 I welcome everyone to the 12th meeting of the Public Audit Committee in 2022. The first item on the agenda this morning is for members of the committee to consider taking agenda items 4 and 5 in private. Are we agreed? Yes, we are agreed. Thank you. We have two evidence sessions this morning. The second is with Audit Scotland, the Auditor General, on the new vessels for the Clyde and Hebrides report. Before that, we have a session where we are taking evidence on the Audit Scotland briefing on social care, which came out recently. I am delighted to welcome our four witnesses online this morning. We are joined by Caroline Lamb, who is the chief executive for the NHS in Scotland and the director general for health and social care. Donna Bell is the director of social care and national care service development in the Scottish Government. We are also joined by two representatives from the Convention of Scottish Local Authorities, Nicola Dickie, who is the director of people and policy at COSLA, and Sarah Waters, who is the director of membership and resources at COSLA. First of all, I invite Caroline Lamb and Nicola Dickie to make short opening statements. We have a series of questions that we would like to put to you. Because you are all online, if you want to come in, please use the chatroom function to indicate that. We will do our level best to bring you in. Similarly to Caroline and Nicola, if you want to bring in Donna and Sarah, just let us know or speak as such and we will make sure that they are called in too. Without further ado, I invite Caroline Lamb to give us a short opening statement. Thank you very much, convener. The Audit of Scotland report acknowledges that our commitment to a national care service indicates our recognition of a significant challenge within social care in Scotland. Indeed, the findings of the report were largely in line with the independent review of adult social care led by Derek Feeley, which is precisely why we are acting to further increase investment in social care and to deliver a national care service by the end of this Parliament. Ministers are clear that we should not wait to establish a national care service in order to take action where it is needed. As such, as I have said, we will increase public investment in social care by 25 per cent over this Parliament. By the end of the Parliament, we will have budgeted over £800 million of increased annual support compared to current spending. In the latest programme for government, Ministers restated their commitment to transformative social care, including developing options for the removal of non-residential charging for adult social care. Importantly, we have also agreed a joint statement of intent with COSR in March 2020. In that statement, we agreed to work together to advance the key foundation principles of the independent review. That included work on many of the areas that are identified by Audit Scotland as requiring improvement. I am happy, along with my colleagues, to answer questions on any of those areas and particularly to expand on the action that we have taken and continue to take forward to support attraction, recruitment and retention of the workforce, on data improvement, on self-directed support and the development and implementation of the healthcare framework for adults living in care homes in Scotland. Throughout all of this work, we are committed to listening to the voices of those with lived experience. Those conversations are already influencing our review of self-directed support. Keeping those with lived experience at the heart of our decision making is what will help us to shape a system that will improve future services and make things better for everyone. Caroline Lamon, thank you very much. That covers many of the areas that we want to probe into in our questions this morning, so thanks for that opening statement. I will now turn to Nicola Dickie, who is the director of people and policy at COSR. Nicola Dickie, thank you very much, convener, and good morning to you and the committee. Thanks for inviting us along today to discuss Audit Scotland's social care briefing and the stark but important issues that it highlights. We know that the pandemic has put exceptional pressure on the whole system, on the entire workforce, on unpaid carers and those with lived experience access and social care support. We also know that many of the issues that are highlighted by Audit Scotland are not new. They are, in many ways, issues that we have consistently highlighted for many years now, as requiring meaningful attention and the whole system preventative investment. As COSR has stated for many years now, there is a pressing need for national and local government, as well as our partners in the social care sector and trade unions, the working partnership and given the current pressures at pace to address those challenges. Local government recognises that we cannot stand still if we want to create meaningful change and improve the outcomes for the people in the communities that we serve. We also know that we cannot wait for the creation of a national care service, nor can we be distracted by the challenges that come with the structural reform that has been put forward. We are committed to acting now and implementing much of the change that is called for within the report. In March, as Carline has already alluded to, COSR and Scottish Government committed to a joint statement of intent, which set out ways that we work together to deliver the key foundation pillars that were set out within the independent review of adult social care. Fundamental to that statement of intent was the recognition of the importance of empowering people, valuing our workforce and indeed embedding a human rights-based approach to social care. We have continued to work jointly to deliver on that through progressing the recommendations of the work convention report on social care, working to ensure that commissioned social care workforce can see improved pay and conditions, a period that fosters continuous learning and development, ensuring a stable, skilled and valued social care workforce is a key priority that is shared between COSR and Scottish Government. Among many of the issues requiring reform are not simple and have been challenged by the on-going and significant calls by the pandemic, as well as the on-going pressures on the core local government funding. We also know that progress has not happened at the pace that we would wish to see, and there is now a shared sense of urgency across the system to address that. Put simply, local government is trying to deliver more, plus less. However, I would ask committee members not to just consider the social care sector and isolation system. Many of the services and supports in our local communities that keep people healthy, connected, engaged and happier are the wider determinants of health that prevent individuals and carers from reaching crisis points. Investment in local government is investment in prevention and wellbeing, which is why we share the ambition of Scottish Government that everyone in Scotland can live well locally. That was reflected in local government blueprint, which COSR published, and in the recent programme for government that Caroline mentioned. Local government is at the heart of that ambition, but we need fair funding to do so, and I am sure that we will pick up some of those issues in more detail. I look forward to discussing some of those points in more detail with members, and thank you again for your invite this morning. Again, thanks to you, Nicola, for that opening statement. I am going to invite members of the committee to come in with some questions, but I just wanted to begin by reflecting on what the auditor general told this committee when he appeared before us on 3 March to talk about the social care briefing that he had produced. What he said in his opening statement was that the Scottish Government needs to take a pragmatic approach and set out what can be improved now without legislation while taking time to determine where the national care service can add most value. You have both spoken about the statement of intense and joint partnership proposals. My question is, what is happening right now? What is your action plan? What steps are you taking at the moment? I will begin with Caroline Lam. The joint statement of a tent that was published in March 2020 had a number of key aspects that Nicola has outlined. In his evidence, the auditor general had quite a clear focus on workforce, on data and on collaboration. In terms of workforce, we have worked with the fair work group to develop a minimum standards framework for terms and conditions. That has been fully agreed and identified, and we are now working together with COSR and other partners on the most efficient and effective mechanism of enabling those to be delivered. Part of that, but not all of it, is about rates of pay. The committee will be aware that, from April, the Scottish Government has provided funding to increase the minimum hourly rate paid to social care workers to £10.50. That is an increase of 12.9% from £9.30. It did stand at £9.30 and then went up to £10.02 in December and up to £10.50 from April. That represents real progress. On top of that, there is a whole load of other actions that we have been taking around workforce. I am happy to talk through those right now, convener, but I am conscious that that might take a wee while to get through them all. There is a lot of activity that has been going on around both attractions, national recruitment campaigns, waving the cost of the recruitment portal My Job Scotland, which has seen over £40,000. Clicks on the apply button, since that happened, waving the costs of registration with SSC and PVG checks, accelerating PVG checks so that we can get people who are applying into social care through that process faster. We have also set up a round table with employers to talk about some of the ways to best use recruitment fares and are currently running our series of recruitment fares supported by DWP. We have looked at what the impact has been of the changes in freedom of movement. Note that care workers have been added to the shortage occupation lists, but there are some challenges around that because very often it is a workforce that is employed part-time. We have also looked at what we can do around increasing the valuing of the workforce through having strong opportunities for development and career progression. We have worked with NERS and the SSC to establish an induction package that went live earlier this year, and we are continuing to work around those routes into social care and flexible routes that will enable people to develop their careers within the sector up to the levels of advanced practice. There has been a huge amount of work that has been delivered in partnership in that area, and that is just around some of the issues that the Auditor General identified around workforce. We have also made progress, I think, on data, which is one of the areas that he highlighted. I can come back and show you will have questions in a number of other areas, but I do not want to pre-empt all of those, so I will maybe just pause there. Nicola might want to pick up on some of the other areas. I will bring Nicola in. We view the report as quite rightly focusing on the value of the workforce, and we have some questions on that, but the report addresses other areas too, doesn't it? The voice of service users, the whole commissioning model and how that is working and whether that is delivering what we would want to see. We are under some time constraints, so we will come to those areas in time, but I want to give Nicola Dickie an opportunity to answer the question that I put, which was about the pragmatic approach and what practical steps are being taken now. Nicola. Thank you very much. I will go back over what Caroline has said, because, as Caroline is quite rightly said, it was all done in partnership around, you know, increasing the hourly rate, et cetera, and the local government and the Scottish Government working partnership to deliver that. It was just two things that I wanted to bring in on top of that. Obviously, we had a very critical period with Omicron just before Christmas time, and indeed that's all local government actually moved to redeploy and shuffle staff into support the social care workforce from the wider local government workforce, and that included keeping them within our own services but also moving them into commission services where that was required. I suppose that that's a really practical way that the rest of the local government workforce and indeed the rest of local government has supported social care. That was one, but I appreciate that specific to Omicron. The other thing that I would just like to mention is that working in partnership just at the start of this year, we have obviously published the national workforce strategy for health and social care. That is an integrated strategy, so those were just the two things that came to mind after Caroline gave the list of things that we've done jointly. Right, thank you very much indeed. The second question that I've got is just really to ask you both whether or not you accept the recommendations that are in paragraphs 35 to 38 of the report, do you accept the recommendations that are set out in this Audit Scotland report? Caroline Lamb, first of all. Sorry to check my microphone zone. I think that the Scottish Government accepts the recommendation and has already taken forward action with partners in many of these areas. Nicola on behalf of COSLA? I think that there's not anything in the general report that we would disagree with and I think that as Caroline's I would do too many of these issues are ones that we were already actively working on and indeed to address. I don't know whether Donna might want to come in on the actual specifics. Donna Bell, do you want to add to that? All I would add to that is that all of the themes that have been identified by Audit Scotland are very much on our radar. There is very little in there, in fact nothing in there that we aren't