 Welcome everyone to the fourth meeting in 2016 of the Rural Economy and Connectivity Committee. Everyone is reminded pleased to switch off their mobile phones. No apologies have been received before the meeting. The first item on the agenda is to take evidence on the draft prohibitive procedure of procedures on protected animals, open brackets, exemption, Scotland amendment regulations 2016. I would like to welcome the Cabinet Secretary, Fergus Ewing, Mike Palmer, who is the Deputy Director of Fisheries Marine Scotland, Andrew Vose, the veterinary adviser and Barry McCaffrey, the Solista, all from the Scottish Government. The instrument is laid under an affirmative procedure, which means that Parliament must approve it before the provisions can come into force. Following the evidence session, the committee will be invited at the next agenda item to consider a motion to approve the instrument. Can I therefore ask the cabinet secretary to make a short opening statement on this instrument, please? Thank you and good morning to members. The statement is of necessity, fairly detailed, convener. I welcome the opportunity to explain to the committee our proposal for amending the prohibitive procedures on protected animals and hope that committee members will concur with the rationale and the requirement for the secondary legislation. We need to change the current legislation to allow for the operation of the beef efficiency scheme. That is explained more fully in the accompanying policy document. The beef efficiency scheme was developed alongside NFU Scotland and has broad sector support. It aims to improve the sustainability of beef production through improved breeding stock and, in particular, to reduce greenhouse gas emissions. It represents a major investment of some £45 million in the Scottish beef sector to improve the efficiency, sustainability and quality of the Scottish beef herd. The scheme will help to increase herd profitability and form part of our world-leading approach to tackling climate change and will benefit our environment both locally and globally. A key element of the BES will entail tissue tagging of 20 per cent of farmers calves for genotyping, enabling the scheme to build up genetic data on the herd. The tags punch out a small tissue sample into a sealed container, which can then be sent for testing. In this way, the tags are different to official identification tags which do not normally remove a tissue sample from the animal. I have examples of both types of tags, so committee members can see what they look like and see the differences. Perhaps we could pass them round. The tagging will enable the active use of whole-life data on animals and active planning to help to improve cattle, genetics and management practice on farms. The proposed secondary legislation applies only to bovine animals. Under section 20 of the Animal Health and Welfare Scotland Act 2006, it is an offence to carry out or cause a prohibited procedure which involves interference with sensitive tissues or bone structure of a protected animal. However, the Scottish ministers may by regulations exempt any procedure that is carried out for a purpose that, in such manner and in accordance with such conditions, is specified in any regulations. Currently, the prohibited procedures on protected animals exemptions Scotland regulations 2010 as amended, the 2010 regulations include an exemption to enable ear tagging for bovine animals, pigs, sheep, goats and deer for the purposes set out above. However, those regulations do not allow for ear tagging for any other purpose, including genetic analysis. Hence, the statutory instrument is required to allow for the further exemption which would allow the tagging of bovine animals for the purpose of genetic analysis. It is important to note that this would not allow any new procedures to be undertaken in addition to ear tagging but would simply extend the scope of the current exemption. The first wave of calves to be genotyped will be this autumn before they are sold at market in order to fit in with industry needs. In short, to ensure that as many calves as possible can be captured for tagging in year one of the beef efficiency scheme before they are sold on, we are keen to obtain approval, if Parliament and the committee so decide, for the statutory instrument before Parliament breaks for recess on 8 October. As required in terms of the provisions in the 2006 act, we have carried out a short, targeted consultation of five weeks duration, which ran from 26 July to 29 August. That took account of the highly technical and narrow nature of the proposed exemption and the fact that we are not proposing to allow any new procedures in addition to ear tagging only to expand the scope of the currently permitted procedures so that they can be used for this specific purpose. There were 21 responses submitted to the consultation, 15 of which were supportive of the proposed legislative change. Those supportive responses represented organisations as diverse as the National Farmers Union for Scotland and Animal Concern. There were five responses from individuals opposed to the measure and one response which made no indication of support or opposition. Among those opposing the proposal, reservations were raised about the impact of additional tagging on the welfare of animals. Ear tagging does cause momentary pain and discomfort at the time of application, but there are rarely any longer term adverse effects on the animal and the risk of infection can be minimised by storing and applying tags in hygienic conditions. The welfare implications of applying a tissue tag are equivalent to those arising from the application of identity tags, which of course are already permitted. Furthermore, as a result of genetic sampling and the resultant improvements in genetic selection, we expect to see cumulative and permanent benefits to the national herd in respect of growth rates, feed conversion, maternal behaviour, nutritional practice and disease resistance. I hope that the opening remarks and the accompanying documents that we have supplied have explained the background and rationale for this proposal. Myself and my officials will be happy to answer any questions that members may have. There are a few of us around the table. Before we ask any questions, I would like to declare an interest as a cattle breeder and farmer and having used tags in the past. I think that Peter May wants to say something. Similarly, I am a farmer in Aberdeenshire. I have agricultural interests and I refer members to my register. Is there anyone else? Do you have an interest to declare? If that is all right and everyone knows that there are people with interests, I would like to ask the cabinet secretary if I may start with what other methods were considered before using ear tags such as the use of hair samples as had been done with pedigree breeds for over 10 years to provide the same information? That is a very apt question, the answer to which I read earlier. I am sure that my officials will locate the details. The question is a good one because, obviously, before we approve any change that involves any issue of animal welfare, we need thoroughly to examine what alternative measures there were for serving the purpose that I described in the opening remarks. Therefore, I understand that this is for memory and my officials will help me out and mark this answer out of 10. The alternatives were taking samples of hair, which involve practical difficulties about cleanliness, nasal sampling as well, which involve other practical difficulties and one other method. I think, but I am sure that Mr Vos will come in and provide a more comprehensive and authoritative answer. The other methods available are basically blood sampling, taking hair samples or nasal swabbing. In this particular case, we want a consistent, high-quality DNA sample and the best and most reliable way of doing that is with a tissue tag sample. Blood sampling would be a valid alternative, but that requires a vet to come in and take the blood sample. Obviously, there are practical and cost difficulties in arranging for vets to come in and sample the animal. The tissue tag sample gives a good consistent, high-quality sample of tissue that is suitable for the DNA extraction that is being proposed for the BES scheme. Can I push you just a wee bit on that? As far as I am aware, hair samples do exactly the same. They form the basis of what BCMS uses as a requirement for identifying animals without passports. Certainly, all the breed societies would use hair samples and find it very effective and it is somewhat less invasive than an ear tag. Although I do have to say that ear tagging has to go on, so this is a minor change, but I would just like to know and I think that people outside the Parliament would like to know that non-invasive methods have been looked at. I think that the hair sampling was considered in detail, but I think that there are problems if you are taking a large number of samples, as will be the case in this scheme. There are problems of hygiene and consistency of collection, so if you do it very carefully, you can get a good sample. However, if you are taking large numbers, you need a consistent, repeatable way of doing it, rather than hair sampling that might be subject to the vagaries of farmers adopting different techniques or maybe not doing it in the most hygienic conditions, which would lead to a sample that was contaminated and might lead to resampling. Cabinet Secretary, you made something of the fact that this will help our climate change plans. My knowledge is incomplete, but I understand that there is considerable genetic variability in the amount of methane that is emitted from various bovine's rumans, partly from diet and partly from different bacteria that live in individuals. Is that what you are referring to when you look to get a benefit for our climate change efforts in reducing the methane from the ruman of bovine's by breeding selectively for those that will emit less methane, or do you have something else in mind? That is certainly an important component of the rationale behind those rules and the beef efficiency scheme. That is a very major scheme involving, as it does, £45 million of financial support towards the sector, which is a substantial contribution. I will bring in the experts again to give an authoritative opinion, but my understanding, and indeed from a meeting with Jim McLaren and Julie Morton of the quality meat Scotland yesterday, is that a key component of the quality of our herd is that one must have as healthy stock as possible and healthy stock tend to emit less methane, putting it crudely. I hope that I misunderstood that, but that is certainly one of the objectives, one of the aims of the beef efficiency scheme is to further drive up the quality of our herd. Indeed, the committee would benefit at some point, not for me to dictate committee business from an exposition, from QMS of the wider policy aims and the benefits and the considerable advantages that we enjoy in the moment. That is the relative low consumption of protein that our herd consumes in relation to the international average, which is quite remarkable statistics. In any event, going back to the original question, perhaps I could bring in Mr Vos if he could expand on what I have already said. The scheme is very much about gathering together a data bank that will allow us to introduce more efficient farming techniques and management practices that will reduce those emissions coming from methane. For example, we will be gathering data on the sire identity, on the carving ease, the calf figure, the calf weight, the cow decility. We will be gathering from the genotyping samples phenotypes, which are the traits of the different cattle. From that, we can put together a meta database for the Scottish herd. At farm level, there will be an advisory service put in place within the scheme for each member of the scheme so that the farmer can talk one-to-one with an advisor and in a group setting with an advisor to talk through how the data that they have gathered on their herd can then be applied to more efficient farming techniques. This is based on evidence in terms of the fact that we have looked at a very similar scheme that was pioneered in Ireland, which has had successful results. We are not going into this blind. We are going into this on the basis of very good evidence from a pre-existing scheme. That has shown that gathering the data in this way gives us that information that allows us to improve the efficiency and therefore reduce the emissions. You might not be seeing, but I can see various members of the committee catching my eye around the table. There are some questions lining up. If I can finish, please, Stuart. Is it without meaning to reduce the quality of your answers? Maybe we could keep them as short as possible and as punchy as possible so that I can get everyone in, otherwise I think afterwards that they will be after me, not you. Stuart, if you would like to follow up very quickly. It is just to clarify, you said meta-database. I would understand meta-data to be data that describes the use of data rather than being a database. What do you mean when you use meta-database? Perhaps it was wrong to say meta-database in that technical respect. You build a database of the whole herd, as well as at the farm level, so you have it at two levels. Peter is next. I have some questions about the practicalities of the thing. Thank you for coming along with an example of the tag. I was interested to know what was actually going to be printed on the tag, but it would appear if that is how it is going to look. The herd number and everything else will be on that tag. I had a thought that it might be more like a management tag, which is a blank tag that you can write your information on it. We actually put in three tags, and the third tag is a management tag that we write on with a pen. That might have been more suitable because we know if it is going to be like that, I am going to have four tags. My suggestion might have been that a blank management tag might have been more suitable for that one. The third question is, if the cattle lose this tag before they are slaughtered, does it have to be replaced? The third question is, is the farmer responsible for ordering these tags or do these tags arrive on site because you know that we keep cattle? Mike, do you want to answer all those practical points? The first question is, the genotype tag will have the identity of the calf printed on it to make sure that we have the right calf and we can trace it all the way back. If a tag for some reason becomes dislodged from the calf, then that is a circumstance that we will deal with on a case by case basis. We would obviously then be in communication with the farmer about how to respond to that. It may be that it is felt that if it is just one calf that we can let that go if you like, that it does not affect the bank of data sufficiently for us to need to go back and retag or whatever. We will deal with that on a case by case basis in a pragmatic and practical fashion. The third question I think was about the supply of the tags. The tags will be sent out to the farmers. The farmers will be told before the tags are sent out which calves are going to be sampled and which have been identified for tagging. Then the tags will be sent out free of charge to them. All they need to do is to apply the tag, take the sample, send it back to the lab. There is no payment involved for the producer and the transportation and the processing of the tag is all done by the lab. Just to follow up, you are aware that the tags get lost on a fairly regular basis. It would be good if there was a pragmatic approach to that. We are only starting with 20 per cent anyway, so I would welcome that answer because it could become a very complex issue if you have to apply for these special tags and replace these as well as all the other tags that we know we do have to replace anyway. I think that it is a very sensible point that Mr Chapman has raised. We will take that way and look at it. I am very keen that we should not have any undue penalties and that should not be the approach that we take, but whilst ensuring that the rules are properly observed. We will take that away and write to the committee on the matter. Many of the questions that I was going to ask have just been answered. How many tags do you have on them just now? How many tags does a cow go to half? At the moment, legally required to have two identification tags. As Mr Chapman said, they could have a management tag. They might have a BVD testing tag. That might be the need for replacement tags if tags are moved. Do we honestly need multiple tags? I will declare that I am not a farmer, but I have seen cows at the Royal High on Show, an excellent beef cattle that we have. Are those tags that we have just seen replaced the other tags, or are we physically going to have cows walking about in fields with five, six or seven tags on them? There is the possibility for the ES sample to be taken from one of the primary identification tags, so that option is already in the scheme. That is possibly something that we could look at in the future. Can I suggest that the tags that I have seen that look very good replace the original tags or the first tag that is on an animal at the end of the day? We do not need multiple tags. All we need is maybe one of possibly two. Can I put that suggestion to you? I think that that is a yes. I do not think that it is a yes, but we will go away since we are going to write to committee. It is a perfectly valid question, and the proliferation of tags is one of the issues that was raised. How many tags can, was it reasonable in terms of animal welfare to put? My understanding is that it is not the case that we are talking as many as you have mentioned, but we will take it away and provide a specific answer to committee. Let us do so now, Mike. If I can, can you? Sorry, Mr Palmer. Driving along the road and people go out in the countryside, we see cows putting their heads up and down against fences or whatever, and the point that has been made, I am sure that some of those tags will come off. I think that we have to minimise. I think that we have to do it. I agree with the SSI, but I would suggest that we do not need multiple tags on a cow. I think that you are being asked, and I would certainly follow up Richard's comment in the sense that you have got your two mandatory tags. You could have this tag, you could have a fourth metal tag as well if you are in a pedigree herd and you want to keep a registration, and you could have a management tag as well. It could end up looking better than going out on a Saturday night with lots of earrings, but from a cow's point of view, the less we have in the ear, the less chances are that they will catch. I think that you are being asked to maybe look at that again. Can I just move on to Jamie? I got the impression that the cabinet secretary did not want to give an answer there, but maybe if he does, he is welcome to do so. Mike can provide any more information that might be of use. By way of background to say that we have looked very carefully at that option in developing the scheme because our aspiration is to reduce the number of tags as far as we can on cattle. Clearly it would be preferable, more efficient and better for the cattle if we can reduce the number of tags. The situation that we are in at the moment is that because this is quite a groundbreaking and new scheme, and genotyping is a new development for cattle, we need to be very careful in scientific terms about the number of variables that we can control. By having a separate tag, we are controlling the number of scientific variables that we have, and our scientists gave us very clear advice that would be advisable at the current time. To back up what the cabinet secretary said, we are very open to trying to streamline that in future years. We have more years of the scheme coming, so we will look towards streamlining in the future. Jamie, you had a question. My first question is to Mr Palmer, and my second is to the cabinet secretary. I presume that the point of the tagging is the collection of the tissue sample. What is the point of the tag itself? Is that just to identify that a tissue sample has been taken? In other words, if it is just the one-off event, surely there would be another method of using the ear to take a tissue sample but not leave any permanent legacy of that sample having been taken. Given that it is not an on-going process, what is the point of the tagging for the duration of the life of the animal? I think maybe