 I welcome everyone to the 10th meeting of the Public Audit Committee in 2021. I will be taking the chair for the first evidence session and the convener will join us for the second. Before I begin, I remind members, witnesses and staff present that social distancing measures are in place in committee rooms and across the Holyrood campus. In addition, a face covering must be worn when moving around, exiting and entering the committee room although they can be removed once you're seated at the table in the committee room. The first item in our agenda is to agree to take agenda items 4 and 5 in private. Are we all agreed? Agenda item 2 is the 2020-21 audit of the Crofting Commission. I welcome our witnesses this morning to the meeting. Bill Barron, chief executive and Malcolm Matheson, convener of the Crofting Commission. Can I invite Malcolm Matheson to make a short opening statement? Okay, certainly. Good morning. Thank you for inviting us to give evidence to you about the Crofting Commission. As you know, our external auditor submitted a report to us at the end of May, which led to a section 22 coming to yourselves in October. We welcomed the recommendations of the audit report and we immediately set about implementing them. The Crofting Commission's board and management and the sponsor team of the Scottish Government have united around delivering this plan. As of today, 33 of the 41 recommendations have now been implemented and two more may be signed off when the board meets tomorrow. The route of many of the recommendations was a lack of clarity about roles and relationships, some of which are arising from, as you have heard before, some unusual legislation. We have, however, tackled that head-on by working with the Scottish Government to revise our framework document and by securing joint training for commissioners, senior management and sponsored division. All of that has progressed incredibly well over the past six months. Bill and I are here and we are very happy to address any questions that you may have or any clarification that you require from Bill or I of what we have been doing over the last six months to ensure that the recommendations are in place, but more importantly, they are in place for the future. If you would like to ask us any questions, we are certainly happy to help. I will now open the session up to questions from members. I will start with a couple of questions. It is good to hear that you have made a lot of progress and that you have done 33 out of the 41, and hopefully another two tomorrow. The report raises some very significant concerns. Can you tell us the extent to which the issues raised in the report have impacted in the key services that the commission provides to the crofting community? I think that Bill would probably answer those questions from an operational perspective. From a board perspective, I think that I can say that it has focused the board into the roles and responsibilities within the commission. I think that it has focused that the board now understands what its responsibilities are. I think that it has now become clear what is operational and what is strategic within the board, and that has been very helpful to everyone. However, operationally wise, Bill would be the best person to answer. Of course, it has had an impact. There has been a lot of senior management time diverted to thinking about those matters, but the staff and the mental management of the Crofting Commission have progressed with performing to an exceptional level. The impact on that side of our work has been minimised. You will be aware that in 2019-20, we met 13 of our targets, partly met one and missed only one, which was about the extent of sickness absence among our staff. There is absolutely nothing that we could have done about that. It has been picked up. I know that, in 2020-21, that picture did shift, so we met nine targets and we missed seven. However, when you look at those targets, many of them were couched in terms of, let's see if we can do as well or better than last year. Of course, 2021 was the year of Covid when, for example, Grazing's committees could not meet. We had issues with connectivity, we had issues with availability of our building, we had staff who were not able to be present because they had caring commitments and so on. It is not at all surprising that that performance measured in that crude way appears to have dipped. I can assure you that the staff back at the ranch have performed extremely well. There was in the report that some of the roles were a bit blurred, so it is good that it has been clarified and they know what the roles are. The highlight is that we have had the training sessions, which we have all attended, as I explained initially, and it has been now very clear as to where the roles and responsibilities are starting and finishing. I think that that has been a big step forward for the board and also for senior management and sponsor. That's good to hear. The report states that there is excessive involvement by the board and the former convener in operational decision making and in matters that would typically be the responsibility of the senior management team. Excluding the office tasks performed during the pandemic, can you explain why the board and the former convener became involved with operational decision making? The definition of operational decision making is that we were operating during the Covid period and what the board did was to give out our board's telephone numbers to empty the crofting community to contact us. The reason is that staff were working from home, it was a new environment, everybody was getting set up with both IT and the board said that we would assist by answering any queries if we could from those within the crofting communities. The board at that stage was involved in operational matters, the convener did, but we thought that it was for the right reasons and that was to try to assist Bill and his operational team. Some of the comments about the previous convener and the role that he was undertaking were not quite correct. It was all done for the right reasons and it was done very much to try to help Bill and his staff. However, in retrospect, knowing what we know now, it possibly did veer into an operational matter. Has that been changed now? Absolutely, totally. There is not the same requirement. Homeworking is now up, it operates, Bill and his team have put in all the procedures, so there is no requirement for the board to be involved now. At the initial stages, the board felt it was the correct thing to do. However, everybody is quite clear on what the roles and responsibilities are. With regards to the board, I can certainly say that, yes, Bill could answer for himself and his management team. Yes, I echo what Malcolm said. We have had some constructive joint training about the divide between the roles of the board, the roles of senior managers and the operational strategic split, as it were. It is quite clear which things are normally delegated to staff to lead on. It is also quite clear—it has been made clear to us in the training—that the board is responsible for everything. It is a question of judgment as to when they ask for more detail. However, I am absolutely clear that my convener understands how to work that judgment and it is working exactly as it should. Can I just ask what things are not quite correct regarding the previous convener? There is nothing in the report that is technically incorrect. The aspects of it—we as a board felt language—was a bit emotive, because the person was doing what he thought was the right thing. For example, taking a staff survey, the previous convener took off his chairs in the back of his jeep around staff to help them when they were starting to work from home. While he was there, we would ask a question about how he housed things and so on. However, when he conveyed it in writing, he put down that he had undertaken an unofficial staff survey. It was not necessarily that. It was more a case of trying to understand what was taking place. In the operational side, as I have explained, we were in a situation that nobody had experienced before. The board was trying to assist, but, technically, we did very into operational matters. There is nothing in the report that is technically incorrect, but aspects of it did not take account of the situation at that point in time. The report mentions operational matters before Covid. Are they still happening now, or has everything been changed post Covid? At the present minute, I think that Bill has explained that, with the training, there is a very clear distinction of what we as a board are responsible for. I think that there is now an understanding within the commission, and I would say within the staff of the commission as well, of the responsibility of the board. Everybody is quite clear of their roles and responsibilities. We should be after the training, yes, and I am sure we are. Speaking on behalf of the other commissioners, we are certainly very clear now, yes. Right. I will move on to questions from the other members. The first question is about leadership and governance of the Crofting Commission, and Craig Hoyes will get some questions on that. Good morning, Mr Matheson and Mr Barron. The impression that I am getting from what you have said so far is that it is effectively what went wrong was circumstantial rather than systemic or attitudinal, but perhaps, Mr Matheson, if you could say at what point did you get the impression that leadership and governance arrangements had broken down after a period of apparent stability? I think that one of the things was that there was a lack of understanding amongst commissioners about the chief executive's roles and responsibilities. I think that the understanding of the board was that the chief executive reported to and was accountable to the board. I think that there are a couple of occasions of roles that are in the report that we were not fully aware of, but it was only then that we probably appreciated fully the dual reporting that the chief executive had. I think that the biggest learning coming out of it is that, within a new framework document, which we as a board will hopefully be signing off tomorrow, that is now clear that the chief executive is accountable to and reports to the board. So, I think that there was a lack of understanding about the roles and responsibilities prior to this report being made available. It might help just to go right back to the start of Covid and an approach was made to myself from the Scottish Government to ask if they could borrow me for a few weeks to go and work on the care homes crisis. Hundreds of people were being moved around to do emergency jobs at the time. It was enormously pressured, but the confusion over my status—was I a Scottish Government person on-site convent? Was I a Scottish Government person appointed to the Crofting Commission? What was I? What happened was that the senior person in the Scottish Government and I both spoke to the then convener and said, what