already aware of and are working on, so I think that I would agree with Caroline really. Okay, thanks very much. As I say, we will return to some of these themes as we go on. I mean, I have to say, I think that the concern that we've got on one of the threads that runs through the Audit Scotland report is, A, the need for a sense of urgency and B, an understanding that it's not just on your agenda but that there is an action plan with force behind it which is leading to change. I'm going to now invite Craig Hoy to ask a series of questions. Craig. Thank you, convener, and good morning everyone. This Scottish Government is obviously planning very significant reforms to social care in Scotland and extending beyond residential social care through plans for a national care service. The commitment seems absolute to proceed with reform but the planning for that reform is obviously still at an early stage and the ink is barely dry on the consultation. But it is quite clear that during the period as we move towards those reforms and that wide-scale structural reform that there are significant urgent needs. Both short-term and long-term, therefore, what levels of investment do you believe are required to meet today's needs and to implement future social care reform? Given that local government in Scotland has been chronically underfunded over the last decade by this Government, do you have confidence that the funds will be forthcoming to meet both the short-term need and the long-term structural requirements? I suppose that Caroline is probably the best person to start with that. Yes, okay. Thank you for that question. As you said, I think that the national care service is a really ambitious and very important reform and the pandemic has made that case the change even more urgent in the way in which it's shone a light on some of the issues in social care. We are committed to establishing a functioning national care service by the end of this parliamentary term. As you said, the ink is barely dry on the consultation and the ministers are considering the wealth of information that came in through that consultation. We are continuing to engage with people who access and deliver services as we think about the next steps. As I have already indicated, we are committed to increasing the level of investment in social care by 25 per cent over the course of this Parliament. As part of the work that we will be getting into around planning for the detail of a national care service, we will of course be doing the work to assess exactly what will be required, both in terms of funding but also how we can look at this across the whole of the system of health and social care. For example, there are opportunities to see expenditure shifted towards community services so that we can get into much more of a preventive and proactive space. Donna Bell, I don't know whether you want to supplement Caroline's comments. I think that we may have lost Donna. Craig, back to you. I just wonder whether, from a COSLA perspective, Nicola might want to reflect on the financial pressures that local government has traditionally experienced recently and what might happen during that interim period where potentially we see a significant hollowing out of local government with social care being transferred to what has been moved under ministerial control. Absolutely. I will give you my opinion from a social care perspective and bring in Sarah on the wider finance point. We have to think about what it is that we want the current system to achieve. Caroline has already mentioned that the Scottish ministers have made a commitment by the Parliament to increase spending. I suppose from a local government and I suppose from someone who has access and services perspective, it is to be, are we comfortable that the existing social care system continues to deliver what it is doing now? Recognising that the Auditor General's report recognises that thresholds and access to services is at a really high level. The 25 per cent increase by the Parliament is welcome, but are we comfortable that that will achieve more than we are doing just now within the existing system? I do not know that we are. With regard to the finances associated with the national care service, COSLA discussed extensively with Eric Feilig when he was doing his independent review of adult social care report, the funding that is in the current system and the wider local government funding that supports social care. If you ask me to describe it, I would say that local government funding is the branch of the tree in social care and health and public health, thanks of the core local government services that we provide, given that so many of the services that local government provides do so much to improve the life of those access and social care. Are we comfortable that there is enough money in the system for the current social care system, as we understand it? Recognising that there are improvements that need to be made is the 25 per cent increase enough to help us to even deliver what we are delivering at the moment? That is a question mark. Is the associated funding that the Government ministers have suggested will be required for the national care service adequate? The difficulty is that Eric Feilig only cost adult social care. We now have proposals on the table that bring in other things. If you ask me to put a figure on it at the moment, that would be very difficult, because I do not know exactly what will go into it. As you say, that is quite rightly because the consultation is finished and indeed the bill will come forward with a financial measure, which, as you would expect, COSLA are very keen to. I might bring Sarah in on the local government financing more generally, if that is okay. I think that one of the main points that COSLA has continued to make, and we have made it quite clearly in our submission to the resource spending review, which we submitted a couple of weeks ago, is that we accept that more cash has gone into local government over recent years. We cannot argue with that, but when you look at what is defined within the Scottish budget as general revenue and core grant, that has flatlined since 2013-14. The problem is that when we add the new funding on top of that, if there is inadequate policy funding for the commitments that are already in the system, we have to take from the core funding to prop up commitments. For example, where they have not been funded and there has been increased demand or increased costs. That is where the real pressure point is. It is that flatlining of the core, which I think Audit Scotland has highlighted in its local government financial review. There is actually a significant real-term cut when there has actually been increases passed to both Scottish Government and to other parts of the wider system. The whole trust of the campaign this year from COSLA was about the other services that are within communities that are the things that not only keep people out of the national health service, but that ultimately can keep people out of the national care service or keep them at the lowest level of care that they require. Instead of COSLA complex interventions, some of the simpler things that we can do upstream in terms of lunch clubs, community learning, mental health support and transport, we need to look at those services. That is where the core funding is the particular issue. On the wider issue of extracting social care from local government, that is extremely complex. If we look at some areas, for example, catering and cleaning services are inextricably linked to other council services. You may have a catering service that caters for adult social care and schools and other parts of local government services, transport services. There is a whole range of services and support services within councils. Their back-office functions, which, as the Auditor General has pointed out through the supply and evidence on the local government benchmarking framework, have taken a hit over the years. It will be really complex to try to unwind some of those and extract them from local government without a real detrimental impact in local government. The Auditor General draws attention to that in his report. I think that the stakeholder has raised concerns not just about doing it in relation to adult social care but also the wider scale of the reforms and the impact it could have on local government. The financial tension is quite significant. The other tension is that during the process over the next three to five years is that the urgent need that the Auditor General identifies within his report in relation to social care is somehow pushed out because of the structural reform process that will need to be undertaken in order to achieve that. Caroline Lam, what assurance can you give the committee that there will be a clear timescale for developing a plan to address the urgent issues within the system? How is it going to be possible to implement longer-term reform, for example with councils that are allocating capital budgets or in relation to reprovisioning of care services? Isn't there a very real risk that that will be pushed off the table? Even though it is, in many respects, urgent because of this longer-term structural review? We are absolutely focused on the immediate and urgent pressures in our winter response plan. We announced £300 million additional funding of which £170 million was into social care, recognising that absolute interdependency between health and social care. We need all bits of the system to be delivering the best possible value that they can, and whilst I understand the focus on budgets and budget management and resources, it is also really important that we look at what we are delivering in terms of outcomes and quality for people. We need to make sure that we are spending the money that we have in the best possible way to achieve the best outcomes for people. I think that so long as all of us across the system remain focused on achieving those best outcomes for people, we will continue to improve the system as we move towards reform. Finally, form of the scale will involve significant changes to governance, accountability, collaboration and require some degree of new leadership. To what extent can the Scottish Government learn from previous white-scale reforms? How do we avoid having a Police Scotland mark 2 as the product of this? I will start on this, but I will bring Donor in, because we are absolutely mindful of the way in which policy has not been implemented as well as we might have liked in the past and learning the lessons from previous large-scale reforms, including Police Scotland, Social Security Scotland and learning from what has gone really well, but learning the lessons from the things that have not gone as well. Donor, do you want to come in on those points? Thanks, Caroline. On the previous discussion about the urgency and a coherent plan for improvement, there are, as you have already described, a number of actions that are under way around SDS reform. We have a really good collaborative group of people working on that to develop an improvement programme at the moment. You have already covered a lot of the recruitment and retention challenges and the actions that we are taking there. There is a range of other work focusing on residential settings for adults, particularly in care homes and the healthcare framework that we are proposing to implement. We have work on a different practice model to support a holistic approach to people, as you have described. The work on multidisciplinary teams that will support that has been moving forward at pace over the past year or so. The intention is that we are meeting with local government colleagues next week to discuss wider improvements as well. I would expect, and Nica, my wish to comment on this, certainly the commitment from Scottish Government and local government to draw together that coherent improvement programme and then to implement that at pace. Post the local government election is absolutely at the top of our agenda. On the learning from other pieces of reform or change, certainly we have done a significant amount of work to learn from integration of health and social care thus far. We also engage regularly with the people who have undertaken police and fire reform, the set-up of the social security agency and others to understand what has worked really well for them, but also the things that they might want to do differently in the future. We have a good cohort of colleagues and advice from those people on major reform programmes and change management. We are drawing all of that, not just into our discussions about the future national care service but also about the reform that we want to undertake now and the improvements that we want to make. A brief closing question about data and how data gaps will be addressed. It is quite clear that there are data gaps on demand and unmet need, for example. How do you intend to plug those gaps now? As you move forward to a more integrated system with social care and the NHS, how will you make sure that you align that data and integrate that data so that you get a better product at the end of it? Thank you. Data is an area that I have a particular interest in. In the NHS consultation, we set out a plan for a nationally consistent and integrated and accessible health and social care record and an intention that we would use legislation to make sure that there is appropriate sharing of data and data standards, which makes it so much easier to share data. However, that is another one of those things that we cannot wait for. Indeed, we have not been waiting. I think that we have made important progress through the pandemic and through the pressures that we have faced. To give you one example, we implemented the tourist care home safety huddle tool, which has provided information that has been absolutely critical to our pandemic response. It has provided a timely, standardised data set for each adult care home across Scotland, which has been incredibly useful to providers, oversight groups, health and social care partnerships and, indeed, to us