that goes back to a certain extent to the point that we discussed before about alternative methods of taking samples. One could take a sample through a hair sample or through a blood sample, but as we have discussed there are various difficulties in that. Tagging is the most efficient and reliable way of taking a high-quality sample. It so happens that that means that there is then a tag applied. We have looked at the other methods of doing that, which would not involve a tag and it is just not sufficiently reliable with the current technology. I think that the other point is that the tag provides a permanent record that ties that sample definitely to the animal from which it was taken. My second question briefly is to the cabinet minister and that is on the scheme itself. Is that a mandatory scheme? Perhaps it is already in the notes here but it is wanted to double check. Given that we are looking to go for 20 per cent of herds at the moment, will all farmers be automatically sent the tags or will they have to sign up to the scheme practice? If so, what is the benefit to the individual farmer in addition to the wider benefits of the scheme? The scheme is not a mandatory scheme in respect that we were not obliged by law, EU law or otherwise to deliver it. We brought it forward in order to promote further the success of the beef sector in Scotland. I believe that, with the advice that we had, that to promote beef efficiency, as has happened in Ireland, is a key method of improving the quality of our stock and thereby the profitability and success of the sector in Scotland. In particular, a very competitive position in relation to cheaper beef coming in from places such as Argentina and even Ireland. I think that that is the answer to the first question about the scheme itself. I think that the rest of the questions were perhaps more of a technical nature if I could ask Mike to address them please. What benefits to the farmers gained from the scheme? There is a financial payment that is given to each member of the scheme to compensate the member for the tasks that we are asking the farmer to deliver for the scheme. There is a yearly payment that the farmer gets. Then, of course, there are benefits beyond that which will accrue from the more efficient farming practices that result from the scheme. As the cabinet secretary has said, we are very confident that that is going to deliver much higher standards and much better outcomes for our beef herd in the future and more profitability as a result. I have not seen any more questions. One thing that I would like to push, if I may, on the cabinet secretary is the replacement of those tags once the information has been gathered. The genetic details of the individual calf has been recorded against the animal on the database that will be kept and kept by farmers. Should the tag get lost and Mike, with the greatest respect, tags do get lost more regularly than you perhaps accept, I would ask that a pragmatic approach needs to be a really pragmatic approach on whether to go back and re-tissue sample again with the same tag just to get the same use. It will not be used data at that stage just for the sake of having a tag in an animal. Can I push the cabinet secretary to be as pragmatic on that as possible? I think that I have already indicated that we take the point that was raised earlier as one that is an important one. It is not one that we should brush aside, but we should look at and consider very carefully. We want to take a pragmatic, not a penal approach to this, but we have to observe that the scheme does require the rules to be met, otherwise the benefits therefrom will not be realised. The process of inspection, which routinely takes place, will, of course, check the tags and we need to take a pragmatic approach on the specific issue of replacement. I do not know if you have anything to add, Mike, or whether we will just come back to committee later. No, I do not think that I have anything to add. I absolutely agree that we will need to take as pragmatic approaches as we possibly can, and that is certainly the spirit in which we will be delivering the scheme. Unless there are any other questions, I would like to thank the cabinet secretary and his officials for the evidence that they have given. It has been very helpful. I would like to go on to the second agenda item, which is the formal consideration of motion S5M-01446, calling for the committee to recommend the approval of the draft prohibitive procedures on protected animals, Exemption Scotland, Amendment Regulation 2016. I invite the cabinet secretary to speak to and move that motion. I think that I will just refer to the remarks that I have already made, which were not short moved. I invite any further comments and questions from the members. I think that, from the questions that have gone ahead and the responses that we have had, this is an enabling legislation to enable tags to be fitted to cows, to animals, and I think that it should be supported for obvious reasons. I would like the minister at some stage to consider bringing forward legislation and instrument to say that there should be a maximum number of tags on an animal, because I think that that is important for animal welfare perspective. If the minister wants to answer that, I feel that the minister has given a clear indication that this is going to be looked at as his officials, and I think that your comments are very much noted because they reflect the position that the committee has taken. I think that we should support the SSI. That was the point that I was going to make, Mr Rumbles, that I am sure that the cabinet secretary is taking away the suggestion that we certainly look at and minimise the number of tags that go on animals. I am quite happy that the scheme will be of benefit to the producers of beef in this country, and I will support it. On the basis that no-one has caught my eye, there are no further comments or questions. The question is whether motion S5M-01446 in the name of Fergus Ewing be approved. Are we all agreed? If we are agreed, then we are agreed. Thank you. That concludes the consideration of this affirmative instrument, and we will report our outcome to the Parliament. I would like to spend the meeting briefly to allow the cabinet secretary and his team to adjust before the next session. The third item on the agenda is to take evidence from the cabinet secretary for the rural economy and connectivity on the common agricultural policy payments. The cabinet secretary has now been joined by two different officials, David Barnes, who is the chief agricultural officer, Jonathan Price, director of the agricultural food and rural communities, both from the Scottish Government. I welcome you both to the meeting. We have a huge amount to cover in a fairly short time, so I would like to go straight into questions from the members, if I may. The first question that I have got down is relating to payments, and it is from Stuart. Fairly simple questions. I will ask two questions, if I may. How much has now been paid out under the basic payment scheme, greening and the young farmer payment, preferably in pounds, and the NFUS are suggesting that 9 per cent of the 2015 budget has not yet been paid out? Is that the figure that you have, and when do we expect to reach near or at 100 per cent? First, we have continued to make fairly solid progress since my statement last week. The figures are published weekly, as members will know. As at 16 September, the total in respect of BPS, greening and young farmer payments stands at £329 million to 17,866 claimants. 17,634 amadvised have received payment in full. Members will be aware that we publish this data each Friday, based on figures at close of play the previous Wednesday. As to what remains to be paid, it should be remembered that the Government has offered loans to farmers who have not yet been paid to provide cash flow. Around 90 per cent of those loan payments have been recouped. Turning to the first question, convener, the second question is that it is estimated that £4 million remains to be paid under the beef and sheep schemes. The net amount remaining to be paid under the BPS, greening and young farmer schemes, the pillar 1 schemes, after allowing for loans, is £5 million to £6 million, giving a total of around £9 million to £10 million for the pillar 1 schemes. Finally, let me reiterate what I said before. Getting this sorted in full is my top priority. A huge amount of work has been devoted to that, and I personally will not be satisfied until every farmer has received payment of their due in total. I am going to call Mike now. On 70 July, I asked a parliamentary question to you, and you were good enough to respond to me yesterday. You said yesterday that the latest figures showed that there were 473 farm businesses that had received nothing, and there were 230 farm businesses that had received something. I just got this from you yesterday, and I am not sure how that squares with the figures that you have today. Could you repeat so that I have this clear, how many farm businesses remain to have so far received absolutely nothing? Most of the figures that you mentioned will have received loan payments, and I want to make that clear. I am being asked to come up with a very large number of statistics, and I will do my best. I think that I need some assistance from officials here, because the last thing that I want to do is provide any incorrect figure through inadvertence, and those are important in complex matters. Perhaps I can ask Mr Price to say where we are in respect of the specific matters that Mr Rumbles has raised. As the cabinet secretary has said, almost everybody who has not yet received an EU payment has been given a loan or has been offered a loan. There are certainly fewer than 100 claimants that have not had either a loan or their EU payment. In terms of the EU payments, the data that you have in the PQ relates to the position as of last Wednesday. I believe that it states that there are 473 businesses that are still to be paid. There is a further 230 that have received a first instalment, which will be about 80 per cent of their payment, but those 230 will still be awaiting the balance, which will be roughly 20 per cent. Those are correct figures. There are 230 that have received something, and 473 that have received nothing. I understand that the last majority of the 473 will have received the offer of a loan. My question was about how much, but I think that I am entitled to point out that you said that they have received nothing. That is not, I believe, factually accurate. In almost all cases, they will have received a loan. The information that I have, convener, just to finish this off, is that over 99 per cent of eligible claimants have either had the cap payment or the offer of a loan. I would not want anybody to misrepresent the number of claimants who have received nothing whatsoever financially, and I am sure that Mr Rumbles would not wish to do that either. I would like the minister not to obfuscate here. The point is that I am not talking about loans. When a loan is given to a farm business, it is not covering the whole amount of money that they do. You made that clear. My question is simply, on the two issues here, the information that you gave me yesterday in this parliamentary answer was that 230 farm businesses have received part payment of the money that they were due nine months ago, and 473 farm businesses have received no money that they were due, but you say that they have been given a part loan. The point that I am making is that 473 farm businesses have not been processed. The point is that 230 farm businesses have been processed and received part payment, and what you are telling me is that 473 farm businesses have not been processed. I just want to make sure that we have the figures right, because we cannot discuss anything unless we understand what the figures actually mean. That is the point. I think that we are struggling to agree here. We are not disagreeing. The figure of 473 has been confirmed, and I have put it in context that that does not mean that those individuals have received nothing at all, but that most of them will have received a loan payment. In most cases, the loan payment will have been of the order of 80 per cent of the pillar 1 entitlement. It would be useful to focus on this, convener, that every year there is a tale of difficult cases that, for one reason or another, have not been settled in full. It would be helpful if officials could describe what those cases involve. Some members, especially those in the farming community, will know that there are difficulties regarding reductions, exclusions, private contract, cross-border cases and entitlement cases. All those cases exist every year and pose particular difficulties, and some claims are not eligible at all. I think that it would be useful, convener, to avoid any misunderstanding if there was an opportunity for Mr Price to add to anything that I have said about the fact that there always is a tale of cases. There is a higher tale this year than before, I accept, and we are working very hard to get through the cases. As I said before, I will not be satisfied until every farmer has received payment in full. I think that the Cabinet Secretary has been quite clear that there is a tale, and I think that we accept that. You have given a very full answer for which I am thankful, and you have explained what the tale could include. To add to that, I am not sure that it would be helpful. I think that what would be helpful is to clarify and ask the Cabinet Secretary to ask his officials to come back to us post the meeting just to clarify so that we all understand of those 473 people how many of them have been paid and how many have by use of a loan and how many of them have received nothing. I think that to chase that round any more would perhaps be unhelpful. Peter was just next. What I should have said, Cabinet Secretary, and I would like to make clear to Jonathan David, but I declared an interest at the start of this meeting that I am a farmer and I am part of a farm partnership. Peter Chapman has made the same declaration. I am happy to make the same declaration again, but I believe that I have made it. I believe that Peter has made it. I would like to move straight on to Peter and then come on to you if I may. We all know that there has been a problem of payments, but there has also been a problem of explanation, a problem of documentation. This was a new scheme and no farmer at the start of this scheme knew exactly how much he was going to get under the new scheme. As payments have come out, there has been very little explanation, very little documentation to explain what has been paid. Sums have arrived in bank accounts. No explanation. Is there more money to come? Is this all we are going to get? It has created huge difficulty out there because farmers have had no ability to plan ahead to get a feel for if there is more money to come or if that is the total sum. That backlog of explanation documentation is still out there and that is something that needs to be cleared up as well. I fully appreciate that we need to get the money out, but we also need to get the explanation out as to how you have come to this sum of money and whether that is the total amount that is due. I think that it is a matter of record that there was in relation to the IT difficulties, the administration of an extremely complex scheme, as will be known, where land is divided into three categories, where we have 4 million hectares, 400,000 fields. Each is the average size of five football pitches and where the need for accuracy is such that the permissible area of error for the purposes of audit for the purposes of assessing disallowance is a goldmouth area. The complexity of the scheme is well understood by farmers. On the topic of explanation, farmers are aware that the scheme is complex. Of course, they all knew that there were difficulties with the IT. I believe that it was the case that the nature of the loan scheme was clearly explained and was by and large appreciated. Looking forward, I entirely accept that there is a need for explanation. That explanation was provided, I hope, by myself at the statement last week in relation to the £216 loan scheme, which will inject up to £300 million into the rural economy in the first weeks of November, at a time when some farmers may be making decisions about investment. I think that there is a need for explanation. I am not sure that it is fair to say that there has been no explanation, but I am very conscious of the need for explanation. In that regard, I can assure Mr Chapman that, in relation to the forthcoming loan scheme, we have an appointed official in charge. We have a team of five working on it. I personally have been involved in two drafts of the letter to farmers, cognisant of the fact that some of the letters to farmers have been couched in perhaps too much legal jargon and not enough common plain English. I have borne that in mind in the wording of the letter, which should go off, I believe, before or around the end of this month. I think that it has been explained that, in order for farmers to get their loan, which will be in normal cases up to 80 per cent of entitlement, they require to complete and return the form before 12 October. I welcome this as a further opportunity to make that clear. Therefore, the need for explanation is absolutely accepted. As Cabinet Secretary, I am determined to make sure that we provide that as best as possible. Regarding the cap payments proper, I have undertaken to come back in January to provide further information at that point. By that stage, I hope that we will be able to assess all the various other issues in relation to penalties and the administration of the cap payments proper, which I am sure we will come on to discuss. However, I think that the need for explanation is an entirely fair point, and it is one that we are bearing fully in mind. I do not think that there is anything else that we need to add to that. David, unless you want to say anything on that in addition to what I have said. As you said, Cabinet Secretary, in terms of the big picture explanations of schemes, a great deal has been done for individual farmers on their cases. There are letters outstanding that will be sent to individuals to explain the position for their individual claim. We are prioritising getting the remaining payments out. That is our top priority at the moment, and that will affect the timing with which the letters ultimately come out. We would have wished that those letters had issued sooner in an ideal world, but given where we are, the correct prioritisation is to prioritise the remaining payments over the letters, which will then come out in due course. Can I just clarify, Peter? You have had a fairly full answer on that. Was your question directed more at the fact that farmers did not know the full scope of their entitlements and whether they had paid that, or whether it was a question to see what was happening in the future? It was the payment window that we have been working through for the last nine months. It was an explanation of the monies that have come into bank accounts, because monies appear in bank accounts with no explanation. It is fine to get the money, but you need to know if this is the total sum or if it is a part payment or what it is. It is awful difficult to manage your business and plan ahead if you do not know if there is more to come or if that is your total sum. That is what I was highlighting. I accept that all businesses need to have a reasonable certainty and clarity about what the future holds. It is possible for farmers to log in under the IT system in order to garner that information in respect of their case. That is one of the aspects of the scheme that I know has been useful to some farmers. Having said that, I am sure that I may now receive some letters of complaint that not all farmers have been able all the time to access that information, but it is one of the benefits, obviously, convener of the IT system. I am sitting here listening to some of the questions that have been made. In the last session, I was previously in the rule of phase committee, and even I knew that I am not a farmer, that some changes were going to be made and less payments were going to be made and less applicants were going to get payments. I want to be clear on the point of reiterate the 400-odd applicants. It is not a fact that they have not received anything. If they have not received their payment yet, they have been offered alone. Can you just again confirm that? It is not a fact that people have