 Felly, fel y cwestiynau, a chdiw'r cyfrifio ddegwyddau 22 ymddianiad o'r Cymru i ddweud y Cymru, yn 2015. Felly, mae'n pryd cyfrifio ddegwyddau a ddegwyddau yn cael ei ddegwyddau mewn cyfrifio i ddegwyddau. Felly, mae'n ddegwyddau, lle'n golygu i ddegwyddau cael ei ddegwyddau, gan gyfwybodol ymddiannosol, neu'n ddegwyddau ymddiannosol. I welcome to the committee Fiona Hyslop, the Cabinet Secretary for Culture, Europe and External Affairs and her accompanying officials. Good morning to all of you. Can I invite the cabinet secretary to make some opening remarks? Thank you very much, convener. At the pre-media, you said that you would hope that 45 minutes had been allocated for this evidence session. I do not believe that 45 minutes is enough with the circumstances around us, and I would ask that this be extended to at least as long as it takes. That was a discussion that took place in private. As we have said before in this committee, discussing matters that are in the public domain that are discussed in private by the committee is not an acceptable way to behave, John. You should know that by now. Thank you very much, committee and convener. I am pleased to have the opportunity this morning to speak to the committee about the Scottish Government's support for tea in the park festival. On 14 August, I provided a detailed account to Parliament on my decision to provide funding support for this festival in responding to a parliamentary question lodged by Liz Smith. Members of the committee should have the text of that answer, along with a detailed timeline of the decision-making process, indicating that we published information on the grant on 28 July, almost immediately after the payment of the grant. In offering some opening remarks, I would like to highlight the motion that was passed by this Parliament in April that recognised the key role that our festivals and cultural events play in making Scotland a great place to live, work, study and visit, and enhancing our international reputation. Indeed, cross-party members spoke of the economic benefit of tea in the park in particular. The tea in the park festival plays just such a key role. It is one of the most popular and successful cultural events in Scotland's annual events programme. Since it was first stage in 1994, tea in the park has become a rite of passage for many of our young people. Each year it delivers significant economic impact, drives additional tourism and supports jobs, and last year it generated £15.4 million for the Scottish economy. I became aware that tea in the park's organisers were expressing concerns over the longer-term viability of the event in May. As cabinet secretary, I met the CEO of DF concerts and events to discuss the serious situation. It was clear to me that the organisers faced a number of unanticipated additional costs in staging the event as a result of the requirement to move from the previous site at Bellado and the three-year-only time-limited condition attached to the planning consent for use of the new site at Strathallan. Following a detailed consideration of options, I approved funding of £150,000 from my major events budget for operational costs associated with the transition to the new site, subject to a number of conditions, including the successful delivery of this year's event and a clawback clause should the event not be delivered in 2016 or 2017. That was done in order to seek to protect the future of an important and iconic event and its cultural, economic and reputational benefits for Scotland. I am happy to answer any questions that committee members may have. Thank you very much, cabinet secretary. We will go straight to questions and kick off with Mary Scanlon. My first question is something of a complaint. As a member of the Audit Committee, I know how important the audit trail is. When our committee papers came out on Thursday, I asked the clerk, Terry, for the audit trail. All you gave us was a written answer to Liz Smith and a list of meetings and dates. That is not an audit trail. The clerk to the committee spoke to Government officials on Thursday night and he was told, and I have an email, that nothing else is available. In other words, there is no audit trail. You have got what there is. Last night, I got home around eight o'clock after my Pilates class and I found 628 pages of an audit trail. Do you consider that courteous to the committee? I consider that it is contemptuous. Mind you, it was not that difficult to read. A lot of it looked like that. Six hundred and twenty-eight pages came in less than 16 hours in advance of the meeting and those six hundred and twenty-eight pages were not available on Thursday evening. Can I have a response, please? The committee asked for information. The information was supplied to the committee. The information that was issued last night was a result of a number of freedom of information requests. As the member will know, in relation to freedom of information legislation, information that is of commercial confidential matters would be redacted and issues around security. The vast majority of the freedom of information was about the transport issues. As far as I am aware, the committee is not looking at the transport issues in relation to the information. It wants to know what was paid out and why. Indeed, when the information was provided in relation to the parliamentary question that I answered on 14 August, I would point out that, in terms of the question that I answered fully on 14 August, Liz Smith asked specifically—all she asked—how much money and what dates I took an early opportunity to make sure that the answer that I gave was much, much fuller than that, because I wanted to provide information. I did provide information, and that answer was published earlier than the final date that was required. Of the dates of decision making, you have the information there, but of the budget information that was supplied to us in relation to what were the additional and extra costs that were being met by Tina Park in relation to the transition, that was provided to us, but that is commercial sensitive information and has not been supplied either to the committee or, indeed, for the freedom of information. I thought that it was courteous to the committee that should the information be given to those who had provided for freedom of information requests, that that information could be provided. The vast majority of that is about transport issues, which is a separate matter than the inquiry that the committee is looking to proceed. The information was there. The fact that you chose to give that information to whoever requested it, journalist or whoever, and that they have every right to do that. You refused that information to me on Thursday night. Are you saying that a freedom of information and a journalist's request for that takes precedence over a parliamentary committee, and had it not been for a freedom of information request, we would not have had our 628 pages today? We would only have had your timeline. The timeline takes you through what decisions were made. Does not give an audit trail. It gives you the information of what was requested when. It provides you a systematic distillation of what happened when and what monies were released when and what decisions were taken when. To me, that gives you, in terms of my provision to the committee, I wanted to make sure that you had clarity of what happened when. That is exactly what was provided to the committee. We could have given you a whole range of transport information that you would have then or your clerks would have had to work the way through. I thought that it was much more beneficial to the committee to have everything laid out in a systematic way driven by date. That is the trail of the dates and the decisions that were taken. That, in addition to the parliamentary answer that I provided on 14 August, gives the comprehensive situation of what happened and when. I would like to reserve the right to ask the cabinet secretary back, given the answers so far are unsatisfactory. I move on to my questions, convener. Why were DF concerts and tenants the main sponsor? Why were they so desperate for taxpayers' money when DF concerts have had a profit of over £5 million, £4.25 million in the past three years? Could they not afford £150,000? The holding company, with a 78 per cent share in DF concerts, has a turnover of £167 million. Why did they come here for £150,000? Two things. The committee will be aware that the Scottish Government provides funding for profitable companies to safeguard jobs and support the economy in all the sectors that are part of the key of the economic strategy of the Government. There are seven sectors—creative industries and tourism—are two of the seven sectors, so that would not be an unusual situation. However, in relation to tea in the park, the costs of the tradition, and particularly the unanticipated costs, meant that any of the seven figures amount was required to provide for those costs, in particular moving from Bellado to Strathallan. In light of the seven figure costs in relation to the cost aspect and also in relation to the reduced revenues, the severely reduced revenues that they were anticipating as they provided to us in their budgeting in relation to that event, meant that the event itself for this year, and possibly for years going forward, would not be in a position that they would want to continue and that shareholders of the companies that she is citing were giving them indication that it would be preferable for them to move if there was not a profitability for this event itself to move from the multi-day, multi-stage festival that brings the economic benefit to rural purse share and to move that to have single day, single stage events, possibly in other cities like Glasgow, as they have been doing recently, or indeed to move the festival itself away from Scotland. That would have the economic situation where the £15.4 million pounds worth of economic benefit coming to Scotland would no longer be in Scotland, so the difference between the profitability and the interests of the company as regards to that event themselves, they can make the decision not to continue that event at Strathallan, that perhaps is why, as you might appreciate, the clawback clauses are there, particularly should the event not go ahead in 16 or 17, and indeed the grant was only given after the delivery of the event in 2015. She is right to cite the profits of the company, that also means that they will make decisions as to what events they will support or not support or continue with. The letter briefing note from Jennifer Dempsey to the cabinet secretary on the 28th of May, her request is based on four main areas in budget regarding infrastructure, bridges, water supply investment, investment for copper and fibre and trackway, a steel road, all of these are infrastructure. Now if we go over to Jeff Ellis and so many here, what we have from the Scottish Government, Economic Development Directorate, under no circumstances can the grant be used to support infrastructure. Eligible operational are only venue hire and costs and the cost of consultants. Now convener, I did read the 628 pages last night. Nowhere did I hear anything about the venue hire, nothing about the cost of consultants. This request was for infrastructure and given that our time is limited to 45 minutes, can I just put it to the cabinet secretary, this was a done deal. Given the applicants close connections with the SNP, the £150,000 to a company with multimillion pound profits, you decided to allocate the money, then you scurried round the state aid and there was more than 150,000 spent in officials time to find which budget it might fit into. The request was for infrastructure and under no circumstances could this money be paid for infrastructure. So if this is not a fraudulent application, I would like the cabinet secretary to tell us why. I'm just going to urge caution about the use of that language, just be careful. Well I'd be very happy if she told us that there's nothing fraudulent here. I'm sure that you will take the guidance of this committee very carefully in terms of the language that is used and the allegations that are being made. The terms of the grant was published on the 28th of July. The actual grant application itself was also published, so you'll be able to identify that information. In relation to the applicant, Geoff Ellis has no, as far as I'm aware, associations with the SNP. It was Geoff Ellis that I met with, Geoff Ellis that I had the discussion with, Geoff Ellis is the chief executive of DF concerts. In relation to the application itself and the terms and conditions, I was quite clear in my meeting with DF concerts in May that I thought it would be a challenge to identify what could be done in terms of support because of other funding that the DF concerts had already received. For example, Glasgow City Council, for example, over the last period in 1314, have provided £200,000, which is more indeed. If I can continue with my point, in terms of the different areas of state aid that could be required, Dominimus state aid was not applicable in this case because of the other public money that had gone into that particular company. Therefore, Dominimus would have meant that under £200,000, that wouldn't have been the case of DF concerts because of the money that it received from Glasgow City Council. In terms of investment and infrastructure, that was not also applicable under state aid. What was able to be provided would be operational state aid for the transition, specifically for venue hire and for those costs that were particular to the transition, i.e. planning consultants costs. That was the operation of the grant that was provided, and it was also the one that was applied for. Cabinet Secretary, in paragraph 4.2 of the letter that the Scottish Government sent to Geoff Ellis in July 2015—we don't have the exact date, incidentally—all we have is July 2015—it says that the guarantee, namely DF concerts, shall on completion of the project submit a report to the Scottish ministers summarising the performance of that project. Such a report shall include the statistical and other information relating to the impact of the project, as shall be required by Scottish ministers. It should also include a clear breakdown of what the grant was used for. Despite repeated attempts by many members of this parliament, journalists and other things, we do not have that clear business case on which the whole award was made. Last night, members of the committee received a half a document, much of which is redacted. Can you clarify exactly what the business case was for you providing the money of £150,000, because, as yet, we do not have that on record? In order for the Scottish Government to provide a grant, particularly those in relation to state aid, and in terms of the exemptions that we identified, we would allow it to be paid for it to achieve accountable officer approval, which it did at a senior civil service level, we had to be assured of a certain information, not least the company report accounts that were provided to us, but also commercially in confidence. That is why it has been redacted from freedom of information requests and also in relation to the budget for the event itself, which again is commercially in confidence. I would point out that the planning approval for this year's tea in the park took place barely eight weeks before the event was meant to take place. That also had an implication on ticket sales, which meant that the revenue costs in terms of what would be achieved for that event would also be problematic. In terms of the information that was required, it was provided to us and, in terms of the rationale, it was provided. The report about the statistical information relating to the impact and, indeed, the expenditure, it will be provided to the Scottish Government. It is required to be provided to the Scottish Government and it will be provided. That is part of the conditions of the grant. One other question, Liz. Obviously, Perth and Cynross are the ones that award the planning consent for this project. At what stage did you have discussions with Perth and Cynross about the viability of this project, giving you sight that there are extreme circumstances? Did you discuss this with Perth and Cynross, as well as do you have concerts? I respect the independence of Perth and Cynross council. They independently can take their planning decisions, they took their planning decisions. That was their responsibility. It would not have been a correct situation for Scottish Government to try and interfere with the planning decisions that they took. Now, the decision that they took to limit the planning conditions to three years rather than five years clearly had implications for the transitional costs, which could no longer be spread over a longer period of time, but it had to be concentrated in a period of three years. It was part of that decision making process, which I did not interfere with and neither should I have interfered with. With respect, cabinet secretary, it is not about interfering. I totally accept that it is not for the Scottish Government to do that. May I just finish, convener? It is about the adequate information. Given that you are citing that there were extreme circumstances, possibly relating to the viability of this whole festival, was there any discussion between the Scottish Government, DF concerts and Perth and Cynross council about that? I think that DF concerts speak to themselves for their discussions with Perth and Cynross council. I personally do not have a discussion with Perth and Cynross council. I do not have discussions with other local authorities where we fund festivals and, indeed, right across Scotland, we provide funding for festivals all over, not least in this city but also in other parts of the country. We make decisions as the Scottish Government. I just want to clear something up before I go on to my own questions. Mary Scanlon asked a number of points relating to Jennifer Dempsey. I do not want to get any individual involved, but I want to make the picture clear. Did you know that the request for an initial meeting came from Jennifer Dempsey? I did not know that the request for the meeting in May came from Jennifer Dempsey. Jennifer Dempsey did not attend the meeting that we had with DF concerts and, indeed, I had no discussions about funding with Jennifer Dempsey. In terms of stay-aid, the Scottish Government has a stay-aid unit. What was its role in the provision of grant funding to DF concerts? Clearly, it was essential that I took advice from stay-aid and, indeed, we have a colleague from the stay-aid unit with us today, Alan Coleman. In relation to the steps that we took in terms of decision making, of course, we would have checked what was applicable, what was not applicable, and to make sure that our stay-aid functions were properly carried out. That also included notifying the European Commission about the application and, indeed, the allocation of the grant, and that was reported to the European Commission's stay-aid at the appropriate time. That was done fully and transparently. It was also published on the Scottish Government website at the time. I was quite clear that we were very conscious of what can and cannot be done in relation to stay-aid. That is why, for example, we could not provide the minimum stay-aid, because Glasgow City Council had already provided funding to the company in terms of other investment that was not applicable, but clearly in relation to the transition, the additional cost in relation to the venue hire and, in relation to planning consults, not least the environmental aspect of what was happening. There was clearly additional costs that were required for that particular move. The information that is provided by the clerks, the timeline that was provided by the clerks. On 18 June, further advice from major event officials to the cabinet secretary on options for supporting the Tea and the Park event. On 26 June, major event officials obtained