do you think? Could he be away for a few weeks? Rodd said, yes, obviously Covid is much the most significant issue affecting crofters as well as everybody else just now. So, it was agreed on that basis. What we didn't do was consult the whole board at that time, which, with hindsight, we should have done. Obviously, it was moving at great pace, but that, I think, was the first time that the board felt there's something a bit funny here about the way decisions are being taken without us being formally consulted. What was your response to the vote of no confidence and what's your understanding as to why it's not been withdrawn? At the time of the vote of no confidence, I wasn't supposed to know that it had happened, in that they had written privately to Fergus Ewing. I discovered the basic content of that letter only when I saw a draft of the Deloitte report in around about March or April of this year. It said things about my style of leadership, which I think were partly to do with a clash of cultures between—I'm obviously steeped in the public sector, I've done 40 years of it for goodness' sake—and my colleagues on the board come from a small business, private sector background. They are impatient for things to be fixed quickly. They are impatient of bureaucracy. I've learned a huge amount from them. I relish that kind of challenge, but there is a little clash of cultures there, if I can say. I considered stepping down because you don't want to be working for a board that doesn't want you, but my staff, my senior managers who knew about it and those staff who guessed, were absolutely four square saying, no, things would be worse if I left. When it all came out to the point where we were able to talk about it and the board actually spoke to me about it in June of this year, they said to me, look, the problem here is a constitutional one, it's not personal about you, it's about the way this thing works and fits together. At that point, it was pretty clear to me that my stepping aside wouldn't fix the problem, so that's why I decided to carry on, to attend to delivering the business of the Crafting Commission and to working as closely as I could with my board colleagues to resolve these constitutional confusions, as it were. The reason that the vote on a confidence was withdrawn a month ago was because we have worked through these constitutional confusions and there is now much greater understanding of the way these roles interact. I think the issue that the board had is that the board was under the impression that the chief executive was accountable to and reported to the board. As such, the board took the decision, well, why is the chief executive going off and doing other things and not telling us first? And it was only when it became clear to us that it wasn't actually our responsibility to actually say yes or no for the chief executive going off to do other tasks. I think that over the last probably five to six months the board and the chief executive has worked closer, I would probably suggest, and it's worked for many, many years in actually delivering the recommendations. I think also the board had private conversations with the senior management team who are very, very supportive of the chief executive. And as such, we then felt that based on the changes that have taken place, the clarity of the role's responsibility and our understanding, and also of the support that the bill has with the senior management team, that it was correct that we actually withdraw our vote of no confidence. But initially it was purely down to the fact that we didn't feel that the chief executive was keeping the board fully informed, but subsequently we found out the reasons why. I just want to go back to the opening statement in which you effectively said that Covid was the cause of this problem, but I'm getting the impression that there was a latent dysfunctionality that came to a head during Covid. Is that the right way of characterising it? I think I said that Covid was probably the reason for more operational involvement from commissioners. It's not, Covid wasn't the reason. The roles and responsibilities existed prior to Covid, so it's not the reason, but in terms of the board getting more involved in operational matters, I think that Covid was probably the main driver for that, yes. Except that there was a weakness there before. Oh yes, absolutely. So just looking forward, obviously there is going to be an effort of rebuilding trust from your perspective Mr Matheson. How are you going to do that? I think that the first thing is we've been very, very open in all communications between the chief executive myself and I think more importantly between sponsor division myself. So the commissioners get notes of every meeting I have with sponsor, they get notes of every meeting with the chief executive, they get the minutes of these meetings. We are now very, very open in the way that we ask our questions, so rather than maybe if you can say both members talking amongst themselves, if we want to ask a question we are now very open and we are very detailed in the questions that we ask. So I think there is a greater, well, number one, clarity in roles, but I think that there is certainly over the last six months become a lot more openness in all aspects of the commission ranging from sponsor through board through senior management through the chief executive. And is there now a more formal process that's been developed to ensure that the chief executive is held accountable for his performance to the board? Yes, the framework document, which we hope to have approved tomorrow, now states that the chief executive is accountable to and reports to the board. At each of the board meetings, the chief executive gives a verbal update to the board on everything that's taken place and the board now receives a lot of facts and information that potentially it didn't receive before. Now, there's a lot of information that comes to us that is purely for information only. We don't act on it, but it means that we now are aware of what's happening within the organisation a lot clearer than we were before. Do you think as a board that you're making the best use of the combination of appointed and elected members? Yes. One of the issues with elected members, which we are trying to highlight just now and hopefully resolve, is that there was a perception that elected members were there to represent their constituents. As such, there is a possibility that elected members can get involved in day-to-day operational matters. Within our website, we are being very clear for the next election. Elected members are there to provide the bill, SMT and the Government with the experience of crafting matters and crafting communities. The greater understanding of the role of an elected commissioner is very, very important. That's something that we're focusing on in the last couple of months and it should come through. I think that the appointed commissioners for skills and experience that they may not get from elected ones, they may or may not. It depends who stands for election. I think that the split is good because you're bringing in specific skills that the commission may require. And is there now a formal appraisal mechanism for board members? Yes, it's already started. I can only do appraisals from when I took over as convener, which was July of this year. That process has now started. The initial documents have been out to each commissioner, which has to be back in by the first week of January. I then have the second and third week of January set aside for having my discussions with the commissioners. I will then document that. That then goes on to sponsor division. So that process is in place. That process has already started with the documents going out. We also reviewed the appraisal documentation as well to make sure that it was relevant for elected and appointed commissioners. Yes, I'm aware of all of that. Malcolm has been supported in that by my board support expert, but also by the training that we've had. We're happy that we've got a proper process in there and it's going to be fulfilled. You said at the house that the training had taken place already. Is that an on-going process? Will that be a continual process of training? One of the biggest learnings from the training that we've just undertaken is that that training should have happened when the new board was brought together. The training that we've had over the past six months has highlighted in a very detailed manner what's operational, what's strategic, what the board should get involved in and what the board shouldn't get involved in. The training was such that the commissioners all felt that when the new board takes effect from April next year, the training sessions that we've just had, we want them within the first six months of the new board because it's imperative that they understand right at the start of the tenure what their roles and responsibilities are. Unfortunately, it's taken five years for us to get to that, so we want to do that very quickly now. We had eight new members out of nine in the space of three months in 2017, and that's a challenge for any board. We did institute a pretty heavy schedule of training, but we probably front-ended it too much, so there was a deluge of information coming to people who maybe didn't have any knowledge of how the public sector organisations operate. I think that we're now looking to do it in a more nuanced way, concentrating on a smaller number of key things upfront and then taking a bit more time over some of the rest of it. Having said that, we're all hoping that there won't be the same extent of discontinuity at the next election. Some of my colleagues stand again and are re-elected, and that obviously helps as well. Before I move on to the next set of questions, could I ask if we could possibly get an update in writing on the framework that was agreed and also the further recommendations implemented after your meeting tomorrow, if you could update the committee in writing? Once it's been signed off tomorrow by the board, we will certainly do that. The next set of questions is sponsorship arrangements between the Scottish Government and the Crofting Commission, and Colin Beattie will get some questions in that one. Before I get on to the sponsorship arrangements, it's easy when I'm sitting here to forget how serious the section 22 report is. The impression that I'm getting here is sort of, you know, nothing to see here, move on, it was just little technical hitches and so on, and we've sorted everything out and it's all cuddly again. But I come back to the fact that this is an extremely poor report, and that extremely poor report is the responsibility of senior management past and present. I expect senior management to have the skills and the knowledge and the commitment that we don't get into this sort of situation, that we should not have to be looking at these reports, and yet here we are looking at it. Now, I realise that from your perspective a great deal of work has