not got in and have not been in contact with. They have got an offer alone. That is certainly what we have aimed to do. Over the summer, following a statement in the Q&A last week, convener, I made it clear that, over the summer, I asked that the records be checked at the 17-area offices to make sure that everybody had received an offer of a loan. As a result of that exercise, an additional 30 businesses were identified and they then were offered alone. Not everybody, of course, takes them up, but everybody has had an offer. While I am not satisfied until every farmer has received payment, I was determined to make sure that every farmer eligible should have the opportunity to obtain a loan precisely to ameliorate and mitigate the financial circumstances that are extremely important. That is why we have embarked on the loan scheme for 216. I was absolutely delighted that NFU President Allen Bowie said that, by doing that, we showed a clear commitment to the wider rural economy. He added that, knowing that up to 80 per cent of your support package will be delivered in early November, it gives clarity and certainty to farm businesses. That announcement will have a positive impact on the whole rural economy. I was very pleased in the good working relationship that I have with the NFU and its president that that was the response that they made to the statement last week. It was really on the back of that. I know that you were not wanting to labour too much on that, and there are so many other questions that need to be asked today. I know that the cabinet secretary a little earlier was going to reflect on some of the complexities that are involved in some of those cases. I know that you said that, although that might not benefit the committee to hear that today, I think that I am not a farmer and I do not understand some of the complexities involved in those applications so that even if we do not have time to get a full explanation on that today, if it would be possible to have that information sent to me. To hear exactly why in some of those cases, if people have not received a loan, offer or a payment, why that is and what is holding up those other cases and why that is taking so long. Cabinet secretary nodding his agreement. If it would help very briefly if Jonathan could just give a list of the cases without explanation of some of the types of ones that would delay, that might help Murray, but it would be useful to have a written response to that as well. In summary, the main reasons why we have had this long tail in this particular year has been because of a number of things that are brand new in the more complex new cap and therefore things that have to be done in the first year of the new regime that won't have to be done in future years. There is a lot of allocation of land parcels fields to one of the three regions that is an inherent part of the calculation of the basic payment scheme. That is something that we have to do this year and we don't have to do in future years unless there is a new land that comes in. The other significant factor that has affected the tail this year has been that some of the most complex functions have required the IT to be built to properly reflect those functions and they have taken longer to come through. The development of that part of the IT is a year one issue that should be there for future years, but it has taken longer than we would ever have expected to get some of those IT fixes in place. If we may then, we would like to just ask the cabinet secretary on issues to do with extra work and input. I have a question to start, if I may, is that farmers welcome the extra effort that has gone in to try and process this situation that we are in. The cabinet secretary wrote back to me after the last meeting and gave me an indication of the extra costs in the form of extra staff time, extra overtime, extra staff required and any expert advice that was needed. Could you summarise that as of today's date, cabinet secretary? We actually know what the failures of the system cost, because I think that that would be useful. I will certainly give you information. I am not quite sure I would accept the last sub-clause of the question, which I think added a slightly tendentious element to it, if I may say so. However, we have always made it clear that in ensuring that the cap payments were delivered and the problems overcome, we asked staff to give more than their normal contribution. I am delighted that they did so. I visited eight area offices and spoke to the staff and tried to understand, as the guy carries the can, what the problems were and learned from them. I can say, for example, that in terms of the overtime costs that you have asked about before, the rural payments and inspections division area office staff, and there are 400 of them, approximately, worked a total of 3,567 hours overtime between 1 February and 30 April at a cost of £106,000. That is £106,000 overtime for—this is just one statistic, there are lots of others. I mean, I can go on and on for several minutes if you want, but just think about that. Overtime, 400 staff, £106,250 each, £106,000 small fraction of a city financiers bonus. We have got this from dedicated public servants and I would be astonished if any member said that that was anything other than the right thing to do for farmers and a relatively modest cost for the public purse, providing for excellent work from staff who themselves are very often from or related to the farming community and who are well trusted and respected by the farmers who every day are determined to assist to the best of their ability. So I make no apology whatsoever for this. I don't know if the Conservative policy is that this should not have taken place, but in my shoes, as the Government to Cabinet Secretary responsible, I think it was money well spent. Okay, if I can drill you down then, Cabinet Secretary, you gave a figure there for a short period of time. This situation regarding farm payments, if you'd prefer it called that, has started in November last year, if not earlier, and actually went on and is still going on today, as we've heard. And you gave a small figure. I would like to actually know the total cost, if I may, for split down, as I asked at the last meeting, for the extra staff that have been employed, how many they are, how much they've cost and the extra overtime right the way across the board. Now, I actually think that Cabinet Secretary's comment, if I may, about the staff in local offices is perfectly right. We farmers absolutely rely on them, and we're very grateful for the extra work that they've done. But we've had to ask them to do extra work, and it's only right that we account for that extra work. So I would ask if the Cabinet Secretary could give me those figures, please. Well, I can run through them now, if you want, but it will take several minutes. I'm happy to have them as a written answer, opposed to this committee, if I may. Well, I will certainly look and see what we've written already, and if further information is required to supplement that, I will certainly do so. But I've got a lot more information here, but I think I've made the point that I wanted to make. I think I as well. Gail, you have a question on the extra work in loans. It was going to be on the loan scheme, and I know that it's been welcomed by all the farmers that I've spoken to. I think that most of it has actually been covered, so I thank the Cabinet Secretary for that. I'm also talking about the staff in the local offices. Every time I've had to deal with them, they've been absolutely amazing, and I'd just like to add my thanks to them and all the hard work that they've done. Can the Cabinet Secretary tell us about all the different payments, because they don't all happen at the same time, and there are a number of different payments that are paid out throughout the year? Just to give us a brief outline and an understanding of when each payment happens or is due to be paid. My colleagues are more expert than that, but essentially there are two types of payments—pillar 1 and pillar 2. The figures that I referred to earlier are in relation to pillar 1, which covers basic payments, greening payments and young farmers' payments. Those are three categories. The other payments cover particular schemes that support various different types of farming activity. In recent years, the single farm payment, which has been replaced by BPS and greening, was paid in December. The less favoured area support scheme in March and beef coupled support in April for 2016-17 for BPS and greening will issue in November, with the balance starting to be paid early in the year. We would be aiming to deliver LFAS and coupled support schemes as close to previous timescales as possible, but recognise that those could possibly be delayed by a month or so. There are also a couple of special schemes that are generally paid later in the year, such as rural payments and so on. I do not know if I want to give a complete answer to Gail Ross. I do not know if there is anything I have missed out that Mr Barnes or Mr Price could add. As members know, the common agricultural policy is split into its two pillars. The cabinet secretary explained what was the previous practice and the plans for the pillar 1 scheme. Of course, he did not give any previous practice for the sheep, the Scottish upland sheep support scheme in previous years, because that was a brand new scheme in the first year of the new cap. Those pillar 1 payments are subject to a European payment window. Pillar 2 payments are not subject to the same payment window and have generally been made later in the year. The cabinet secretary has mentioned them, the rural priorities scheme and the land managers options scheme. Those are legacy schemes. Those are contracts that were entered into with farmers under the last pillar 2 Scotland rural development programme. Those contracts will tail off as they come to the end of their life. We will, from 2016, begin to be paying out under the equivalent contracts under the new Scottish rural development programme. The so-called agri-environment climate scheme payments will begin and will take the place gradually of the rural priorities and the land managers options. I would like to move on to discuss the issue of the IT in relation to the scheme. Rhodo has a question to start. Can I ask how much the scheme has cost to date, the IT system? What is the total budget for completion and when do you expect to be fully complete? As at 31 July this year, the cap futures programme has cost £140 million. The total budget for completion is £178 million. The principal cost is that of the new IT system, but the programme budget also includes other necessary elements such as staff trading and programme management costs. The two figures that the member wanted to elucidate from me are £140 million to date and £178 million is the total. That is the end of the duration of the programme for which the budget was set. Will the computer system be provided at that date in the form that it was contracted or will that have changed because of the problems that have been faced? The computer system is designed to deliver the functionality to enable the administration of the new cap payment system. The cap payments from year to year change. In other words, the rules change, the programmes change and that adds to the complexity. The commissioner Hogan has indicated that there will be changes to BPS in the coming year. So, whenever there is any change, that requires the IT solutions to be followed, the IT fixes, as they are called, or functionality to deliver various specific aspects of the scheme. So it is a dynamic scheme and it is not static, but the programme does provide the framework for delivery of payments. Of course the budget is large and we are mindful of the Audit Scotland reports to which we have responded in full. However, it is reasonable to point out that although the budget was substantial, it was conceived and designed to administer payments totaling £4.6 billion. So considering the cost of the computer system in relation to the job that it was to do in terms of the total figure that it was designed to enable payment to be administered, it was a relatively small percentage of that total. However, plainly, we have to do what we can in order to address the financial issues. I might well be asked about that and we have certainly achieved some reductions in the budget, which I can go into if members are interested. So it has not been scaled back in any way. Is that correct? Is that what you are saying? That the computer system itself has not been scaled back in any way? Well, I think that it would not be correct to say that. I do not in any way ever wish to mislead parliamentary committee. I think that originally there was to be intended or hoped to be functionality, for example, text messages to be delivered to farmers. It was decided early on that, with the more immediate challenges of administering payments, additional functions such as that might have to wait for another day. I mention that because there were originally some functions that it was desired to have that have not been delivered and we do not anticipate delivering them by March 17. I am not sure if that is what the member was driving at or not. That is what I am driving at. It would be useful to get a note of that. I think that there was one or two other aspects in that and I am happy to write to the committee to list any functions which, if you like, have not been delivered. I have received lots of letters from members diligently representing constituents and, quite fairly speaking, on behalf of farmers who have had problems with receiving their payments, I do not think that I have received one letter complaining about the lack of a text message. However, I could be wrong and I will check that out as well. I think that there is probably a hierarchy of need here in money. It takes presidents over a text message, but it would be useful to know what has been scaled back. Given the problems that have been faced with the whole system, can I ask whether the developer is subject to any financial penalties for the delays that would cover some of the additional costs that are faced by the Scottish Government? Obviously, we have had a long and detailed process, much of which took place prior to my appointment of our dealings with the contractor. I myself have met Steve Thorne in June and earlier this month. We have achieved reductions in respect of the payments due under contract. We have the details here. We are also looking and, I believe, expecting to deliver further improvements and savings, if you like, under the contract. I think that we have the details here. Neither of my officials seems to be able to find them, as far as I can see. However, we have taken very seriously the task of ensuring that, as far as possible, we hold the contractor to account, to deliver functionality and also to ensure that there are no elements of excess payments being paid under the contract. That has been something that we have dealt with extremely seriously. I am happy to write to the committee with the details, because there have been some positive achievements, relatively minor, perhaps in the scheme of things in relation to £140 million. I think that the savings of a couple of million have been achieved and further measures have been added to contract to incentivise success going forward. Is it useful to have a note of that and to be broken down into efficiencies and also into penalties to the developer? Mr Price is now happy to give some more information, which might be of help. Certainly, we have been working with the contractor to press down on the costs of the system. From November, we were expecting to see a reduction of about 10 per cent or more in the costs of the contractors. That is essentially a reduction in the costs that the main supplier is underwriting. There are no penalties payable? If they are unable to reduce the costs of those contractors, they have committed to us that they will bear the effect. That could be a penalty for them. It is not a penalty imposed by the Scottish Government. I am trying to drive at whether the contract was written in a way that had penalties built in if there were problems such as those that we are now experiencing. The other thing that we have reintroduced is a penalty regime and a service credit regime that means that the contractor is incentivised to meet the timetables that they commit to, but also that they incur penalties if they do not meet those. Those are additions to the contract. Those were not in the original contract. The original contract allows for penalties and a service credit regime. What we are doing is putting them properly in place for the next period, for the remainder of the programme. I am sorry, I am not following you. You seem to be saying that there was not any penalties in the original contract. Now, because things have gone wrong, you have put some penalties in going forward, but that will not require them to pay any penalties for the mess that has gone before. If we were to go back to the earlier period in the programme, then the contractor has not charged for all of the work that they did. That is not a penalty. That is a voluntary contribution from the contractor in good faith. If it helps, what the contract does is not to specify a penalty regime. What it enables is that when you commit to a certain section of the work, it is something called a work order that is agreed, and those work orders can include but do not have to include an incentive and penalty regime. In the early days of the contract, it was not possible, because of the early stages of the work, to apply a penalty and incentive regime in those work orders. It is very similar to what the Auditor General said some time ago, that this was not the sort of contract that could be awarded on a fixed-price basis, because the requirements were still subject to change. Now that we are much further through, and we have seen significant improvement in the ability of the supplier to marshal all of the tools together, we have entered into them for future work orders, this service credit penalty regime. It seems very strange that the stable door has been shut. Can I ask the cabinet secretary about an inquiry into the whole IT system? I think that he is on record as saying that he will deal with the problem first and then look at an inquiry into what went wrong. Can I ask what his thinking is about an independent inquiry into what has happened and when does he think that will take place? The member is absolutely right that the priority for us and for farmers is to resolve the remaining difficulties with the IT system and to restore the operation of the system to proper footing. Anything that detracts from that process by taking senior officials away from focusing on that would, I think, be counterproductive and would certainly be most unwelcome to staff who are determined to do their job their best for the ability. I think that that point, to be fair, seems to have been accepted across the board and I welcome that. However, there also does need to be lessons learned. I have remarked in my statement early on in the session of Parliament that, of course, we have had the benefit of a very thorough series of inquiries by the Auditor General. Here it is, when we have had a Rose Royce inquiry already and it has looked specifically at this. Moreover, members will recall that in this report, which was not actually the first report of the Auditor General, I understand it into the system that they have looked at it from the beginning, but this report, published on 20 May, the date of my appointment, goes into the difficulties. It already has conducted, if you like, a forensic inquiry into those difficulties. That process continues. The Auditor General, Caroline Gardner, whom I have met, to explain the work that we have done in order to move to put matters on the proper footing, has indicated that she herself is giving evidence, I think, to the Public Accounts Committee, as are Mr Price and Liz Ditchburn from my directorate. I believe, convener, that there has been an appropriate inquiry into those aspects. It is not over, obviously. The work is continuing. Of course, we are being quite appropriately subjected to scrutiny today. That is the purpose of today, not exclusively at, but questions have been asked and answered, and further information will be provided. My view is that the work that these parliamentary committees are doing, this committee and the Public Accounts Committee, is work that you have chosen to do to hold us to a client quite properly. That work, coupled with