accountable officer approval of intended approach to provide funding. On 26 June, further funding advice provided to the cabinet secretary by major events officials. Are you able to share any of that advice and what was the role of the accountable officer? In terms of the timeline that was provided by ourselves to the clerks and the clerks provided to the committee, that is the information that we have provided. The information that was provided to me, that was advice given to me by officials, some of that is confidential because it has the information that we got from the company in relation to reports, accounts and also in terms of the budgets for the event itself. Clearly, that was not made in isolation by me as being alleged by other members of this committee. It was made together and collectively with the advice of government officials and indeed in terms of signing off of the final grant, the role of the accountable officer, senior civil service level, was appropriate because that is what we do in situations of this kind. I would point out that it is not unusual for government to support a company to safeguard jobs and keep and sustain the economic interests of this country. In sustaining the economic interests of this country, we have to reflect on the importance of the event. Creative industries, tourism and festivals are not second class in relation to the importance and impact on this economy. Clearly, the view of those who are not supportive of the festival and the people who have spoken out against having the festival at all at this site. There are lots of interests at play. My interest is the economic interests of this country and the cultural offering that we have to generations of young people and the development of the contemporary music scene in Scotland. You mentioned earlier about the European Commission. What was the significance of the European Commission issuing an official scheme number? What was the significance of that? That was a validation of the notification that was appropriate in terms of the fact that there not only was this state aid but we also indicated where we thought the general exemption was in relation to this particular aspect. That means that, when it is public, we make sure that people know about it. It also provides that the commission can question it at any time and that is part of the process of being open and transparent about what we are doing. It was a supplement just to clarify on an answer that you had given. The advice that you had given was that the festival was under threat and may or may not go ahead. Is that correct? Yes. I would also refer you to the answer that I gave in the 14th of August paragraph 8. I said that at that time, several months ago, that DF concerts and events had confirmed that the 2015 event could be delivered under pressure but that the additional costs that were faced in relation to it were a threat to the longer-term viability on that site. Paragraph 11, when we made it quite clear that the grant was given in order to protect the future staging of the event in Scotland, I have been clear about that right from the 14th of August. I am not sure that that is something that has perhaps been reported as widely as it might have been. Just to be clear, it seemed to be from your previous answer that the 2015 festival was under threat of this funding and was not awarded. Just to be clear then that that is not the case, that the 2015 festival was delivered regardless of any Government funding. That is why the grant was given after the event because it was only ever going to be given if the event took place. The event did take place but in terms of the longer-term viability, it was essential that we made sure that the clawback clauses were there for 16 and 17. At the time that I met DF concerts in May, that was only 16 days or so after the planning decision that should have limited it to three years as opposed to longer, and that obviously meant the spread of their costs, in particular the seven-figure costs that they were citing themselves. That put additional pressure at that time. Even at that time, they were not sure about whether they would be able to go ahead or not, but in discussions and as it developed, it was clear that they could under pressure. However, the point is that it is about the profitability of the event going forward. If it is such that the company, the shareholders of DF concerts, think that this is not an event that they think provides them with what they need, they will move. I do not think that it would be in the interests of Scotland. I am quite clear that I am standing up for tea in the park. I am standing up for all the tens of thousands of people who go every year and the generations that I have gone. Importantly, it has been a very important part of developing the music scene and many of the contemporary music acts have gone to greater and wider success in Scotland. I think that that is in the interests of this country. Gordon MacDonald asked about Jennifer Dempsey, and there have been many allegations made regarding her role. Can you categorically tell us in one way what was her role in the whole scenario? Also, was she paid any consulting fee from the grant itself? The relationship with Jennifer Dempsey is clearly one between DF concerts and Jennifer Dempsey as an employee. She was a staff member of DF concerts. If she worked in terms of arranging diaries for Jeff Ellis, that is a matter for DF concerts in terms of her connections. In terms of her connections with me, I know of her for having worked as a special adviser finishing a contract. I think that in 2009, in relation to the last six years, I have not had a relationship with her either in terms of friendship or anything like that. My relationship clearly was with Jeff Ellis. She was not at the meeting, she did not discuss any funding with me. In terms of her relationship, she was a paid employee of DF concerts. She was not a consultant. In relation to some of the payment issues, for example, in relation to the grant itself for venue hire and planning consultants, that would not have gone to Gen Dempsey because Gen Dempsey was an employee of DF concerts. Planning consultants clearly are defined by the role in relation to the planning area. That helps in trying to clear up some of the allegations that are being made. At the time, cabinet secretary, were you aware that Jennifer Dempsey was trying to make the appointment or were you not involved at that time? I was not involved. I do not see every piece of correspondence that comes in. Because Gen Dempsey stopped being a special adviser, probably about six or seven years ago, there is no reason why MD in my office would know who she was. She was not part of the meeting, she did not discuss funding with me. My meeting was with Jeff Ellis. If Jeff Ellis, who is the chief executive of the biggest festival in Scotland, wants to meet you because he has concerns about the viability of that event, I think that you will meet him. Why, then, would a private company be able to secure direct access to the cabinet secretary through Mr Dempsey, a former aide to Alex Salmond, rather than through the official chancement? Excuse me, would you mind moving your mic closer out? I am sorry, I have had a bit of difficulty picking you up. Sorry, I did not catch the beginning of you. Yes, just following on from George Adam there. Could you perhaps tell us why a private company is able to secure access to your office through Mr Dempsey, a former aide to Alex Salmond, rather than through the official channels? The answer is that the official channels are the idea of concerts as the company gets in touch with me. I did not know who the individual was who was making the arrangements for that, so I think that that can advance your point. The request was from the biggest company, the biggest events company that we have in Scotland, and the chief executive of the biggest events company that runs the biggest music festival wanted to meet with me, and I thought that that was a reasonable thing to do. Government meets business people all the time. We meet with festivals, and I meet with festival directors across Scotland all the time. That is a normal thing to do in government, and particularly if there are issues of concern, so I did meet. To imply that somebody who worked for the Scottish Government in terms of six years ago knew that that is incorrect. People have livelihoods, and they work for companies. My relationship was with the company, and that is who I met. You were unaware that Jennifer Dempsey worked for the FM concert? No, I knew that she was working with that. I think that that contract finished in me. Have you met Jennifer Dempsey? Did you meet Jennifer Dempsey at the SNP conference? Yes, I did, very briefly. Because GFLs wanted to let me know about the concerns about it, they were looking at the planning. As I do with everybody, as a Government minister, I cannot discuss planning issues. He told me about ospreys and the environmental work that they were doing on ospreys, but I made it quite clear that, at that time, it was so subject to a planning decision by Perth and Cren, so I could hear what he was saying, but I could not discuss anything, and I would not discuss anything. Could you maybe advise the committee who else was in attendance at that meeting? It was not a meeting, but we met briefly at conference. Could you maybe advise the committee who else was in that company when you were having a discussion with Jennifer Dempsey? I think that I had delegates from my branch. Sorry? Delegates from my branch, I think. I cannot remember. To go back to a question that my colleague Mark Griffin had asked about the funding, did the committee at any time suggest that we build a plug if we did not get the funding? They said that their shareholders were giving them pressure to look at moving the festival from being a multi-day, multi-stage. Why is a multi-stage multi-day important? You have the tea break stage, so the likes of Biffy Cliro has broken into the music scene using that, so actually having the multi-stage arena is very important to the success of the event for Scotland. They indicated that they were under pressure to move from that to either single-day, single-stage as they have been developing in Glasgow or indeed, if they wanted to have the festival in that format, they might have to move out of Scotland. Did they suggest that they were going to pull the plug? They said that they could... And I answered that question quite clearly on the 14th of August. They said quite clearly that the 2015 event could be delivered under pressure but the additional costs faced in relation to it were a threat to its longer-term viability at its site. With regard to the £150,000 that has been paid over three years with a clawback position in 2016-2017, why would you give £150,000 then? Why would you not give £50,000 and then, if need be, be another £50,000 next year and the year after? Why would you give £150,000 just now? Well, because the costs were for the transitional costs, for the venue hire for that year to establish itself and also to make sure that the planning consultants, which again was a one-off cost in relation to that year, could be met. In terms of the level of funding, it is in par with a number. For example, the Turner prize is about to open in Glasgow. Great event for Glasgow, very important. It has also been provided with support from public funds, the tune of £150,000. The World Pipe Band Championship has £100,000, regularly rather than a one-off cost. Indeed, a number of other events, for example, the John Muir Festival received £210,000. So the amount of funding for festivals in relation to events is not any different to the kind of levels. In fact, some other events receive even further. That is a question for this Parliament and for this committee. Do you believe that tourism, cultural tourism is important? Do you think that festivals form part of our economic offer in terms of what we can provide in terms of the income? Or not? I believe that it does. I believe that Tina Park is one of the biggest ones. I think that people will be looking very closely to see what support and where they get it from in relation to those events going forward. I think that a lot of people in the events industry will be wondering what commitment people have to that part of our economy. I agree that funding is really important for these iconic events that take place. Obviously, there is a real concern about the process and how we get to that funding. Perhaps I do not know when I am most likely to come back in. I will come back in one step to check it out. Thank you. Good morning. I wonder if I may ask about two questions. One is the business case and the other is precedence. In terms of the business case, the £150,000 that we have talked about was paid after the Tina Park event. That might suggest that there was not a cash flow problem for the company. What do we do in terms of looking at the results after an audit if we find the company actually made a profit of, let us say, £151,000? Was there any indication that in the event of them being profitable this year there would be a clawback this year of the £150,000 that was made available to them? The second question is, what business case was presented up front regarding the whole project? Because of the iconic nature, I find that I disavowed the notion that with Tina Park, which is co-joined with Scotland, they would move. What business case was presented to afford them the £150,000, apart from some of the issues that were said because of the move? In my experience, companies normally have contingencies in the event that things do not go the way that they might, so these are my two questions. Okay, in terms of the first issue, in relation to cash flow was something that we discussed with them because that might have been one of the issues in terms of resolution. They made it quite clear that it wasn't a cash flow issue. It was a case about the profitability or indeed the success of this going forward and they would take a kind of hard decision which they could take. If the additional costs, which were considerable because of the move from Bellado, some of it is up to the company. The additional costs? The additional costs, sorry. Sorry, a beginning. In terms of clearly, there was anticipated costs and that's exactly what they should have planned for and did plan for. What came quite apparent was that, first of all, in terms of the decision, it wasn't until the summer of August 2014 that it came clear that an environmental impact assessment was required. I think that it is the only one in terms of the planning process. They've had to go through an additional planning process. The other events in moving have not had to go through. So therefore, the planning application itself, particularly in relation to the ospreys, the environmental impact was considerable. That wasn't anticipated at the time of a decision to take the move from Bellado in particular and the venue hire was much more costly than necessarily they were anticipating. Therefore, in terms of the costs, it also meant that because of the, I mean, I've talked about the conditions just being about the three year, the other conditions were related clearly to the environmental impact of nesting ospreys, et cetera, which reduced the footprint of what was able to be used. That in itself would reduce the numbers that compared to previous years would be able to attend and also in relation, as mentioned previously, about ticket sales clearly in relation to a slowness in ticket sales. People did not know for certain that the event would take place until eight weeks before the event. Now, people will be familiar with the marketing of tea in the park and ticket sales are usually conducted way, way in advance. It was quite clear when they came to us that there was an issue there. But in relation to the projections for going forward, they made it quite clear to us that they would have difficulties in the next two years. And therefore, they would make a decision as to whether to keep the event at Strathallan or move it elsewhere. Either that would be to single stage, single days, and that is where, obviously, they have had some experience of that, and that is obviously a very profitable aspect. It does not help Perth and Cronos. It does not help the rural economy of Perth and Cronos if the event is moved to single day, single stage to the city of Glasgow. But that also is a consideration as to why you ask the question, why is this of interest to government? Our job in government is to... Where was the business case to prevent that? The other question, because I came because of time, is previously, funds have been made available from bodies like Creative Scotland, Visit Scotland, Scottish Enterprise. What approach was made to any of them? Well, again, one of the reasons why we had to look at the funding was the availability of funding. One of the reasons that there was available funding in the events funding budget line is because the costs of the mobas were being pushed into later years, not this year. That freed up funding, particularly for this year. In relation to funding from other organisations, the nature and the timing of that meant that they could not apply for the regular funding that might be available from other events, whether events Scotland or, indeed, Creator Scotland. It was not a new event. It was a transferring event. Events Scotland quite often would support event development and marketing. In relation to previous funding, Scottish Enterprise did provide funding in 2012-13 to undertake a feasibility study looking at alternative sites to Bolado for hosting tea in the park. Again, as part of that economic impact, that was something that they were prepared to help support because £15.4 million to the Scottish economy is important. Creative Scotland provided funding as part of an opportunity to try to introduce new art forms to a new audience. It was about audience development. That was 80,000 in 2013-14. And Visit Scotland provided additional marketing funding in relation to homecoming 2014. Again, a big push promoting Scotland across the world was part of their funding, so that gives you an explanation of the funding from other public bodies. And you had a business case for the extra 150,000? Yes, we did. We wouldn't have approved it otherwise. Can we just follow up to Brodie's line of questioning there? I mean, we've heard in response that there wasn't an existential threat to the event in 2015 that it was going to go ahead, albeit under pressure. And the concern was more about 2016-17. Well, earlier you suggested that the impact on ticket sales was one of the concerns. Now, presumably with an event that was then guaranteed to go ahead in 2016-17, the ticket sales could be managed more appropriately. And similarly, you've got an event that's sponsored by tenants who I would have thought would have had some concerns about an existential threat to the event, or it moving to a single stage, single day event, and therefore presumably could have been approached in relation to their own support for the event. What consideration was given to those two factors that ticket sales for 2016-17 couldn't necessarily been assumed to be depressed because of the uncertainties around the 2015 event? I think that that's quite a hy... I mean, that's hy... You've got a lot of hypotheticals in that question. Can you explain to me why it would be that the event in 2016-17 wouldn't achieve the ticket sales that had been achieved in 2014-2013? Well, ticket sales, depending on number of things, is not least a line up in terms of the experience any move for a major event, indeed, for those of us who are old enough to... You're not going to intervene on the basis of a line up, isn't it? The line up isn't very good and therefore the Scottish Government needs to step in. I can't... Sorry, never. Yeah. I'll try to get quick questions and quick answers, but let the cabinet secretary finish and I'll bring you back in. Thank you. Cabinet Secretary. Yeah. I mean, you don't know what's going