probably been done. There's been changes to the board and everything. I'm concerned to ensure that we don't see the Crofting Commission in front of this committee again with the section 22. I'm not really hearing that reassurance of the senior management skills, the assurance that we've got people in charge that actually are capable of managing this to an adequate level. We're told, for example—I think it was you, Bill—that said that there's extensive training given to the new board members and everything as they came in, eight out of nine having changed. But they have a responsibility and they can't walk away from that responsibility, whether they're elected or appointed or whatever. They have that responsibility and they should have the skills. If they don't have the skills, then clearly they're unsuited to the job. Now, we have seen the results of what appears to be failure after failure in the management process, and that's why we've got that section 22. Now, I'd be happy for you to comment, but we cannot walk away from the fact that this is a serious report with serious deficiencies, and it will take time for us as a committee to understand and to accept that the changes that have been implemented are going to be a step change in this situation. But I think that we're being maybe a little bit naive in just accepting that everything's been fixed, because there's no evidence of that at this point. All I can say is that the board, as it's constituted today, is totally committed to ensuring that the situation never arises again. You did make the comment about having necessary skills and experience. When there's three appointed commissioners, you can obviously get a skill set that you require. When there's six elected commissioners, what you have to work with is the individuals that's elected, and we've been very fortunate. We have a very, very capable group of elected commissioners, and I would hope that, going forward, that's the same case. I think, as Bill has said, that there was a lot of training that took place at Starr, and it was trying to understand the difference between a commercial environment and a more public environment. I think that going forward, what this board has learned will be passed on to the next board, and I know myself and one of the other appointed commissioners. We are still here for another three years, so we will ensure that what's happened in the past, that lesson has been learned will be carried forward into the future. I do Bill speak for management, but I certainly think that the relationship is a lot closer now than I have seen it in the five years that I've been in the commission. We'll move on to safer ground, shall we? Sponsorship arrangements. Clearly, there was serious concerns about how the sponsorship arrangement worked, and that came out in the report. How did it come about that the Government's sponsorship division seemed to relate to the senior management team rather than the convener? How did that come about? Obviously, I can't comment for the previous convener, so I'm not aware of that relationship there, Bill. I think that that probably relates back to the predecessor board that was in post between 2012 and 2017, and there were, as you know, governance difficulties with that board towards the end of their term. I became chief executive initially on an acting basis five months before the election, and there were all sorts of discussions between me and the Scottish Government about how we can keep the organisation going and how we can restore credibility with crofters and so on. We probably got into bad habits then of there being a strong connection between myself and the sponsor team. We did try to reset that when the new board came in. Rod MacKenzie became convener. He was chalk and cheese different from his predecessor, and he started meeting with sponsorship with me and so on, but I think the relationship was already quite strong, and Rod probably felt that he was not entirely necessary there. We didn't do enough to strengthen that direct relationship between sponsor and the then convener. Did the Government sponsorship division comment at all on the unusual route of contact? No, I suspect that they were also caught up in the same mistake that I was. Having been through a very troubled time with the previous board, they were then also in a comfort zone of talking to a civil servant, and none of us spotted the importance of correcting that. It was Malcolm who touched on the current relationship with the sponsored division. Does it provide the support that is required now? Are you satisfied with that support? From my personal angle, absolutely. I think that the revised framework document, the major changes that we as a board wanted in that document sponsored division were essentially helpful in making sure that it actually went through. I think that the changes there, for example, myself as convener along with Bill's direct report now do appraisals. That didn't happen in the past. The board had absolutely no input to that. I have found that the sponsored division has been exceptionally helpful over the past six months. Any time that we have asked for assistance or clarification, we have received it very quickly. I have experienced very much an openness in the past six months as well. I cannot call mine, obviously, prior to that period of time, but, for my position as convener, I am very pleased with the support and openness that we have with the sponsored division now. We should also note that sponsored division colleagues have been part of the joint training that we have been saying so much about, so that has been joint between board management and sponsor. We have touched again in the course of the discussions about the use of Scottish Government staff, including chief executive. They are provided by the Scottish Government on Scottish Government terms. All your staff are actually seconded, which is usual to that extent. What are the advantages and disadvantages of that? The main advantage is administrative convenience. Other NDPBs of not totally dissimilar size to us would have an HR team of maybe three staff. We do not have an HR team as such. We obviously look after the wellbeing of our people, but all the pain negotiations, terms and conditions, disciplinary arrangements, all of that is provided for us. Can you affect the same thing simply by recruiting people on the same terms and conditions as the Scottish Government? We could do, but the other issue is that— You do not. So, when the Crofting Commission was formed out of the previous Crofters Commission, which was an agency, the proposal at that time was to move staff from Scottish Government, being part of Scottish Government, as it were, for HR purposes into the normal arrangement for an NDPB. There was a backlash against that. I think that there would have been considerable disquiet and probably quite a lot of losses of staff if we had made that change at that time. Parliament decided that it would leave the Crofting Commission the option of doing it either way. Parliament decided? It is in the act. It is actually embedded in the act that it is going to be Scottish Government staff. It is in the act that says that the Crofting Commission may use its own staff or may use staff provided by the Scottish Government. So, it is provided an option? Yes. Can I also just clarify again from the revised framework document, in that document it says that any subsequent chief executive may or may not be a Government appointee, or sorry, a secondment from the Scottish Government. So, you know, within the framework document it gives the board the opportunity if it requires to do so of recruiting outside of that area. I do not think that that is quite right, Malcolm. I think that the appointment has to be a Scottish Government appointee, but the recruitment can be from wherever. Correct. The appointment has to be approved by the Cabinet Secretary, but from a board perspective, the board can look at employees outwith of a Government. But it never has. To date, it has not been able to know that the framework document has only been ordered to reflect that just now. Now, just to go a little bit to the side on this one, the proposals for an expanded role in grazing for the commission were not subject to final board approval before the national development plan was published. What were the consequences of this? The consequences are that there is something in the national development plan that the national development plan says the commission will deliver and which the commission has not agreed to deliver. So there is a continuing tension between ourselves and the Scottish Government about that. How long do you anticipate this continue? It is difficult to say. The commission is not against the proposals in the national development plan. We can see the value of all of them. It is a question of prioritisation and resources. If there were a different set of priorities from our side or a bigger envelope of resources, the problem would go away and we would willingly do the things that the Government has said that it wants us to. I think that there is every prospect that there might be a conversation about resources that would take the heat out of it. The other option that the Government has, of course, is to direct us to do it, which they can do, but they would prefer to do by consensus with us. The root of the problem—I know that you did not ask me about the root, Colin—was muddled communication. There were a number of conversations between the Government, the board and myself and SMT colleagues about what was going on in the national development plan. Drafts were shared, but this was a muddle that never got nailed before the document went to print. The actual concern here is not a question of disagreement on a point of fact, but disagreement on prioritising the proposals. Yes, that is correct. Just to finish up with one last question, you have been fairly clear that you are happy now with the relationship between the sponsorship division and the crofting commission. Is there anything that you think still needs to be done to improve that relationship or to make it more effective? I think that there will always be things to improve, but what I feel just now is that as problems and situations arise, I think that there is an openness there that we will discuss it straight away. I do not think that it is the perfect relationship when nothing on a level happened. What I do feel is that there is an openness that if anything crops up, we will not be in a situation as we are before. We will be able to have that discussion very clearly at the start. Can I now move on to the next set of questions, which are weaknesses in business planning? Morning, Mr Matheson. Morning, Mr Barron. I apologise for being so late, and I am sorry that I have missed your answers to the earlier questions. There was something that I think was highlighted in the Audit Scotland report, which we did want to look at, which was about business planning and where things stand at the moment. I wonder whether