the solid work carried out by the Auditor General, constitutes an appropriate and sufficient form of inquiry. Of course, it is for Parliament, at the end of the day, to decide if more needs to be done, and if members believe that more needs to be done, I am open to consider that. However, because of the need to deliver the task in hand, I could not see that such an inquiry, where such an additional form of inquiry to be seen by anyone to be necessary, I cannot see that it would be sensible or prudent to commence that for some considerable time to come. My view is that the parliamentary committee inquiries and the substantial, forensic, painstaking and comprehensive inquiry already conducted by the Auditor General means that putting it in layman's terms, anything more would just be duplication. I suspect that it would not be welcomed by many farmers who might simply see it as spending more time and money on something that has already been thoroughly examined. Stuart, you have a question. I am mindful of time, because there is a lot to get through. I remind everyone, if you would, to keep them as short and snappy as possible. What I am going to do, convener, is to suggest that this might be something that I am about to ask that is responded to in writing, because it is complex. I used to lecture postgraduate students in the management of precisely this kind of project, so my questions are very detailed and precise. The first one is that I want confirmation that there is a project office in the computer development right. I am getting a nod to that. On that basis, it should be easy and about 10 minutes' work on that part to give me the number of tasks that are in the way at work breakdown structure so that I can get a sense of how big a project it is. The number of delivery phases that they have chosen to adopt. From the change log, the number of outstanding changes that there are currently and the number of changes that have been addressed and the number of being deferred to other phases. Of the changes, the proportion that comes from the client, in other words, because, as we understand the need as customers, we have made changes and those that have come from errors. Finally, in relation to errors, in the error log, how many errors have been found, of those that have been found, how many have been fixed and, fundamentally, what is the current estimate of the number of errors that has been made. Unless anyone thinks that it is impossible to predict things that they have not found, if they are not able to give me that figure, that instantly tells me that there is poor design in the testing system. Accordingly, I would therefore like their document that describes their testing approach, if I may. Those might be only of interest to me, but they will help inform how I am able to help the committee and others later. As I am sure that members appreciate, Mr Stevenson has considerable expertise and business experience in his form of banking career. We take seriously his questions. I think that they are relevant and they are important. He is absolutely right that I am not proposing to answer them right now, but we will write to him their anent and continue to engage with Mr Stevenson and benefit from his knowledge on one proviso that he does not charge us a consultancy fee for so doing. I am sure that he is doing it for the good of everyone in Scotland. I would like to ask the cabinet secretary about EU penalties and disallowances. Was there a specific question on IT? I would like to continue on IT, because I think that, Richard, you had a question on IT. I will try and be brief, but again I agree with Mr Stevenson. I am not a farmer, I am not an IT consultant, but at least I live in the real world. The real world is that you had a system, pillar 1 and pillar 2 changed, the money went down, the number of applicants who could get that money was reduced. Connect me if I am wrong in your answer. We had a situation where we had an IT system that, from what I got from you earlier, cabinet secretary, had to take into consideration what people had in land, even to a goldmouth. People were getting paid on what they had and some people were not getting paid and some people were complaining. We had a system in which the last rule affairs committee discussed cap payments on several occasions and the new way that cap payments were going to come in. Can you confirm what were the changes in the cap that caused this? What were the changes in the administration of the cap that caused this? Could we have foreseen this situation? Hindsight is a wonderful thing, but could we have foreseen that this was going to happen? Those are the most important questions that have got to be answered. To try to answer the question briefly, I think that the major changes were the agreement, which was reached after careful consideration and discussion with Interalia, the NFU, that land should be divided into three categories, one, two and three. That immediately, if you like, made more complex and already a complex task. Should we have foreseen that there would have been problems? Well, I am not blessed with the benefit of hindsight either. Perhaps the answer is yes. Perhaps everybody should have foreseen that. I do not mean this to be a political point, but to some extent the process that we have been going through in the past few years was not dissimilar to the process that England went through in 2005, when there were even greater problems of an IT nature, which went on for several years. Anyone who wants to know more about it should read the blunders of our Governments by Professors Avery King and Anthony Crue. It makes very good reading. The main challenge has been because of the complexity of the scheme and the need to marry the mapping of each holding. The detailed requirements about how that mapping is carried out, with a number of fixed coordinates having to be taken of various boundaries, all by hand inspection conveyed on to a tablet, that tablet having then to convey the information on to the IT system. The communication between the tablet and the IT system has been the source of huge frustration of people who are working in the arped offices. You can imagine when you are trying to do your work every day and you cannot complete it because of IT problems. Let us spare a thought for the people who have been bearing the brunt of this. The people in the offices, in Dumfries, in Eir, in Galloway, in Hamilton, in Inverourie, in Inverness and in Stornoway, all of which I have visited. The sheer frustration of not being able to do their job meant that that created a bit of a demoralisation, fair to say, amongst the staff over several months last year. It is fair to say, however, moving to the less gloomy part of the short answer convener, that improvements have been made since then. Specific IT fixes have been delivered for many of the schemes. The staff form, the application form, which farmers fill in, has been a much more successful process than it was in the previous year. We have received assurances from CGI, our contractor, following the meeting that I had most recently, that functionality will be delivered early next year to enable payments to proceed and to be delivered by the end of June. I think that Mr Lyle's commonsensical approach is correct. Perhaps on the hindsight it was too complex to be delivered in combination with a brand new IT system. What is the time table that cap IT system contractors have committed to? We will be brief. I have often said that I am too long taking questions. When will the system be fully functioning and complete? I take it with all the problems that we have had this year, and next year should be a plain sale. That is not a phrase that I am planning to use. I will restate that our contractor, CGI, has assured me that IT system functionality will be delivered early next year, so that final processing can be undertaken thereafter. The functionality is in place and there are processes to be gone through before the payments can be made and received by individual farmers. In tandem with that, around 5 per cent of farms have to be inspected every year in accordance to comply with the EU audit system. The IT system needs special processing functionality to deal with the inspection results. I can inform the committee that the IT contractor intends to deliver the main processing functionality needed for all cases separately from the special functionality for inspections. That is why I mentioned this point. To conclude, once the functionality is in place, our area offices will carry out the processing tasks to enable payments to be made. I am sure that the disappointment of the staff in the front line, which the minister has made entirely clear, is echoed by the people who have to work with them, the farmers. I think that it is a two-edge thing, but I do not think that either of them should be underestimated. Peter wants to move on and talk about the potential penalties. Following all the problems that we know all about, we may not meet all the criteria. We could have EU penalties, disallowances and these can happen for various reasons, such as paying out the money on time, late issue of the final entitlement letter, failure of cross compliance and system checks, and failure to have a land mapping system in place that meets the purpose. There are lots of problems out there and there are lots of hurdles to jump over. What estimate of disallowance have you made for the 2015 payments? I agree with much of what the member has said, but it is important to say that there are two issues that we should not conflate or confuse. Firstly, disallowance is the process of assessing penalties for making inaccurate payments. Disallowance is the process of each application being considered to ensure that the payment has been properly made and not improperly made. The late penalty applies to our role and our performance in compliance with the EU system. It is important to start off from that point. To answer the question that has been raised, all of us aim for 100 per cent accuracy, but, like all member states, we have in the past suffered small amounts of disallowance following audits. In other words, a small proportion of the total payments have not been properly paid in accordance with the rules, and the rules are, as Mr Lyle has just confirmed, incredibly exacting and complex. That in itself has been commented on unfavourably by Commissioner Hogan himself, who has recommended, and we support this, a less penal approach for farmers, a less disproportionate penalty has been applied for administrative errors. That has been a long feature of the regime, and I think that all parties would agree with that. The level of disallowance following audits has been of the order of one or two per cent in previous years. That puts us in the middle of the pack compared with other member states, certainly a lot less than our friends down south. The question is asked about 215, and the late payment penalties issue. Of course, the Auditor General in her report estimated that the total level of penalties could be between, I think, £1425 million. I can assure members that we do not expect that this scenario will apply. However, the process by which the cumulopenalty is computed is one that cannot be carried out until the payment period is over for the purposes of the scheme, and that date finishes, I think, on the middle of October. Only after that is it possible to do the maths, and the maths do not just involve Scotland, they involve the member state, the UK. I could go into the rules, which are incredibly complex, but perhaps I suffice to say that it is not possible to give a clear answer in the moment, because we have not reached the end of the period. The computation depends not just on us but on the performance of administrations elsewhere in the UK. What I can undertake is that as soon as we can come to a conclusion as to what that figure will be, then obviously we will wish to report that quite properly to Parliament. We will not sit on it for months, but I do not expect that we will be able to do that for some time to come yet. It is incredibly complex. I have undertaken to come back to report to Parliament in January next year. It may be that by that time I will be able to report. I certainly would like to do that. The last thing that I would say is that the first thing I did, in fact, it was actually before I took the oath as a camp secretary, was to meet with the First Minister in Bute House, with Commissioner Hogan, advocating that flexibility be granted. We were not the only ones to do so, but France did so as well. I was very pleased that our advocacy played a part in securing flexibility so that, if you like, the worst consequences will not be visited upon us. That was much appreciated from Commissioner Hogan. It does, I think, illustrate that the EU commission is capable of being flexible and helpful in some cases, but that is a debate for another day. I do not know whether officials have anything else to add, but I hope that, for the reasons that I have stated, the member will accept that it is not that we do not want to answer, we cannot. There is no answer at the moment. There cannot be. But as soon as we have one, we will share it with this committee. The committee and Parliament would welcome that information as soon as it is available. Again, we are very short of time. Murray has a very quick question. There are two particular areas that I would like to cover as well. If you could keep it as brief as possible, I would be very grateful. Thank you, convener. You will be glad to hear that the cabinet secretary touched on the answer in his last response. That was what I was going to ask, was just really in terms of disallowance, what that looked like over the last programme and period and how that has compared to the rest of the UK and across Europe as well. I know that you touched on that answer, but if you did have any broad figures that it might be comparable to, that would be helpful. We do not have figures yet, but as soon as we do, we will come back. I should also say that the work in the area offices, particularly in Soft and House in May, with a huge amount of money going out, there was a massive effort that was made by people in the area offices between May and June by the end of June, by which essentially we have to pay 95.25 per cent. Do not ask me why the 0.25 is there of the total of Bill 1 in order to avoid an element of penalties. Anormous amount was done to get closer to that, 95 per cent, and appear to be possible as at the 20th of May. For that, to all of the staff involved, I am extremely grateful. Thank you. Jamie, you had a question about debt in agriculture that you would like to raise. Thank you. Just before I move on to that, could I make a request further to the response that Mr Price made to Rhoda Grant's questions on penalties? I think that it is still quite entirely unclear to the committee whether there is any existing financial recourse that the Scottish Government can take with the IT contractor. Perhaps in writing it could follow up some more full answers to the current situation with regard to any existing penalties that we can reclaim from the IT contractor given the IT problems that have been experienced this past year, if I may. Moving quickly to my question, the cabinet secretary will be aware that debt in the agricultural sector has increased around 9 per cent over the last year, but there is a worrying trend over the last five to ten years in the sector. Will the cabinet secretary accept that, specifically, the debt increase this year in the farming community has been or potentially has been caused by delayed payments, but in general, what his views are on debt in the agriculture and how we may look to address that in the future? It is a reasonable question. As with all answers to questions, the thing is to look at the facts. The most recent facts that we have in terms of figures that were published last Monday indicate that loans to Scottish agriculture increased 9 per cent to £2.2 billion, up 177 million from the £2.03 billion last year. At the same time, similar figures for loans to the UK, and the categorisation was slightly different to be accurate about this, loans to agriculture, hunting and forestry sector published by the Bank of England show increases. Moreover, a further important fact to note is that, since 2010, lending has increased year on year both to the UK agriculture, hunting and forestry sector. Lending increased by 51 per cent since 2010 and to the Scottish agriculture sector without hunting in the forestry sector. I am not sure that we have much in the way of hunting. Lending increased by 46 per cent. Over the five-year period, according to the statistics from the Bank of England and official statistics, the level of lending increase, and there is no doubt that there has been an increase in the level of bank debt, but the level of increase appears to be higher, to have been higher, ie 51 per cent increase, in south of the border than north of the border. I deal in facts, I deal in evidence, that is the only way a minister can or should make decisions. Looking at the facts, any case that is constructed to demonstrate that the problem is more acute in Scotland falters on the grounds that the facts show that it appears that the level of debt has increased by more south of the border. I was quite keen to read that into the record because I was not able to do so at the same length in the statement last week, but it was raised then by colleagues. Of course, we absolutely appreciate the willingness of our banks to lend to farm businesses. Just yesterday I met one bank, a meeting with two others this afternoon, and I think that the good relationship that exists between banks and the farming sector is an asset. They are tried and trusted relationships. Some other sectors have difficulty in raising access to finance at all. I will not go into that right now, but I know that perhaps the prudent approach that farmers take to managing their finances and perhaps the fact that there is substantial security value in the value of most farms indicates that bankers view farms and farming as a reasonable proposition. Obviously, we recognise that any further financial pressures are likely to have some effect here, and that is one of the other reasons why, convener, just to conclude that I was pleased that there seemed to be such in the farming sector, if not perhaps the political world, such a broad-based welcome for the fact that in November we will be injecting a very substantial amount of money into the rural community, up to £300 million. That money will benefit, of course, farmers and crofters. It is their entitlement by way of a loan, and it will also filter down through the whole of the farming world, the contracting sector, the rural community. I was delighted to see that the Scottish Farmer recognises this, the NFU recognises this, various local papers with substantial farming communities recognise this. I think that it will perhaps make a contribution to tackle in some respects the matter that has been identified by the member. I am sure that debt in agriculture worries everyone on the committee, but we are quite short of time. If you are happy, I would like to move on to the issue of the EU. The cabinet secretary would not be surprised that this matter was going to be raised, and I would like to ask Mike to lead on that. Thank you, convener. I have three or four minutes on my watch. With a common agricultural policy, we inherited it when we entered the European economic community. It was not designed for our agriculture, it was designed initially for French, German and Italian farmers. We are now leaving the European Union. The UK Government has guaranteed pillar 1 farm payments for the next four years. I do not want to discuss what the UK's response is. I would like to discuss what your response is, minister. We are going to have, because it is entirely devolved to Scotland this, it is going to be your responsibility. Agriculture is your responsibility in Scotland. I would like to know when the four years are up, a design of a new system for Scottish agriculture must be a really important issue for you. It must be really almost, if not at the top of your agenda at the near top. Have you set up a system of a team of civil servants in your department looking to design a Scottish system for the system that we will go to from 2020? As you know, all funds that come to us... Do you not want to answer this question, minister? All funds come to us from the UK Government in the block grant. I am very happy to give an answer, convener, but I am over the time at which we agree that we are going to