to happen in future years. Rockness, for example, has not taken completely this minute and pressures under that. I mean, festivals, it can depend on year to year. I cannot, as the Government minister, forecast ticket sales for T in the park in 2016 or 2017. What I think is reasonable to assume is that the first year of a move, some people may not have gone because they were concerned about the teasing problems and I think undoubtedly there were in relation to transport. I think that's one of the key concerns that people have had. But also in terms of issues going forward, I can't predict what those ticket sales would be. What I can understand is why there were pressures this time around because if you don't know what event is actually going to take place because applying approval for it and decision wasn't taken to eight weeks. You can understand why ticket sales were slow in relation to this year which also then had an impact on what would be achieved in terms of returns. So not only was there significant increase in costs, there was also pressure from reduced returns for 2015 in particular. Paid after the event, but let's leave that for now. In the note you've provided to the committee in advance, it suggests on 27 February on behalf of the CEO of DF concerts, T in the Park project manager, Jennifer Dempsey, first contacted the private office of the cabinet secretary, requesting that cabinet secretary consider meeting with the CEO of DF events so that she could be briefed on the plans for T in the Park at its new venue. I mean, I have to say, I find it incredible that officials wouldn't know who Jennifer Dempsey is despite the lapse in time. But it then goes on to say that on the 9th of March a meeting didn't take place on 23 April and 28 April. Again, it didn't take place. And that there was further contact through May and that finally on 28 May a meeting took place. Three months after, in a process that we were being called, being conducted with a sense of urgency, there didn't appear to be any direction from your private office to speak to officials in the major events team so that they could engage in the process, they could speak to colleagues in state aid and find out what is and what is not supportable under the current rules. And yet that process only got under way in June, at which point Mr Coleman in one of the unredacted bits of correspondence we've received suggests that article 53, 5C sets out the following as eligible, including the costs of digitisation and use of new technologies and the costs of improving accessibility. So all this time was wasted. Exploring options for support for this operation simply because DF concepts hadn't been directed by officials to go and speak to the officials who would be able to answer their questions. They're all hung on a meeting with yourself on the 28th of May. I'll answer that directly. Clearly during the period of March and April and into May the discussion really, the issue there was the event didn't even have planning permission. The event did not have planning permission and wasn't given planning permission till if I checked the date, it was at the 12th of May. It was at the 12th of May that the planning permission was given and I've repeated it, one of the issues in relation to the pressure on costs was that the permission that was given was time limited to three years. So that also then pressurised the cost over a three-year period rather than a five-year period. It was only at that time that in relation to the request of the meeting the meeting became about funding issues. But you were happy to have the meeting in March and in April but it cancelled? That was purely about the fact that Tina Part was a major event and was moving. That was not about funding. That was to keep us in touch and we kept a watching brief on what was a major festival that was moving from Belladol having been there for many, many years and was moving. Clearly it was a significance and the fact that there was pressures particularly and it was on, I'm sure, that people would have identified in terms of the news coverage. The nesting offsprays were a key issue in terms of the environmental aspects as to whether or not the event was going ahead. The meeting that I had with Dave Constance was after the planning decision was taken. I've made it quite clear until the planning decision was taken I was not going to be involved in relation to what the decision-making process with Perth and Cynrosc Council were. In terms of the cost the cost became quite clear when a three-year limited time condition was put and also the environmental aspects which reduced the footprint of the festival because of the nesting offsprays. That again was not clear until the planning conditions of planning was made and that was on the 12th of May. But it wouldn't have been prudent to direct Dave Constance in the direction of officials that could have had those conversations presumably. That wasn't prudent. Well, the funding pressures were not apparent in the March-April period. They were apparent after the planning conditions were set on the 12th of May. But they're being requested in the meeting back in the end of February. Well, I can ask the final question because I'm not going to get an answer necessarily on that in relation to the document referred to by Liz Smith previously with the track changes that it refers in section 6 to publicity. And what was initially proposed was that the grantee shall be reasonably practical and with the advance agreement of the Scottish Government acknowledging all publicity material relating to the project the contribution of Scottish ministers to its cost. And this has been changed to ministers and required to approve the form of acknowledgement of Scottish Government support for the project in the project's publicity material prior to its first publication. Does that suggest that there was a reticence about acknowledging the involvement of the Scottish Government in supporting this event? Because it certainly looks like it's been toned down very considerably on what was initially proposed. You need to repeat it to me but it sounded fairly similar but I'm happy to look at that. I don't think it... I don't think it would be any reticent. I mean, in fact, if you look and go to any event that has any Scottish Government funding you'll see the logo and you'll have the material extension. No, one suggests... Well, exactly. And I think the trademark is that whenever there's any sort of Scottish Government involvement it is blazoned all over the place. Whereas this is suggesting that if there is to be any acknowledgement that the Scottish Government won't prior approval of whatever goes out as opposed to demanding that in all publicity an accreditation is given to the involvement of the Scottish Government in supporting it. I'm struggling to see the issue here, genuinely. We're all struggling a bit. Cabinet Secretary, I'm looking at the timeline of events here, page 3, the 14th of May. It's quite a strong phrase to use, extreme difficulties being faced by the organisers. Was that purely financial? No, a lot of that was operational because, again, the planning permission was given eight weeks before so there were issues around as... Again, probably most importantly the infrastructure that was required. So some of the conditions of planning would have required issues around heights of bridges or safety issues or aspects of... I mean, I've mentioned water access. A lot of the decisions could only be taken once you knew that the planning application was approved. So the pressures that they would have had would not have just been financial pressures. It was genuinely operational pressures to put on what is the biggest music festival in Scotland. Having only been given the go-ahead for that eight weeks before the actual event. But that's not an area that, you know, they relay their concerns to me when I met them. But in terms to in terms of our concentration of attention, it was the funding of financial pressures that they were... were clearly wanting to talk to us about. Reference that we've made to the infrastructural costs and additional infrastructural costs accruing from the movement from one site to another and also about the contraction of the period from five years to three years and during which they could recover those costs. Infrastructural costs, I mean that event. I have no experience in these sort of events but infrastructural costs, what would that be in terms of what's happening on site? Well, I mean, it's the decision about whether to I suppose have permanent provision or temporary provision. Temporary provision means that they could up-stix and leave at any time investing in permanent equipment for infrastructure would be more committed to the site and I think that was the type of decisions they were taking to us. They were having to take within eight weeks of the event taking place. You've already made made very clear the sort of contracted period in which these decisions were being made. Normally these events would be planned very much in advance and I see a lot of planning did take place well in advance. However, most of the financial planning and so on would have taken place a year or more before. The only thing that I would have thought would intervene in terms of unanticipated costs would be the planning. So did the actual planning costs trigger the financial difficulties or was there an indication previously in relation to what detail planning that it previously that indicated the problem? Well remember they were told very early on I think in early 2014 that they wouldn't require the planning permissions that were later imposed on them. It wasn't until summer of 2014 that as a result of a Government assessment they were told that they would have to have the environmental impact assessment as part of the procedure. They then had to go to the full planning process at the beginning of the year that they were meant to be delivering the event itself. And obviously the environmental aspects of planning in particular as well as other planning issues would have put a considerable pressure on the costs that were unanticipated. So yes, the planning consultants costs that they had to face for 2015 were not anticipated a year and a half out from the issues that they had to address. So clearly there was particular pressure at that time in a very short period of time. That's why in relation to the conditions as well understandably because environmental conditions are important that a lot of these decisions they weren't they didn't know the final conditions of planning until the 12th of May for an event that was taking place at the beginning of July. I've got a number of members who want in so it could be briefly a question supplementary starting with John. Thank you, convener. The process on how this award was granted now my understanding is that Tina Park asked to meet you you then agreed a figure of £150,000 and you then went for a formal request on that. Yeah. I'm just wondering how that then sits with other organisations you know in particular those who have been received funding including Edinburgh's Hugmanay, the John Muir festival the world pipe band championship Celtic connections and the international boot festival. Now which of those organisations and any others who have received state aid applied after meeting with you as cabinet secretary? Festals you required wouldn't wouldn't be classified as state aid. Perhaps Alan can I can ask you to come in about the process that's required for state aid if that would be helpful? No, I don't want an explanation in stated. I just want to to kind of get to the point about you know when people meet with you. So my question to you is how many people have you met before an application was made from these organisations that spoke to you? Right. In terms of the applications many of these applications are to organisations Visit Scotland or Creative Scotland or indeed events Scotland in different areas. If you want me to go through who I've met in relation to these events I regularly meet with festival directors regularly. The Expo fund for example which is not £150,000 over three years is actually £2.25 million on a yearly basis to support the Edinburgh festivals because of the economic impact £250 million the Edinburgh festivals have in relation to the Scottish economy. I regularly meet with the directors in relation to they provide an information as to what they want to apply for in relation to the Expo fund. I in charge the decision making the curatorial decision making about what would merit or not for the book festival or anywhere else with the something who's which is the collective of the festivals. My officials would work with them I would see what it was that they were wanting to provide their funding for. So for example the Edinburgh international festivals James plays extremely successful was one that I was aware of way before it was announced or applied but I don't judge what they spend their resource on in terms of that. Festivals are very important to Scotland's economy. I want to repeat this. I do not think that festivals, tourism and the creative industries and cultural tourism are somehow second class in relation to the economic impact compared to life sciences or indeed energy or other areas. And I think it's really important really important that members of this committee support that. And I might want to add in terms of what the public think of this. I've had two pieces of correspondence two pieces from across Scotland in relation to concerns about the funding of this. Now I'm not saying it's not of public interest I think the committee is absolutely entitled to have information and we need to be open and transparent and that's despite the fact that the question I received and at the beginning of end of July beginning of August from the Smith was very limited at its scope. I set out very comprehensively what the background to the decision why we'd made it and indeed a timeline information on the 14th of August because I wanted to be open and transparent because this was in a different format and you're right that we would normally have because this was unanticipated costs and pressures on a major event that weren't known until the decision of planning was made on the 12th of May. So when you meet these other organisations do you then form an agreement with the amount of grant that's going to be done? Do I then tell them, sorry? Do you agree to grant before a formal application is made? Well, it operates in a different way. When you've got planned expenditure for festivals, for example, the world-like band championships is something that I wouldn't see the application. It goes to event Scotland. Perhaps you might explain the world-like band championship. Event Scotland run a number of programmes each of which have criteria. Typically events, we would route them through event Scotland to apply for their funding. In the case of this instance, the event Scotland director of Visit Scotland's budgets were already fully committed. As the cabinet secretary mentioned, it didn't meet some of their criteria in terms of new events or marketing of events. Thank you. I'm going to move on. I've got Mary first. I'm not finished. Well, I'm sorry, John, but let's say to you. Mary. John, may we make one? Said to, in answer to George Adam and Gordon MacDonald, cabinet secretary, that you didn't know the request came from Jennifer Dempsey. And yet, I haven't got the 628 pages in front of me here, but at a very quick glance, Jennifer Dempsey, there's a list of emails to your office. 27th February, referring to a discussion on the phone to your office, the 9th of March, the 24th of March, and then the 14th of April. Hi, we actually caught up with Fiona at the SNP conference. So, you know, my question is between the little I've got here, February, and you making the decision on the 14th of August, when did you know that the application was from Jennifer Dempsey? And the seven weeks that were critical, if it was seven weeks that was critical to give them the money, then why did it take them six months to apply for planning permission? They were told that they would need it on the 21st of August, and they applied, submitted a planning application in January. So, the time lag is not the taxpayer's fault. The time lag and the problems and the extreme difficulties are the fault of DF concerts. So, when did you know the request came from Jennifer Dempsey? I didn't, because my email is wrong to your office. Can I just say that in terms of the applications or phone calls, that's to my office, it's not too, I didn't see it. Did they not tell you what they do? I've been quite clear. Look, I don't decide who DF concerts employ or not employ. Jennifer Dempsey was an employee of DF concerts. She hasn't worked for the Scottish Government for six years. I don't expect everybody in the Scottish Government, the thousands of civil service that we have, to know who she is or to alert me. I don't think that people should have to show a party card in trying to work for their employee. I think that that would be an incorrect situation. In terms of the decision making process, I met with Jeff Eddard Ellis and the financial director, Joe Blyth. It was those two that I spoke to. It was they who expressed the concerns about the conditions that they faced, the increased unanticipated costs and indeed the pressures on revenue. And it was in answer to them and to their request that I asked officials to look and see what would happen. Officials also attended the meeting with Jeff Ellis and Joe Blyth and heard directly from them. We asked them for various bits of information. I've set it in the timeline when we asked them for information. We asked them for financial information which we have received, but under commercial confidentiality I cannot share that publicly. That is part of the everyday work that the Government has. Was this an unusual situation? Yes, it was unusual. It was a pressured situation. It's why I've made quite clear and transparent in my answer in the 14th of August why we did what we did. And I believe that it's important to the interests of Scotland that we have a continuing tea in the park that is multi-stage, multi-day, the benefits of rural Scotland, not just city Scotland. And I'm pleased to be able to have done that. We're only here of tea in the park, but the fact is you said to Gordon MacDonald that you didn't know the request came from Jennifer Dempsey. We have in front of us emails from Jennifer Dempsey to the Cabinet Secretary as early as February and probably even further back if I had time to go through the 628 pages. I did not see those emails. Pardon? I personally did not see those emails. I personally did not discuss them. Did your office not tell you within a couple of days there were about four or five emails? Do your office not tell you about phone calls, about emails, about requests for meetings? I was told by my office that Jeff Ellis, the chief executive of DF concerts, wanted to meet with me. Jeff, this is going to be on the previous question I had. Wouldn't all the hysteria around us have been avoided if we hadn't used the bodies that are there, the creative Scotland, the Visit Scotland? Wouldn't it have been better rather than have somebody approach you directly no matter how well they knew you or didn't know you? And can we look at this going forward so that we avoid this situation? The answer is, if it was anticipated, then yes, you would be able to use other bodies to do this. But we had the funding available in the major events budget because of the change in circumstances of the mobos. That released the funding that was available. We had the legal powers to do it and we wanted to move swiftly. We had a very limited period of time. It would have taken much longer if people had to apply through the regular funding of Creative Scotland and Event Scotland. And I said also in terms of the funding that Event Scotland provided, wouldn't necessarily have been applicable in that time. With all due respect, I understand that it would take longer. That