just put aside our party political differences and recognise we're trying to do this for what is an objective that I think we all agree with that we want to see presswick survive. In terms of your specific question about the losses I mean we I think Mark actually asked a question along these lines the last time I was at the airport and Sharon was able to give some information which I'll hand over to her in a second about some of the figures you use being associated in part with right off of assets and such like so I think the best way to look at this in terms of the government investment is through the figures I've given today in terms of what the investment will be in this financial year because that is what the taxpayer contribution is in terms of the ongoing operation of the airport but in terms of the the loss these figures and how that's made up can you amplify that Sharon? I think the one point that I would make is that when we took over the airport we didn't inherit the debt so Infratil cleared their intercompany debt when we acquired the airport so we started from a clean slate if you like so so the debt that's building up is basically the loan funding that we are putting into the airport which you've been made aware of the accounts for the financial year 1314 are currently being prepared at the moment so we will be in a better position in a few months time to to make people aware of the the figures coming out in the 1314 accounts and we will need to split that between up to the point of acquisition versus beyond the point of acquisition in November so once they've been audited KPMG auditors we'll we'll be able to issue information and they'll be there for the committee to you know scrutinise and ask questions on as as you see fit. Sorry sorry so are you able to see whether the loss figure is still running at 800,000 a month and are you saying that those liabilities of 16 million pounds have all been completely written off? I would want to see the breakdown of the numbers that you're quoting for the write-off to be able to confirm that but but as I say our position was that all the infaturned intercompany debt was written off on acquisition and I will come back to you on the running figure for the losses since we acquired the airport the losses up to the point of acquisition are from a perspective less relevant because we weren't funding those but the operating support in this financial year is as you know in terms of our projections at this stage for this financial year is as I have set out the you know one million for the money we had previously given and I've updated today that wasn't spent in the last financial year with a further three million pounds for the remains of this financial year that we project is required for the operating support of the airport. I appreciate what you've outlined in terms of monies going forward I'm just trying to understand what the starting position is. Well the starting as Sharon says we didn't inherit any of infertiles debt I mean I think obviously you'll appreciate I'm not trying to kind of be vague around any of this but you'll appreciate that you know asking questions about you know the the losses and I give that will be influenced by you know passenger numbers by you know the amount of bottles of perfume that passengers are buying in the duty free on a monthly you know ongoing basis when we publish the accounts for 2013-14 you will be able to see from the point of acquisition what that financial position has been and that will be the case for this year when those accounts are published but in terms of the position from the taxpayers perspective you know what is important is the information I'm giving today in terms of what the operational support from the taxpayer albeit in the form of loan funding is going to be to keep the airport operational. I understand that but it's still important if the business is going to become an ongoing concern it's important to understand what the level of losses are just now so we know what works have got to be done to recover that position and also what the liabilities are because they have obviously been involved in anything that the public corporations take on. Just to repeat and I agree with all of you I think this is about how we best report and are subject to scrutiny by parliament and you know I think you know as I said this before you know I think it would be good to have a kind of regular cycle with this committee that allows that information to be shared as fully as as possible but in terms of the you know the liability in terms of the debt of the airport all of the government investment at the moment is in the form of loan funding that is you know is debt of the airport we didn't inherit the debt previous to that when we acquired the airport so the debt position is the funding that I have outlined today. Okay just in terms of the funding obviously I've outlined £15 million of funding and an additional £5 million required for the railway though I understand what you're saying in terms of how that is funded and you said that in order to return the enterprise to a cash positive position I was going to take several years so clearly there's going to be further investment required and you spoke about producing a vision in terms of you know given the committee an update when will that be produced and I think it needs to be more specific than just a vision they need to be the main components of the business plan so that we can understand not just this initial investment but what further investment is required and when the plans are in place to ensure that the airport will return to profitability. I've already said that the vision document and I'm describing it as a vision document not to suggest that it won't have you know detailed information in it but you know that will be as fulsome as possible in terms of and I can have answered this to some extent in relation to I think John Scott's one of John Scott's questions you know I've been very full today in terms of the investment that will be required in this financial year there will come a point where you know we need to project and share with the committee future estimates of investment but you have I'm sure you do understand there are a number of variables associated with that with capital investment and you know that is easier to predict because we have a detailed sense of what the backlog maintenance position is that's why I've said that we anticipate this year and next year being the peak years in terms of capital but in terms of the requirement for operating support you know that will depend on the success and the speed of success in implementing the business plan you know I'm making an obvious point here but the more successful the management team are in growing the different strands of the airport's business the less operational support the Scottish government is going to require to put in and you know I can look ahead in this financial year as I've just done and make the projection I'm making you know obviously if anything happens to substantially change that I would expect to come back to the committee but in terms of future financial years that depends to some extent on our assessment at a later stage of the success of the early implementation of the business plan but you know I'm making very clear today I want to be in a position of sharing information with the committee as fully and as timely as I possibly can all I'm asking in return from the committee is to understand the variables that are at play in terms of making some of these projections when will your publication be made available we will aim to publish that as I say there's further work that I've asked to be done around the stage two business plan I've gone into some detail of that when I have that work completed I would hope to be in a position to publish that document within the next couple of months final point mr scott thank you convener i'm just a very small point for clarification he spoke about the 4.75 million pounds required for the for the skywalk and the station itself and he said that that was going to be funded through regulated access charges from the rail company now by that do you mean through network rail or do you mean through first scott rail or will it affect a new franchise holder can you give a little bit more information around that if you're able to what I said is that that is how it would be funded just to be absolutely clear I didn't say there was an agreement to fund it on that basis we need to have discussions I mean you appreciate we're in the midst of a re-franchising of the scott rail franchise so clearly this will have implications that the scott rail pays access charges to access the airports so it's scott rail not network rail and you know there would have to be discussions about an agreement to use those access charges and in case those access charges in order to pay overtime for the capital refurbishment of the station in addition to that as you'll be aware there is a commercial arrangement between scott rail and the airport about discounted fares in relation to flights depending on the stage of development of of different routes that would be a matter for discussion on commercial grounds between whoever is the new franchise holder and Glasgow Presswick in the fullness of time. Can I just finally ask cabinet secretary you know to put all this in context in terms of the investment has a figure being put on the cost to the economy and to the area of not investing not taking over the airport I don't I'm sure I could dig them up I can't remember I gave the sort of economic benefit figures for the airport both in the local economy and in the wider Scottish economy when I made the initial statement to Parliament but there is you know I don't misunderstand me here we're making significant investment in the airport but not just are we making that to deliver a return for the tax payer we're making that investment to avoid the situation where an airport that has lots of jobs dependent on it directly and indirectly that for Gil Paterson is no longer here but some of the reasons he was saying has a significant impact on the local economy and there's no doubt that the impact on the local economy had the airport closed that would have been significant and I think it does merit the action that the government is taking. Thank you very much cabinet secretary and your officials for that evidence and we move into private session as agreed earlier in the meeting.