have a new system that is not an issue about cap payment. I am very happy to provide an answer, but it is really a very much political question. It is really not part of the remit. I would respectfully suggest of today's inquiry into the cap payment issue. Cabinet Secretary, I think that there is an issue here that we thought you were leaving at 10.50. That was the information that we have got, and that is the timescale that I have been working to. I apologise if, for some reason, I have not been able to say that I have had a slight misinformation there. I would say... I am happy to answer the question if you want. If you could, within the timescale, I would be very grateful. I do not want to be precious, but he does canvass a lot of areas. First of all... What are you doing about it? Hang on, Mr Rumbles. There were several questions that he asked there. Which of the several questions is it that you would like me to answer? Have you said a bit... Hold on, my... Sorry. If I can come in, could I simplify it, Cabinet Secretary, and ask you one simple question from what Mike said? Is what processes have you put into place now to start looking at what is going to happen post 2020? We have already had engagement with the sector. I myself led a discussion. Roseanna Cunningham has already led a discussion with key stakeholders. All ministers are doing that, and therefore we are preparing in that respect. However, it is not just as simple as Mr Rumbles would have us believe, because, of course, there is absolutely no certainty about what is going to happen following the referendum, because the article hasn't yet been triggered. Until it is triggered, there is no formal process. I am no expert in this, but that is my understanding. So there is a total lack of clarity. What I can say is the facts. The facts are that we have sought and cap payments is a reserved responsibility. The facts are that we have sought and Mr Mackay has sought from David Gawk, the Treasury Minister, that the cap funding will be guaranteed and the SRDP funding will be guaranteed. Thus far, we have received assurances in respect of pillar 1 up to 220, up to the end of the multi-annual period, and we have already guaranteed that we will pass all of that money on to farmers. The second strand is the SRDP, the pillar 2 funds, and that, I'm afraid, and this is absolutely essential, because you can't make plans until you know what your budget is going to be in a devolved Parliament. We do not know what our budget is going to be, because despite having asked the UK ministers and myself having written to three of them in June and August, we have not received any confirmation about up to £360 million of SRDP funds. There is a huge shadow hanging over the farming community. At the moment, many of them look to sign up to SRDP, but the only elements of that that has been guaranteed by Mr Gawk in his letter are those contracts that have been entered into or expected to have been entered into prior to the autumn statement, all of the rest. Our estimate is that it is £360 million. It is shrouded in total uncertainty. I would put it back to members in this committee. How can a Government plan when we do not have clarity of the budget which is set by another body, namely the UK Government? Of course, as soon as we get that clarification, then we are able to remove the doubt. I have spoken to individual farmers about this, and many of the farms that I have visited, they do not know what to do because the UK Government, despite the fact that the referendum was several months ago, they have not got a clue as to whether or not the UK Government is guaranteeing the component of the farm payments that would have been guaranteed in continuing membership of the EU up to 220. Certainty has been replaced by definition, Mr Rumbles, with total uncertainty. I think that there are two things here. One is that there are a couple more questions on the EU, given that Cabinet Secretary's time is up, I would like to submit your question in a specific form and ask if the Cabinet Secretary would be good enough after the committee to respond to those questions as he has offered to do to previous questions. Before you go, Cabinet Secretary, is there anything that you would like to say in summary before you go bearing in mind that you are very short of time? I am happy to continue to work with the committee in order to complete the task of getting cap payments on to a proper footing. I am very pleased that we have made substantial progress and the national loan scheme that we have brought forward seems to have been welcomed by the farming community. I hope that the committee in its deliberations will be able to conclude that the loan scheme is a pragmatic measure that provides, as a Conservative member mentioned last week, certainty and clarity for the rural communities in the winter months coming. Cabinet Secretary, I would like to thank you and your team, Jonathan David, for coming and giving evidence to the committee. I think that the committee would ask me just to put on record that we would look forward to having an opportunity to question you further in January as you have said that that is approximately the timescale when you will be in a position to come back to Parliament and to brief them on the payment situation. I would also like to place on record that I look forward to having an opportunity to discuss matters with you in ways that the committee can help to take business forward for farming in Scotland. Thank you very much for your time and your honesty. I am going to suspend the meeting to allow the cabinet secretary and his team to depart. For those members of the committee to refresh themselves before we go on to the next subject, which is of equal importance. I think that there is a queuing system in operation that normal business will be resumed shortly. The fourth item on the agenda today is to take evidence from the ScotRail Alliance. Following the infrastructure and capital investment committees inquiry into access to Scotland's major railway stations in session 4, Phil Versa, the managing director of the ScotRail Alliance, committed to providing regular updates on the rail network and service issues to the predecessor committee. The committee has agreed that it would be very helpful to continue these sessions and I would like to welcome him and Carl Budge, who is the regional director of the infrastructure projects, SNE and Network Rail. I would like to ask Mr Versa if he would like to make an opening statement. Yes, thank you very much, convener, for the opportunity to be here today. I'm very keen to share with the committee the very exciting future that we have for Scotland's railway over the next three years. During the next three years, there are four big changes in Scotland's railway, which has a very big impact on our customers, our customer satisfaction, the capacity and the size of the railway. The first of these are infrastructure programs and projects such as Egypt, such as Aberdein to Invernais, programs that will contribute significantly to how the railway operates. If I give you a sense of the capacity increase that would be possible after that, we'd have Aberdein to Invernais capacity and daily seats would increase by around 75%. If you think of the central belt, we will have seat capacity which is increased by around 51%. On borders, 33% more capacity. And Aberdein to the central belt would be 66% more and Invernais to the central belt would have 43% more capacity. These are huge capacity increases. And then secondly, we are changing the fleet size in Scotland from around 800 vehicles to 1,000 vehicles. And that increase of nearly 200 vehicles makes a massive difference to our ability to improve our performance on our railway because congested trains run slower, it's more difficult to keep to time. And that capacity that we get from extra rolling stock will allow us to solve many of the complaints that we get from our customers in terms of capacity. The third big change is we're changing the products we offer our Scottish customers. So implementing an intercity railway between the seven cities of Scotland is a fantastic change and it will replace the old commuter type rolling stock that is currently working the services between places such as Aberdein, Invernais and the central belt. And the last and fourth change which is fantastic for us is we as a company are investing significantly in our employees, in investment, in behaviours, in customer experience and customer focus programmes and over the next three years we see a change in terms of how we serve our customers as well as how customers buy tickets. One of our very exciting programmes is our smart card programme which by 2019, March, we expect about 60% of our ticket sales to be through smart cards rather than the old paper based tickets. All of these changes will amount to a significantly different railway and a very positive change for Scotland's railway. If I can close a convener just to say thank you for the opportunity to be here today and we will continue, I'll continue to support the committee and very welcome, very keen to attend further sessions in the future after today's session and to continue to give you an update on what we do on Scotland's railway. Thank you very much. Okay, I'd like to thank you for that opening statement and before we actually go to asking questions I would just like to ask any of the members present whether they have any declarations of interest that they'd like to make. I see three of us, four of us, so starting, John, would you like to hear? I don't know if I really need to declare this, but I'll go to the cross-party group on rail in the Parliament. Okay, Stuart? I'm an honorary president the Scottish Association for Public Transport an honorary vice president of Rail Future UK. Gil? I am joint vice president of friends of the Foreign Earth Line. Gosh, they're all coming out. John. I'm a member of the Parliament's RMT group. Okay. Maen nhw. Mae enwedd. Dwi ddim yn ddefnyddio i chi i ddiwethaf. Rwy'n wedi gweld ein cyfrifol sy'n gyfacegau phrydau. No, rwy'n edrych. Oedden nhw'n gwneud bod Ysbyddiant yn deallach mwy ffordd. Oedden nhw ym comparingau. Mae'r ffordd peir o ddiogel待an eich fod, a'r ddechrau sy'n gallu gweinydd gyddo mewn ysbydd. Felly, I would like to move on, if I may. The first question that we have is to do with project management and I think that Stuart is going to lead on that. Sorry. We are going to say something about the Alliance first. The Alliance? I'm just going to ask questions about how the Alliance works. Oh yes, yes, sorry. Yes, John, sorry. We are going to be covering a lot of ground today, but I just wondered if you could say, by way of introduction, something about how the ScotRail Alliance works with Network Rail, because in the past we thought you were ScotRail and somebody else was Network Rail, but now you represent both. Could you just explain a little bit how that works? And there's obviously other people using the rail across country who are not part of that and how it affects them. So in the last two or three years, Network Rail has devolved responsibility for operations, maintenance and renewals, therefore not enhancement projects to what's called routes. And in Scotland there's a Scotland route that does the operation maintenance and renewals. And to picture it, these are the teams and they work for me that, on a daily basis, make sure that all of the infrastructure equipment out there, tunnels, bridges, everything, signalling is maintained, that it's renewed on an ongoing basis so when it gets to the end of life gets fixed and that the railway is operated in the interest of all of the train operators that operate in Scotland. So I have that accountability in the Scotland route. Then, sitting right next to it, we have a Bello ScotRail as the franchise that was led by the Scottish Government. Throughout the United Kingdom, these two parts of the railway have been separated as different entities. And in Scotland and Scotland alone, we have formed what's called the ScotRail Alliance. The logic behind that is that in the end, the customer on the ground don't really want to know how the railway has decided to organise itself. The customer on the ground has very clear requirements to get journeys, travel punctually and get a good service. And we've put the two in Scotland, we have put these two organisations together to work together and to close those gaps which existed between these two companies in the past and to get a better product out for customers. And I'm sure we're going to spend a lot of time today to talk about that. But just as a distinction then, Carl over here on my right hand side is a close colleague. Carl is the regional director of a part of Network Rail which is not part of our alliance. And that part of Network Rail is called Network Rail Infrastructure Projects. Carl heads up the operations in Scotland as well as the operations in the northeast of the United Kingdom from York for those types of operations. However, Carl contributes very closely to Scotland and my team holds the clienting responsibility. Therefore, everything Carl delivers, my team makes sure that that is delivered to TSS requirements. And so if there's any difficulty with scope or programme or on-programme delivery which is all Carl's accountability, we work together with Carl and with Transport Scotland to come up with the right answer for Scotland. And just on your question on other train operators, I hold and this week held the regular review with other operators as well because yes, there's a different dimension here. There are six different train operators that operate into Scotland on a regular basis including Caledonia Sleeper and the two Virgin trains east coast, west coast, cross-country, first Trans-Pennine Express. And so it's really important that even though we're an alliance, ScotRail and Network Rail operations, maintenance and renewals, we must also have that breadth of approach to deal with the issues of other train operators specifically. If you have a very quick example, when Lamington on the west coast had the scour problem last year due to the excessively high water levels in the Clyde, I took my ScotRail trains off the Glasgow and South Western Railway and we ran Virgin trains, west coast trains and we cancelled our service to run that. Because even though if it was wrong, I would have had a proprietary approach and said no, no, no, our trains run, we made the decision about what's best for Scotland and that's why Virgin trains got the clear path and we cancelled our services to accommodate Virgin trains. And that's a type of approach that we follow and we regularly review with other train operators how we are servicing their requirements. So it's a unique model in the UK, it's very innovative and we are aiming to focus on our customers as best we can. That's very helpful, thank you. Do you want to follow that up? Stuart, do you want us to question the non-project? Yes, thanks very much. Thanks for your various reports, Mr Vester. On a very specific, you would imagine a bellio would be hoped to get some sort of advantage out of the nature of that relationship, this deep alliance. If, for instance, all things being equal, there was the opportunity for a commuter train from Perth to travel to Ladybank or a delayed sleeper to travel north from Ladybank to Perth in that single stretch, who would have priority there? Very good question, Mr Fene. What we have in our control centre is a very clear definition of what we call regulation priorities. Regulation is a type of decision we make when two trains get to a junction and we put a choice and we agree a choice with the train operators of which train is the most important to run. Your Ladybank example is really spot on, actually, because when we had a diversion of Caledonia sleeper trains during the Winchborough tunnel blockade, we had to make choices when the Caledonia sleeper train got to its slot too late. And if we then let the Caledonia sleeper train run, we were in a situation very often where we would affect four or five services through five. So we made arrangements with the Caledonia sleeper to make sure that they get there early so they can use their slot. So very clear sets of rules, no judgment of, no, that's our train, we can go first. Clear choices, clear decisions about how we do what's called regulation choices and it's agreed with the train operators. So we try not to leave that to chance. You didn't mention the freight companies, the goods freight companies. Where do they fit in on this? Because, again, due to the limitations of a lot of the line structure, there's a lot of, as you say, window lake and resulting several knock-ons. Yes. In terms of our cross team collaboration with other train operators, freight operators are included in that discussion. We have a separate freight forum that meets regularly with my own team separate to the train operating companies. And the issues with freight are very different to those of train companies. But freight is as important if not in some market sectors more important. And so we've got a dedicated person that develops freight opportunities and work very closely with the freight companies. And when you look at freight companies and the type of performance choice that you refer to at Ladybank junction, any other junctions that are more freight oriented, freight very often don't run to the same time constraints that passenger services run to. So in that same regulation statement that I've just mentioned to you in your example of Caledonia Sleeper relative to Abellio Scotrail trains, we'll also have freight companies listed on there. And by industry agreement freight companies are very often at the bottom of the list of regulation choices because the time criticality on passenger services for punctuality is five minutes at end destination while for freight companies it is flexible. Thank you, that's very helpful. Thank you very much, convener. Essentially I'm focusing on Network Rail's management of projects. The Scottish Government in the light of what's happening in Egypt in particular has commissioned a study into project management. And I know that Network Rail has experienced a number of issues, GB-wide in particular that is of interest in some ways to us. The Great Western Railway electrification project is well known to be in some serious difficulties. How are you in relation to what's happening in Scotland, which is primarily Egypt, but there are other projects seeking to address issues with project management? Thank you, convener, for the opportunity to be here today and speak to the committee. As you say, we do have a number of national issues. These were realised probably four or five years ago, mainly in a couple of categories. We were quite late, I think, as an industry in developing the current enhancements work bank and therefore to actually be able to clearly define what the scope was that met the required outputs that were given, the outputs being time savings or capacity increases and so on and so forth. It was acknowledged that the costs that were given back in, say, 2013-2014 were not fully developed to meet the required scope and outputs. It was accepted that, as an industry answer to that issue, a process was put together called the Enhancements Cost Adjustment Mechanism, which allows us to take what the initial business plan was, the Office of Rail Rail, then at an appropriate point in time when the scope has been developed through to a single option. We understand some of the ground investigation, some of the more detailed issues that we will then agree what is an efficient cost to deliver that project. That is carrying on each project as we work through the current five-year control period, which is 2014 through to 2019. That is the first point. The second thing that we realised is that, instead of giving a single figure at the beginning of this control period, we should probably have given a range of figures for what projects could cost, instead of defining something that none of us were really certain about at the time. There have been several reports done in Greenpris in the past couple of years. Sir Peter Hendy did a report, and there has also been the Bay report and the Shaw report. The Bay report is specifically about those issues that I just talked about on cost and scope. Some of the further issues as we came into the current control period and the one bespoke feature about this control period is there is about a tenfold increase in the amount of electrification going on compared with what happened previously to what is happening now. That is a massive leap in electrification and also ties