nationally. That sort of work has made and continues to make a difference. We have also a big focus of taking the work out of data collection. It is a very simple system, not lots of complex spreadsheets. We have also implemented a data improvement programme. We are working with partners again to identify what the barriers are to achieving improvements in the short term and as quickly as possible. You referred to the data gaps across the health and social care system. That focus on management information is absolutely critical. I have already mentioned the interdependencies across health and social care. In terms of understanding how we can best make the system work for people, we absolutely need to be understanding what the pressures are and what the demand is at each point in that system. Particularly through the pressures that the system has been under, our adult social care gold group has worked in partnership to develop key sets of management information, which is really helping in terms of our understanding of how the system is working end to end. There is still work to do with that in terms of improving quality, time and consistency of the data. I am not underestimating the challenge, but it is something that all partners are committed to working on. I hope that I will have the opportunity a bit later in the session. I do not want to lose up too much time just to talk about what that data is starting to mean in real life for people working in the system. I think that Donna Bell wanted to come in on that point as well. Donna, do you want to speak? Thank you, convener. It was just a pick-up on the point that Caroline made about the gold group, which is a multiagency group that has been brought together over the pandemic to better understand the issues that are emerging and that are live for us all. There has been a significant focus on that group on data. Specifically, as Caroline said, there are outbreaks in care homes on pressures in the system, particularly unmet need and things like workforce absence, workforce supply, etc. Nicola might want to come in here too, but that has given us a better shared understanding of the pressures in the system over the past year. As Caroline said, there is a lot more work to do on quality and probably to expand that data set significantly. At the moment, it captures known unmet need at a management information level. People are waiting for assessments or for packages of care, but it does not cover wider unmet need perhaps in the community at a more preventative or early intervention level. I think that there is a significant amount of work to do, but we have made a lot of progress over the past year. We are, as I mentioned at the beginning, quite pressed for time, so if you could try and keep your answers concise, that would be really helpful. I am going to invite Willie Coffey, who has some questions in this area, to come in. It is really a question to follow up on what Craig Hoy was asking just there on funding and sustainability. If you look at the figures that the Auditor General presented to us on adult social care spend, you can see significant increases in the spend over the past 10 years. In fact, the spend has gone up by 22 per cent for adult social care. We heard Caroline say just a moment ago that we plan to spend more, another 25 per cent more on that. The bottom line question for me, convener, is with that additional funding and the whole service redesign coming through the national care service, is that going to be adequate? Will that be adequate to address the concerns that the Auditor General expressed about sustainability of the service going ahead? Could you give us your view on that, Caroline, please, in some reassurance, if you can? I think the additional funding that we've already made available into the system is making a difference and that commitment over the term of this Parliament is really important. I think we've still got more work to do to understand demand and the nature of demand and to understand as well whether we are addressing that demand at the most appropriate point. Are we providing support to people early enough to prevent them from being in a position of needing more support by not being able to access the support that they need early? I think there is still a lot of work to be done. I think as well we're still understanding the impact of the pandemic on some parts of society and the extent to which for the elderly population not being able to get out and do the things that they would normally do has actually had a detrimental impact on how we can assess that and how we can meet that demand going forward. I think that the answer to your question is that we've still got work to do just to bottom out absolutely what we're expecting in terms of demand and to start to do some scenario planning, looking at that going forward. For now, convener, I know we're really pressed for time, but thank you for that answer. I'm going to now turn to Sharon Dowie, who's got a couple of questions to put. Good morning. Service users and carers do not always have a say or choice about what support works best for them. Self-directed support, SDS, was designed to give people choice and control over their care, including personalised options for carers to take short breaks from caring. SDS has not yet been fully implemented. People using social care support have described the hurdles encountered in accessing services and described accessing support as a battle, difficult, overcomplicated and bureaucratic. The pandemic has highlighted the precarious situation of many vulnerable people who rely on social care or support and has had a negative impact on people requiring support. The Scottish Human Rights Commission has expressed deep concern about future levels of social care support likely to be available to people whose packages were reduced or withdrawn during the pandemic. Can you tell us how the Scottish Government is involving service users and carers in reforming social care services? In my opening remarks, I talked about how conversations with people with lived experience were already influencing our review of self-directed support, but I'll ask Donna to say a bit more on that, and Nicola might want to say something about consistency of implementation. I mentioned about the work that we are doing to revisit the self-directed support guidance. We are clear that guidance alone is necessary but not sufficient to make the change that we need to see on self-directed support. We are working with a fairly broad group that includes people with lived experience, people who have caring responsibilities, who agree a way forward in terms of that improvement. We have held two short-life working groups meetings as a part of that review, and we have a number of key themes that have been identified, which I think are concurred with what the member has said. There is work to do on effective decision making and consistency on decision making and considering whether there is any conflict in legislation and policies. We support the support in the right direction programme as well, which provides support and advocacy. We are keen to draw all of that together and put in place a set of improvement actions to make sure that there is much more consistency, access is more streamlined and that people can get what they need from self-directed support. Nicola Dickey, do you want to come in on that point? Thank you very much. It is absolutely to concur with what Don has just said about the place of lived experience coming through. The minister has also established a social covenant group, where we have service users directly providing their opinion on current social care and the reforms that will come. Causola's health and social care spokesperson councillor, Stewart Curry, also sits on that group. Here is a political level directly from service users, which is good. Myself and Donna, over the period of the pandemic, have also chaired what was termed as the pandemic response and adult social care group. On that group as well, we had unpaid carers reps, carers associations and other people who represented service users on that. We are getting better, there is always more to do. I would also point out that local government hears from users of social care every single day in every community up and down the length and breadth of the country. I am sure that if you had a local councillor here today, they would tell you that they get lots of experience and feedback, as I am sure members of the committee do. To come back to the point about localisation and unmet needs, we have to be absolutely clear the difference in outcome of experience versus the outcomes that people actually access. Causola is an avid believer that the access to support that you get in Shetland, the process should be the same, but the actual outcome might be different. How you get supported with social care needs on Shetland might be very different to how you are supported with your social care needs in the centre of Glasgow. I think that we can agree that that is true, because people are individuals. It goes back to the point that was making in my opening remarks that we need to make sure that what we are seeing is person-centred outcomes. We need to get away from the idea that a nationalised model will support individualised outcomes. What a national model may well support is similar outcomes and one-size-fits-all is something that we have worked hard through the process of it. I am not going to sit here and say that it is all perfect, because we have already alluded to the challenges that we have with the demographics in Scotland. We have already spoken about the financial challenges that we have. The other thing that we need to think about is that the pandemic did not hit all of our communities equally at the one time. What we heard during the pandemic was why our day services, for example, are still closed in X authority, but they are open in Y authority, because the pandemic was not felt the same across our cities as it was in some of our... We just need to be really careful that we do not strive for a one-size-fits-all and then move away from what we have been talking about for a very long time, going back to Campbell Christy, which is prevention and indeed person-centred outcomes. I think that from a local government perspective in the way that COSLA has approached the independent review and indeed the Scottish Government consultation is not saying that everybody should get the same, what we are saying is that everyone should get the same support and should go through the same journey, but ultimately the outcomes might be the same. The pandemic has also put additional pressures on unpaid carers going to the closure of day centres and respite services. That has resulted in increased feelings of anxiety, depression and mental exhaustion. Are you aware at the moment of whether all of these facilities have opened back up post-pandemic? If they have not opened back up, what is the Scottish Government doing to ensure that those services are open to give the people the support that they need? I do not know if Nicola wants to come in on that. I cannot speak for the Scottish Government, but I can certainly tell you from a local government perspective that we recognise that the closure of day centres in the very height of the early days of the pandemic was on the basis of public health guidance and that we did not want people who were vulnerable or at that time, as they were calling, shielding being put into day centres where they maybe had difficulties with increased access to the virus. We have to remember that there was a public health reason for day centres being closed. From a local government and a health and social care partnership, people recognised absolutely the importance of getting those day centres back up and running for people if they wanted them. Going back to the point at which local government did with our partners, when the day centres were closed, we tried to step into a space and give a person-centred approach to what might work for those individuals who had previously been in day centres. For obvious reasons, there was some nervousness about, instead of someone going to a day centre, a service worker coming in access and a person who accesses support in their own home when they were shielding. When the day centres were closed, we tried to step in and provide support. There was a bit of reticence in some respects. There were also workforce challenges from a local government perspective. During the course of the pandemic, the way that we approach day centres has changed. It has changed not always for the same reason. Some of it was very early on, but it was public health advice. These are the high-risk settings and should not necessarily be operating. As we are coming back through the pandemic, those day services where they are still a requirement and that is what local support and service users want have opened back up. I think that local government has, in some areas, taken the opportunity to reform the services. As people have moved into other things, we just need to go back to my point about localisation. It is difficult when we start to say that we had 150 before the pandemic and we have 140 now. That might not always be a bad thing, because if people have gone elsewhere or have started to access different supports, that is exactly where we want people to go. Going back to the point about choice and responsibility and personal support, that might be a good thing, but Donna might want to come in on the Scottish Government's approach to day services. You have covered most of it. All that I was proposing to say is that we have worked closely together on making sure that the guidance is right, working with Public Health Scotland and others, to ensure that folk are supported to open up as and when they can. Mr Stewart, Minister for Mental Well-being and Social Care, wrote out last year to encourage day centres to open back up, but Nicolae, you have covered the primary points on localisation. Sharon Dowie asked about commissioning. I would like to ask Caroline Lamb, who is the chief executive for NHS Scotland, as