there was a medium-term financial plan that was put together. I wonder whether you could tell us where that is and what steps you have taken to improve the financial situation of the commission. I do not know whether Mr Barron wants to answer that question. Finance is actually one of our strong suits in that we have an exceptionally strong finance officer who has got plaudits from auditors for the way he manages the finances year by year. Forward planning has been the issue that has been raised by Deloitte over the last two or three years, and they have said, can you look ahead and be sure that it is going to be financially sustainable two, three or five years ahead? That is an interesting one for us, because over 75 per cent of our spend is staff, and all of our budget comes from the Scottish Government and we get it a year at a time. You will appreciate the challenge of what do you write in a medium-term financial plan when you do not know what your budget is going to be. When Deloitte said, do a medium-term financial plan, we wrote one that said, this might happen, resources might go down, this might happen, resources might go up, and these are the kind of management responses we will take in either of those scenarios. It detailed, these are the kinds of staff we would have to lose, and these are the areas that we would like to expand if it were possible. Deloitte came back and said, could you do that more thoroughly, looking further ahead, tying it in more definitively with the stated objectives in the corporate plan and so on? The second version of it last year was better, but they have given us a number of other things to improve again. We will be doing another one in the near future, tied in with a new corporate plan that will be developing at around the time of the election. It is a work in progress. This is your election to the commission next year? Indeed, yes. Sorry, I had my heart beating. This is a question for both of you. When I read the report, one of the things that stood out was a failure to properly involve the commission in the setting of the budget. It was that last year or the year under review in the Audit Scotland report. I know Mr Matheson, I think that you were formally, before you became the convener of the commission, you were the chair of the Audit and Finance Committee of the Commission. I was vice-chair. You were vice-chair. Can I go first? Yes, you go first. So my question therefore is, what steps are you taking to avoid a repeat of what was clearly a failing in the communications and relationship between the commission, the setting of the budget and the interaction between the commission and the Scottish Government? Let me explain that we've always done it that way and we're going to change it and do it differently. There isn't a go back when it was right. We've always done it this way. What we have done in the past is that we've involved the board closely in the decisions about priorities, business plans, staffing and indeed some of the smaller decisions about accommodation IT that are going to have implications for the budget. There's a closeness at that level. What we hadn't done and what Deloitte had flagged up to us was actually in those earlier discussions had drafts of the whole budget alongside so that they could see these are the immediate financial implications of those discussions that we're having. Rather, we'd done it by having those discussions, getting our good understanding of their priorities and aims and then working through the budget as a sort of arithmetical exercise to give light to that. I don't think it will fundamentally change when we bring it forward so that we're actually sharing budget numbers in more detail at an earlier stage in that process, but it will just close that loophole. I think, again, just from the perspective of the Audit and Finance Committee, as an accountant, the calibre of financial control in the commission is absolutely superb. Each of the Audit and Finance Committees, we have a very detailed analysis of the current financial state of the commission with the projected outcomes to the end of the year. With the commission having about 65 per cent of its budget, nearly 70 per cent, the staff costs, as an ASC, we were always aware of where that would be within the coming year. We were, as an Audit and Finance Committee, comfortable with the information that we were receiving from Bill and the finance team, but as Bill said, we have followed our recommendations and I believe that the Audit and Finance Committee now are getting involved in an earlier stage. But we were confident about the information that was being conveyed to us at the ASC. Isn't it odd, and maybe I'm misreading it, that you have a commission that is largely a majority of which is directly elected and the commission doesn't shape the budget of the Crofting Commission? The elected commissioners do not shape the budget of the Crofting Commission or were excluded. I know that Mr Barney said that that was the normal state of affairs, but why would that be? I really don't understand that. I disagree that they didn't shape the budget. They did shape the budget. They told us, these are the priorities, these are the aims. Sometimes this is what we want you to do with your IT. It was quite clear that the boards were in charge of the direction of the way resources were used. What Deloitte has picked up is, in my view, a technicality about the way those conversations were not numerical early enough, and they are saying that they should have been, and we are fine to do that. I would also point out that our non-staff budget is about £700,000 a year. We are not talking about huge amounts. An awful lot of that is, for all practical purposes, fixed spend on things like accommodation, communications, travel and so on. It is a question of how much detail you need to go into at an early stage and whether you make those things numerical at an early stage. Let me turn now to workforce planning and staffing and so on. I just wanted to get your views on how you see progress being made to develop the planning of the workforce in the commission. Again, I accept that it is not a huge organisation, but, nonetheless, you will have to have a workforce plan. I wonder how you are reaching conclusions about whether the senior management team mix is correct or whether you need additional resources in that area. Mr Barron, first and then perhaps Mr Matheson could comment on that. We are on a journey with this one as well. We produced the first of our new style workforce plans at the start of 2020, revamped at the start of this year, and we will be doing another one in the near future. The big change that has happened is the delight recommendation that we should get an independent examination of the structure and staffing need of the commission. That has been commissioned from external consultants and the report came in just a couple of weeks ago. The board will be discussing it with them tomorrow. That report and the board's judgments based on it will enable us to take workforce planning to a new level in that we will be able to say that we have now got some evidence about where we ought to be, what we need at the senior management level and what we need at the front line level. That will mean that we have more evidence conversations with the Scottish Government about how to implement that. The manpower review was completed about three weeks ago by independent consultants. A very, very worthwhile document. For ourselves and the board, it is clarified basically the necessary skills and structure of a senior management team. The recommendations have come forward. We as a board will be discussing that at the board meeting tomorrow. It is a document that I think is giving us a very, very good blueprint as to how the commission should be structured. One of the things that I picked up was a suggestion that there ought to be a deputy accountable officer to you, Mr Barron. Is that part of the plan? It is not. Actually, I am delighted to be wrong about that. The Scottish Public Finance Manual does not permit me to appoint a deputy accountable officer. It says that what I should do is appoint someone who will be the leader in position if I am not available, but I am not entitled to give him accountable officer status and nor would the permanent secretary do so if I was only going to be away for a short period of time or if I was contactable. We do have that person in place. We have someone who is designated paragraph 7.1 in SPFM that says how you are supposed to do this and we have that person in place. We will reflect on your evidence and look at the supporting documents that you have referred to. I think that that would be helpful. I have just got a couple more questions to ask. One is that we were told by the Auditor General at the hearing where he gave evidence about the report that there was an improvement plan, I think, with a capital I and a capital P. I wonder whether he could just give us your insight into where you are on that journey on the improvement plan. What I call the improvement plan is the same thing as the delight recommendations, the 41 of them. If you have been here at the start convener, you would have known that we have implemented 33 of them and hoping to get to 35 tomorrow out of the 41. We are well on track with that. We do have other improvement plans. There is another one that has recently emerged from the joint training that we have had, which was one of the actions in the first improvement plan. That, I expect, will be adopted by the board tomorrow as well. That is an on-going basis, but we have put enormous amount of energy into following up those recommendations. I will point out that, although we have still six recommendations to complete, there are subsequent two. We have to complete one recommendation before we move on to some of the others. The other recommendations will come. Once we approve the manpower plan tomorrow, further recommendations will start to be actioned after that. My final question is one that we reflected on in the session that we had with the Auditor General, which is that there was a report by consultants with recommendations in 2016. It appears that some of the report and the recommendations that come out of the delight audit this time have got an echo of those issues that were raised back then. I guess that the question that is still lingering in my mind—and again, forgive me for missing the first part of the session, but the question that still lingers in my mind is what confidence should we have as the Public Audit Committee of the Parliament? What confidence should we have that this time it will be different and that the improvement plan that is in place and some of the fundamental issues that require to be addressed and solved will be this time? I would like to draw a very clear distinction between the difficulties in 2016 and the report that is before you now. I listened to the evidence that the Auditor General gave you a few weeks ago and I am quoting. He said that there were