in all of the design and specification increases which you have come out in modern electrification as well because we have significantly modernised the way we electrify the railway. There is a significant piece in there. That was accepted by the Network Rail Board in early 2015, and we set up something called the Enhancements Improvement Plan, which focuses on several key elements, seven key elements that we need to do better in future. We are working through those seven key elements at the moment. How those elements, three specifically of that plan, are being ingrained in Scotland is a review that the Office of Road and Rail are undertaking at the moment, and I think they are due to report back to Transport Scotland at the end of October 2016. Those three specific pieces that they are looking at are really about portfolio governance, and that is partly about the relationship between my own team, Phil's team at the Three to Transport Scotland and Three to the Office of Rail. Partly at specific project governance and how we carry out reporting and also project portfolio monitoring and how we pull all of the enhancement projects together so people have a visibility of the entire portfolio within Scotland at a single time. That report is going on at the moment. I can't talk at detail about each one of those and a whole load of other things, but I will let you advise me if you'd like to go into much deeper detail. I do forgive me if I suggest that that sounds a bit like jam tomorrow when we have projects that are in course right now. The shore report seems to be a considerable doubt as to what parts of that will or will not be implemented, and that is definitely jam tomorrow if it is anything. The one thing that you didn't mention was access to skills that are required for particular projects. For example, there are shortages in signalling engineers. At Europe-wide, there are shortages in engineers that can do the overhead electrifications. How does that influence and feed into the projects that you are undertaking? If I could respond and just respond to the first aspect, just of the bow review and improvements in project management, Mr Stevenson that you referred to. So what's really clear, just unambiguously clear, is that what we used in the UK industry, UK industry-wide or throughout network rail to price and estimate schemes and infrastructure projects during the period for 2015 to 2019 was done at too early a stage. It was done very often with desktop exercises, best estimates, but not with enough detail. What we are seeing now is that when we get on the ground and detailed designs are getting done, the cost of the work is significantly more because things arise. Ground tests are done and all of a sudden where you thought you were going to do track just like this, you need to do it in 10 different ways and much more of it. We will talk about that as we get to that. On your project management question and your skills question, in Carl's team and Carl will talk about that as the question on Egypt comes up, we have seen a significant limit on resources in electrification specialties, but what we've done on project management has been extensive. We've put better project management, a project management office in place, more transparent procedures in place. When we realised around January, February that electrification on the Egypt programme was behind programme, we've changed the senior management on that project very significantly. We've made intrusive changes in terms of how that team works, not only relative to the Scotrail Alliance, but also relative to Transport Scotland. Carl will talk you through that detail very specifically. In terms of electrification projects, your comment on scarce resources is really on the mark. We see that design bottleneck of resources, skills resources in the United Kingdom to follow through on designs is very, very significant and many parts of our electrification project now is about making sure that we get access to the right competencies at the right time. I've just made the observation that I'd agreed with Andrew Adonis when I was transport minister, a sort of 10-year view on how we do electrification so that we'd give the industry a solid programme that they could ramp up to it and probably hasn't, but don't comment on that, we don't have time. My final point on projects, particularly given your Dutch experience, recognising that you don't have any bridges and cuttings in the Netherlands, nonetheless there is a startling difference in the cost of doing projects in GB and in Scotland in particular, compared with most of Europe and perhaps in particular the Netherlands. Why is that case? Can't we learn something more about how we manage projects and deliver projects from our continental cousins? That's a very astute observation, Mr Stevenson. We do go out and look at how other countries in Europe operate, how they make decisions, how they get critical aspects, how they get access secured with the train operators. In many cases, the separation between track and train operator is not the same as in the UK and the cost equation to get access to the railway is different. Your point is still valid. What we are doing now in terms of our cost increases on electrification, again, Carl would pick up on what has been done to get our standards to be compliant with European standards and that has contributed to cost increases across our electrification programme. If I could just add a little bit further to that answer as well, specifically to Holland, for example, it's not unusual from an access regime when you're delivering a significant enhancement to close the railway for several weeks and that can be an acceptance. I have reports, which I can send you, which would help back that up if needs be. They can close it so there can be a specifically different access regime at the night. If you look at elements of Egypt that we're working on at the moment, we get circa one and a half hours of good working time per night. By the time the final train has gone, we've been able to start the possession. I can grief everybody and got them on site. One and a half hours of working, then you're taking them off. That, unfortunately, is never going to be a really efficient way to do a significant amount of works on the railway, but that is the regime that we work in. I think it would be a dangerous proposition closing railways down, not one that we'd necessarily be recommending here. Can I just push you a wee bit on this project management? I understand that project management is good when the scrutiny downwards as well as upwards and from higher up. Can you just explain to me what level of scrutiny the Government does in relation to projects and how regularly your meetings are with them in relation to projects? I was rather surprised to see a quote from our Minister of Transport suggesting that he wasn't aware of a delay that was coming down the track if you'll excuse the pun. If I can respond to that. We have formed with Transport Scotland a portfolio board. Even before the portfolio board, we have had with Transport Scotland a regular Egypt board to review progress. In the portfolio board with Transport Scotland, we review what the programme and AFC or full cost estimates are for the different programmes. We work very closely with Transport Scotland and Transport Scotland has a very strong and positive role that they play in helping us to understand what the priorities are for the Scottish Government. In terms of our own governance procedures, we have literally levels and layers of governance where Carl and his team give myself and my team visibility of where they are with their programme deliveries. Carl will have with his own electrification team that delivers his contractors that work in an alliance with him and his team that have an alliance board meeting where they track how that programme is running. Then, right at the front of the business, there are weekly what we call visualisation rooms or control rooms where governance is exercised on what has been the progress this week, what has been the progress last night and that level of control is part of our corrective actions that we have implemented from January and February this year. I mean what I'm trying just to get my thought process round is when the Minister of Transport made a statement on 5 July that he said that two months ago everything was on programme as far as the Egypt project was concerned and then it's seven months late. Was there a meeting two months? When was the last meeting before the fifth of July with the portfolio board that informed Transport Scotland on this project? I don't have the exact meeting dates here but what I can provide the committee with is when meeting dates happened as a further correspondence with this committee year after. What I can indicate, which may help and which would clarify the comments that you refer to, is that in January the Egypt team, the then Egypt team that manages the leadership of the then Egypt team that managed the Egypt team, the Egypt electrification programme, started to indicate to me that there were delays quote unquote that had to be quantified and clarified but that the initial estimate was that delays were in the region of eight weeks. So we started immediately with a programme to establish exactly what the delay is. I insisted that there's a review, that there's a critical path analysis of where the programme is, that there's a resource assessment and a risk assessment of what's the remaining risk on that programme. So that process to clarify exactly where the programme was, what work has been done, what work is outstanding, started to elevate quite a lot of the issues we have seen and that we have rectified later on. We informed Transport Scotland typically if it was in February, I think it was the 11th or the 15th of February, I'll confirm that date with you as well, that there were delays in the ballpark of eight weeks that were being investigated. So at the time we could not put a price on what the scope of the work was or what the cost of the work was. The eight week delay was still such that it would have enabled key output one in December of this year to have been achieved. So while the delays were then visible in January and February, it was anticipated that we could still deliver the programme and we responded as a ScotRail alliance by changing when we train drivers to make sure we can still hit an energisation date. As an industry, we thought we came up with something that was a real workable solution. However, as we kept on digging and finding problems on this programme and Carl joined during that stage as leadership changes happened on that side of the business, we found more issues. In the end, the programme that we then advised the minister on come March, April, very close to the date you are talking about, that programme looked very different to the one we thought in February would be achievable. We started to share what we thought the cost estimates were because by then we had costed up what this changing compliance, which is an adherence of a European standard that we insisted the project must achieve, what that would cost. I appreciate that you will give me the committee those dates afterwards. What is concerning me is that we moved from February where there is a seven or eight week delay, which I think you intimated there to May, which is when the minister tells us that it had gone to seven months and nothing really was in the public domain to that. Maybe it would just be helpful to leave that there and ask for the dates and a timeline so that we can understand that as a committee. Maybe then if I could turn to... Was it you, John, because I think you want to go specifically on to this issue of Egypt? We have spoken quite a bit already about Egypt, but just maybe a few more points on that. I suppose what surprised me and disappointed me was that other projects had gone fantastically well. Airdrie Bathgate's new line electrified went to time, went to budget, the borders were the same, it was not electrified. Even the Queen Street tunnel closure, which I accept as a separate project, seemed to go very smoothly. It was a bit of a surprise that Egypt's Edinburgh Glasgow improvement programme did not. The ORR has made various comments. One of the things that they raised was the whole question of international engineering specifications and electricity at work regulations. Can you just explain whether they are major factors? Was that a major part of it? We'd really like to explain that. If I can just start by putting our delivery in Scotland in perspective. Our delivery and Carl's team's delivery in Scotland, despite the difficulties we are facing now, has been exemplary. We've got 16 regulated targets, milestones, during this control period from 2014 to 2019. We've already delivered 10 to time. There's a further four that's in progress to be delivered on time. Then there are two, which is the key output one we're talking about now, and potentially the key output three for the completion of the Queen Street refurbishment, which may be affected by the current TORS Transport and Works Act programme that we are working through. The delivery has been good, but the compliance part of this international specification electrification has added critical cost and time to our programme. Carl will explain how we had originally in the programme a national network rail standard that we thought could be delivered and that we were risk assessing that and how the risk assessments have led us to a decision to adopt the European standard. Thank you, Phil. The electrification compliance piece is really quite complex, but I'll try and keep it as simple as I can do for the purpose of today. There are multiple bits of legislation that tie into it. Some is UK legislation, some is European legislation, some are UK rail standards and then network rail has its own further set of standards and advice notes as well. So it's an element of being a minefield within there. A lot of those standards also allow for interpretation and risk assessment as to what is an acceptable level of achievement against those standards as well. So interpretation comes into it. The interpretation between ourselves and the Office of Rail hasn't always been the same, partly because we have a historic way of managing electrification on the network, which doesn't necessarily always time with some of the new requirements coming in, since it's a transitional piece. If I look specifically at some of the compliance issues that we've had, in early 2015 there was an energy TSI, which stands for technical specification for interoperability, which is a European standard, which was updated, which changed the distance away from the wires that was meant to be safe for bridges or for railway platforms, for example. So that actually brought into being design changes and redesign of some of the wire heights on some of the obstructions that we've got on the Egypt line. The new rules were presumably stricter and were wanting a greater distance in these cases. So a distance from a platform, for example, for the wire height, the minimum distance used to be 2.75 metres from the edge of a platform went to 3.5 metres. The distance from a bridge to the wires went from something like 270 millimetres to 350 millimetres. So that doesn't mean it was a complete rewire of Egypt and that everything had been put up, which is what the media suggested several weeks ago. What it meant was redesign in certain areas and very localised changes to, certainly around structures where we had to change the wire height slightly or risk assess through to create that we didn't need to. So that was an ongoing process that started in 2015 along a project the length of Egypt and with as many structures as it has, it's been really quite complex to do that and each one of those risk assessments needs obviously signing off and agreeing in turn. That's one example. It's also impacted things like boundary wall measures, so we're having to do thousands of metres more fencing than was originally considered. Parapet heights, so I can pass around some photos, but a typical Parapet on a bridge would have been up to about this level and then we have to go and put two extra levels of layers of work on top, then a very significant coper on top. So that's on probably 140, 150 parapets over the railway line. And if you have your own reference, all of the other older electrification schemes such as the East Coast, Mela, West Coast, Mela line wouldn't have had those restrictions on them, so they'll be on the old specification and they are... No, they don't have to go back and change that at all. So there was this attempt by Network Rail to keep costs down and say there's new specifications really high, can we risk assess it so we get a derogation and therefore not have to comply. So we made a decision last year when all of the shenanigans started to become really clear about the cost issues. It became also clear to us and to me that if we don't comply with these standards, the ORR will not sign off that this line goes live. So we can continue to have the debate and it gets so late in the programme that you then build a railway and the ORR says you can't run anything on it. So I made the decision in around March period of time and asked the project team, and it was just before college I said stop the debate, move to the new standard, the railway needs to be in, but the railway has a life of hundreds of years into the future, fix this now. When they're bringing in a new rule like that, how long do you have to adapt to it and prepare for it? I dare say it's reasonable notice and I dare say therefore in full transparency the debate on risk assessments and what standards to use went on for too long. We had to call time on it and we did that in 2015. I just need to be absolutely clear with you that that specific compliance issue relates to an energy standard update in 2015 that there were other standards European ones that came to being in 2011 which Network Rail continued to debate with the office of radar rail for several years and we didn't react to immediately and that is something that we could potentially have done faster. Right, so 2011 rules were there but you were still discussing how they needed to be applied. Right. And whether the hierarchy of standards that we've got in the UK actually came over the European standard. Right. So the whole standards debate is actually in the context. Okay, that's helpful and we probably don't want to go on forever on this particular thing. Could I just ask two more things on this? Sorry, yes, okay. What's really important to understand here though is for the committee's benefit and I know it's unpalatable and it's a difficult message. Quite a lot of the cost movements and the ORR references that in their submission to this meeting as well. Around 50% of the cost movement on electrification, rolling electrification programmes are due to this type of compliance issue. The railway, this is not money wasted. The railway is getting a different specification. So it's work that has to be done. It has a programme impact, yes, and we are doing everything, working very closely, very collaborative with Transport Scotland and the supply chain to deliver it. But it's not money wasted. It's delivering a scope which is different to what was envisaged at the time when the programmes were costed and estimated 2012-20. Is it lucky that, with this project, the new rules came in at the time, whereas it takes something like Erdre Bathgate, we were lucky that no more the rules didn't change at the time? Gradually over time, the ORR has insisted that compliance levels be increased to these standards. So yes, that is one of the big differences in cost drivers between Erdre Bathgate and where we are today. I want two more things. First of all, going forward, we've looked at the past, how are we for timetable going forward on Egypt and what about costs? In terms of costs, we have made a submission to Transport Scotland of what we estimate the cost increases will be as well as what the programme will be. Transport Scotland is busy with their own review supported by Ernest and Young and it's the intention of Transport Scotland to declare the outcome of that review and the cost increases across the different programmes when that review is complete. Clearly, the cost that Network Rail submits into Transport Scotland is only a part of the overall cost picture. So Transport Scotland will declare what the full impact on Egypt is, I think it's the end of October. It will be useful for us, or Transport Scotland, to share that with the committee afterwards. What is the timeline