well as the director general for health and social care, about the commissioning model. If we look at the national health service, the commissioning model is not the model of the national health service, is it? Arguably, there would be an outcry if we went down that route as the model of delivering the NHS. As part of the discussions that you have been having with COSLA and looking indeed into the national care service of the future, are you looking at alternatives to a competitive tendering model, which is how the commissioning model has developed? I think probably what's key around this is that, within the independent review recommendations, there was a recommendation, which is also part of the joint statement of intent with COSLA, to move towards ethical commissioning. That's much more about a partnership approach to commissioning and a focus on the outcomes and what's important to people in amongst that. We have started the process of engaging on draft ethical standards and Donna can say more on that. In preparation for the move towards the recommendations from the independent review, we also issued a Scottish procurement policy notice in December, which was designed with key stakeholders and advising of the actions that they can already take in commissioning a procurement and how we can make improvements on that. I'll maybe ask Donna to come in around some of the detail of that work on ethical commissioning. Thanks, Karen. The procurement guidance that was issued in December is a really important starting point there, because there is a lot that can be done just now to bring current activity in line with the principles of ethical commissioning. I think there's a lot of work to do. We've had some really great input from CCPS and from others on where we might go with this. It's not straightforward, so there is a significant amount of work to do, which will take a bit of time. I think that a focus on what can be done now is really important. Colleagues in local government have been working closely with us on what can be done now, so it's maybe worth asking them to give us a bit of comment on that too. Thanks. I think that Sarah Waters wants to come in, so I'm going to invite Sarah to comment on that. It wasn't a point specifically on the last point that Donna made, but it was just really in relation to ethical commissioning. Local government takes commissioning across a range of services really, really seriously, as well as ethical commissioning, sustainable commissioning and local commissioning. Many councils are now working on community wealth building strategies. It's only one part of what local government is trying to make sure that we are getting the best value for local communities right through the commissioning process. It's really challenging, and I'll come back to it and the Auditor General has said it, with single-year budgets. It's just really challenging. You're continually having one eye on next year and the year after and what you're going to have to do, but certainly ethical commissioning is just one part of a whole range of commissioning approaches that councils are trying to take. Thank you. In and amongst those answers I didn't hear anywhere anybody talking about going beyond commissioning or looking to a conversion to more of a national health service model for the national care service, but we are pressed for time, so I'm going to move on. We've covered quite a lot on the workforce so far. My parting question on that before I bring Colin Beattie in is just to ask, you mentioned Caroline Lamb about the uprating of the hourly rate of pay from April of this year. Do you have any forward timetable of where you expect rates of pay to go over the next five years, the time horizon that you've spoken about, this 25 per cent uplift in resources in? Within that 25 per cent uplift, obviously pay will be one factor of that, but we haven't yet modelled out exactly what that would look like. That's fine, that's clear. I'm going to invite Colin Beattie to ask a final couple of questions. I'd like to look at leadership. Leadership is a concern that's been raised depressingly often in the public sector. In this particular case, I'd draw your attention to paragraph 20 of the Auditor General's report where it says that the health and social care sector needs stable and collaborative leadership to address the challenges. There's also a reference to the local government in Scotland overview of 2020, which emphasised the critical need for effective leadership, which wasn't there. Again, the NHS in Scotland 2020 report highlighted the lack of stable NHS senior leadership with high turnover and short-term posts. Those are quite serious issues. Leadership is absolutely vital and yet so often we find it's not there. Here we are looking at the challenges facing social care and they seem to be facing exactly the same issues in terms of leadership. Maybe Caroline Lam might be able to comment on that and how this is being tackled. I'm happy to come in on that one and I'm sure that colleagues will want to contribute as well. I would agree that the health and social care sector needs stable and collaborative leadership. That's not necessary always about everybody staying in the same job. I think we see real benefits from people moving between health and social care. We have examples of chief officers who have become chief executives in NHS boards and I think that really helps to break down some of the barriers and enhance collective understanding of some of the challenges across the end-to-end system. However, it's absolutely the case as well that I think if we look at the impact of the pandemic over the last couple of years, it has put the workforce under extreme pressure and it's also put our senior leaders under extreme pressure as well and people have worked incredibly hard in the face of some quite extraordinary challenges. That said, I think it's also been a unifying factor so I think it's actually brought people together and certainly as I speak to people around the country, most of them will comment positively on how the experience of COVID of working together with clear priorities has brought them together into a collaborative space and actually built relationships that are stronger than they were before and that will endure going forward. I think that one of the things that we need to hang on to in terms of that collaborative leadership is that it does become more complex as priorities start to become more complex as well. There's a risk that that focus and the single mission that we had through COVID gets a little bit diluted but I'm sorry, I'm choking a little bit. I'll maybe just pass to Donna to talk you through some of the things that we're doing to support leadership across the system. Yeah, thank you. We do work very closely with chief officers in particular so the support that is offered to them includes a range of, there's actually a very good self-supporting network and I think that has led to some great connections, practice sharing and a good leadership cadre there who support each other. There is activity in place to support wellbeing for leadership coaching and various other aspects but I think the point that Caroline makes about that collaboration point, people learning together and people coming together to address joint challenges is a really, really important one. And as Caroline says, a lot of what we could call learning on the job and collaborating on the job over the past few years has brought people much more closely together to understand their common challenges. I think the focus on wellbeing is an important one that Caroline says, it's been a very, very difficult time for a lot of the leadership operating and health and social care, which has both challenged people but helped them grow in their roles. So I think that as we come out of this current period there will be more to do but certainly there is a fair amount of support in place already. Nicola might want to talk a bit about local government and any specifics that are in place there. Before Nicola comes in and that's that the Auditor General's report here is at January 2022 and I applaud the optimism and everything expressed and all the collaborative. But it's not being evidenced in what's coming before this committee and obviously it's going to take time before that feeds through but at the moment on the evidence that we see that's given to us, at the moment it's substandard to be honest. Nicola? Sorry, I absolutely agree with Caroline what Caroline and I said earlier about Covid bringing leaders together. Caus of submission and indeed solace, the chief exec's core submission to Scottish Government consultation on the national care service flagged the risk of unstabilising the senior leadership within health and social care and indeed the wider public sector. So I think that it is a risk and it's one that people are aware of. What I would say is that there's an awful lot of support going into supporting all of Scotland's public sector leaders in terms of leading through change because there's not a single part of the public sector in Scotland social care included that will not be leading through some form of change as we come out of the pandemic. So I think that we've got the Scottish Leaders Forum set up. We've got various support networks there but it is something certainly that the chief execs in local government and indeed I'm sure not to speak for them but the chief execs in the NHS are absolutely mindful of. So do we have the golden ability at the moment? I don't know but it's certainly something that is on the risk list from a local government perspective to ensure that the senior leadership across local government and the wider public sector are supported regardless of whatever the form of the national care service might be. Just very briefly because I am conscious of the time. In paragraph 21 of the report there's also reference made to the issues between partner organisations, the model of governance being over complicated. This is not new. These integration authorities have been in place for some time and Donna, for example, said, we've been learning from other integration initiatives such as police and so on. Again, I say, as at January 22 when this report was produced, there seems to be very little evidence of that coming through in the Auditor General's report. So I'm hearing a lot of good words. I don't see the evidence for it and I hope that we will see that in the future. I don't know whether anyone wants to say anything further on the integration authorities. I think that Donna was wanting to come in and I'd maybe just like to give a specific example around collaboration. Donna, do you want to come in first? The first reference that I made to understanding change and the need for change was to integration authorities. Audit Scotland has published a number of reports on learning from integration and we obviously have a range of our own learning. I absolutely recognise what the member says about the need for change and I think that that has come to fruition both through the independent review of adult social care but also the proposals for the national care service. Both of those things, as well as all the other work that is under way, are a direct response to the points that the member makes. It's absolutely the case that we are learning from where we are now and are putting plans in place to address the issues that have been identified. Thank you very much. That ends the questions that the committee has got. I thank Caroline Lamb and Donna Bell from the Scottish Government. Nicola Dickie, who may have dropped off but nonetheless, if she can hear us, I hope that she takes our thanks for her evidence and Sarah Waters who joined us both from COSLA. As a committee, we will reflect on the evidence that we have taken this morning and decide on what our next steps are. Thank you very much indeed for your co-operation this morning and hope to see you again soon. I am now going to suspend the meeting to allow for a changeover of witnesses. I welcome people back to the second half of this morning's public audit committee. Agender item 3 is our first consideration of the new vessels for the Clyde and Hebrides audit Scotland report into arrangements for the delivery of vessels 801 and 802. I welcome witnesses to the meeting this morning, the Auditor General Stephen Boyle, who is joined by the team of three people this morning, Anthony Clark, who is the interim director of performance, audit and best value, Angela Canning, who is an audit director at Audit Scotland, and Jill Miller, who is an audit manager, performance audit and best value at Audit Scotland. We are joined virtually this morning by a guest MSP, who is taking part in the evidence session this morning, and that is the Hiles and Ions MSP, Rhoda Grant, who is joining us remotely. Rhoda, you are very welcome. I remind you that if you want to come in at any point in particular, if you indicate by putting an R in the chatroom and we will do our best to bring you in. What I would like to do to begin with is to invite the Auditor General to give us an opening statement, then we have a series of questions. I have to say that we may not cover all of the ground that we need to cover this morning, in which case we might be looking to have a part 2 of this session with you, Auditor General, but I am going to begin by inviting you to make an opening statement. Under section 23 of the Public Finance and Accountability Scotland Act 2000, I am bringing to the committee my performance audit report on the project to deliver two new ferries for the Clyde and Hebrides. The main headlines surrounding these two vessels are well known. They are significantly late and considerably over budget. My report sets out the reasons for the delays and cost overruns and the remaining challenges in completing the vessels. It highlights a multitude of failings over the last six years. In particular, my report highlights that the Scottish ministers approved the contract award to Ferguson Marine Engineering Ltd in October 2015, without the standard financial guarantees being in place, and contrary to the