depends on how it's managed. There was nothing stopping a movement of budget. I still don't understand why there's a separate budget. Incrementing the budget of Creative Scotland, of the stem, overnight to say, right, you handle it. From a management point of view, it would have avoided, as I said, all the hysterics around Europe is getting sucked into this. Who did what? Who didn't do what? And as a suggestion, going forward, might as humbly suggest that this is what is done. Well, in terms of swift decision making, sometimes in government you have to make decisions swiftly to ensure the economic impact and interests of the country are protected, which I did. In relation to being able to channel it through other funding, I know what would have happened. The funding for this, again, I would have been in front of committees because people said either the event didn't take place in 1617, I think the interests of the committee would be absolutely strong in wanting to have me in front of committee had the events not taken place, but also in relation to the funding. That chart, if we transferred it from the major events budget into Creative Scotland, there would still have been an issue around state aid because it would have come from a public funding source. So there would still have been a state aid issue and that would have meant that in terms of what they were allowed to spend funding or not, Creative Scotland, in terms of what they would normally provide funding for or indeed what events Scotland would normally provide funding for, wouldn't necessarily have covered the eligibility of costs that would have been compliant with state aid. So actually, in terms of transparency, clarity and indeed ensuring compliance with state aid, this was actually a route that was appropriate and indeed has been deemed to be appropriate by those that have looked at this. Yeah, I mean, just to add to that, the budget, the Cabinet Secretary's major events team's budget typically is used for things that are slightly out of the ordinary. In this instance, events Scotland might have been a route, you're absolutely right, could have looked to increase their budget, their funds were all committed but beyond that, the criteria of their funds require the event to be new or developing or to be around the marketing promotion of the event, which in this case it wasn't. Just to ask the cabinet secretary when and where you first met with the AF concerts to discuss issues around Tina Park and who attended? In terms of discussions, I had met them at the conference which was not prearranged, which was just about them telling me about their planning process which I couldn't engage with in discussion because clearly that was still subject to planning discussions. That was very briefly back in March. I then, the time I actually met them, was as detailed on the 28th of May and that was the request where they wanted to discuss funding. Attendees at that meeting, if I check, it would be Jeff Ellis and Joe Blyce and there was an official from planning and also Malcolm attended. It was Helen Wood from planning who attended along with Malcolm. In that initial meeting at the SNP conference, what was that date and who attended that meeting? It wasn't a meeting, it wasn't prearranged. There were many people, many companies, many organisations as observers. It was just on our party had gone from being in tens of thousands to more than 100,000 of members, one in 50 of the public and our members of our party. People wanted to see what was happening, but I was very clear that I couldn't enter into discussions about planning. That's all it was. It wasn't about funding. I couldn't enter into discussions and I was told about the environmental work that was going on in relation to ospreys and the ospreys nesting that was obviously causing them some concern, but they felt that they had it all on handle in terms of their planning application. That was a very short meeting and it wasn't prearranged. It was in party space, not in government space. From the FOI responses that were released last night, it says that an official meeting was arranged to discuss issues around teen the park, but it was then cancelled because you had met at SMP conference. It would seem that that meeting at SMP conference was more substantive since a subsequent official Government meeting was cancelled. Some of the Government meetings were cancelled because there were concerns around the planning and timing. I think that if you recall the planning decision itself by person across council was put back. It was meant to be a certain date and then it was put back. So I'm not responsible for the timing of that. Diaries, meetings with ministers have to be arranged. Because of my responsibilities, I quite often have to cover for either the Deputy First Minister or the Deputy First Minister. I can't recall why they were cancelled and whose request. I do remember DF themselves wanting to cancel because they wanted to concentrate on the planning issues in hand with the person across council. That was the key issue. Because I remember at that point it wasn't clear whether the planning permission would be given or not given. And their focus quite clearly was about securing a favourable planning decision and that's where they concentrated their resources. I'm not accountable for their diaries as to how they managed them but I could understand that they wanted to focus on meetings in relation to the immediate planning decision rather than the overall transition which was of interest in discussion with myself. The FOI responses suggest that the meeting was cancelled at the request of Jennifer Dempsey after meeting with herself at SNP conference. Given that we're time limited, my last question is do you understand the public concern around this given that a former SNP Government adviser meets herself at SNP conference, makes a request for funding based around infrastructure and then gets awarded £150,000 on a totally different area of spending? Can you not understand the public outcry and the whiff of cronyism that comes off this welfare? Well, in terms of the individual she worked for the Government over six years ago. In terms of her status she's an employee of DF concerts. It's up to DF concerts who they employ as staff members of their organisation. I can't refuse to work with an organisation because of who they employ or who they don't employ and in relation to why I should meet them, should I have met DF concerts? Absolutely, because they are a major events company. They were in a major transition year, a very pressured year for the biggest event and music event that we have in Scotland and being kept in touch and up to date with the process of that as the lead minister for major events was part of my responsibilities. Absolutely. In terms of the application the application was made by DF concerts themselves and as far as public outcry is concerned I understand the need for openness and transparency which is why, despite the question that I had from the Smith in August being simply about how much and when I myself proactively laid out in a full answer in parliamentary answer to Parliament full information about what happened and when I raised that point issues around viability and in terms of the public outcry as I said I've had two letters from members as a public about the funding issues and the other letters I think there's another three are about understandably the event management the pressures the problems they had at the actual event so absolutely I understand that people can be concerned they're quite right to be but I also know absolutely that had Tina Park been under pressure had not delivered properly in 15 or indeed moves in 16 or 17 people would have demanded to know what we as a Government had done to ensure that Tina Park stayed as a multi-stage multi-day venue in rural Scotland and I think they would have been entitled to ask that question sometimes you have to make decisions that some people might not like but it's important for the greater cultural interests of Scotland and the economic interests of Scotland and that's the decision I took Thank you Dr briefly Liz Smith Salis, I could just on that theme to pick you up on the fact that Tina Park is a major cultural event very important event This was public money and if you were clear that there was a cast iron business case for that £150,000 can I ask why you didn't at the time when other questions were being asked when this fuss really blew up two months ago decide to put that business case into the public domain and why now do we have redacted comments which make it almost impossible to know what that cast iron business case is? Well the concerns were the additional and significant costs in relation to the planning issues of the 12th and the planning decisions of the 12th of May in the answer that I provided I made it quite clear that it was in relation to the added pressures that it was a one-off grant it was to support the transition and it was about ensuring we're supporting tourism and at the risk the pressure on the risk was laid out in paragraph 8 and indeed paragraph 11 of the answer in the 14th of August Would I like to be able to provide the commercial and confidence figures that were given to me? Of course I would but that's not how government works it doesn't work with this company and it doesn't work with others companies will not come to us when they are at risk if they think that we're about to publish the pressures that they face in terms of their budgeting you've got to understand that that happens in other areas of industry which people understand quite readily where jobs and the economic interests are set out people just sometimes find it difficult to understand cultural festivals and tourism as if it's an economic business in order to do that yes I would have liked to provide those information to you I couldn't but I can give you assurances that officials looked at this very robustly we ensured that in terms of compliance with state aid that it was compliant and indeed we had a senior the senior accountable officer to sign off the final grant and it's provided as much assurances as I can give you I have done it might not satisfy you because you want to see the information I can't provide you and I wouldn't be able to provide it for other companies whether it's in life sciences whether it's in other areas in terms of companies in terms of the other issues I think on your advice to Jeff Ellis from the letter that was written to him in July 2015 I think you'll find under paragraph 5.2 that you might actually be forced to put all this on the record because it says very clearly there that through freedom of information material the Scottish Government may have to come clean given that this was public money Yes, and that's what we've done I'm sure Cabinet Secretary you will agree that suspicion will continue and linger as long as evidence is hidden but my final question is did any civil servants question the deal? Well, I asked my colleagues that they were partless in terms of we questioned what was eligible because Glasgow City Council had already provided £200,000 over a two-year period. I'm also going to make clear they've asked that should the state table be shared with the committee they would want it to be known that the funding provided by Glasgow City Council was a commercial arrangement between GCC and DF concerts and events to establish the summer seasons on a level commercial footing so that in future years they would generate money for the city a very similar situation of a transition but they want to make that clear so one of the issues was what we could provide because we couldn't provide the minimum state aid we couldn't provide investment state aid but we could provide it operational state aid but perhaps Malcolm or Alan you might want to come in on this. In terms of the advice we provided the cabinet secretary we'd firstly confirmed that funding would be available it was affordable within our budgets we confirmed that having had the Scottish Government's finance director look at the company accounts that the company was profitable but also that the projected costs for the event did show significant increase in costs and significant reduction in revenues we were concerned about state aid and the initial advice had confirmed as cabinet secretary's outlined that investment aid for infrastructure costs and the minimise aid were not appropriate means of providing support and we also confirmed that we were looking to see if there was any other in kind support we might be able to provide the company in relation to the staging of the event Gwadysmydd Gwadysmydd Sorry To add it excuse me One of the things when the core of our work in the state aid unit is to robustly question everything that comes our way to make sure that fits with the European Commission's guidelines and that's what we did Could I perhaps then ask the convener why in some of the FOI papers that an official said that Tina park is a profitable commercial festival and as such under normal circumstances, there is limited scope for public financial support. As you've just heard, we knew that the company was profitable. The issue was about the event, not the company, and the pressures that weren't normal about the circumstances of this event. It was moving for the first time for decades and had additional pressures in terms of that transition and unanticipated costs related to the planning conditions that were only apparent on the 12th of May, so it wasn't normal circumstances. I read with interest the email from the Accountable Officer, which was, I think, one of the few that was not redacted at all. It did seem unusual. It's not standard practice and does suggest as John Pentland was indicating that there must have been some level of disquiet amongst officials, but you set out the fact that you had the powers, that you had the budget and that you had the interest in ensuring that the festival took place not just this year, but in future years that it didn't get effectively downgraded to a single day, single stage event. Similarly, tenants as the sole sponsor would have had an interest in ensuring that it remained a multi-stage, multi-day event. In what Malcolm Pentland just outlined, of the due process of looking through the accounts, the profitability, the additional pressures, there wasn't any mention of any attempt to ascertain the willingness of the sponsor to step in and provide additional support through this transition. What efforts were made just because we have the powers and the budgets and the interest in supporting it shouldn't necessarily mean that the public steps into the shoes where a lead sponsor, tenants exceptionally profitable company, could reasonably be expected to shoulder up for something in order to maintain an event through which it has received enormous benefit and publicity over the years. That would be a matter for DF concerts and tenants in terms of their participation. It must be a matter for Scottish Government. If you are going to go through the process of putting in £150,000 to ease those pressures, presumably you would need to satisfy yourself that all other options have been exhausting, including asking tenants to front up a bit more to transition into 2016-2017. Clearly, in terms of the pressures, the £150,000 did not go anywhere near alleviating the other pressures that were there that we know from infrastructure and the aspects that we couldn't fund. In terms of the relationship that DF concerts has with tenants in terms of their discussions, that is the discussions that they will have had with them. They will have had pressures that they have had to meet in that seven-figure amount that they had to provide for the transition. They would have had to met them from all the sources that they had. The £150,000 from us was specific and quite clearly in terms of the callbacks is conditional on that festival taking place I appreciate that it is tied, and there are callbacks and all the rest of it, which would make any funding from tenants probably a good deal more appealing. However, there is a responsibility on Scottish Government and Scottish Ministers to satisfy themselves that all other options had been fully exhausted. Satisfy yourself as to the reasons why tenants are not prepared to fill and plug that gap before any public funds are committed to the Scottish Government. The company itself, DF concerts, provided us with their projected costs and their projected revenue in terms of whether it is in sponsorship or indeed in ticket sales or in terms of what they anticipated for the event. That was the information that was provided to us. You cannot influence ticket sales because those are dependent on other factors. You would hope that in 2016-17 they return. I am glad that I realise that I cannot influence ticket sales. Your expectation would be in 2016-17 with other things having been resolved, the planning requirements and the environmental impacts and all the rest of it, that there was a fair chance that those would recover. However, I think that there is a reasonable expectation on the Scottish Government to explore whether the sponsorship could be temporarily increased in order to plug a gap that you yourself had identified. Just because you have the power and the budget and the interest in ensuring that this takes place does not mean that you should be committing public funds before satisfying yourself of that? At the end of the day, you have to decide whether we think that Tiena Park contributes to the Scottish economy in the way that members from all parties said that it did in relation to the debate that we had in this Parliament, recognising that it is important that we support festivals that provide cultural tourism, and particularly in rural areas of Scotland, and that also provides an opportunity for the cultural celebration and the cultural tourism of Scotland. That is not an unreasonable thing to do. It is not unreasonable thing to do. In answer to John Pentland, was this normal circumstances? No, it was not normal circumstances. Did we act in the benefit and the interests of the Scottish people were elected to represent? Yes, we did. Do we interfere with the relations that DF Constance has with its other sources of funding? No, we did not interfere with that, but we had quite clearly a responsibility to act. We could have said no. I think that many people in this committee may have wanted us to for other reasons because of the unpopularity for some people in rural Persia of having Tiena Park relocated there, but for many people in Scotland and for generations, Tiena Park is something that is important to them, both in terms of culture and the economy. Sometimes in government you have to make decisions and sometimes within a tight period of time, but if it is legal, if it is something that can be provided for, if it was within budget and it is something that was compliant with state aid rules, in which case this was, it was a decision that I was prepared to take. Some people might not have wanted us to do that and they are entitled to their view, but sometimes you have to assess risk. As I set out in 14 August in my answer, there was a risk to the viability going forward of a multi-stage festival held in rural Persia. My decision was that we had to do something about that rather than ignore it because I am sure that members of this committee would have been first to challenge me had we stood back and done nothing. In future years, Tiena Park is not as we know it today. I thank the cabinet secretary and officials for their attendance this morning and I suspend briefly to allow us to change the witness panels. Our next item is an evidence session from the Scottish Funding Council. This is continuing our work on examining the spending decisions made and outcomes delivered by some of the key public bodies within our remit. I welcome to the committee this morning Lawrence Howells, Professor Alice Brown and Dr John Kemp at the Scottish Funding Council. I believe that Professor Paul Haiggan is on his way. Is that correct? I am