similarities between 2016 and 2020 because there were strong personalities, differences of opinion and incongruent individual priorities within the board. That is absolutely true. I think that that is true of every healthy board of an NDPB in Scotland, where you have got this difference of view and the point is how you bring things together. However, the fact that you can describe both the troubles that we are having now and the troubles that we are having then with that phrase does not mean that there is any similarity between them. One of the evidence of evidence for that is the way that the media have reacted, that the media in the Croft and Counties were all over the difficulties in 2016. They are not very interested in this one by comparison. Another one is the staff. When we were at the depths of the problems in 2016-17, our staff satisfaction rating was 46 per cent. Now, when we measured it last April at the height of all of this, it is 65 per cent, which is a record high for us. They are chalk and cheese and they are not the same. Your question is to how we can be confident about whether those things will be cemented. I think that there are two answers to that. One is that we are documenting a lot more. The new framework document has gone into areas that had been left vague before about how my dual accountability works. Documentation is going to strengthen us. The other one is continuity on the board. We know, thankfully, that Malcolm and one of his appointed colleagues will continue beyond the election. I am hoping that some of the elected commissioners will stand and be re-elected. If we can get more continuity rather than breaks from one board to a completely new set, that will also help. I think that I concurred there myself and one of the other appointed commissioners were there for another three years. It is our intention to ensure that whoever is on the board is brought up to speed very quickly of what has happened over the last years and what we are doing at the present minute to ensure that it does not happen again. The continuity of having two of us going forward is certainly a benefit and it puts a responsibility in us to ensure that everybody is aware of what has taken place, what we have now put in place and to ensure that it is carried through. My final comment would be that you described, Mr Barron, that this has been not untypical for what happens in other parts of the public sector. When I read and understand what has happened, there is a high degree of turbulence. The former convener left, the one before that, left under some extraordinary circumstances, which I have not quite got to the bottom of, but there seemed to be some turbulence. Of course, there was a vote of no confidence or a call for your resignation, Mr Barron. Those are not necessarily recognisable as typical instances of how things have been in other parts of the public sector. The questions that we are asking and some of the questions that I am asking are not because we want you to fail but because we want you to succeed, because it is extremely important for those crofting communities and that way of life to be sustained, sustainable and successful. It seems to me that you have a key part to play in that. I certainly wish you well. I presume that there is a continuing relationship with Deloitte or the auditors to help you and to work with you through the improvement plan and to make sure that things get on to a track that is sustainable and will lead to the support that is needed for the crofting communities. Deloitte is working with the Audit and Finance Committee and is also feeding back to Bill in his team. From a board perspective, we have a lot of confidence in our auditors. If you like their help, their experience is invaluable to us. I was listening carefully to Colin Beattie's line of question in Malcolm and Bill. He was talking about where those problems arose from. In European in remarks, Malcolm, you said that much of it was arising from unusual legislation. Could I just go back there for a moment and allow, just for the purposes of the record, to allow you to elaborate on that and make it clear to the committee and everyone whether you are saying that the problems that arose in the Crofting Commission arose from dysfunctional legislation or whether they were from management failures or about both? I think that what I was explaining to start with is that board members assumed incorrectly that the chief executive reported to and was accountable to the board. I think that one of the major issues that arose is that when the sponsor, via the Government, was asking Bill to help them out in other situations, our view as a board was, well, hold on a minute, that is our responsibility. We did not appreciate at the time that Bill being a secondee from the Scottish Government, if you like, reporting structure, was to the Government via sponsor division. That being clarified meant that we were a lot clearer on the roles, responsibilities and who reported where, etc. I think that, as we said earlier, the change in the framework document and I think that one of the biggest changes in that document is that it is very, very clear. The chief executive reports to and is accountable to the board, so that confusion has gone. I think that the board, and again, I think that Bill touched on it earlier, the board are all individuals from a very commercial background, so, therefore, they expect that it would be operating in a very commercial manner, not your chief executive reports. I think that that is where a lot of the problems stem from. That has been resolved now. In making that jump, Nick, why would you not have arrived at that position firstly about concerns about framework and governance and so on, rather than jumping to things like votes of no confidence in the chief executive? It seems to me that that is the wrong way around. Did you raise those concerns with the Government and did you say to the Government that your legislation is not fit for purpose here? Why not? Because the situation never arose, I think that that is the answer to it, the relationships, the way it was working. There never came a situation where something happened that the board would have taken a divergent view. That just did not happen, so, therefore, that understanding did not really exist, I would suggest, for the first four years of the board. It was only when a decision was made, and again, as Bill explained, due to very, very difficult circumstances that the board were therefore surprised that that relationship was not as we anticipated. I think that it is purely and no situation of the reason before that called it into question. The position now, though, has, as the Commission said to the Government, this legislation is perhaps not fit for purpose? Absolutely, the framework document has now been agreed between management, the convener and sponsor. As well as the framework document, I think that the board is a lot clearer now on the roles and responsibilities, not necessarily from a legal or documented perspective, but from an operational perspective, as well. I have got a slightly different take on this. There are two odd things about our constitution. One is that I am not just on civil service terms and conditions. I am appointed by the Scottish Government, so they choose who is going to be the chief executive of the Crofting Commission, and that creates a slightly funny dynamic right from the off. What Malcolm has been explaining is that we have learnt how to live with that legislation, that we have recognised that, although that is an unusual route by which I got my job, my job is to be entirely accountable to the board in exactly the same way as any other chief executive would be. That means that, in future, if they want to change me, then I should respect that, because that is where the accountability ought to be. The other unusual thing about our constitution is the fact that six members of the commission change on one day every five years. That has also brought raised eyebrows about how to get continuity, how to avoid the problem when not too many people don't understand the role at the same time. That is another one that, as the Scottish Government is thinking about, it may not be easy to change that. I would like to finish off, if I may, to follow up on a couple of questions at Richard Leonard, about the improvement plan and looking to the future. There have been several mentions, Malcolm and Will, about the recommendations in 33 out of 41 have been achieved. Who agrees with that? Who agrees that those have been achieved? The board signed off on the last board meeting at that stage. I think that we had 31. Was it 29 or 31? The board at that stage reviewed the report. We reviewed the recommendations. Within internally, it is not just a case of a tick. What we have decided is what has happened over the last six months, all the actions that have been taken. Prior to the board meeting, that went out to the board. The board reviewed it and had the chance to question Bill and his management team on those actions. The board then could turn around and say, yes, they will, however, be audited by dogs. While we as a board are saying yes, we accept that, we can see that it is happening, ultimately it will be deloitte when they come around to do anual audit that will review that and confirm it. What about the community, the Croft and community themselves? Are they seeing the benefit of the achievement of those recommendations? Is it too early to tell? Is it mostly structural internal changes and recommendations that have taken place? When will people see the benefits of the achievement of what is an improvement plan? I hope that the Croft and communities are not too directly affected by that. Indirectly, they will be, of course, because it affects the whole operation from a distracted management, as it were. I think that there is a lot of support from the Croft and communities. They are behind the commission, they want the commission to succeed, and they want us to get around those difficulties, but I do not think that they are feeling directly affected by them. The feedback that commissioners are receiving from Croft and communities is that there are probably two or three incredibly important items for them, and those important items are not included or not part of it. I think that they see that this is an internal document and is to their benefit that the internal, if you like, structure and internal operations of the commission are improved, but it does not affect their day-to-day involvement with the commission. The remaining recommendations that you are continuing to work on, are they the most difficult challenges? Not particularly. For example, there is one of them, which is the longer-term financial planning. We have to get a manpower report, we have to decide the management structure, and then cost that before you can then carry on and do another three or four years of financial planning. The majority that are left are actually subsequent to ones that we have completed. They