advice of Caledonian maritime assets Ltd, CMAAL, the public body that owns most of the vessels on the network. There is insufficient documentary evidence to explain why these risks were accepted, and I consider that there should have been a proper record of this important decision. Only two months after the contract was awarded, CMAAL identified concerns with the project and overtime problems, delays and costs escalated. The Scottish ministers approved several financial and non-financial interventions to try and get the project back on track, but they had little impact. FMAAL entered administration in August 2019 following unresolved financial disputes with CMAAL. By this point, the Scottish Government and CMAAL had paid FMAAL over £128 million, but the vessels remained far from complete. In December 2019, the Scottish Government nationalised the shipyard with the stated intention of helping to get the vessels completed as quickly as possible, protect jobs and sustain shipbuilding on the Clyde. Now operated by a public body, Ferguson Marine Port Glasgow, there are still major operational issues at the yard that remain unresolved and remedial work on the vessels, which should have been completed within seven months, continue to be uncovered. Since my report was published, the new accountable officer of Ferguson Marine Port Glasgow has updated Parliament to report that vessel 801 is now expected to be delivered between March and May 2023, five years later than promised, and vessel 802 between October and December 2023. Those new vessels were intended to create more capacity and improve reliability across the Clyde and Hebrides network. They were also meant to bring social, economic and environmental benefits. That these have not yet been achieved over six years on is of course a source of frustration for island communities, which rely upon lifeline ferries. It is imperative, therefore, that Ferguson Marine Port Glasgow delivers these vessels within the new timescales. Closer collaboration with CMAL is a positive step. As I said in my report, there are several operational and workforce challenges remaining that need to be addressed if these vessels are to be delivered. I make recommendations, convener, to help support this. After the vessels are completed, all public sector bodies involved must turn their attention to fully considering what went wrong with the project, learning lessons and, crucially, preventing a repeat of such problems in the future. As ever, convener, my colleagues will do their utmost to answer the committee's questions this morning. Thank you very much, Auditor General, for that concise and very clear opening statement. I am going to turn, first of all, to the deputy convener, Sharon Dowie, who has a number of questions to put. Good morning, Mr Boyle. Good morning, everybody. Again, your team has reprided a report that, in your words, has shown a multitude of failings. A comprehensive report, even with the lack of documentary evidence that was available, has obviously raised a lot of concerns and a lot more questions. Once again, the issue of transparency within the Scottish Government has been raised. The report makes it clear that the project has been riddled with problems and delays over six years. The vessel is now four years late, now looks like five years late. The cost two and a half times the original budget at the moment. Wordingly, paragraph 105 states that the Scottish Government is committed to paying the additional vessel costs regardless of the final price. In all of that, at the expense of the taxpayers and seemingly with no accountability from ministers. When we read paragraph 141, it states that, because engines and equipment were purchased several years in advance, warranties have expired and any repairs required before vessel 801 enters service could be expensive and time consuming. We now know that there will be delays due to cabling being too short for the vessels and to add another layer to the saga. Once the vessels eventually do come into service, there is now talk that the vessels are 40 metres too long for the hardware that it serves and that the masters of the boat who have been practising using simulators have been unable to dock them safely. So it seems that the story will continue, the cost will continue to rise and there may well be further delays. That is before we start talking of flawed decision making processes, lack of documentary evidence and the Scottish Government ignoring alarm bells that have gone off repeatedly. It is understandable why there is a lot of interest in the report. Going back to 2015 and moving on to my first question, looking at Exhibit 1, in August 2015, ministers announced Ferguson Marine Engineering Ltd or FMAIL as the preferred bidder. Could you tell me more about the decision making on that? I believe that there were seven bids from six companies, so who would have taken the decision to award the contract to FMAIL, taking into account that it does say that FMAIL was the most expensive bidder? In respect of Exhibit 1, we look to set out the very significant chain of events up to current day. Right at the start of that exhibit, we note the identification of FMAIL as the preferred bidder. I will bring in my colleague Jill Miller in a moment to talk the committee through the process around the procurement. Before doing so, it might be helpful just for the purposes of our report to set out the scope of our work. We did not review the detail of the procurement, the design arrangements of the ferry contract. We took a judgment based on the evidence that was considered by the Rural Economy Committee in the previous session of the Parliament, having their investigation taken considerable evidence on the design arrangements and the procurement circumstances that our work would be best served by picking up from the point of the identification of FMAIL as the preferred bidder through to the current day and some of the circumstances and challenges that have unfolded therein. Nonetheless, in the report, we give some of the history of the procurement circumstances. I will invite Jill Miller to update the committee on some of the decisions that are made by the various parties, the use of cost-quality indicators and so forth, if that would be helpful. As you said, in March 2015, FMAIL received seven bids from six ship builders. I just want to emphasise that those bids were all anonymised when the evaluation panel over the period March to August were looking at those bids. The bids were evaluated on a 50-50 price-quality score and overall the panel assessed FMAIL's anonymised bid as achieving the top score overall. In terms of when the decision was made, as I said, that was over the period March to August. We understand that the NCMAIL board had to review the evaluation panel's assessment. FMAIL had been identified as the leading bidder at that point. However, we are aware that on 20 August 2015, Transport Scotland submitted a paper to ministers to say that FMAIL was the preferred bidder and said that the First Minister would be announcing it at a visit to the yard on 31 August 2015. We understand at that stage that CMAIL and FMAIL still had not negotiated the point over the builders refund guarantee and it was not indeed until after the announcement on 31 August that FMAIL stated that it was unable to provide the 100 per cent refund guarantee and the best offer was a 25 per cent refund guarantee. Do you know who was on the evaluation panel? I do not know the exact members, but I do know that CMAIL and CalMac were involved. In September, FMAIL confirms that it is unable to provide a builders refund guarantee that was a mandatory requirement. Did FMAIL give a reason why they could not give the builders refund guarantee and why it had not been mentioned in their bid? The actual procurement process was out with the scope of the audit, so we do not have the details of FMAIL's bid. However, we do know that the pre-qualification exercise was made clear that the provision of a 100 per cent refund guarantee was mandatory and we know that FMAIL passed that qualification stage because it was given the invitation to tender. The draft contract, which was part of the invitation to tender, made it clear that the builders refund guarantee was mandatory. All bidders had the opportunity to provide comments on that draft contract and FMAIL did not, thus implying that it was willing to offer the builders refund guarantee. In September, CMAIL advises Transport Scotland of the risks and states its preference to start the procurement process again. It says later that Transport Scotland fully appraised Scottish ministers of the significant financial and procurement risks. In October, Transport Scotland advises CMAIL that Scottish ministers are aware of the risks and are content for CMAIL to award the contract to FMAIL. Is there any documentation to show this and to explain the reasons why the contract still went ahead? That is undoubtedly one of the key findings from our report, Deputy Convener, that, with CMAIL highlighting the extent of the risks, as Gill rightly points out, the importance of the provision of the 100 per cent guarantee is particularly significant in the context of a shipbuilding contract because the nature of the contract allows for the builder to progress and the transfer of risk rests with the shipbuilder. The buyer is insulated by the 100 per cent guarantee, but in the circumstances where that did not occur, as we have here, risk flows back to the buyer, albeit with a 25 per cent offsetting and then an additional provision about final payment that offsets some of the risk. Antony, you might want to comment a bit about the transparency point in a minute. What we are effectively seeing is that Transport Scotland advised ministers of the nature of the risks, allowing for CMAIL's significant concerns and indeed positioned that the contract should be retentored, but the ministers took a view that they wished to proceed with the contract cognisant of those risks. As we set out in the report, there is no documentary evidence of how those risks were considered or how intended they would be managed during the running of the contract. Transparency is hugely important. It matters that important decisions of this nature are set out and recorded, but through our audit work we have not been able to be provided with any evidence to set out how those risks would be managed. If I may, deputy convener, I will bring in Antony who will want to say a bit more about how those circumstances work normally. In those circumstances one would expect the accountable officer in Transport Scotland to share their thoughts, their ideas, their risks, their concerns and make proposals to Scottish ministers upon which ministers can then reflect and make a formal decision. As the audit general has already indicated, one would expect that to be recorded and documented. In the circumstances of this audit we requested the documentary evidence, but, as the audit general has already said, none was forthcoming to us. Therefore, we are not in a position to offer advice to the committee on what thought processes took place and what advice Transport Scotland gave to ministers or on what basis the Transport Minister on this occasion determined that they should recommend that the contract should proceed. As the audit general has already said, this is quite a significant finding and I suspect that it is something that the committee will wish to take evidence on in due course. There was no documentation at all to show the communication between CMAL, Transport Scotland and the ministers or who had actually been spoken to. There was nothing at all that came out when we were doing the audit. We made several requests to the Scottish Government and to Transport Scotland to receive information on this matter. None was forthcoming. I don't know if Gill has anything short to add to this. What we did have was the submission that went to ministers around the risks that were set out by CMAL's concerns, the clear risks. It also set out some of the amendments that CMAL had agreed with FML to try and mitigate some of those risks. It also set out some of the assurances that Transport Scotland was putting in place to mitigate CMAL's concerns. That was around the lines of CMAL not having to pay back the vessel loan until the vessels were completed. Scottish ministers were looking favourably to CMAL's requests for additional funds if any of those risks came to pass. We saw that documentation. Part of that documentation, Transport Scotland had offered ministers to have a discussion with the CMAL board to discuss its concerns. We don't know if that went ahead. We asked for all documentation related to the minister's decision. We asked that of Transport Scotland and the Scottish Government, and we didn't receive any. We are not clear if there were any discussions. We are not sure what discussions took place up to decide what the assurances that Transport Scotland would give CMAL. We don't know on what basis ministers decided to accept the risks and to proceed with the contract award. I think that there are other members of the committee who want to come in on this point. I'm going to bring them in. On this point, Gill Miller, that you made, and I direct this first of all to the Auditor General, if there is no documentary evidence, why not? Is it hidden? Is it missing or does it simply not exist? We can only speculate on that point, convener. I think that Gill and Anthony have set out through our audit work that we request all relevant documentary evidence from public bodies in respect of our audit work. The Public Finance and Accountability Act 2000, section 24, gives us rights of access and provision, where there are circumstances that we know of the existence of a document, but it's not being provided. We can and have on occasion cited such provision to secure access. Where there are no relevant documentation to support a decision, it becomes harder. We don't entirely know whether it's a case of there isn't a document that supports this important decision or that we've asked for it and we weren't provided it. I suspect that it's