to declare those costs and to identify what those costs are? Something of the cost in October. When are the electric trains going to be running on the line? So, while Key Output 1 was for electrification by December, the first electric trains, the Class 385s, the new electric trains that gets delivered arrives in September of next year. So, the current programme that Carl and his team is working on is for completion in July and we are doing quite a lot of work to try and better that and improve that and to turn that situation into a success. Maybe when we get to a future meeting we will update you on that. Even though Key Output 1 has moved to July, it is still in time to accommodate new trains and the customer impact is negligible. However, we would have wanted to have had electrification as soon as possible. My final point is that, as part of this or as a separate project, Queen Street Tunnel was closed. As far as I am aware, that went very smoothly and people were pretty happy with it. We did close the line and we survived, so that was great. To my surprise, when you reintroduced the timetable, it was a different timetable on other lines, especially the Ardribathgate line. That resulted in a cut in service to people, particularly in the East End of Glasgow. Can you explain how that happened and there was no local consultation? Definitely. There was extensive consultation and the consultation around what the post-Queen Street timetable would look like was conducted at the time when we consulted out the timetable for the Queen Street blockade itself. So, what we have had post-Queen Street as a timetable has been what we call a clock face timetable, which is broadly, if a train runs every quarter of an hour, they run exactly quarter of an hour apart. By running quarter of an hour apart, it gives customers a higher degree of certainty that they don't have three trains in the hour, two of them are bunched up in the first quarter of an hour and the other one sits somewhere else, so they know exactly when trains run. At the same time, in terms of the comment you make, Mr Mason, on capacity, by having a clock face timetable, we have been able to strengthen more trains than what we have done in the past. So, we have also a real opportunity from the North Lanarkshire area of the country to the West Lodian area of the country to exploit untapped latent demand. Now, travel opportunities which we have not maximised with previous timetables. One of the things that we have suggested is to apply for four trains an hour train every quarter and this clock face timetable through post the Queen Street blockade. A station like Shettleston used to have four trains an hour to Edinburgh and now it only has two, so you do accept that as a cutting service. So, I have to come back to you on Shettleston because I don't think it's two. I think it had two fast trains and it had two slower trains which were stoppers. And what we have done is we have changed the fast train, we have changed the two fast trains to be two slower trains, therefore more multiple stops. By doing that, we have given our customers along that whole route a better service in terms of stopping pattern without reducing journey time too significantly. The original timetable had this idea of fast trains running through from Glasgow through to Edinburgh. By having a different stopping pattern, we have added something like two minutes to those trains. I'll come back to you on Shettleston specifically. I'll come back to you on Shettleston specifically. I think I've had my shot. You are ready to talk because Rada would like to come in on this project as well. Just a very short question because I think a lot of questions have been answered. Just going back to the specification, given that that specification was in place a long time ago, who was responsible for implementing it as part of the design? Was it Transport Scotland yourself? Was it the contractor? Who's at fault here for not implementing the specifications? Mrs Grant, could you please clarify which specification that's for Egypt? Yes. The Transport Scotland passed to us. We deliver those outputs. We build up the final specification along with our route colleagues in Phil's team. Then delivering to that specification is absolutely my accountability. What I would take you back to is the specification has been changed as the compliance piece has developed over the last three or four years. That has brought a number of changes in that specification. Each time one of those compliance elements changes, we change the specification effectively for what we are building. That is why we have to remain relatively agile from a design perspective. The decision on how to implement something, the specification, resides with Network Rail. What Transport Scotland, as the client does quite correctly, is that they would specify an output. For example, very often Transport Scotland would say, if I take Aberdeen to Inverness, to say, there's a requirement to run an hourly service or an half hourly service. They don't specify going to fix this bridge over there and put double track over there and do that. Network Rail's responsibility of getting the project to sign correct. That's right. But you're going back to Transport Scotland for more money because you got it wrong. That's correct. Can we move on from that particular project? Mike Scott has a question on Aberdeen to Inverness. Indeed, I was just thinking that train services every quarter of an hour would be marvellous. Aberdeen to Inverness, the Office of Rail and Road indicates and written evidence to the committee that is currently reviewing the Aberdeen and Inverness project and the elements of the project. It was quite alarming when it said that it may be delayed by some years. I was really concerned about this. Can you give me an update from your perspective on what's happening on the Aberdeen and Inverness line and what does it mean by some years? Yes, I can give it an update, Mr Rumbles. If I give you, honestly, a view that says there isn't a better example of where the previous estimation stroke pricing regime has not worked, it is Aberdeen to Inverness. If I give you what was covered with a bow review and was found to be the endemic problem throughout the United Kingdom, I give you two practical examples. On Aberdeen to Inverness, as I listed to you previously, the aspirations for capacity increase there and what we will deliver with Aberdeen to Inverness programme is a 75% increase in seat capacity on a weekday. Even though you have said every quarter of an hour in an attractive service, you will get every half hour service, which is fantastic for that part of our network. I am very excited about that. Let me give you the two examples. What has happened here is that the initial exercise to determine what Aberdeen to Inverness should look like as a future railway was very much a strategic and planning process, which was a desktop exercise without enough detailed development. We really clear, even with our revised programme, we are not declaring it will be years late. That is not on the cards. What we are declaring is that it may be completed in two phases. As you probably know, we have spent nearly £30 million already on the initial work at Elgin and Forrest. Coming to the two examples. Elgin to Inverness, for example, to deal with a half hourly service, needed capacity changes. So, if we were to deliver just what was originally envisaged, we probably would have had to come back in five, ten years time, close the line again and do more work on it. Understanding in detail what had to be done on the ground when it got to the detailed design over the last year. The teams identified that now is the right time to go and put in things like turn back facilities for trains to turn around, more sidings and different signalling. So, that was not envisaged originally, but is implemented now to give the capacity that is useful for the future development of that line. So, go in once, spend the cost once and get it done once. So, this is cost that would have been incurred somewhere in the future to add the capacity we incurring now. So, the whole phasing of how Elgin to Inverness over the next ten or fifteen years would have grown and developed has been affected by this decision in terms of how we now plan to do the Elgin to Inverness end. I'll give you a second example. Between Inveruri and Aberdeen, it was previously double tracked and so the desktop exercise assumed, well it was previously double tracked, we're going to double track again so we'll only renew four miles of track and double tracking will just put it in there. But when ground studies were done and when people started actually getting to the nitty gritty to see what the detail on the ground was, which is the big change from what we've done in the previous control period up to 2019 and which we'll do differently in the future, it was found that we had to do extensive earthworks to actually support the new double tracking and that those earthworks would be necessary to avoid having to procure land on the side of the railway so it is a cost balance. But also the team then said, well if you have to move the track in order to get everything to where it needs to be, the track will have to renew a further eleven miles of track in order to deliver the railway as we want it. So again if you just explain how this works, that track would have been renewed say somewhere in the future, seven, ten years from now. So cost we would have incurred in the future, we've now pulled forward to get this program to give us the best possible railway when we commissioned it. So those things are examples of scope changes that if you do not work out the detail up front to the level that you can actually pinpoint the cost better, it comes back and it looks like big numbers after the event. However, again as with other cases, the railway is getting more because more is getting done to get the railway in place. This is not wastage or cost, this is about more capacity that's added and how it's done. I would just ask you therefore, when the residents in my area of Aberdeenshire for instance on that line, when can they expect a half hour service from that train line? December 2019. December 2019. You're fairly confident about that. Yeah, I am. I am because we, look forgive me for just saying it like this. I know how committees like this feel when you see witnesses. I'm passionate about our railway and so is Carl. We want to deliver the right thing and we are just focused to get our estimates right and to get the job delivered right. And the plans we've put in to Transport Scotland is aiming for December 2019. Can I just add two points to that as well if I can do. Firstly, the team that we've got working on Aberdeen to Inverness, the same ones who delivered borders, same ones who delivered to Bathgate, an excellent team. So they don't just become bad overnight. So great people on it. And secondly, one of the regulatory milestones that we have already passed in this control period was dated July 2016. So a couple of months ago, which was to pass the single option development on Aberdeen to Inverness, we hit that milestone. From my perspective, as of today, we are actually on programme as was anticipated three years ago. What then has changed is the scope has grown, which is what pushes it into the beginning of the next control period. To clarify something there, just so I understand, in December 2019, when I think you said that we on the line would have a train every half an hour, is that a train between Aberdeen and Inverness or is it on a shorter route? I want to be exactly clear so when we meet again in 2019 to understand what we're holding you to account for. So there's a number of phases of what we deliver and when timetable changes will be implemented. So we implement timetable changes regularly in December of every year and May of every year. So what I will supply the committee with is our forecast and our position on what will happen in each of the timetable changes on that line from now to December 19. Right. I look forward to seeing those timetables. Mikey, you're happy that we leave that there because there is a huge amount to cover. I know Stuart just wants to ask a quick question on electrification. Yes. We've covered it. We've covered it for steam. Don't worry. Don't worry later. Sorry, Richard. Mr Budger, I now know why you're raising the bridges on the M74. Thank you very much for that information. I also say that my mother-in-law was Dutch and I travelled on quite a lot of trains in Holland. Thank you for allowing us to, John Mason and I, walk through the Queen Street tunnel before it was opened. That was an interesting day. I turn to the Office of Rail and Road. I have identified the issues with the rolling programme of electrification, especially on the shots and dumb-blane lines, particularly the underestimation of what is required to deliver the project. What is happening? What are you doing to rectify those problems, prevent them from occurring in the future? Can you also tell me whether the closure of the bridge at Clirland station over the railway at Clirland has any effect on timetables? There's a huge amount on the agenda and that was an extremely long question, very detailed as always. Could I implore you to keep your answers as short as possible? And could I just ask members of the committee always to keep their questions as short as possible? It's a very reasonable question, looking at no one in particular, but we have a lot to cover between now and 12.30. Sorry, yes. Thank you. Firstly, many of the electrification issues on shots and the other projects that we're delivering at the moment come back to the compliance issue again, unfortunately, which I think we've probably covered enough here. There are changes that I'm making anyway since I've come in and I take the point of Mr Stevenson with regards to enhancements improvement is jammed tomorrow, so we have to do things immediately to try and get hold of some of the things we're doing. One of the things that I've done is restructured the Scotland team, so we have a specific programme management organisation that sits above all of the electrification schemes and also gives a single engineering team that sits beneath it instead of siloed engineering teams sitting on each. That means that as we get the compliance learning on key output, one, for example, is passed on to shots, passed on to Stirlingdon, Blaine Allure, which makes a significant change. Plus, also, the commercial team within Scotland has now moved into a more matrix managed structure, which is increasing the level of transparency across my team. So, instead of it coming up into a hierarchy as it used to do, there's now much more internal transparency and challenge as well, plus the change in reporting regimes that I've already instigated within both Scotland and the London northeast. So we're making a number of internal changes to strengthen the way that we deliver electrification projects anyway, with respect to the timetable changes at Clalland. Can I respond to you in writing on that after the meeting, please? I think we'd like to now move on and look at the Borders Railway, which is probably not surprising because it has been in the news. John Finnie was going to talk about that. I think that it's important to say that the good work that you and your staff do is appreciated. In relation to the Borders Railways, and I'll roll this into one big one, issues about crew shortages, signal failure, the overheating of the class 158 units, the projections, and how that would fit in with the improvement plan requested by the Transport Minister. Can you comment on all of those, please? Finnie, thank you very much. Yes, the Borders is just a fantastic railway and the people, our people that work on the railway are making a fantastic contribution and the customers are just brilliant, and it's a big success. The first year has brought us challenges, and if I can start with crew shortages, clearly during the industrial relations strike we've had, we've seen an impact on crew availability. That is unfortunate. That is why it's important for us to have closed off the strike, and we did so this week with an agreement with RMT and with ASLIF that was reached on Monday evening, which have taken a lot of work but have given us a win-win outcome on the strike. More than that, we have had challenges with new equipment. Without boring the committee and being short, as the convener has asked, there's this thing called axle counters, which actually determines for the signalling system where a train is on the railway. These have performed really badly. As part of our improvement programme, we've adjusted our maintenance regime, which should be every once a year to every six to eight weeks. We are sending people out to recalibrate and reset these axle counterheads and to give us the maximum assurance that they'll perform. We had a mal-operation on Monday morning this week, again, and it affected services. On top of that, we're doing non-destructive testing, which we are leading with Siemens, the supplier, as well as destructive testing, and we're doing everything possible to get our equipment to be in a state where it performs better. Very often on the railway, new equipment that come onto the railway is not as reliable as you would want it to be. On top of that, what we have seen in that area is power supply interruptions, and we are now considering to what extent we can ameliorate that problem by putting UPSs or universal power supplies on to fix that particular problem. Just by discussing that one issue, I've given you a sense of this extent of focus that we are bringing to problems such as that. On infrastructure problems, I cannot convey to the meeting how dedicated our teams are and how our teams really fantastic good people on the ground are doing everything we can to focus on where the issues are and fix them. You would have noticed in the press that there's a lot of commentary about how much of the route is single-tracked, how much is double-tracked, et cetera. I don't want to particularly be drawn into that, but to say... So I hope to draw you into it. So what I'd like to say, Mr Finney, is there's always a balance. If there is more double-tracking on that route, it would definitely provide more flexibility. It would definitely provide us with more of an opportunity to recover from delays. But similarly, there are other things we can do potentially with a timetable, and we're working exceptionally closely with Transport Scotland, and I can say that again, the relationship with Transport Scotland is very open, very positive. The lessons we learn from this will feed back to Transport Scotland and look at what other choices need to be exercised to make the railway and the timetable more robust. And again, this is about an output, not necessarily about an input. If I can talk a little bit, and I just want to show the meeting this as well, if you can see and I'll send it around, but you would have seen this thing about radiators on the Class 158 fleet. Now that's what a radiator looks like, and from the one side, it should have very bright hot water, this infrared photo, and as it goes through the radiator, it should become dark. So from that side to this side, it should become darker to show that it works. And you can see this radiator design is not really working. We know the Class 158 for a long period of time, like two thirds of the radiator is not really effective. And so we saw this at the beginning of the hot days, and what happens when the radiator gets so hot? It just cuts the engine out, so the engine runs at lower power. So now we struggle up Fallahill and start to lose time, and the time loss gets captured to us. So what we have done is we first looked at how we cleaned the radiators, in case there were contamination affecting it. But in the end, we got a new radiator design, we busy refitting the old fleet. So the problem will be removed for next year. And just the focus on things like this will put us in a better place with performance in the long run. Your comment about the overall performance improvement plan is also really important. And if I can say this again, as railway people, we understand when our customers are affected by punctuality not being where it needs to be. Currently our punctuality is just about 0.6 of a percentage point away from where we would want it to be. It's at 89.7% instead of 90.3%. However, our customers have had a very rough summer. We've had industrial relations issues, we've had strikes. We've had a number of serious failures on our OLE system, overhead line system, which have caused significant