sure that he will join us shortly. I invite some brief opening remarks from Lawrence Howells. Good morning, convener, and good morning to the committee. I apologise for Professor Paul Haiggan's late arrival. He has been on a train from Glasgow since before seven o'clock this morning, so that is a bit of a challenge. We very much welcome the opportunity to meet the committee this morning. You will be relieved to know that I will not repeat the content of our submission, but I just want to make a few brief opening comments. However, I would like to draw your attention to my introductory remarks on the first two pages of our submission, where we provide just some examples. We are working with our partners. We have added value in different ways, whether it be widening access, skills development, the development of innovation centres or indeed growing the research excellence in Scotland. Can I just step back for a moment and look at the establishment of the funding council? When I became chair of the council, I was told that there was a book in the cupboard that provided a history of university funding. As you can imagine, that is not exactly a bestseller or riveting read. Nonetheless, what it points out is that the funding council and its counterparts in England, Wales and Northern Ireland can trace the roots back to 1914, where the objective of the state at that time was to provide sustainable funding in recognition that there was a need to support universities after the consequences of the First World War. We can trace our roots right back to then. If we move to much more recent times, you will be aware that the current Scottish funding council is a merger of the former Scottish Further Education funding council and the Scottish Higher Education funding council in 2005. Our function is to secure the coherent provision of high quality further and higher education and research, and we have a duty to ensure that provision is made for assessing and enhancing the quality of funded post-16 education. The funding council's decisions support the delivery of the Scottish Government's national performance framework and its economic strategy. The Scottish Government sets national priorities and issues guidance to the funding council based on its priorities and its policies, and it is for the funding council to implement such guidance, and we do so following discussion with our key stakeholders. It is worth saying a couple of words about who our stakeholders are, because they are quite extensive. Clearly, the sectors that we cover, colleges and universities specifically, are key stakeholders, including staff, trade unions, students through NUS and Sparks, and representative bodies such as Colleges Scotland and University Scotland, but also the broader education system as a whole. Secondly, clearly, the Scottish Government and Parliament are stakeholders, as is local government, and indeed the UK Government, particularly through the Department for Business, Innovation and Skills. Again, other NDPBs and public agencies such as Scottish Enterprise, High, SDS, Creative Scotland and so on, are key stakeholders and we work very extensively with them. Also, other funding bodies in other parts of the UK are observers at our board meetings, and they are key stakeholders because we have to be aware of developments elsewhere. Other relevant organisations such as learned academies, research councils, research charities, European Commission and professional bodies are a whole range of stakeholders. What we try to do is work with all our stakeholders to ensure the delivery of high-quality education and world-leading research. If you like examples of extreme collaboration, I think that we are evident in our submission to you. Change has not ended there because, as you are aware, change in the role has also developed with the introduction of outcome agreements in 2012, also with college regionalisation and ONS classification. With more focus on outcomes such as widening access or international competitive research, this involves much more engaging and negotiating with individual institutions. There has also been a change in the significant enhancement of activity to promote exploitation of research for economic and societal benefits through, for example, our renovation centres. As a result, outcome agreements provide an explicit link between public investment and delivery on Scottish Government priority areas, but they also facilitate a relationship-based engagement between us and our stakeholders and it promotes dialogue and enhance mutual understanding of the issues so that, when we engage with individual universities or colleges, it provides new opportunities to learn first-hand some of the pressures that they are facing, but also their ambitions and aspirations. However, that has all meant a significant organisational change for the funding council itself and a change in the role of the staff within that organisation. The reform is on-going. We have a new strategic plan for 2015-18. Our last strategic plan very much outlined the changes to be made. The new one focuses on embedding those changes and realising the full potential of the changes. We are also implementing the Scottish Government's three-step improvement framework for Scotland's public services, and that all means on-going organisational change for us as an organisation. Our vision in this plan is to make Scotland the best place in the world to learn, to educate, to research and to innovate. We see our task as caring for and developing the whole system of colleges and universities and their connections and contribution to Scotland's education, social, cultural and economic life. We cannot do that alone. That is why partnership working is central to this and much greater collaboration from all parties concerned. The theme of our strategic plan is ambition and what we will be doing is building on the strong foundations that currently exist. I pass over to my colleagues, Lawrence and Paul, who have thankfully arrived and John Kemp, and we are delighted to answer your questions. Thank you very much, Professor Brown. I welcome Professor Hagan. No, just in the Parliament to Edinburgh, I believe that you have had a bit of a journey this morning, Professor Hagan, but I am glad that you have made it. I take this opportunity to apologise for the delay in our getting round to you. I think that we said you would be honest earlier than this, but thank you for waiting. I begin the question with George Adam. Good morning. I would like to ask about the outcome agreements that you mentioned there, Alice, when you were talking. Obviously, universities are explaining how they are living national priorities. With the outcome agreements, if they focus more on outcomes, are we doing enough to wind in access by using the outcome agreements as a process? The outcome agreement process is a process of discussion and debate between us and the universities. The beauty of the outcome agreement approach means that we can tailor things to different institutions. There is always more that we can do, but it is clear that the sector is making progress in winding access, but there is more that needs to be done. As you know, there is currently a commission on winding access that will give new impetus to that. There has been significant progress in improving access, steady and slow, more needs to be done, and there has been really good progress in terms of the relationship between different parts of the education system, colleges and universities, but also schools and universities. Perhaps it is best if I pass over to my colleague John Kemp to give a little bit more detail on that. Your question is enough being done. As Lawrence has said, there has been progress on winding access over the last decade since we published learning for all, which was our winding access strategy. That has been fairly slow and steady in some areas, but more recently in the last few years, the progress on winding access to people from the most deprived areas has speedied up slightly since the outcome agreements came in. There has been more significant progress in areas such as articulation, where the numbers are articulating. That is entering university with an HN qualification has doubled in recent years. The question of whether it is enough, the First Minister has set out an aspiration, which she has tasked the commission for winding access. By the time a child born last November is entering university, it has an equal chance of entry, regardless of which deprivation quintile it comes from. That is quite a substantial change, so a lot will need to be done over the remaining 17.5 years before that deadline is reached. However, we are working with the commission for winding access on ways that that can be done. On a regular basis, it seems to be that certain universities are doing a lot better than others. Is there an explanation for that, or is it the cause of some of the more modern universities? It seems to be easier for people from certain backgrounds to access these universities and institutions? All of our universities are different. They all face different challenges in winding access. Some universities take in a significant number of their students through articulation, sometimes one in five of their students are coming through that route. That makes it easier to widen access because the HE students in colleges actually are slightly overrepresented from the more deprived quintiles. Articulation is a big reason why some universities have different figures from others. It is also the case that some universities have higher demand for particular courses, which make it more difficult to widen access because they have a lot of students with five A's and their highers who all want to study medicine, so it is more challenging to widen access in areas like that. In our support for widening access in universities, we have a range of types of support that are partly aimed at getting articulation to work well, partly aimed at improving retention for access students, but also aimed at the very high-demand subjects and ways that we can work with schools to help prepare people so that they can compete with courses where demand is extremely high. One final question. Universities Scotland has said that outcome agreements are focused on the council's relationship with individual institutions with a risk that they are inadequate to address shared strategic opportunities. What did Universities Scotland mean by that? I cannot speculate what Universities Scotland means, but from my perspective, I think that it is making that balance between an individual set of relationships and systems that we make across the system as a whole. Outcome agreements undoubtedly do focus more on individual institutions and their contribution, but they also recognise the fact that each individual institution in its locality, providing the surface, is individual, and we think that it is important to get that balance right. We see the balance as being that there are some things that are about what individual institutions do and what they contribute, and there are other things about how we can work in partnership maybe across institutions. For example, all of our activities in research pooling and our activities in innovation centres are partnerships across multiple groups of institutions in trying to get those strategic things right. So, I think what Universities Scotland is referring to is, well, have we got the balance of those two things absolutely right, and I think it's a thing that balance needs to change over time depending on the issues of the day. My view is that we have got the balance right, that there needed to be a shift away from uniform national policies to things, policies that were more focused on individual institutions. Can I just add to that slightly? Yes, Lawrence's point is about how do you balance the diversity, which is important, one of the strengths of the Scottish system with making sure that you have a strategic approach that all are signed up to. In relation to widening access, because there are lots of other examples where we do this strategically, but in relation to widening access, the learning for all that John referred to, we hold an annual conference with principles of all the universities, and we're playing the next one now. For me, that's a very valuable way of bringing them together to collectively share some of their direct experiences, but I also think more strategically as a collective, as well as how individually as institutions within their different parts of Scotland and recognising the different pressures that they're under can respond. What does that do with the widening access agenda? For the very reason of the questions that I asked earlier on, some institutions seem to be taking up more of the slack than others? Absolutely, and you'll find that on the commission there are representatives from different universities on the commission. I should point out that, within the funding council, we have our own access and inclusion committee. It's an excellent committee. It's very up-to-date and at the forefront of some of the strategic discussions on all of this, so we play our part in different ways, but very much in partnership with the different principles. In addition to outcome agreement meetings, it's also worth stressing that the board gets an opportunity, along with members of the executive, to visit all our universities and our colleges. I know that you're going to look at colleges another day where we have what's called strategic dialogue meetings. It's another opportunity for our board to be up-to-date and aware of some of the developments, but to have those strategic discussions that are so important when choices have to be made and moving forward. There are different ways in which that operates. Lawrence, you mentioned twice in your first answer that, in terms of widening access, more needs to be done. What specifically does the Scottish funding council have to do more of in order to assist with widening access? I guess that what was in my mind was two things. First, more of the work that we've been doing already in terms of additional places and improving articulation between universities and colleges, so that there is a clear route through. The second thing is, in terms of enhancing and improving and developing what's been called contextualised admissions, where universities take a wider range of factors into account in assessing talent and ability. I guess those would be the two priorities that we would be looking for, making that system of the whole work better and thinking about how individual universities look for the most talented. Do you want to add anything? There is a commission on widening access that is sitting at the moment, and we will report early next year. We hope that that will give some advice on what more needs to be done. The reason that we are saying that more needs to be done is that there continues to be a disparity between the proportion of people from the more deprived areas going into higher education, as opposed to the least deprived areas. That is a fairly stark one. The Government has an aspiration to address that over the next decade and a half or so, and quite a lot will need to be done to do that. Professor Brown, you were very clear in your statement that you feel that the outcome agreements from 2012 have done a lot to increase the accountability of universities for their spend on public money. You gave some examples of exactly how that has happened. Do you believe that there is anything else within outcome agreements that could further enhance this process? Again, I will ask my colleagues to come in. My impression is that they are evolving, the outcome agreements. When they started, they were for one year only, and I could see the particular challenges in that. When you are running big organisations, they have moved to three years, which I think is much better, so it allows a different kind of dialogue, if you like. However, they have evolved and improved since they have been established quite considerably, and we are always looking at ways in which we might improve them. That is where the dialogue with the University of Scotland and with individual institutions is so important, because we genuinely want to be open to improving them. From both perspectives, there is a lot to be gained by those. One of the first things that I did when I was appointed chair was to meet with the principles of universities. Clearly, they wanted to ask me about outcome agreements and so on. For me, I certainly feel that they have provided for the university sector too an opportunity for them to very clearly demonstrate to their stakeholders and, indeed, their communities much more generally what they do. There are great stories to be told. For me, they are valuable in lots of different ways, not least to say, in making them much more open and transparent about what they do. Can I just ask—obviously, universities have a huge amount of money that comes in from known state funding, from research councils, from the EU, from charitable foundations, philanthropy, etc. In terms of the outcome agreements about the accountability of that spending, do you think that the outcome agreements since 2012 have improved the way in which universities are accountable for that kind of money? I think that we would see the priority for the accountability for our funding. The outcome agreement is an agreement between the university and us about what our funding buys. As well as the accountability, it is important to stress that, as Alice Huzz, the outcome agreement is a dialogue between us and the institution where part of it is an agreement, a funding agreement that defines what it is that it will do with our funding. However, it is the dialogue that gets you to that when you were discussing what the priorities of the institution are and how that relates to the aims that we are seeking to promote, and reaching an agreement on how we mutually fund something that takes you closer towards it. That is the main benefit of them. You would argue that, because of the outcome agreements with your own funding, which Government provided, it has helped the accountability process with other areas of funding, because they are having to look at what they do well. Just to emphasise the point that was made about the dialogue, when engaging with institutions, we are anxious to hear about the ideas that they have that can improve things. One example that I have given you is the Transitions 2040 programme that the Conservatoire, or people who would normally have access to the Conservatoire, are encouraged and supported at an earlier stage in their development, and many of them are now moving on to courses at the Conservatoire. It is a significant exchange with the institutions. What new ideas do you have? What could we do differently? How could we support you to do that? In terms of accountability, I would agree with John that accountability for SFC and Scottish Government funds is primarily the area that we are interested in. However, the institutions have significant accountability to those other bodies, and if they do not discharge those responsibilities properly, then their funding sources will soon dry up, so it is certainly not in their interests to not pay attention to that aspect. I spent some time at Stanford University in California and was overwhelmed by the partnership, involvement and engagement between business and university. In one of the outcomes in your search and thank goodness that you are talking about outcomes and not targets, the outcomes plan for 2012 to 2015 was about university industry collaboration. Given the amount of public money that is provided to universities, how much do you receive, if any, of the £441 million income generated by universities from knowledge exchange activities? Given Scotland's poor record in creating small businesses, the knowledge transfer activity is very important. Do you take equity participation? Do you take equity involvement, or do you simply give them money and hope that something comes out of the other end? I