the former rather than the latter, but we can only speculate, convener, and probably that would be unhelpful to do so. Potentially there could be a breach of the act? Through our audit work, we ask for all relevant documentation. I think that, especially given the significance of this, that we've highlighted in the report, it's our understanding in the position that we've reached that there is no documentary evidence that supports the decision of such significance. That led us quite clearly to the conclusion that we consider that there really ought to have been a level of documentation to understand why the scale of the risks, so unusual in the extent of this contract, were acceptable. I'm going to bring in Willie Coffey at this point. On the point about the builders refund guarantee at the very beginning of the process, my understanding, having read the paper's auditor general, was that, within a standard shipping model contract, that's assumed, that's embedded as part of the contract agreement. It was assumed by default that FML had consented to provide that guarantee 100 per cent, but only a month later, they said they couldn't. Is that potentially a clear case of FML misleading the client at the outset of the contract? Mr Coffey, as we've touched on, our report picks up at a certain point in terms of, so we haven't reviewed the detail of the tender evaluation and procurement exercise. But we do note the significance of the builders refund guarantee in a shipbuilding contract, and the extent to which that insulates the buyer from risk and so forth. CML's position, and they'll, of course, have the opportunity, I'm sure, to restate this for themselves, that if a buyer doesn't raise an objection, whether it's about builders guarantee or any other aspects of the contract, there is a tacit acceptance of the terms and conditions of the contract. That became known at a later stage, shortly after identification on the preferred bidder, that FML weren't in a position to offer the full 100 per cent builders refund guarantee. That presented the buyer and Scottish Government Transport Scotland ministers with an option to whether they wished to proceed or otherwise. But I think that the position would be, as I suggest, a tacit acceptance of the terms and conditions to investigate why that guarantee was withdrawn within a month or did it just proceed to make the best of the circumstances that they then found themselves in. I want to say a wee bit more in a minute, but there were undoubtedly discussions between FML, CML, in respect of the builders guarantee and the position that was ultimately reached. We set out some of this detail in the report that, instead of the full 100 per cent offer, 25 per cent builders refund guarantee was eventually the position that was offered, along with some of the other mitigations that Transport Scotland was able to arrive at. Those do not equate to 100 per cent builders refund guarantee. Most important, the overall substance of it about the scale of the transfer of risk back into the buyer, as opposed to how we would expect to operate with a standard shipping contract, that the 100 per cent guarantee provides the buyer with the surety in the event of circumstances going awry. Gil might want to say a bit more about how those events unfolded. As we all know, FML was a relatively new company. It was performed in October 2014. CML was aware that, as a new company with very little financial history, it might struggle to get a bank to provide it with a 100 per cent guarantee, but CML had assumed that CBC, as FML's parent entity, would provide a parent guarantee for FML. We've always had discussions with CBC as well, and they said that that was never the case. As the Auditor General has already said, the requirement for the full BRG was stated in the contract very clearly. FML did not make any comments on that contract. Therefore, when CML was evaluating its bid, there was no indication that it was not going to provide the 100 per cent refund guarantee at that stage. I'll leave it at that for a moment. I think that Craig Hoy has got some questions again in this area, so I'm going to turn to Craig to put some questions. Good morning, Mr Bond. Normally, when you come before us, you bring reports that give us the complete picture. You put the pieces of the jigsaw together on how much money has been spent, and the best value that has been achieved through that. Generally, there is an audit trail that underpins that. Today, on two lifeline ferries for our island communities, we don't have that. Your report clearly identifies multiple failings, but there are key pieces of the jigsaw that are missing. I think that, as the convener said, either of those have gone missing. They weren't produced or they've been withheld from you. My first question is perhaps just a bit wider than those that I'll turn to. It is told that over or close to half a billion pounds could end up having been spent. First, with a company owned by someone with close links to the party of government, the SNP, and laterally by a company owned by the Government itself. How concerned should Parliament be and the public be that you have been unable to publish a report that tells a full story of how this money has been spent and why? There is clearly frustration, Mr Hoy, from us that we weren't able to review all what we were considered to be the relevant evidence. As I mentioned to the convener, our judgment is that it's not that evidence has been withheld from us during the course of our audit work, but rather that an important piece of documentary evidence wasn't prepared to arrive at the judgment that ministers arrived at to accept the scale of risk. The scale of risk is so unusual in the scale of the contract and contrary to the advice of the public body seamal that oversees the contract. I'm sure that it's a matter that civil service will want to reflect on about how the best document important decisions that significantly influence not just the use of public money but the provision of extremely important aspects of public services. Paragraph 27 of your report says that, on 8 October 2015, Transport Scotland advised Scottish ministers about seamals considerable concerns about awarding the contract to FML. We would have expected, obviously, any discussions to have been minited in the company of civil servants and, perhaps, Transport Scotland, and no doubt there should have been note takers, but you say that you have no insight into those discussions on 8 October. What we find out from the report is that, the very next day, the day after Transport Scotland advised ministers of seamal's concerns, ministers said that they were content to proceed. There must have been some discussion during that day. That doesn't imply, however, that ministers were aware of the risks and chose to ignore them in awarding that contract. Is that correct? That's an understanding. I know that there weren't any communications, but they haven't been documented and that the seamal's position, the extent of the risks, variation from the standard builders guarantee in the contract and that the risk flowing back to the buyers, public bodies were part of those discussions, but, as we've touched on, those weren't adequately documented. Do you normally expect where there is a division between the civil service and ministers for there to be a ministerial direction issue? To your knowledge, there was no ministerial direction issue, and it wouldn't have been far better had there been such a document produced. The Scottish Public Finance Manual sets out the provisions for such circumstances in Scotland. It refers to the term written authority, as opposed to ministerial direction, which said that the circumstances where an accountable officer considers that they would be unable to achieve value for money in respect of implementation of a policy request from ministers. We don't believe that there was a written authority or ministerial direction requested from civil servants in these circumstances. Therefore, again, I'd be entering into the territory of speculation as to why one wasn't requested or otherwise. It is clear that it would have been an option had a civil servant considered that they wouldn't be achieving value for money that they could have asked for such written authority, but it remains our understanding, Mr Hoy, that no such request was asked. I'm just rewinding a little bit something that Jill said in relation to the awarding of the contract and the tender process, which I think is another key missing piece of the jigsaw. I know that you at the outset talked about the scope of your report, but it has been suggested that, obviously, FML was the most expensive and potentially the highest quality, but yet not being able to give a refund guarantee is still being suggested that significant additional appointments were awarded for quality at some stage in that process. Have you had any sight of the actual tender scoring and should it not now be published if it has not already been so? I'll ask Jill to pick this one up. Hi, so we did not look at that. However, we obviously reviewed the information that was given to the former REC Committee's inquiry on the procurement of these two vessels, and I understand that CML has provided the scores for each of the bits. I'm just looking in relation to payments and milestones, just to move that on a little bit. Again, there are potentially some missing pieces of the jigsaw here. Speaking to those in the industry, it appears that it's quite common for contracts for ships to a payment schedule for five payments, but each of the contracts for 801 and 802 had 15 scheduled payments. Did you explore why this happened and who agreed to it? Isn't this alongside perhaps the failure to provide a refund guarantee and the plea for accelerated payments, and further evidence of the financial fragility of FML? I'm sure that I want to say a bit more about the variation in the use of milestone payments in this contract relative to the industry norm, but just before doing so, I think that you mentioned, Mr Hoy, some of the financial circumstances of FML. Those are noted at various points in our report and, indeed, our public record before our audit work began about the additional financial support that was provided to the Yard and alongside the variation of the use of milestone payments. We do note that the use of, as we said, Exhibit 3 in the report, the extent of milestone events and payments. Before handing it to Gill, one of the points that became clear during our audit work and perhaps at odds with other large public sector infrastructure contracts is that the use of milestone payments in a contract didn't bear a direct relation to quality or progress, but that is also the industry norm in shipbuilding for contracts. Gill, I'm sure that I want to say a bit more about what FML is up to. Mr Hoy, you're correct. Typically, the payment schedule is vive, equal payments of 20 per cent. However, it's not unusual for the buyer and the shipbuilder to agree a payment schedule that best suits the project. It's our understanding that, during the period of discussions after FML was awarded, it was announced as preferred bidder in October that there were seven iterations of that milestone schedule, suggested by FML to help ease its cash flow over the duration of the project. We discussed this with CML, and they said that that was not a concern to them, how they distributed the funding and when, because ultimately they were not paying more than the £97 million. Finally, if I can close by just a question about the loan payments that the Scottish Government was making, it appears that the accelerated payments and the loans did point to a significant cause for concern in terms of cash flow at FML. The Scottish Government, certainly in relation to the first loan, was effectively secretly loaning the company up to £15 million, and then laterally a further £30 million to keep a company afloat, certainly in positive cash flow terms, so that it could continue to service another part of the Government. There is almost a Ponzi scheme at the heart of this. The Government claimed that the original £15 million was commercially confidential, but that reasoning was dropped when the further £30 million loan was made available. Do you have any understanding why the Government changed its tune in relation to the commercial confidentiality of those loans? That was subject to consideration by the predecessor committee following receipt of my predecessor's section 22 reports on the Scottish Government. If memory says me correct, Mr Hoy, where a loan is made on a commercial basis, as there were in these circumstances, there was not an immediate obligation upon the Government to inform the Scottish Parliament that the £30 million loan was brought to Parliament's attention alongside the details of the £15 million loan that had been made earlier was a matter for the Government. We have set out our views on the need for transparency in such circumstances. I know that the committee is interested in a theme about, in more general terms, how financial interventions are made in private companies, the framework that supports that, the exit strategy, the financial terms and so forth. None of that detracts from the fact that where there are interventions of such scale and in these circumstances, that ought to be done as transparently as possible. One final quick question, if I may convene. It appears that a significant number of senior management from FML when they left were then covered by non-disclosure agreements. Were significant sums of public money are involved, is it acceptable in your view that such agreements are put in place and has this hampered your audit work in any respects? We are gathering evidence to support our report. We spoke to a wide range of people who were involved in the project, current and former officials. Gil can say a bit more, I am sure, about some of the detail of that, but we were unable to speak to all of the former directors of FML because of the presence of the non-disclosure act and the willingness to give assurance that there would be no follow-through should