follow on. The final point that you mentioned is that they will conduct a follow-up audit to check on whether they agree that the recommendations that you have completed are satisfactory. As far as I am aware, as part of their annual audit, they will review the document, which I would expect them to do. If the same day I want to come in for any final questions, no. In that case, we have to the end of our questions for today. Thank you very much, Malcolm and Bill, for all your evidence. We will reflect on all the answers that you have given us. I will look forward to getting the written reports on how you intend to take forward the recommendations of the staffing review, whether the framework was agreed, and the further recommendations that you have implemented after your meeting tomorrow. Okay, thanks very much. I have the opportunity to explain the progress that we have made. So we will now suspend the meeting to allow for a changeover of witnesses. Can I resume this morning's meeting of the Public Audit Committee and introduce agenda item 3, which is a session where we are going to review the Audit Scotland report into NHS NSS services and the PPE report in particular. First of all, I welcome the witnesses who all joined us online this morning. I would like to welcome Mary Morgan, who is the chief executive of NSS, Caroline Lowe, the director of finance and Gordon Beattie, who is the director of national procurement. I would also like to welcome Caroline Lamb, who is the chief executive for NHS Scotland. I think that accompanying Caroline this morning is Richard McCallum, who is the director of health, finance and governance in the Scottish Government. As you are all virtual this morning, could I suggest that if you want to come in at any point, if you put an R in the chat box function and also please note that you don't have to press your own mute and unmute button, the broadcasting unit will do that for you. Our time is necessarily limited and I know that Mary and Caroline are going to give lead-off statements. I suggest that both Caroline and Mary, if you want to bring people in, in particular, to bolster or substantiate or develop any of the answers that you want to give, then you could do that and encourage that person to come in straight after you. Without further ado, I invite Mary Morgan to give us a short opening statement. Thank you, convener, and to the wider Public Audit Committee for welcoming me and my colleagues to the meeting today. We are very pleased to have the opportunity to discuss the reports that you previously mentioned. I would like to extend my thanks to Audit Scotland for its reports and its acknowledgement of the integral role that our organisation has played in response to the pandemic in Scotland. Though the past two years have undoubtedly been the most challenging in the history of the NSS, our teams continue to deliver solutions at an unprecedented rate to ensure the health, safety and wellbeing of the people of Scotland. During the pandemic, we protected frontline workers by sourcing and supplying more than one billion items of PPE to health and social care and established a virtual portal to help process inquiries during periods of significant pressure. We have also established a domestic supply chain for PPE with 88 per cent of supplies coming from Scottish companies, which not only provides Scotland with more resilience but also an added economic benefit. We have played a vital role in Covid testing by establishing 94 testing centres across the country, along with three dedicated regional hub laboratories as part of the NHS in Scotland, along with all of the associated procurement, legal and digital services that it has required. We swiftly established the national contact centre to deliver the contact tracing programme, recruiting and training more than 1,200 contact tracers of our own and supporting an additional 2,000 across partner organisations. Our digital and security team has delivered exceptionally. Initially, by rolling out Microsoft teams across the NHS in Scotland, revolutionising our work environment and ensuring that thousands of NHS staff can continue to work safely from home. They provided security assurance and management expertise for the Protect Scotland app, as well as developing and rolling out both the Tech in Scotland app and the Covid vaccine appointment scheduling system. National Services Scotland has supported the build, stocking and decommissioning of the NHS Louisa Jordan field hospital. We have provided legal guidance across numerous aspects of the pandemic response and continue to play a key role in the Covid vaccination programme. Although there have been exceptional achievements for our organisation, we acknowledge the points raised in the reports about variations of standard processes and aspects of transparency when it came to procurement and the awarding of contracts during this time of extreme pressure. We take on board the recommendations, particularly regarding consistency of recording and publishing documentation. To address that, I can let you know that we have fully reinstated the standard processes for regulatory procurement, contract approval and notice publication. Once again, I thank the committee for having us here today, and we welcome the questions that you will have. Thanks, Mary. I invite Caroline Lamb to make a short opening statement. Thank you very much, convener. I welcome Audit Scotland reports and the opportunity to give evidence to the committee today. The last 22 months have been exceptional in terms of the demands placed on our healthcare services and in turn the response of NHS and social care staff has been nothing short of extraordinary. I would like to place on record my thanks to NSS for, as the Auditor General puts it, the pivotal role that they played and continue to play in that extraordinary response. As reports set out, we responded at pace to an immediate threat and one that has evolved and continues to evolve over time. This has presented significant challenges and a response to that we've seen amazing innovation and progress. PPE supplies were not only sustained during a period of unprecedented global demand, but a resilient supply chain was established, including domestic PPE manufacturers. We've seen the establishment and continued operation of our national intestine protect programme, the opening of an entirely new hospital in just 20 days, and quickly repurposed to provide outpatient capacity and vaccinations, and of course the delivery of vaccines to millions of people in a matter of months. Those achievements are remarkable, but as the report sets out, there are lessons to be learned to ensure that we're best placed to respond to the on-going and future challenges. I'm committed to doing just that, to embedding the innovation that we've seen as we continue to remobilise our NHS and continue to respond to Covid and the new variants that we see emerging. I'll be very happy to answer any of the committee's questions. Thank you very much indeed to both of you. I've got a quite particular question and then a more open question to begin with before I ask other members of the committee to ask the questions that they've got. My first more particular one is just on that issue around PPE supply chains. We've looked at or at the growth from zero to 88 per cent in the percentage of domestic supply of PPE, and I think that that's been one of the more interesting consequences of the pandemic that we've been living through. I wonder whether, and I think that this is probably more for Mary Morgan, I don't know whether you can tell us what the balance of trade is now. Are we still importing some PPE and if so, where from? We're also interested as a committee, Mary, in whether, given the growth of the PPE supply chain in Scotland, whether it's in a position to perhaps supply into international markets, including the lesser developed parts of the world that perhaps need PPE at a time when we appear to have at least as much as we need or possibly even looking at a surplus. Mary, do you want to respond to that? Yes, thank you. I'll turn to Gordon Beattie in a moment or two who will be able to give you some more detail in and around that. The success of that has been largely down to, I think, two pieces of work. One is collaboration, particularly with Scottish Enterprise, in helping to secure Scottish markets. In my statement, I referred to the opening of a portal where many people step forward with their capabilities in developing not only PPE but testing capacity. That portal was critical in helping the procurement teams to assess the potential that Scotland had across its manufacturers. Working together with Scottish Enterprise, we were able to harness the Scottish capability. If I turn to Gordon Beattie, he can give you a more detailed answer about the potential for international markets. Good morning, everybody. We've been working closely through the supply chain development programme with colleagues in Scottish Government and Scottish Enterprise and our suppliers, who have stood up magnificently and fallen to the emergency that came before us. We will continue to look at our forward forecasts. We will continue to seek best value in high-quality products. We really want to support our Scottish businesses in that endeavour. The Scottish businesses are looking to use the springboard for exports. In some cases, they have been successful already. We have had some good news recently from one of the suppliers of specialist masks, who have developed a transparent mask. That mask is now being used in Scotland and has been deployed for our health boards. The final assessment can be done in England, and, as I understand it, export orders into Europe. That is a great example of the initiative here being a springboard for exports. We obviously do not have a direct role in that in terms of the success of all those suppliers. We are helping as best we can to enable that success. Thank you, Mr Beattie. That is helpful. As I said, the other question is a bit more general, but, again, it is directed to NSS, to reflect on one of the conclusions in the report, which I think was on paragraph 13. The conclusion was drawn that NSS is now heavily reliant on non-recurring funding to deliver services. We are a week out from the Scottish Government tabling its budget before Parliament. The Auditor General had cautioned that reliance on non-recurring funding—I think that the quotation was—limits the ability of NHS and NSS to effectively plan and resource future developments. I wonder whether, Mary, you could start by telling us whether that funding uncertainty is real. Are there areas of your work that you have been forced to deprioritise because of that? What are the risks entailed in doing that, if that is indeed what you have been required to do? The first thing that I would say is that many of our services are very often non-recurring in nature. Clearly, as we have gone through the past couple of years of the pandemic, it is not clear what the longevity of the pandemic