am taking equity share. The priority here is ensuring that businesses are supported and that our research is translated for the benefit of business and industry. Our institutions are actually pretty good at spinning out companies and creating new companies. In fact, as good as many other countries in the world, our investment in this space is about trying to make it even better and to smooth the interaction between business and industry, which is why we have actively engaged with University of Scotland in the implementation and development of their own five-point action plan to deliver benefits for business and industry. What matters is that we translate the research for the benefit of the economy. The economy will benefit through the creation of small companies, through growth of companies and through the jobs that will emerge as a result of that engagement. That is sufficient for us. Can you tell me why I would not say which university, but I have talked to a professor who developed a voice unit that was way ahead of its time. When I asked about how his plans were to transfer this to market, he showed total disinterest. On the basis that all he wanted to do was to go around the world presenting a paper on it. I think that our universities have moved a very long way from that, and we will find that a very much higher proportion of academic staff and researchers in universities are now working towards the translation of the research. Many people go into research because they want to make a difference to the world in some way or another. Many of them are interested in pursuing an academic career, but the move of our universities in recent years has been towards the translation of research. That is backed up by the push from the research councils who want to see their investment in research translated for the benefit of the UK economy in that case. Of course, the research excellence framework, which has assessed the research every few years, now has an impact assessment included, and the funding that flows from the funding council is influenced by the success of that impact. That impact is beyond the academic publication. It is in terms of the benefits to the economy, to the health and the wellbeing in the culture of the country. Forgive me, Professor Hagan. That might be your view of the world. If I talk to business people, there seems to be this divide where we have the hallowed cloisters of the universities and the aggression, if you like, of creating business and pursuing it. I also disavow your comment about we are one of the best in the world. I was involved very heavily in European business, and we are not engaging in creating that transfer of knowledge from universities to market. There is no go-to-market philosophy, as far as I can see, and you will correct me, but go-to-market philosophy in the universities. I will describe exactly where that go-to-market philosophy is engaged. I will refer you to our innovation centres. The innovation centres have been established to feed the demand from industry for research and development. Some major industries from within Scotland and global industries, including some SMEs, have engaged in the development of the innovation centre programme, and the whole thrust of that programme is having a demand-led development of research for the benefit of the economy and the people of Scotland. Already, the culture of our universities is changing in that regard. Perhaps not quickly enough, because let me ask you for specific examples when the funding council has influenced course provision in a way that significantly improves outcomes for employers and students. If I look at the curriculum of universities, yes, we have business media courses or business studies courses, but I see no real connection. There are some commercial units, I understand that. In another committee, we have been looking at internationalisation and exports, and I talked about a small number of start-ups relatively. £441 million is not a lot of money, given the reputation that we have for research and development, innovation partnership, is it? Can you give me some examples? It comes into the universities. This is not the money that businesses and the economy benefit from, so there are two things. Think how much more you could do if you took an equity share, for example, having that money recycled through the universities again. How much more your funding would be increased? Some of our universities do take an equity share. The funding council does not. In those situations, the funding that stems from the equity shares that universities take can be recycled to support business and industry and further development of research within the institution. Just in clarity, since it is a couple of times and quite rarely, why do you not take an equity share? The negotiations, we fund research, we fund development, the negotiations and the ownership of the IP that is associated with research development, lies with the institution and the researcher. It does not lie with the funding council. We would need to impose a condition of funding that allows that to happen. I guess that one of the major issues in any business arrangement between two partners, the university and the business and industry, is that they are interested in exploiting the IP. We would be having another player at the table or another slice of the cake. If our universities are negotiating on a reasonable basis and they are securing the investment for the universities and they are using the return of that investment effectively, then I am not sure that we necessarily have a place as a middleman, but I am open to other opinions on that. I am running back in a second, because that is interesting. I do not think that that is answering the question, to be honest. I am still not understanding why, if such an opportunity arises, is there anything to stop you doing this? Is there anything that actually blocks you from doing it in your rules or your… I do not think that we could absolutely block from doing that. I guess that it is back to incentives and trying to keep an entrepreneurial culture in our universities, so that they are actively seeking to make these deals happen. Again, in our experience, there tends to be a myriad of deals from very, very large ones to relatively small ones. I guess that our view would be that we are here to try to balance the needs of teaching, research, innovation in the economy, widening access, cultural contribution, and our role is to create a healthy entrepreneurial, active university sector that then engages. I think that the experience of the past of universities that have had the benefit of deals from industry and money coming back means that they are then hungry for more and keen to do more and re-invest that money. I will bring it back in a second. I am still absolutely struggling here, because it is nothing to prevent you from doing something like Chick Brody has suggested. I am struggling to understand why you would not do it. In some cases, you might not do it in all cases, you might provide a grant in some cases. In other cases, you might take a small equity stake, which effectively, particularly in times of austerity and difficulty in terms of finances, that may bring money back into the system, which would increase your ability to fund other projects. I mean, surely this must happen elsewhere in the world. Why would it not happen here? I think, again, we tend to be funding the long-term infrastructure within universities rather than specific projects. If we were funding a very specific project, we would probably be doing that in partnership with a whole range of other partners. It is an idea that is definitely worth thinking about. What is the scope for the state benefiting from co-investment in the system? Right now, at the moment, we are trying to shift the culture, so it is a more entrepreneurial one. There is more of the sort of activity that you have described happening. We are just trying to get you to be more entrepreneurial. I think that that is maybe what we are struggling with. I will just move on, though. Thank you very much. Okay, very pleased for seeing you. Professor Hagen had £441 million apart from buying a Bellio ScotRail. Any investor has a right to say, I want a share of the IP or I want this return or I want shares in the company. We just do not do that in Scotland. It is great news that the culture is going to change, but the fast way to change it is to say that that is what you are going to ask so that you will demand on the public purse would ultimately be less, but an awful lot more than you are probably getting. I am happy to take away and explore the options. I would say that the research councils do not take an equity share. If you go back to the discussion that we had earlier about outcomes, the outcome is the benefit for the economy and the people of Scotland. In this case, that is probably best discharged through company growth and the creation of wealth and jobs. I was going to let it go there, Barth. If you took an equity stake, what stops that being a benefit to the people of Scotland and economic growth and etc? We will take it away. We will look at it. Okay, thank you very much. Gordon, please. Just to continue this discussion about employers and higher education institutions. In your submission, you said that you are in a unique position to anticipate and to respond to student employer needs and gaps in higher and further education across Scotland. We have heard previously that there are up to 150,000 IT vacancies across Europe, including Scotland and the rest of the UK. Engineering UK itself, in the State of Engineering 2015 report, said that engineering enterprises are more likely than average to have hard to fill vacancies for professionals, 32 per cent compared to 18 per cent average. They want to say furthermore, nearly half of engineering enterprises said that hard to fill vacancies meant delays developing new products or services. Given that we have got these two large areas with issues on it, we have access to a high-demand professionals national programme, which is two projects, REACH, which is access to law, medicine, veterinary medicine and dentistry, and ACES, which is access to creative arts and architecture. Why is not there a project that focuses on the STEM subjects when we know that there is a huge vacancy out there? The two projects that you talk about are widening access projects. As well as that, we have a series of interventions on skills, which will tackle some of the issues that you talked about. But ICT is a good example. There is an issue in Scotland with a shortage of ICT professionals. The skills investment plan reckons that there is about 11,000 of a gap in Scotland, which will be part of the larger gap that you identified in Europe. We had a meeting with some employers from the ICT industry and the departments from our colleges and universities in May to talk about how we take forward that mismatch between what was being produced by the colleges and universities and what employers wanted. We followed that up just the Friday before last with a meeting with the colleges and universities about how we were going to respond. We are encouraging them to come together to ensure that the suite of courses that are available in colleges and universities are ones that meet employer needs. Sometimes it is not just about numbers, it is about getting the right courses. One of the things that was evident when we got the employers and the colleges and universities together was that the colleges were saying that the destination stats for people leaving our courses are not that great, and you are saying that there is a shortage while I am not employing them. They were saying that you have not quite got the skills. We need to match that better together. We are encouraging the colleges and universities to come together in some form of partnership, possibly similar to the energy skills partnership, which is one that operates in part of the engineering sector to make sure that the courses are right and that that is bad to employers and that they know that when you take someone on from that course at that university it has the skills that you need for your job and that, crucially, students know that when they enrol on that course at that university it will lead you into that particular part of the industry rather than that you graduate and the employer suddenly says no, that is not what we need. By and large employers are happy with the output of colleges and universities but there are some mismatches in things like ICT and we want to work with colleges and universities to make sure that that mismatch disappears. I have two points to come back on in that. You quite rightly said that your national programme, Reach and Aces, is about narrowing the educational attainment gap but are you going to put a similar project in place for ICT and engineering? We do not have a specific plan to use ICT as part of the winding access project but that could work. The reason we have the high demand professions project is that in order to get into medicine or some of those creative subjects you need either five As in your hire plus experience of working in a hospital because your parents are doctors and so on. That is intended to address that gap rather than a shortage of doctors because that is not an issue. That is not to say that you could not combine addressing a skills issue with an access issue as well, so we could look at that. The second point that I was going to ask you was that in relation to engineering the same report went on to say that they are concerned about the calibre of STEM graduates also needs attention and they say that heading the list is a troubling finding that nearly half of those respondents experiencing problems have concerns about the equality of STEM graduates and that just ranks ahead of the problem of a shortage of STEM graduates. Is there anything that you are doing to address it? I know that you touched upon it earlier. We are expanding the number of STEM graduates. Some of our additional places are specifically for STEM and that will increase the proportion of students at university who are studying STEM. One of the bigger issues with STEM is that there is quite a lot of STEM in the system, but a lot of the people who study STEM leave and do not go into STEM industries. It is about attractiveness post university because they have numeracy skills which are attractive in a whole number of areas. Part of it is about expanding the number of STEM graduates and we are seeking to do that, but it is also about getting, coming back to the point that I made earlier, a better match between what is in the courses and what employers need. STEM graduates are attractive in a whole number of areas, not just in engineering or science courses. We probably supply far too many for simply those industries. It is getting a bigger proportion of what we do supply into the right industries. First of all, I will ask a question on the Scottish index for multiple deprivation. I was at the West Highland College graduation on Friday. Do you not agree that in rural areas such as Fort William, Arden and Merchan etc, it is a very crude measurement and it does not reflect students from poorer backgrounds etc? What are you doing in order to get a more accurate reflection of students from poorer backgrounds? We would recognise that in rural areas the sector does not work as well as it does in urban areas. No, we are aware that even in urban areas, for example Aberdeen, the proportion of the population who are from the mode of deprived data zones is far smaller. In our interactions with the universities in Aberdeen, we are very much aware of that. We do not have one target for all. In rural areas, because of the very small populations, more mixed data zones work particularly badly. We are keen that institutions use a basket of measures to describe what they are doing in widening access, some of which relate to individuals not to data zones. That helps to give a bit of richness to understanding how well they are doing in widening access. That needs to be done fairly quickly, because our latest paper in the audit committee said that UHI had 4 per cent of students from poorer backgrounds compared to Glasgow and Forth Valley at around 35 per cent. It looks like a poor reflection on that institution. When we look at how well UHI is doing or Robert Gordon's is doing, we contextualise that by looking at the figures for where they are drawing students from and recognise that it is different from Glasgow. The second question is, what is your role in national pay bargaining for further education colleges? We do not have a direct role. That is a negotiation between the colleges and their staff. Our role is limited to funding and supporting the system and from time to time reflecting on how that is actually operating and how that impacts on the operation of each college. It is a Government policy to have national pay bargaining. I was also told on Friday that I was familiar with it. In the UHI, they are the lowest paid college and university lecturers in the whole sector. In fact, if you look at FE, the difference between a UHI lecturer and James Watt is £5,000 salary a year. The cost of living is no less in the UHI, but they cannot offer lecturers more money. They cannot fulfil the Scottish Government's national pay bargaining on a national pay scale because of the lack of funding from themselves. Do you recognise that it is an issue if the Government wants to fulfil national pay bargaining that you are going to have to step in? Either some colleges stand still for five years or you bring the UHI up to the level of others. We are not directly involved. The discussions between Colleges Scotland and the unions on national pay bargaining are about equalising the pay increase each year rather than sorting out the underlying disparity immediately. You are right that that will have an impact on institutions. As I said, we are not directly involved, but I am not clear when they plan to tackle that issue. They are funded by the union in order to pay the staff that they have to get that money or stop doing courses. My third point, convener, is on the back of Gordon MacDonald's points. Last week at health questions in this Parliament, we had eight questions on the shortage of GPs. Other weeks, it is questions on the shortage of nurses. There has been huge media interest this week in the shortage of radiologists and many other health professionals as well as people in STEM subjects. We have also heard about the drastic shortage of Gallic teachers. One of your responsibilities is to look at workforce planning, look at the skills required by our economy in the future. If you are looking at that and you are doing your job right, why have we got 29,000 fewer places in FE for under-16s, 150,000 fewer part-time places, 74,000 fewer places for over 25s, 24,000 fewer IT places? If we go back to schools, obviously I hope that you would be talking to schools because they are not going to get into further or higher education unless they have the qualifications in maths 4 and 5 part this last year, 29,000 fewer pupils sitting computing. That does not exactly sound that you are on course and at one with the Government or indeed the economy in meeting skills shortages, so can you address the points that I have made? For all those cuts, 3,000 additional full-time places. Can I ask Professor Hagan to talk about the should-do-with-medical subjects and then perhaps John Kemp in terms of FE places? In terms of medical and nursing places, of course, the numbers are strictly controlled by the Scottish Government and we implement the numbers that are given to us and arrange for the distribution of those places across the sector. The issue of the numbers of GPs and other specialised disciplines across the sector is partly an issue of the choices that students make whenever they are starting their courses and whenever they progress through their courses. There is nothing that determines that students going through medicine have to become GPs or have to become surgeons