somebody be seen to breach the terms of that. In overall terms, I do not think that it has hampered our evidence-gathering or the conclusions that we have reached. I think that we set out in very clear terms the events that followed. I should say, Mr Hoy, that there are many differing views about the events that took place at the Ferguson Marine and the progress of those vessels. We note that a number of times in the report that the former owners of FML, CMAL, Transport Scotland, there is no consensus shared about why the events unfolded. Nonetheless, we look to, when we are undertaking audit work, to speak to as many people as possible, but it is fair to say that we were not able to speak to one of the individuals who wished to participate in the audit work. If I may briefly bring Gill in, I am sure that you want to say a bit more about that. I would like to say that we reviewed an extensive amount of evidence for this audit covering a number of events over a six-year period. That was substantial evidence that we went through. We spoke to a lot of people through a lot of documentation. As public sector auditors, we were focused on the roles of the public sector organisations involved and their arrangements, setting up the contract, managing the contract, and how it responded when it went wrong. It was right that we focused our evidence on those. However, as the Auditor General has said, there were very conflicting views on what had gone wrong. It was very important for us to understand FML's view of events. FML had former management submitted a lot of information to the former REC inquiry into the project, so we reviewed all of that. We also spoke to one of FML's former chief executives and one of its former directors. There are also two directors currently at FMPG who formerly worked at FML, and we spoke to them about their experiences, pre- and post-nationalisation. We also spoke to the workforce representatives at FMPG who formerly worked for FML as well. I feel that, in the round, we were able to get a good understanding of FML's point of view. Auditor General, can I take you back to one of the questions that Craig Hoy put to you? That was about written authority on ministerial direction, because I think that this is quite central to the debate about transparency accountability and where decisions were made. When I review the correspondence that took place on 8 October and 9 October, I do discern that there may have been written authority at work. The email from Transport Scotland reflects the concerns about the risks associated with the contract. The board would wish the minister to be appraised of those risks and to acknowledge to the board that he fully understood the potential risk of assigning a contract to FML under those circumstances. The board feel it is their absolute duty to point out the risks to their shareholder and, in that respect, would expect approval should the Scottish Government, with the project to proceed, would expect to receive direction to that effect. The board used the expression, direction, quite explicitly in that correspondence. We then see that, within the space of 24 hours, the very next day, the reply is submitted, in which, in a letter to Eric Ostergrad from the director of aviation, Maritime Freight and Canals Transport Scotland, dated 9 October, they said paragraph 6, the Scottish ministers, both in their capacity as CML's sole shareholder and, more generally, also confirm that CML is authorised, so they use that word, is authorised to enter into the contracts and any associated documentation and paragraph 10 of that letter said, I can confirm that the Scottish ministers plural have considered and approved the contents of this letter. So it does look very much as though there was written authorisation, that there was ministerial direction, but it doesn't appear to have been recorded as required under the act. Do you have any comments on that? It's a fair assessment, convener, that the substance of the discussions were consistent with what I would understand to be ministerial direction or written authority, but the application of it were inconsistent with the requirements of the Scottish Public Finance Manual. One of which I should say is that the Auditor General for Scotland is informed in writing if there is an event that is identified as a request for written authority. No such information came to the office of the Auditor General for Scotland during those discussions. So whilst there is an exchange of correspondence and I'm clear setting out of the views, we didn't then see that translate into, I suppose, the formality, the record keeping that we would say is clearly consistent with the request for written authority. But again, it could also represent a breach of the Public Finance and Accountability Act. If there was written authorisation, if there was ministerial direction and it was not recorded either with you or with the clerk of this committee, which is also one of the requirements of the act. I think that we probably pushed up against some of the boundaries of our analysis and perhaps into the realms of legal judgment as to whether the events that took place are consistent with the act or otherwise. What I'm clear on is that none of the Government officials have identified that there was written authority requested from ministers and approved as such. On that basis, we've not been unable to say so and are clear in our judgment that there was no formal written authority. Thank you. We will have to consider, as a committee, how we can best seek to get to the bottom of that. We are limited for time and I'm conscious that Colin Beattie has a series of questions that he wants to put, so I'm going to invite Colin to put those questions to the Auditor General. Thank you, convener. Auditor General, obviously this issue about the ferries came about as a result of the Rural Economy and Connectivity Committee's report of 9 December 2020 in which they asked you to carry out your investigation and I presume that was what triggered your investigation at that time. Is that correct? I should say, Mr Beattie, that the Rural Economy and Connectivity Committee's review references their request for Audit Scotland to undertake further work. As the committee will be aware, I'm independent and I'm not directed by any particular committee of the Scottish Parliament in forming our work programme. Although we are cognisant of the work of the committee, as I mentioned to Mr Coffey a few minutes ago, our interest in ferries, the use of public finance and loans had been consistent for a number of years, which is fundamentally an issue of real public interest and public expenditure. In drawing together all those sources, we felt that it was appropriate for us to undertake further work and hence today's report. That is in line with your letter to the committee. The report itself would have obviously been something that you would have reviewed as part of your audit process in this. I assume that's correct. Yes, of course. Looking at the report, there are some very strong statements made in this report, most particularly paragraph 160, which says that there is strong evidence that the contractor deliberately proceeds to construct a specific section of the vessel, either out of sequence or not, according to the proper specifications, purely as a means of triggering milestone payments on the contract. Again, paragraph 157, where evidence is given that work was carried out either incorrectly or out of sequence in order that bigger payments can be made against the contract. Interestingly, paragraph 158, where it says that invoices presented were rejected on the basis that are related to other projects. It seems clear that, on the evidence taken by the committee, they had great concerns about the contractor. In paragraph 153, the lawyers had advised that they had to make the payments that were called for, because that was in the contract. Of course, they didn't want to be in a position where they broke the contract. Again, in paragraph 154, there's a statement here in the evidence that Ferguson deliberately slowed down some of the subcontracting. In your report, maybe I missed something, but I don't see directly where you've addressed that, because this is very serious, it's very serious indeed. If what the Rural Economy and Connectivity Committee concluded is correct, then what action needs to be taken is the question. There are some very significant sections of the Rural Economy and Connectivity Committee's report that you referenced Mr Beattie in terms of work being undertaken out of sequence, allegations to trigger payments, not done correctly, invoices relating to other projects and so forth. As I mentioned at the start of evidence this morning, we took a view about the scope of our work, as we always do with any audit, that our work would be best served by picking up this matter following the Rural Economy and Connectivity Committee's report and looking at the circumstances after the identification of FML as the preferred bidder, rather than repeating much of the extensive evidence that the Rural Economy and Connectivity Committee took about the nature of the procurement, the design and the contract. Clearly, we are not shipbuilding experts, and we also note in particular in arriving at the judgment about the scope of our work that there were conflicting expert views about the nature of how this contract ought best to be operated, independent experts who disagreed. Therefore, our judgment that we arrived at would be better to look at the use of public money after the identification of the preferred bidder. None of that detracts from the examples that you provide. I should say that there were clearly very significant events during the course of the running of the contract, but as we reasonably and consistent with the Rural Economy and Connectivity Committee position is that there is a significant disagreement between FML and CML over how the contract was running. Mediation and arbitration were explored between the parties and eventually the position that we set out in our report was that the course of action that CML and the Government recommended to FML was that they pursued that through the court session. Clearly, FML took a view that that was not possible for them and, as we know, subsequently entered into administration. The conclusions that were reached by the Rural Economy and Connectivity Committee have serious implications and they need to be addressed, surely. If there is this level of contract of failure, that has contributed massively to the costs and the delays in this project. As we finalise the report, we recommend that there needs to be a fuller review. Lessons learned feels too glib to describe the circumstances before us. Mr Beattie of the circumstances that took place in arriving at a contract that is many years late, two and a half times the original budget, to establish how those ought to be delivered in the future. We have not done that in its entirety, given the fact that, as I mentioned about the work of the Rural Economy and Connectivity Committee, the project is still being undertaken. However, we shared the substance of your concern that there needs to be a fuller review. We are pleased that some of our recommendations have already been acknowledged by CML about the adequacy of the contract and the need for the review of milestone payments to be more closely aligned to quality and progress. I am quite sure that there will be more reviews that will follow the consideration of our report. In effect, your report has not addressed the issue of contractor failure and the impact of that. I do not see it in your report. The Rural Economy and Connectivity Committee has certainly raised the flag on that. I would have thought that it would be a priority to look at it. It is our public money that has been paid out to this company that has not, according to the evidence of this committee, it has not been paid out in the manner in which it should have been. It has yet been paid out according to contract by CML on the advice of their lawyers. I will maybe bring Anthony in. He wants to come in in a moment. I am not sure that I would agree entirely with your assessment or that your report does not identify concerns or problems in terms of the running of the contract or the work of the contractor. I would point to the report that we referenced of the turnaround director upon entering the role about the scale of operational failures in the yard. The extent of issues that the deputy convener mentioned in her question is the management of assets, warranties and so forth, the recent further information about the quality of cabling and so forth that has been uncovered. It is very significant to refer to the words of the former turnaround director, operation of failures in the yard and that will no doubt have contributed to the late running of the contract. What we also say in today's report is that there are many accountabilities and reasons why we are, in the circumstances that we are today, the performance of the contractor being one of those. If I may bring Anthony in, I think that he has more to comment on this point. I was going to highlight the points that the audience has already made in terms of reference to the turnaround director's report and the deficiencies that it highlighted in the management of the shipyard, pre- and to an extent post-nationalisation. The other point that I want to draw out, if I may, is the clear reference in the report to the weaknesses in the contracting arrangements, which, in the absence of a builders refund guarantee, placed real risk, I think, to the Scottish Government and others in the use of public money. If you look at paragraphs 33 of the report onwards, Mr Beattie, we highlight the deficiencies in terms of the contract, setting out C miles and F miles responsibilities for managing the project, but it's very clear that the milestones weren't clearly defined and weren't linked to quality standards. You yourself, Mr Beattie, have acknowledged the fact that C miles took legal advice on that and found themselves obliged to make the payments, even if there