response—somewhat business as usual in that regard—might look like. So, a lot of our funding and financing related to the Covid response is by its nature recurring, and we are actively planning with what that future might be. Clearly, it is difficult at this time to make assumptions in and around that. We do recognise that we need to transform, and there have been opportunities presented through Covid around new ways of working to do so, optimising a digital first approach where possible and realising the benefits of reducing travel going forward. We have not had to pause or delay or stop any of our services because of funding difficulties or funding constraints. That has more been about the mobilisation required through Covid and the prioritisation of that, but, perhaps, I can ask Caroline Low, who is our director of finance, to give you a bit more detail about what we are doing in that space. It is true to say that, if we go back to 2015-16, our baseline funding was £317 million, and that represented 80 per cent of our total funds. In 2021, our baseline had increased to £337 million, but it was only 43 per cent of our overall funding. As an organisation, our gross expenditure is £1.3 billion. The significant amount of what we do is passed through and paid for services from health boards. As an organisation, we have a large reach, but we are underpinned by a relatively small proportion of that through baseline funding. We need to transform as an organisation and we have a sustainability programme under way. Our services are all planning for the future to see what we can do differently and how we can embrace hybrid working so that we can be both financial and environmentally sustainable. Importantly, in a digital-first environment, how do we deliver our services differently? We are confident that the underlying deficit that Audit Scotland identified in the report, which is around £13 million, we can recover that by doing things differently. We look forward to continuing the strong working relationship and partnership that we have with Scottish Government finance to explore the aspects of our services that have been funded non-recurrently for a long period of time and to convert some of that to baseline. Those conversations are currently on-going. Mary mentioned our Covid services and the Covid response and the extent to which we will have to maintain those services on a long-term basis. It is important for us to be able to confirm that position so that we can provide certainty to the staff that we have employed to deliver the excellent services that they are currently delivering and to provide them with continued certainty of employment. However, I can reassure the convener that those discussions are on-going with Government and we are confident that we will get to an agreed position very soon. We have funding confirmed to September of next year and that gives us enough space to plan what that future looks like. Thanks very much indeed. If time permits, we will come back to revisit some of those questions around the funding of NSS. I want to turn now to Craig Hoy, who has some questions to put to you. Thank you, convener, and good morning. I just want to draw down a little bit into the longer-term approach to PPE supply and demand and look specifically at how you are working with partners to develop the capacity for both the on-going normal needs and perhaps for another pandemic should something like that occur, but just to capture really where we've got to, perhaps this is one for Mary. How has NHS NSS learned from the process that you've just been through, not so much specifically what you've learned, but what processes have you gone through to capture the learning and how are you making sure that what you've learned is baked into future planning? We have already got to additional new warehouses to increase our stock and increase our supplies and are actively looking at what stock we retain on a business as usual basis, so not necessarily increasing all of our stock lines, depending on what their turnover is. There does need to be turnover in play, so a lot of the data that we've used around inventory management and inventory control has been critical to supporting those pieces. Perhaps Gordon can tell you more specifically about the detailed work of the team in gathering data and working together with Scottish Government colleagues to identify individual lines that may be needed going forward. Gordon, I don't know if you want to come in. Yes, that will do, Mary. We've done a lot of work on our forward planning arrangement, so it's one of the reflections that we've had on lessons learned from our experiences to improve the way in which we understand what the future pandemic might look like and to have good forward planning arrangements and demand profiles of our key products that we require. That's something that we've got a really close relationship with the Scottish Government and the Public Health Scotland and others who are involved in that kind of forward planning. We have in place good models that allow us to predict what we will need. That allows us to get well ahead of the game in terms of forward buying. We have, as Mary said, established two new large warehouse in Scotland, and we have very good stock of the key products that we think we will need in the future. What we're also doing is working across the public sector to understand what the needs will be on a wider footing and to work with colleagues in the public sector and the Scottish Government in terms of future pandemic readiness. That includes the role in which we would play in providing a national stockpile and accessing that national stockpile. That work is all under way. One last thing that I would add in in terms of data that has been mentioned is that we've got really good data in NHS Scotland. One of the things is that we have a great single finance system, a great single procurement system, but one of the areas where we had a need to improve was the visibility of stocks at a local hospital level. I know that, last year, we've implemented the purchase of a new system that provides with inventory management at an individual hospital ward level. That's been rolled out at the moment, and that will give us a great deal of extra visibility in understanding where we have to supply a product to make sure that we have the products that are essential for the need. That's the key elements of work that are on going at the moment. How do you go through that process of balancing the need for the stockpile and the cost of the stockpile and the fact that I'm assuming that those products are perishable? Are you moving more towards a sort of just-in-time ordering system or is the stockpile important, just bearing in mind that the absence of a stockpile was something that was criticised at the beginning of the pandemic? Yeah, it's certainly a balance to be struck. What we found in the beginning was that the stockpile was designed to have an eight-week period to allow us to replenish and, clearly, with the collapse of the international supply chains as referenced in the report, that became a real issue for us to try and ensure that we had supplies coming in in time to replace that stockpile. We've increased our stock levels and we have good stock levels at the moment. We're well ahead of that. What we have to do is to make sure that we have a shelf life as we turn those stocks over. That's one of the discussions that we're having about the role across the public sector in Scotland of a national stockpile. More areas can access it, and, therefore, we have more of a stockpile current that allows us to maintain stock in shelf life. Clearly, the pandemic is a fairly rare occurrence, and there will be times when we'll have stocks that we'll need to try and use before they run out of date. That's just something that we're working with and thinking through as we look to the future. Caroline Lamb and Mary Morgan want to come back on that, but Caroline Lamb first. Thank you very much. I was just going to add to that that, obviously, the Scottish Government has a key role to play here as well. We've been working with NSS and with other partners across the public sector to learn the lessons from the pandemic so far, and to take those into future PPE procurement. That includes absolutely looking at the work that Gordon just described to you around understanding of the data and being able to be clear about what we need to stockpile and how we predict demand and supply, but also thinking about the further development of Scottish manufacturing capability, thinking about innovation and opportunities for further innovation, being clear about a policy for PPE provision to primary and social care providers, and very much focusing on those lessons learned. So this is all wrapped up in the PPE futures programme with a view to developing a strategy which we hope will be produced by the end of this financial year. Thanks. We've spoken a little bit about the importance of data, and one of the pieces that you've asked about is how have we learned some of the lessons. I have to say that some of that has been about a dynamic process and how we've applied learning early on from PPE across other areas. We've worked very closely with Public Health Scotland and our digital services to produce more real-time dashboards and access to data at the point of need so that people can access their own data and have that wider communication. One of the things that we learned very early on is about that communication and shared intelligence about what is happening. The PPE team national procurement of their colleagues developed a daily stock bulletin that went out across NHS Scotland and our partners. We learned from that experience and replicated it, for example, in testing and beyond. More laterally, with the vaccination programme, for example, we're using teams channels to improve those communications. A lot of the lessons that we've learned are around the PPE provision, around stop piling, and we need to consider those going forward because we remain in that pandemic response piece. However, a lot of the learnings have been dynamic and have been replicated and tested and quite innovative in the way that we have moved forward. We need to have a bit of time for evaluation and what it might look like when we're post-pandemic. Obviously, one of the phrases that's come up is partnership, working in partnership and the capacity building that's taking place within the domestic PPE industry. Is that sustainable and does that pivot towards buying domestic product? Are we seeing that being replicated by health services internationally? Is that perhaps one for Mary again? Is partnership and working definitely sustainable? I believe that it is very enabled by our new ways of working. We found that using teams approaches and some of the mechanisms that we pulled in place is much easier to have wider communications with people and to work together with them. I'm not sure about the sustainable on an international basis. The work around future