or in fact have to follow any particular discipline. Perhaps the solution to that problem is some incentivisation for people who go into specialised subjects areas rather than determining at the outset which particular part of medicine any student would want to study in. I would expect that many of the students who start medicine generally have no idea about what particular disciplines are about and form their views on that as they progress through their course. Of course, they also form those views on the basis of their particular aptitude for particular parts of the medical profession. There are huge cuts in the science subjects at schools and in science teachers, except I do not want to, we have lost it all in the last couple of weeks at this committee. On the reduction in college places, a large reason for the reduction in headcount is that there are more substantial full-time courses on offer, but often the courses that are no longer there were extremely short and it requires quite a few of those in order to create a full-time course. You are correct that the number of courses in schools or sub-16 courses by colleges, which often were delivered in schools, has gone down. That was often very short courses right through the kind of school career. I suspect that that will go up over the next couple of years as more substantial courses related to developing their young workforce become part of what colleges do in schools, but that is partly about getting a better link between what schools and colleges do together in order to respond to employer need. We are not responsible for all of the things that are happening in schools, but colleges are working quite closely with schools on courses that have vocational routes that could lead to college, could lead to university that we think will develop quite fast over the next couple of years in responding to the youth employment strategy. I think that the panel would probably agree that the SFC has an important role in providing information and advice to Scottish ministers based on your interactions and so forth with institutions, but there has been some criticism from a number of the written submissions that we have received that the SFC has become too closely linked to the Scottish Government. I will give a couple of examples here. The University of Dundee says that, at times, the Scottish funding council has appeared to serve more as a conduit for government policy rather than as a critical buffer between government and universities, ensuring that the SFC is unable to fulfil this role as vital to the success of our sector. Cwng Margaret University says that, over the last few years, it appears that the SFC's role in delivering a challenge function to Scottish ministers has been diminished. How have you responded to those criticisms? We have two roles, and that is clear. Firstly, our key role is to operationalise the Government priorities that we have been asked to do using working in a full range of partnerships with all of our partners, not just colleges and universities but other partners. That is our key delivery role in terms of us developing and improving the education system as a whole. We also have a role in providing advice to the Government and the Convention as we provide that advice and confidence, and we do that on a whole range of subjects very frequently. I am concerned if our key stakeholders, the universities and colleges, do not perceive us as being acting in an objective way to create the best system that we possibly can. Part of our continuing dialogue with the University of Scotland and with universities individually is to make sure that they realise that we do understand the individual pressures on them and that we do act strategically to try and create the best possible system that is there. I should also stress that universities and colleges themselves offer advice to Government themselves directly and through other bodies. It is a difficult balancing act for us to play. Our key role is to support the delivery of the Government's key priorities, and that is what we put most of our focus on, and that is what most of our outward focusing activity is that people will see. Perhaps there is more that we need to do with individual stakeholders to make sure that they understand that we have understood and heard and reflected on the feedback that we get from them. Do you agree with Cwymarget University that you should have a challenge function to the Scottish Minister? Yes, we do have a challenge function and we operate that challenge function when we offer advice. Challenge is maybe too strong a word, but we offer advice and we say, if you wish to do X, then this is the best way of doing it, or if you want to do Y, we will need to do this amount of money or whatever. We equally say actually, if you want the kind of innovative educational system that you want, this is the best way to achieve that. And again, taking a phrase that was used by the University of Dundee, do you see yourself as a critical buffer? We see ourselves as a role of being expert implementers of the Government policy to create the best education system we can, and if that is the definition of a buffer, then yes, buffer is not a word that I would use. Yes, it does seem a bit strong that you are a buffer between Government universities. I mean, specifically looking at universities, where do you see your role there in terms of interfacing with the universities versus the Government? Where do you see yourself fitting in there? I would see us as trying to create the best connections between whole ranges stakeholders, not just a binary relationship. There's the universities, there's the student body, there's the local authorities, there's the local employers, there's that whole system of education and schools as well. So I don't see it as a binary one versus the other, if you like. I think it's, we're all combining, we've all got the same goal, which is the best education system we can possibly have in Scotland, and our role is to try and engineer that. Can I just maybe illustrate that a little bit? I mean, we meet regularly with University of Scotland, and as I explained earlier, also with individual institutions. But if we look at one of our recent experiences, and that's on the research excellence framework, I look particularly at Professor Hagan, because he and his team worked a lot with the different institutions talking about and in consultation with them about the methods of how we would organise funding for all that. So we don't do these things in isolation. So when we're thinking about implementing particular policy, it will be through that iterative process, that kind of exchange that goes on regularly with us and our stakeholders and universities being key stakeholders here. Do you think that the comments that just these two examples have made indicate that there's perhaps any sort of misunderstanding as to the role of SFC or an expectation that's not there? All those comments are such important things for us to work on with the universities and to go back and say, well, what did you mean and what more could we do to change that? It's part of us thinking about how we improve, how we function and how we work. It is important to say that we also meet Universities Scotland in a three-way meeting with ourselves, the universities and governments. So we very much take the point that feedback of this thought is of value to us to learn about and to engage more about, well, how could we do it better? In fact, one of the things, Colin, is that we're meeting later on in October, we're having a strategic meeting with the board, and I think it's always useful. I certainly find the submissions extremely useful and we'll use some of the points in the submissions to have a discussion in the board about if that's a perception. What does the board think about that and what might we address it? Just very recently, 10 September, there was a letter of guidance issued to SFC. The cabinet secretary stated, I consider it essential that you accelerate your efforts to reform and strengthen your own organisation to ensure that it's attuned to the evolving political and economic environment and the needs of our communities, capable of acute analysis and effective and efficient ways of working and for delivering effective, high-quality leadership to the itchy and FE sectors at funds, ensuring that public investment delivers for learners and ultimately grows the economy. That's quite a statement there. How are you going to assess your performance against those guidelines? Obviously, from my point of view, continuing improvement and development of SFC is at the top of my agenda. The cabinet secretary gives us a strategic framework within which to do that. We have all ourselves adopted the Scottish Government's three-step improvement programme, which gives you a method whereby you can develop and improve what you do. At the next meeting of the board, we will be presenting a new way of the board itself, asking questions of the executive about how we are doing and those will be put attaching measures or ways of assessing how well we are doing against that task. Along with all the other tasks that we've got. That's quite a sweeping ask here. Indeed, but turning it back, it's only the aspiration that we would have as an organisation to be regarded in that light. I guess I would add to Lawrence's comment that we aren't starting from nowhere. We've been engaged in this for some time and I'd give another example in terms of impact on the economy, the significant partnerships that we've developed with Scottish Enterprise and Highlands and Islands Enterprise. That partnership has been refined and improved over the last three years, and working in partnership, I think, we can make a much bigger impact and deliver on some of the requests that are in the letter of guidance. I've got two quick supplementaries—one from Chick and one from Mary. Just on that last point, because again, I sit in another committee that looks at the economy and internationalisation with Gordon MacDonald. One of the aspects that we're talking about funding again—the Horizon 2020 European programme is worth 72 billion euros over the next six years. How are we engaging with that to develop and strengthen the Scottish economy through the university mechanism? In two ways, the universities themselves, of course, are heavily engaged in securing Horizon 2020 funding, just as they were in FB7, and the evidence is there to show that the bulk of the funding that came into Scotland as a consequence of engagement with Europe during that period was taken by our universities, and that's on the basis of the quality, the excellence of the research and the feed into the economy. In terms of other initiatives that we're taking, we have established interface, and we've mentioned interface, the link between business and industry at universities and business and industry, which has been working very successfully. We provide additional innovation vouchers that allow the SMEs to engage with universities to secure Horizon 2020 funding, and that's a relatively new intervention from us. So do you have somebody dedicated to looking at the Horizon 2020 programme, or are you working with Government or Scottish Enterprise, so that we access that because it's not being a member state yet? We have to be very fast on our feet to make sure that we know what's going on. We are proactive, we work with Scottish Enterprise, we work with Scottish Government, we work with Highlands and Islands Enterprise, and, importantly, we work with and are heavily engaged with Scotland Europa. We deal directly with Mr Swinney's team in Atlantic Key, the commercialisation and innovation group, in terms of meeting regularly with those various partners to plan out our activities in relation to Horizon 2020. We organise a series of events as a partnership around the country in advance of Horizon 2020 to engage SMEs from across the country to promote the various opportunities that would be available, and we're continuing that dialogue with them. I'll be to read out the guidance from the cabinet secretary that you accelerate your efforts to ensure that you're more attuned to the evolving political environment. Would you have to do to be more attuned to the political environment? What does this mean? I guess from a research perspective you'll be probably aware that there are significant discussions under way across the UK with the nurse review of the research councils with the consideration of an alternative role, perhaps for Heathgade, those of you who have read the times higher education supplement will be aware of that. So it's being aware and alert to changes that are happening across the UK in particular that impact on the research agenda. In fact, my colleague, my deputy Stuart Fancy, is at Biz this morning discussing these various aspects. As far as I'm aware, the research councils are not political. That doesn't answer my question. But they are influenced by political decisions made by Biz. Is that what this sentence means? That you've to become more attuned to the evolving political environment. It's only related to the research councils. Is that the case? No, well this is certainly a UK agenda for the research councils and I did a previous comment about research. Can I ask Lord and Sir, what do you think it means? I take it as attuned to the environment that we're operating within. What is the Government of the day asking us to do, not only in Scotland but obviously in the UK, where it affects us and potentially in Europe. Maybe it's also for us to do a little bit of horizon scanning of what we see coming down the road as the environment in which we're going to be operating. One of the very big messages that I take from the current Government is this impetus for us all to work together as more of a system with the other partners in Scotland and that strong drive from Government. That's what I would take that as. I just have a couple of questions as to how the higher education sector responds to international competition. Particularly one of the questions that were sent out to yourselves in advance was how the funding council provides leadership and added value to universities by helping to monitor and respond to challenges from international competitors and the University of Edinburgh in providing everyone said that the SFC does not have particular strengths in looking at international competitors or in enabling universities to meet the demands of international competition against that backdrop. Perhaps you could tell the committee exactly what the role is for the Scottish Fund Council in monitoring international competitors and how you help universities to respond to that? I don't think that we are actively engaged in monitoring international competitors, so I'll be open about that. From our perspective, using the resources that are available to us, it's about ensuring that our universities are a resource to be internationally competitive. If you use a benchmark for that, the performance of the sector in the recent 2014 exercise, the research assessment framework, you will be able to see that our institutions are as competitive as any across the UK. In addition, I think that we refer in the documents to two publications, one from BES and one from the Welsh Funding Council, which look at a range of metrics in terms of the research performance across the four administrations in the UK. In every one of those metrics, Scotland outperformed the rest of the UK. If you are asking how we match up against the rest of the UK in competition, I would argue that in terms of accepting that the UK is ahead of much of the global competition, I would say that Scotland contributes a disproportionate performance in securing the international position of the institutions across the UK. It was also commenting that we're a core member of the Connective Scotland group, which is a partnership between the universities, colleges, British Council and Royal Society. That's where the expertise is, particularly through SDI Scotland Development International. That's where the expertise is about helping our sector to export and be effective in the world lies. We see our role as being a supporter of that, but not the one with the key lead in leading trade missions and the rest of it. I can add two other things. The innovation centres have been taken out to three of the innovation centres, have been out in China, and the Chinese have been back to investigate what we're doing in terms of innovation centres. They are taken by the model. In addition, we've had the research pools in energy and in live sciences now, following a visit to Hong Kong, directly engaged in bilateral partnerships with them. I would also refer to the Max Planck partnership. The German Max Planck Institute doesn't form partnerships with any organisations across the world, but they have formed an international Max Planck partnership with Scottish institutions. In terms of the innovative medicines initiative, securing funding to establish the lead drug factory for drug discovery here in Scotland against competition from across the whole of Europe and, indeed, across the rest of the UK indicates that the investments that we've made make our institutions internationally competitive. I appreciate that you've given a list of examples of what you do to make institutions internationally competitive. You've given examples of where you've been able to successfully export, but do you have no role in monitoring what competitors are doing, for example, how successful they are and their initiatives to export expertise to attract research funding? Is there no role for the funding council to see what competitors are doing and possibly to be taking their initiatives and seeing if they work here in Scotland, too? Our principal competitors would be the rest of the UK in terms of the research agenda, and we have to make sure that we are at least as good if not better and, in many respects, we are better than other parts of the UK. If we are hitting that benchmark, then it's almost certain that we're hitting a benchmark above most of the performance of the rest of the world. You need to watch them, Paul. Sorry. I guess that it's also a question of resource and the focus on that, but I have to say that our universities themselves are actively engaged in looking at what's happening outside. They're involved in many international partnerships as well. Again, I think that it's very interesting that we have the vice-chancellars of the six leading research institutions in Hong Kong engage in a dialogue with the funding council and some of the principals from Scotland to find out how research pulling in the various disciplines had worked. They're very interested in the success that's emerged from that model. In terms of where we are in the landscape, I think that we're ahead of the game in many respects, and other people are trying to emulate what we're trying to do with the sector here in Scotland. Liam McArthur, do you have a question? Can I firstly offer my apologies to colleagues and to Lawrence Howells and his colleagues for being unavoidably absent from the committee? Just on the issue of research, I'm listening with interest to what you were saying, Professor Hagan, particularly in relation to Mark's questions. There's undoubtedly been some quite serious concerns raised about recent decisions, particularly in relation to the removal of the Global Excellence Fund, and we've had evidence from Dundee University suggesting that that reduces the level of investment in international leading research in Scotland. A key partner, the Royal Society, suggests that recent changes quote, might make it more difficult to sustain true global research competitiveness in Scotland, and Edinburgh University, going even further, I think, pointing to some of the research that they're doing and the world-leading nature of it, but also the extent to which it delivers a considerable saving to the NHS in Scotland. The response to this world-leading impact has incredibly been to cut research, excellent grant funding to the