were perhaps concerns about aspects of the quality and delivery of the ship. It just seems such a big and fundamental gap in the overall picture here. Again, I'm relying here on the good work of the Rural Economy and Connectivity Committee. I just don't see where that's been built on in the Audit Scotland report in order to bring out that part of it, which is so critical. Yes, we can all argue about the contract and so forth, and there's a huge amount of documentation online and has been online for some time in connection with that. However, how are we going to address that? That question mark is still sitting out there now about the failure of the contractor. The minister, who came back in response to the committee report, highlighted the fact that he felt that even that report didn't reflect in full the contribution of the contractor's performance, contract management and financial management, described in independent evidence. Why are we being so precious about this? If there's an issue here, if there's evidence pointing to non-performance by the contractor, which has contributed to charges on the public purse, if there's been applications for funding, which have not been done in the correct way, all that should be brought out and highlighted? I think that I have a response. We absolutely recognise that the work of the contractor is, of course, part of the story of where we are today, set out very clearly in the Rural Economy and Connectivity Committee's report. As we've touched on already about how we arrived at the judgment as to where our work was best focused in building on the work of the Rural Economy and Connectivity Committee, recognising that there are many differing views about the circumstances that we are in today. If I may perhaps just repeat the point that Anthony makes about public sector contracts do fail, the Ferguson Shipbuilding circumstances aren't the first. Where the contract is properly used, it provides insulation to the public body to end the contract should they so wish. I think that these are the unique circumstances of this contract. The transfer of risk under the typical shipbuilding contract that would normally rest with the contractor wasn't properly applied and therefore the risk came back to the public sector body and usually where in such circumstances they would typically rest with the shipbuilder. Those are the points that I'm amongst others that we sought to reference. I think that in terms of the work of the contractor, Mr Beattie, I'm sure as we make the recommendation that that will be subject to further consideration. Again, I apologise for repeating myself, but I think that we do recognise that as part of the story and particularly reference the judgment arrived by the turnaround director and the extent of operational challenges, failures in the shipyards once they were subject to review. We've talked a lot about the contract and we can argue about different aspects of that. The contracts are really only there for when things go wrong so that there is something to refer to. Here we have a situation where again referring to the committee report, the allegations are that the company did not act in the proper way in order to receive the correct payments. That to me is, as I say, contracts are there when things go wrong but generally speaking you don't expect things to go wrong. Generally speaking, delivery is made in goodwill and all the rest of it and parties work together. This has not taken place. There are a lot of questions around this and these questions are going to get bigger and bigger. I would ask if you're going to carry out an investigation to ensure that the contractor's apparent failures are highlighted or that they may be explainable. I don't know, but at the moment this is where the big questions are. In terms of the number of points that I'm trying to address all those, we agree that contracts are there to be enforced for good times and for bad and provides both the provider and the purchaser with safeguards. Clearly in the circumstances of the application of the traditional shipbuilding contract, the industry standard, are not what, as we've mentioned already, we would expect to see in the public sector context, but nonetheless those are the industry standards. The absence of the 100 per cent builders refund guarantee meant that the risk grew for the public sector body and when circumstances went awry as they did here is that risk and additional payments flew to the Scottish public sector. I want to come in again and talk about the payment schedule and the fact that that wasn't aligned with the quality of the work. That's clearly a significant part of the story, and as we've mentioned and set out in the report, that seemal has already responded to that part of the recommendation that that is much more closely connected in future matters. Last but not least, we will reflect on what further work we can undertake to add further to the circumstances. We won't arrive at that judgment today. Mr Beattie, I think that we will reflect on any further evidence sessions and particularly the recommendation that we finalised the report on for seemal and the other public bodies to undertake a full review of lessons learned of the events that took place. That's a simple question to your selfies. All that money that was paid in, where did it go? What was it spent on? Because it wasn't in the yard when it was nationalised. Simple question. There's a combination. I might want to cover both of those points and the detail of it. When we arrive at the £240 million and the analysis of that, we include both the amounts paid to the contractor and the loans that the Scottish Government provided to some of which that it was able to recover through the administration process and the evaluation of the assets that were on the yard at the time of nationalisation. Clearly, the scale of money that was invested didn't bear any resemblance to what was initially anticipated that we would be delivered for such a size of public sector investment. Are you able to cover both of those points? Yes. Your first point, Mr Beattie, on contractor failure. I just want to make clear that we were very limited in what we could say about Fergus and Miriam because it was a private sector organisation. Although we did speak to them and reviewed a lot of documentation, we could not report any issues that we found with its spending, with its decision making, etc. What we could do was report what Seamall was reporting to Transport Scotland on to the programme steering group. I think that we have said that in several places, that it started highlighting that there was issues with FMAs performance as early as December 2015, so only two months after the contract was awarded. We were not able to say ourselves whether or not we found those, one because Fergus and Miriam no longer exist, so we couldn't go in and see for ourselves, but as I said, we didn't have that remit to make those judgments about a private sector organisation. I think that we made the point very clearly that Seamall was consistently reporting issues with the contractor, but I also think that it is very clear that FMA completely disagrees and that it has a different point of view, and it firmly believes that Seamall was responsible for the delays to the project. In terms of the outs of sequence working that you mentioned, we have mentioned that in the report. FMA itself admitted in evidence to the REC committee that it did engage in outs of sequence working, just to try and keep the project moving, and that was due to delays with Seamall approving the designs. We have spoken to independent shipbuilders who said that outs of sequence working isn't necessarily an issue, and it can take place to keep the project moving and to make it more efficient at working, but Seamall reported that FMAs approach of sequence working was an issue and caused problems with the project. In relation to the £14.55 million that you mentioned and the invoices that were submitted that were not related to the project, that specific point, so this was an agreement that ministers had made with FMA for Seamall to accelerate the £14.5 million before the Seamall board had made that decision. Ministers had agreed with FMA that that would take place and that Seamall only agreed to it, subject to very tight controls, which was FMA must submit. All the invoices related to the project, Seamall would review them and make sure that all the money that they were accelerating to FMA was being spent on suppliers, equipment etc. for the vessels. Our understanding is that there were some invoices that were submitted by FMA that were not directly linked, but Seamall refused those. There was no public money spent on... None of that £14.5 million was given to FMA to spend on anything else. In relation to where the money went, that is a question that we asked several times. Seamall paid £83.25 million out, but as we set out in Exhibit 6 of the report, there was a significant amount of work outstanding. Typically, on a typical project, with a 100 per cent refund guarantee, that provides a significant financial incentive for the builder to build a quality product. Because that guarantee was not in place, that same level of incentive was not there, that therefore placed more importance on there being a very clear link between the payments that Seamall was making and the quality of the build. As we said, that link was not there. Seamall was required to make the payments, but because the milestones were not clearly defined, that is what caused the issues, so the money was being paid out and the vessels were not being constructed as we would have expected. The £45 million loan from the Scottish Government, the first loan of £15 million, which was made specifically for vessel progress, was drawn down very quickly by Seamall, £13 million within two months. That was because it had a substantial number of outstanding invoices, suppliers who were threatened to withhold equipment, materials etc. Subcontractors were threatened to walk off site. That money was very quickly drawn down and made very little difference to the project. The second loan, the £30 million loan, although the PwC was providing the Scottish Government with reports on FML spending, did not go into the little detail of where that money went. We were not able to trace exactly how that money was spent and what progress was made on the vessels, but we were told that suppliers were paid, the workforce was paid and that enabled that to stop any legal action against FML and allowed progress on the vessels to continue. We are really running short time. We have all got a lot of more questions. That is one of the reasons why we have demonstrated that we really need to have at least another session to look at that. I know that there are members of the committee who wanted to come back in, myself included. I mentioned at the start of the session that Rhoda Grant was joining us remotely. For the final couple of minutes we have got, I am going to invite Rhoda to put any questions that she wants to put to the team who are here with us. Thank you, convener, and I appreciate that. As others, I have a lot more questions, but I will keep my questions quite short to get some clarification. Listening to the session, it seems to me clear that there was communication that was documented between FML and Transport Scotland. It was Transport Scotland that came back to SEMA with ministerial decisions. Is there any paperwork regarding Transport Scotland's discussions with ministers, how they put that to ministers, and which ministers responded? We will just ask Gill to talk through the chain of events again. Gill? There was no documentation to explain any of the discussions, the assurances that Transport Scotland put in place and which it agreed with ministers, which allowed SEMA's board to agree to approve the contract. We did ask for all documentation related to the minister's decisions and we did not get any. There is nothing regarding ministerial decisions and how that was carried out, documented. I also understand that that decision was taken within a day. Would that be normal? How would you normally expect a decision of that magnitude to be taken within Government? I am not sure that we would be able to give you a precise or reasonable comparator to this decision. Some decisions will be taken at pace and some will be more considered depending, I am sure, on the availability of ministerial diaries and so forth. The point that we look to set out very clearly in the report is that where decisions of significance are taken and where the risks are coming back to the public sector, those ought to be documented for public records. At the level at which they are taken? At which level would you expect such a decision of this magnitude to be taken? Apologies, I must go on. I guess what we look to set out at exhibit 2 of the report is the range of accountabilities and responsibilities and the circumstances of the awarding of the ferries contract that those rested with ministers. Yes, we would expect that to be documented, but the unusual circumstance is that the contracting body, CMAL, identified additional risk outside of the standard terms and conditions of the contract. The builders guarantee point that we have talked about already the fact that that context was applicable, all pointed to the fact that it needed to be well documented as to the acceptance of those risks and how they would be managed. Okay, thank you. Right, thank you very much. We are literally out of time, so I therefore am going to draw this session to a close and thank the Auditor General, Anthony Clark, Angela Canning and Jill Miller for joining us this morning and to extend an invitation to you to return at the earliest opportunity that we can make. But thank you for your evidence this morning. We've got a whole load more questions that we need to ask. We've got some consideration to give to what our next steps might be, but I do want to thank you for your openness and willingness to answer the questions that we've put to you this morning. With that, I'll move the committee into private session. Thank you.