disruption. We are spending more than £8 million now on specific reliability improvement programmes. More than that, we're not just throwing money at performance. We are also focusing on how the railway operates on a day-to-day basis and how people work together to make sure that trains depart on time, doesn't lose half a minute year or there. And we will, over the coming weeks, continue to retain that focus and work towards improving the punctuality of our service. Needless to say, periods of change where we are asking customers to bear with us when we do Winchbrook Tunnel, when we do Glasgow Queen Street Tunnel, when we have at night's longer access to give Carl more than one and a half hours to get the electrification done. All of these things affect our customers and I understand that. There is nothing worse for me than to have customers being dissatisfied with our railway. We take it very seriously and we'll focus on the next couple of weeks and months to improve the performance on our railway. That's a very comprehensive reply. I appreciate the effort that goes into the design and future proofing that you talked about earlier with projects. I appreciate that neither of you gentlemen were part of the decision-making process of the layout of the border railway as presently configured. Clearly, it impacts on some of the challenges that you face. It will also compound difficulties around the expectation that a lot of people will have to expand that line, would you agree with that? I'm not sure. I think that the extension of the border line to Hoik and even further has gripped the imagination of those communities, quite rightly so. To say that that quite understandable expectation has been impacted by what could have been fairly modest double tracking and looped opportunities that weren't put in with the design as it now is. I think honestly, as we get a sense of how this part of our railway, the border railway works, it takes time for things to settle down and we are now in a mode where we can see what it's shaping up to be. There are real opportunities for us as a train operator and Transport Scotland to agree what can be done to change the effectiveness of how this railway works. I think that there is a very real opportunity to go back and think about either different timetables or further infrastructure investment. I think as part of the benefit that it brings, if we look at feedback from Abbotsford House just for example in terms of footfall to Abbotsford House, footfall to businesses in Galashill, it is a huge economic contributor and I don't think that some of the difficulties we've experienced now and which we are fixing will affect that as a business case for further extensions of that railway. I think that everyone is wanting the border railway to be a success and to provide what people need. I think that it's something that will continue to watch. I'm also mindful of time, as I keep saying. One of the issues that we'd like to talk about is the issue of the recent dispute. Since the papers have been prepared for the committee, there has obviously been some movement and I wondered if you'd like to just update the committee on that before we have a couple of questions for you on it. So what we have agreed with both our RMT and ASLEF unions, RMT representing conductors and ASLEF representing drivers is a dispatch method for new trains whereby the driver will stop the train and open the doors and the conductor will close the doors and do the safety checks on the platforms. This proposal has come after, as I'm sure the committee appreciates, after a very difficult period of proposing solutions. This was the sixth or seventh variant of the original proposal, but this is a proposal that presents benefits for both parties. I appreciate that the situation has changed since we had those papers. Thank you for the update. It is just to clarify that there isn't a plan from here on in to extend the driver-only operation. So no, we couldn't get agreement on drivers operating doors. We were never suggesting that there will only be a driver on the train, but the railway terminology of driver-only operation pertains actually driver-only operation of the doors. It is so misleading to the public because that was immediately read as driver-only operation of the whole train. It was always our intent to have a second person. We now have a solution that has that. You did nonetheless have a significant number of trains that operated with just the driver and that had implications, for instance, for disabled passengers. So in parts of our network we have an agreement to operate trains with a reasonable expectation of putting a second person on a train. In parts of our network we do have an agreed process whereby if there is not a second person on a train the train can depart and can operate. I fully agree. It is less than desirable. Working very closely with our unions having identified that there are some instances where it would be better to make sure we have headcount increases, I have increased the headcount of ticket examiners to make sure that we have less of those instances. Over the last couple of weeks we have reduced the number of trains that run in that format significantly. It is good that you have a resolution that satisfies everybody. I understand with your contract with the Government that you are able to seek compensation from them for lost revenue due to industrial action. Are you going to be doing that? Under our contract, if we show that we have done everything reasonable to avoid or manage a dispute, we have recourse to go to government. Government has indicated to us right at the beginning of the dispute that the risk of industrial action resides with us as a business. Government has already been clear that for the revenue loss that we have suffered due to industrial action we do not have a recourse for that loss. Now that the 3.8.5s, the doors will be shut under the control of the conductor, is the button still being pressed by the driver but at the control of the conductor, or are you going to have to spend extra money refettling the 3.8.5s that are ready in course and those that you are going to order? The opening of door control panels will still go into the assembly process and there is therefore only a few sets that have initially been built where door control panels have to be retrofitted. The door control panels will make up part of the fitment programme on that fleet from this point onwards. The next question relates around passengers and I think that Jamie has a question for you on that. First of all, I would like to say that it is very clear that you are passionate about Scottish railways. That comes across in all your answers. You did mention in one of your previous answers that customer satisfaction is of the highest importance to you. However, the national rail passenger survey, which transport focus performs, does flag up some areas of concern, which I would like to hear your views on in particular. Passengers' concerns around cancellations and delays and the way that you handle delays has been a drop in satisfaction levels with the way that they perceive you to handle delays and also the overall satisfaction around the environment within stations in particular. Clearly, some delays are caused by factors outside of your control. Cancelations in Scotland are often caused by weather, for example. However, many cancellations are caused by staff shortages, for example, as we have read a lot of in the press. I wondered what your overall view is on passenger satisfaction and what you are doing to address that and to increase passenger satisfaction in Scotland. Our focus as a business is on customers and customer satisfaction. I don't say that lightly. Our whole business plan is predicated on growing our customer base. We see ourselves not as a business that just operates metal boxes up and down two metal rails, but rather a business that succeeds in what we do for customers. Immediately, I do hold my hands up and say, this last year has been an incredible amount of difficult challenges. Even the fourth road bridge, while successful for some of our customers, affected other customers differently and also affected our punctuality. Let's look at delays. On delays, we've done a couple of things. We've equipped all of our employees with mobile phones and we've given them an app, a contingency app, which is really cool because when there's a delay, you just press a button and it tells them, it says exactly what the delays, which trains will be affected, what replacement bus services will be available and they can then advise our customers. That helps to get information to customers quicker. We're also modifying that same app so that we can issue it to our customers, so they can then do a journey planner. On their way to catch the East Coast Bride into Glasgow Central, tap in 15 miles an hour before they'll say, this is the route you have to take because there's a disruption on the line. We're also implemented on our app and our website, something that declares where, very similar to what the underground does, yeah, our 31 top routes, which routes are affected currently, which routes are healthy. So that level of information we are working at to get out to our customers is significantly more and we're just in the phases of rolling it out in the last year and we need to do a lot more to inform our customers of this and get them to use this and be familiar with it. In the strathglide area in particular, I am concerned about how, because of the complexity of the network, how we get messages and alternative options for customers when a train is disrupted, what other choices they've got. So I've put my team led by extremely competent director, Jackie Taggart, has put together an idea of the strathglide disruption desk, which is for the strathglide area we're going to deal with disruptions in a different way that makes sure the person on the ground knows exactly what's happening in other parts of the network to advise customers immediately. So that's a big drive for us. But on top of that, one of the things that needs to be really effective is how our people actually think and behave and we've got what we call an inspire program that's focused on changing the behaviors of our people. Not changing behaviors, just adding to it. Our business is based on super fantastic people working in our company. I mean, I go on the trains and I announce myself to our customers and I say, I'm full versatile manager director, I'm walking through the train, throw eggs at me or whatever, but give me comments and tell me what you don't like and be sure they tell me. And one of the things they tell me most is not, this is bad, that's bad, they tell me, do you know how super your people are and your people make your company work? And it's fantastic people that run our business. So we continue to help them to understand what they can do during disruption for our customers. And perhaps the last idea, which we have also not yet successfully sold to our customers, but we have set up a number of really good, what we call ticket acceptance arrangements with bus operators. So if a service is disrupted here, you can take your ticket and get on a bus and travel as if you're traveling on a train. It's not the same as a train, it's definitely not as good a product, but it gets you from point A to point B. We've got deals like that with McGill's for Inverclyde, first bus for the whole of Glasgow, Lothian bus for Brich to Edinburgh, Stagecoach in the Highlands for Inverness to Aberdeen and Inverness to Thurso and so on. We've recently closed similar agreements with Stagecoach East for Fife and Borders and Stagecoach West for Dumfries and Air. So we've done so much of these things that will help us to work the railway better and we will now go out of our way to get that to our customers. First of all, thank you very much for that in-depth answer. I'm still conscious of the time and I'm delighted to hear about this app, which obviously will rely on being able to get Wi-Fi on the train, which may be another issue that leads us neatly on to whether that's possible and to talk about rural railways. Thank you for coming along. I think that some of the questions are as a follow-up to when we met up in Thurso and thank you for coming on the far north line and experiencing the opportunities and challenges that we face every day. I just wanted to ask a couple of questions. I'll try and keep them as short as possible. I was on the train myself last Friday from Tain to Wick. The Wi-Fi wasn't working and I was unable to get my work done, so I wonder if you could look into that for me. One of the questions that one of my constituents has asked me is about your pricing, how it's set, because he finds it quite high. I must say that I disagree with that because I found that the journey from Tain to Wick was cheaper than it would have been on the bus, even though it probably takes about two hours longer. The scenery is beautiful as you know. Network rail, what are the plans going forward for additional loops? As you know with our declaration, the friends of the far north line have been pushing for loops for quite some time and it certainly would help to improve the service. At the moment, we are facing a four and a half hour journey from Inverness to Thurso, which is quite challenging for a lot of people. There have been a couple of timetable changes. I am just making a plea to reinstate the early morning request stop at Colrain. I am getting pushed here by the convener to probably shut up. It is unfortunate that one of the last questions has been taken, as I think that we need to spend as much time on this as we spend on other projects. I am sure that I can put anything else in writing to you. If I can just say, the far north line is very different to any other part of our railway. What is different about the far north line, if you compare it to a typical commuter railway, the far north line is really inherently part of the local communities. It is such an important line, very similar to what borders have manifested to be. On the far north line, we have as part of the root study improvements that will be made closer on to Inverness. We continue to consider how we can get speeds in loops to be faster, which is something that Frank Roach has brought to my attention, so that we can get more flexibility in terms of how the timetable works. There has been no ambiguity about the importance of the far north line to us. In terms of our performance improvement plan, we have a far north line team that looks particularly at performance on the far north line and focus on how we improve that. In terms of tickets and pricing, the prices for the railway people have a belief that it is set by the train operating company and it isn't. The prices for tickets are set by the client, which is Transport Scotland. Transport Scotland are really good to listen and to work with different groups to understand what their concerns are with ticket prices and the like. In terms of the timetable changes that you referred to at Kilgrain, I think that what we have to do, what we have to do continuously on the far north line, is to make sure that we have a timetable that is workable, especially on approach into Inverness, because so many people make important connections at Inverness and that remains our focus. On the same issue, there are stations on the far north line to the Kyl line and others that are being missed out in order to get the train to Inverness for those connections. There has to be better information for people at those stations who are just seeing trains pass them. Can I just maybe take you to the piece that was in the Sun newspaper yesterday, which appeared to be informed by the Scottish Government? There were certainly quoting Scottish Government insiders. One of the quotes from that was that you have neglected everything north of Edinburgh. In a way, that might be quite stark, but that you were saying that 30-minute train service is fantastic for that part of the network, i.e. anything north of Edinburgh as well, plays into that allegation. It also said that the Scottish Government had given you an ultimatum. What is the Scottish Government's ultimatum to you about improvements to services, especially north of Edinburgh? The Scottish Government, as quite rightly, approached us when our punctuality performance measure, which is the measure of punctuality of our service runs called PPM, dropped below a trigger level of 90.3%. They expect us to have an improvement plan for performance at that level. This is not an ultimatum. This is practical contract management with us. Train service performance have suffered. We have had an awful winter with Gertrude, Frank and Henry, which were three of the worst storms that have hit Scotland in a long time. If I give you an example at Lamington, where water levels are typically one metre deep in that part of the Clyde, it was three and a half metres deep and touched the underdeck of the bridge. We have not seen this type of weather in Scotland and people say in Scotland you must be ready for bad weather. We understand that, but this has been extraordinary bad weather. Our response to the Forth Road Bridge, as the ORR has submitted to this committee as well, has been exemplary to help in the national context, but it has affected our train service performance with overcrowded trains significantly. We accept all of that, and we are not making apologies here. We are just saying we are passionate to fix performance issues in the railway. I do not see this as an ultimatum as such, but I do see it as a proper step for us to deliver an improvement plan. That improvement plan we have submitted to the Scottish Government, and we will deliver that. In terms of some of the other comments about what was in my reference to an half-hourly service in Aberdeen, it was not made relative to the fact that it is north of Edinburgh. It was made on the fact that I think a centre such as Aberdeen in Venice have had a service that for many years have been too sparse for the huge demand that we have seen. So that was the context of my answer. I think Aberdeen is a fantastic part of our network and very important to serve. We cancelled 1.1 per cent of our trains, and some of the data that made its way to the sun, we hold our hands up. Data published on our website was incorrect and did not reflect that percentage. The sun has reported on that again this morning. We are perfectly in the same space as the Scottish Government is. Train service functionality will have to improve, and we are committed to doing that. Is it possible to get a note somewhere else to the committee of the lines that have an improvement plan in place? All of the railway have an improvement plan in place. For example, on reliability you said you had to put in improving plans when reliability fell below a certain level. Is it possible to get a note of those lines and those plans? We will give you a detailed answer on that. We are now at the stage where the meeting has to come to a conclusion, but there are various questions that are still to be asked, notably questions on access to Waverley station, the Scotland route study and access to the track by steam trains. There are probably other questions that we would like to just think about and submit to you. I would be very grateful if you would consider responding to those. The committee is informed just purely because we have not been able to get everything in on time. That will come to you in the next week. I personally would like to thank you, as I am sure all the committee would, for the excellent evidence that you have given. What has come across is a passion and a knowledge. We look forward to getting you back to update us on how things are going and to hold you to some of the promises that you have made as far as delivery. Just before I close the committee meeting, I would like to make an announcement. At the previous committee meetings, there have been issues raised on crofting. I have seen the first draft of a work plan and a paper that has been produced on that. It will be available on 5 October, which is going to be quite detailed, suggesting how we take things forward. I want the committee to know and to be fully aware that that is coming down the track, because that seems to be a reasonable analogy today, and that I am working on it. As soon as that is available, we will let you have that. John, I know that you have got probably something that you want to say to me about that after the meeting, and I will take it after the meeting. I would like to close the formal business of the meeting now. Thank you very much, everyone, for your time.