university by £14 million per annum by 2017, and they go on, this is in large part the result of the SFC decision to reduce the priority attached to supporting world-leading four-star research and is unlikely to support Scotland's higher education sector to perform competitively at an international level. I hear what you're saying in terms of our competitiveness with regard to the rest of the UK and indeed internationally, but it would appear that some of those who are delivering that international competitiveness and world-leading research have serious questions about some of the decisions that you've taken and the basis on which they have been taken. I wonder if you could help the committee to understand the rationale behind those recent decisions. I'm proud to do that. The global excellence was provided and at the time it was provided, it was provided with a view that it might be a short-term investment. It was provided in advance of the ref-24 teen exercise when the reality is that there is a transferent market of high-performing staff across the rest of the UK. We were conscious that this activity was under way and we and certainly the Scottish Government didn't wish to see Scottish institutions disadvantage in advance of ref-24 teen. The additional investment was put into the sector and it was put into the sector by adjusting the waiting for four-star research from three to one to three-star, three to one to four to three point one to one. The increase in waiting for four-star research was simply a mechanism to deliver that additional global excellence funding to the institutions doing the very best research. We operate on the basis of the boards policy, Scottish Government policy and indeed the sector's view is that all our universities should be involved in research and teaching. The way we distribute the funding to the universities is as a result of their performance in the ref exercise, the research assessment exercise and in this case and probably partly as a result of previous investments from the Scottish Fund and Council, many of our institutions performed better in the ref 2014 exercise. As a consequence, although Edinburgh improved its performance, many of our other institutions improved their performance as well. The distribution of four-star research and three-star research across the sector varied. If we had moved away from supporting research as we had in the current model, we could have faced the challenge that we were disadvantaging institutions that had improved their performance and improved their performance partly because we had resourced them to help them to improve their performance. Given that it was effectively a zero-sum game, any redistribution as a consequence of the ref was going to hit some of the larger institutions. We have described that in other places as the peloton had caught up with the leaders of the group. You could see that as a bonus for Scotland in that there was a higher quality, peer-reviewed research across the whole of the sector, but of course it had the consequence of course that Edinburgh did see a drop in its funding. Simply Edinburgh was expressing that concern? Given that they are all in the same pot and it is a zero-sum game, the distribution of funding would change for all of them if all of them increased their performance. At the very least, you have set out the rationale for what you have described as a temporary measure to bridge between those ref processes. Presumably that must have been understood by the institutions themselves at the time. Presumably they may have even been making an appeal to yourselves or to ministers that this period needed to be bridged, in which case it makes it rather surprising that they feel as if the approach that has been taken laterally cuts against their expectations about what was likely to happen. I think that in terms of global excellence, it was clear from the outset that this might have to be a short-term measure and indeed in terms of the funding available to us. It might have to be? In the sense that if it was a bridging mechanism, you make clear that Governments use either directly or through their agencies bridging mechanisms the whole time. We have talked this morning at length about a transition period. I am sure that you found out to your costs turning up on time. Nevertheless, it is made clear that it is a transition mechanism that is time limited. We were clear when we made the funding available and we were clear that it may not stay there forever. There have been a number of concerns that have been raised about funding and leadership in Universities Scotland. For example, I questioned the Scottish Funding Council's ability to introduce further additional places. If its budget remains static, it said that this would be a retrograde step at the time when the Wining Access Commission is working to promote a step changing access to university for learners from disadvantaged backgrounds. It also went on to say that it understood that the Scottish Funding Council to be overcommitted in its funding projects and said that institutions are only funding to 96 per cent of the full economic cost of teaching Scottish and EU students. Do you share those concerns and why? We introduced the additional places into the system as a significant long-term measure. If our budget remains static, we can afford those additional places at the price of managing other budgets that we have, which is what we would normally do. Obviously, that is the basis on which we have planned. The issue about the full economic costs is a little bit more complicated. Of course, we have universities that have multiple sources of income and we expect them to maximise those sources of income. Those contribute to the costs that they incur in their provision of teaching. For us, in terms of the priorities that we have, we would like to continue with the efforts that we are making to support Wining Access, which is involved in the kind of distings that we have described. At the same time, we are helping to support institutions to make a big difference to the economy, but it is always going to be a balancing act in the budgets that we have. To continue with what you have just explained, do you consider your current levels of funding to be adequate? Sorry, I did not quite hear. Sorry, to continue with what you have just said, do you believe that or do you consider the current levels of funding to be adequate? I should have opportunity for you to pitch. There is always more that can be done. In Scotland, we have a great set of universities and colleges that do a fantastic job for Scotland. For us, the key focus is what more can we do working in partnership with them and with other agencies. That is the key agenda for us. It is always important for us all to think about how we make more efficient the whole system in Scotland, and what do we all do to make it work better together? As more funding would take it. Obviously, as much has been spoken about, Wining Access and, as Dr Cameron rightly said, it is due to provide an interim report. How much have you put a cost on that as to what it would be to deliver the Scottish Government's ambition to that access? It is quite hard to cost that because you need to make assumptions about whether you do it by equalising upwards so that the participation rate by the lowest quintile is the same as the highest quintile, or whether the world changes between now and 17 years time so that the participation rate maybe equalises but does not increase. It is quite hard to cost that at the moment. There are also costs related to the kind of things that you would need to do in order to help schools to improve attainment and to put the kind of articulation arrangements in place to support universities in Wining Access. Those are costs that we are already having our budget and it would be how you focus those in future. The short answer is that I do not know how much it would cost. The commission is still carrying on its work, depending on the solutions that it proposes and the ways that access is widened. There could be additional costs or it is possible that they will not. I know that that is not a very helpful answer. No, we will maybe be able to answer my follow-up then. That being said, do you believe that perhaps changes are needed in how we allocate our funding to universities to respond to the increased focus on widening access? I am not sure so much about how we allocate our funding to universities but how we use the outcome agreements, which, as I talked about earlier, are a dialogue between us and the universities about how they meet aspirations. If there is a clear aspiration coming out of the commission for widening access for a series of targets for how we get to the First Minister's aspiration in 17 years' time, then how we use the outcome agreements that contain within them the widening access agreements that were set up as part of the 2013 act will be very important. That is more of an issue about how we engage with universities and funding rather than the funding system. I do not want to prejudge what the commission might say on funding. We will hear that in an interim report in November or in the final report in March. To have a bit of clarification on something that you said, if you, in agreement with universities, are asked to provide more university places because of the widening access agenda, did I catch you correctly when you said that some of that funding might come from private sources of income? Could you just clarify exactly what you said there? Universities receive funding from all sorts of sources and they apply that to their business. I would not see an obvious mechanism for increasing places by directly. We would all have to come through SFC funding. The number of places in the universities are effectively regulated and we fund all those places at the moment, so that is how we would do that. Can I just be absolutely clear about that? If there were additional places that were required to meet the increase in participation from those more disadvantaged backgrounds, it is your understanding that that would come from public money? Yes. Very quickly, when you are talking here about ambition and aspiration, it is to refer back to a question that Mary Scanlon asked about the short-term courses being actually abandoned in colleges. Do you feel then or do you believe that perhaps some young kids' people's ambitions and aspirations have been suffered because of that? I think that the focus on full-time places for young people in colleges, which is something that has been a Government priority and colleges have responded well to, has probably enabled more people to meet their aspirations. If you look at, I think that we are talking about widening access, the higher education in colleges is the area of higher education that has the best record on widening access. The most deprived areas are over-represented in that part of education, and that has grown quite substantially in the past few years. Over the past seven or eight years, the proportion of school leavers going into higher education or the number of places in higher education in colleges has doubled. That is creating aspiration for a lot of people. For a lot of people, that aspiration will then go on to university. Against that, some of the courses and the very short courses that are no longer there, were very short courses were often in the leisure area. We are talking courses of sub-10 hours in some cases. Balancing those two things, I think that perhaps some of the part-time courses were things that were valuable, but a lot of them were things that I do not think were as valuable as full-time courses for young people. A question. Are you aware of the concerns around the severance packages for senior management at Coatbridge College? Part of the funding for the severance packages was provided by the funding council. Why was that provided? Given the concerns that I know that the funding council had over those payments? The problem for us is that we did think about that. Had we used a slightly strong term to find the college for those actions, that would have simply damaged the service that was provided to students since that money could not be recovered from those that it had been paid to. On balance, we thought particularly not to burden the existing students and indeed the new college that was being created at that time. We felt that it was best for us not to pull that money back. By extension, since some of the severance packages were funded by the previous Coatbridge College and partly by yourself, the new would acknowledge that, since some money has already left the sector, students in new college Lanarkshire have been disadvantaged by the excessive pay-outs to the previous management. We did fund a proportion of the packages at Coatbridge College, but we only funded up to the amount of the Lanarkshire scheme, which was the 13-month, broadly, one-year payback scheme. The proportion above that that was paid to some of the senior staff, particularly the principal at Coatbridge College, was not funded by us. However, because that money came out of Coatbridge College's resources, that was not available to new college Lanarkshire afterwards, I accept that. A few months ago, I had discussed with colleges that said that they were short of funding. I wanted the noble approach of using non-cash depreciation to provide cash. Do not ask me how. It transpired that the problem was that ONS had reclassified some of the spending. I mean, what involvement do you have with ONS before they changed the classification, which in this case ended up with the very severe potential shortage that the Government recovered at? We had no involvement with ONS before. So they can just reclassify education and then we ended up with a shortage in one area? ONS reclassified, the Government engaged with ONS about that and with, I believe, the Treasury about the implications of that over several years prior to it happening. We had no direct involvement with ONS about whether that should be reclassified. However, it can have a severe effect on reclassification on college and university funding? Not on university funding. Universities have not been reclassified. However, it has had a significant effect on how colleges operate and on how SFC needs to operate with colleges to monitor spend, now that they are part of Government accounting. I was interested in the discussions and I would assume that there is a level of discussion at a Government level with ONS about the implications of any reclassification. Presumably, the funding council would have had discussions with the Scottish Government about what additional legislative changes the Government would have in terms of their bearing on ONS classification. Is that true? We did not have particular discussions about those issues at the time. My understanding is that some of the key issues that ONS were identifying were about if you like control and some of the issues about borrowing consents, which are nothing to do with the legislative changes that were taken at the time. To be honest, there were issues in relation to the control that ministers had in terms of the workings of the college sector. The ONS reclassification happened before the legislative changes that happened in 2013. I suppose that, theoretically, the Government could have used the opportunity of the 2013 bill to move in the other direction, but the reclassification was prior to that. That would be a discussion that, presumably, the funding council would have been involved with ministers. We discuss all the time, yes, and both in terms of if we are going down this road, how do we mitigate it and, you know, are there alternatives? I am just thinking about the overall finances of universities. I got a figure yesterday that the SAAS tuition fee paid to students as a very rough average is £1,820. Given that we have people coming here paying £9,000 in fees, how can we ensure with the controlled numbers that we have? I go back to my first question. There is an example for GPs. How can we be sure that Scottish universities choose students who are domiciled in Scotland—for example, Highlands and Islands, where there is a critical shortage of GPs and radiographers—why would a Scottish domiciled student who is more likely to go back and work in the Highlands and Islands as opposed to someone coming from England with a £9,000 fee? How can we be sure that that is reconciled? The funding that we give to universities is for Scots and EU students. The SAAS fee is only an element of that. There is our funding on top of that, which, depending on the subject area, brings it broadly in line with the £9,000 that comes from the fee. The teaching grants £5,700, so it brings it to £7,600, which is still quite a bit less than £9,000. The institution will not be making a choice between that student that brings in £9,000 or whatever our particular funding is for that level, because they cannot substitute between the two. What institutions will do is try to recruit students from the rest of the UK over and above our students, if they can. However, it is now impossible for a student from the rest of the UK to displace a Scottish student, because we have a target with the institution for a number of places for Scots and EU students, and that is what we fund at the institution. By and large, institutions meet that target. I am not aware of any recent examples where they have been significantly short. It does not indicate that students are being displaced by the rest of the UK. Theoretically, it could be possible if they only have room for 100 students in a building that they might take English words. That is not happening. In fact, the introduction of the fees for the rest of UK students enabled us to withdraw funding from those students who used to be in our system, and it used to be possible for a rest of the UK student to displace a Scottish student. However, because that was withdrawn from our system, we used the money that we saved to purchase additional places for Scots and EU students. Therefore, there are now more places in the system for Scots and EU than there were prior to the introduction of fees. When does a target become a cap? There is a cap as well, which is there to control the sales cost. The cap on Scottish students can know that there are more places. There is a cap that is over and above our target. Our target is for a particular number of places. Universities can recruit above our number of places and just recruit the SAS, take the SAS fee, but there is a control on that to control the sales costs, which exists purely to control the sales costs. However, in cases where institutions want to breach that cap because they want to widen access or meet a particular skills needs, there is now an arrangement in place where they can tell us in advance that we are planning to go help or leather to recruit more ICT students or more widening access students. We, through arrangement with the Government, will arrange that they can breach the cap if they wish. One final question, which is related to outcome agreements. Just for clarification, could you explain to me whether outcome agreements are concerned with all of the relevant SFC funding or just with specific funding streams? How does that work? It is for all the key funding streams for any individual institution, but it would not be for, for example, if we have a multi-institution project, that would be managed through some different process. The vast bulk of provision to whenever universities would be covered in that outcome agreement. It is the vast bulk, but there is just some around the edges where it is not covered. For example, if you are managing an innovation centre across multi-institutions, it makes sense to do it in a slightly different way. We try and integrate them as much as we can. Thank you very much. I thank you for attending. Once again, I apologise for the delay in the start, but I think that helped Professor Hagan. We are very glad you made it along. Thank you all for coming along this morning. We do appreciate your time. Can I close the meeting?