procurement strategies—we have a procurement strategy—we also need to consider the carbon footprint of our purchasing and part of that strategy is to buy locally wherever possible. However, we will continue to work with our partners to make sure that we are sourcing locally to Scotland wherever we possibly can. That's embedded within the procurement strategies that are published. I want now to invite Colin Beattie to ask some questions. It's already been touched on the very credible situation where there was no PPE made in Scotland prior to the pandemic, but now 88 per cent of all PPE, excluding gloves, are manufactured here. What kind of support was given to Scottish companies? Was the financial support given? Were there specific skills here already to develop this? How did this come about? I don't know. I'll pick somebody at random, Mary. I will again defer to Gordon, who has all that detail to hand. There were many assessments that needed to be undertaken. We had some of the data and figures of the number of people who came forward offering their services and the number of companies that offered their services. There were a considerable number of those who went through an assessment process. We worked jointly with Scottish Enterprise to carry out quality assurance and assurance processes with them. Clearly, financing cost was part of those contracts, but Gordon can let you know some more detail about what was actually gone through by way of process. Thanks, Mary. I did lose a wee bit of reception there just in the question, Mr Beattie. I hope I'll pick this up correctly. When we looked at our supply chain in place, we worked closely with our contracted suppliers and known suppliers, and what we were trying to get there was access to stock that was available. That was the first phase of trying to combine stock and bring that in. It came quite apparent that the stock was not available once initial range of purchase had taken place, because in the world market, where everybody was chasing the same stock, what we had to do next was to try to secure production, and some of that was secured overseas, and some of that production became apparent because it was secure in Scotland. We went to suppliers who were known to us. In one example, supplier who was an existing provider of masks to the NHS Scotland, and particularly the specialist mask at FFP3 respirator masks, which had already been fit tested for use by a lot of our staff and were a preferred product to be used. That gave us a point of reference and a point of discussion on that supplier. It became apparent that the supplier could not access the overseas supply chains, but they could ensure that capacity in Scotland. That was the initiating element of talking to these particular suppliers and building that capacity in Scotland. At the same time, for a number of the different PPA examples that we have, that has led us to have a good response from our Scottish businesses and the abilities that are mentioned already to deliver 80 per cent of our PPA from Scottish sources and, as I said, with the exception above. That is the process. All of the suppliers, clearly, we do full checks on in terms of their standards, in terms of their factory standards, ethical and fair wage use, etc. All of that is done and companies that we were using from overseas initially, we work closely with Scottish Enterprise colleagues to undertake those checks as well. We had a good level of due diligence on the suppliers that we chose. Were there any specialised areas of PPE that we cannot produce here in Scotland? Is that the reason why we are not 100 per cent being ambitious here? The main ones are gloves. Gloves are typically produced in the Far East. We have very little capacity in Europe, never mind within the UK. However, we have some shoots of new production in the UK, and we are engaged with companies that are trying to set up business in the UK. There are some options that are emerging, Mr Beattie, but at the moment, we have the predominant of the PPEs that come from Scottish sources. Clearly, at the moment, we are some way from being able to say that the pandemic is over. How resilient is our supply chain in terms of PPE? As far as we can project, is it reasonably secure? Yes. We have established good relationships through one of our master vendor contract providers, and they have a very good supply chain that includes the Scottish-based organisation. We continue to have a very close relationship with that master vendor and their supply chain to ensure that we have that capacity in place. At the moment, we have secured good stocks of PPE, and that is getting us a long-term projection, certainly over this next year. What we are doing now is keeping our eye very closely on what is emerging at the moment, working very closely with our colleagues in terms of that future pandemic modelling and ensuring that we have the future supply orders in place and that production capacity is secured. That will include discussions through that master vendor and down to our production Scotland. Given the changes that are happening with the virus that we are dealing with and so on, do we have confidence that the type of PPE that we are producing, the type of PPE that we might need in the future? Are we reasonably satisfied that we can secure those? I know that that is a little bit of a hypothetical question for the future, but do we have that flexibility to be able to affect the changes in PPE that might be needed? I think that that is yes. We are having close discussions with our supply chain partners. We know that we can ramp up capacity, and we can ramp up capacity in Scotland, for example. Those are the discussions that are going on just now, and we clearly are keeping very close discussions with our infection prevention control colleagues in terms of any change to guidance that may occur, and we can react to that. The discussions that we are having on the supply chain is trying to maintain that flexibility and the ability to ramp up what is required. The convener in his opening question has talked about the export markets. Are we aware to what extent export markets are, I would not say, important, but maybe significant in maintaining the viability of the local supply chain? In other words, the production line is it geared just as Scotland in a wee bit of export, or does it rely for its viability on a proportion of exports? Gordon, I am going to pick you again. I think that the answer to that really is that it is not just the NHS or health that these items can be used for, so the companies will have a broader marketplace to service. They know that their business is much better than I do, and we will continue to help and support them in developing products, and I hope that that will allow them to have the advantage of exporting to the worldwide markets. However, it is down for the individual companies to support it, and Scotland has emphasised to me to ensure that they can access the markets and be successful. I know that we are trying to modernise and improve the efficiency of their equipment, et cetera, to make a good value proposition. Obviously, one of the important byproducts of this, apart from the PP itself, is the fact that it has created jobs here in Scotland. Do we know what proportion of these jobs are permanent, and if that is likely to continue? I cannot tell you what proportion are permanent, but I know that there are about 470 jobs that were created. A major chunk of those were created in the increasing gallery, and that company is investing heavily in that production, in that workforce, and, again, that is the look towards their future business, exports, et cetera. That is a great example of the kind of springboard that would be able to create from the NHS Scotland business and, indeed, other parts of the United Kingdom, in terms of purchase, and then a springboard into exports. It is a good example that we have seen there in that particular company. Just a final question that you may or may not be able to answer. Obviously, the companies producing PPE have geared up their production lines in order to produce the quantities of PPE and the types of PPE that are required. That will probably not continue at this pace forever, at least we hope not. At some point, it will hopefully settle back to what might become a normal level. Do we know if those companies—and I am thinking of the resilience here—will be able to repurpose their production lines into other areas at the end of that? Is it a case of, well, that we are going to have to lay the surplus people off and reduce production? I hope so. As I said, some of the products are not just used in health, they are used in industry and other specialised chemical industries and laboratories, et cetera. I do hope that they can do that. For example, I mentioned earlier on the transparent masks, so that is already a repurposing of one of the production mechanisms in the business and the precinct alleyway to repurpose that equipment to make this specialist mask, which allows the user to see that in the mouth and help where people require to see somebody else speaking. That is a great example of already a few of the things that we need to think about. Thank you very much indeed. I am going to now invite Sharon Dowie to ask a couple of questions. After that, I will ask Willie Coffey. Just a question on the environmental impact of PPE. The Auditor General's briefing paper recommended that when developing a future approach to PPE supply and demand, the Scottish Government and NHS NHS should consider how to support suppliers to develop more environmentally sustainable PPE. I think that we have probably all seen masks lying in the street and in bushes and in fields. What is the current environmental impact of PPE and also what work is being undertaken by the Scottish Government, NHS, NHS and partners to develop more environmentally sustainable PPE and what are the challenges associated with it? I do not know who wants to answer that one. I will try to answer in two parts. In terms of the sustainable future, we have initiated an innovation competition through colleagues in NHS Tayside. That competition is on the go just now, and that is inviting in companies with innovative ideas and solutions with regard to sustainable and reusable PPE. That will carry on over the next few months. We expect to see the results of that competition through a renovation approach over the early part of spring. We have already introduced some items such as laun dribble gowns. We have brought those in quite early on in the pandemic. That is a bit of the pressure of the full non-sterile gowns that you have to wear if you are doing aerosol giant procedures. That is in place already. They can be used up to 50 times and can be laundered through our NHS laun dribbles. They are there at the moment. The environmental impact is that we have seen an increase in tonnage of clinical waste. Typically, in a hospital, that has gone up about 20 per cent. The community services that we previously used to a great extent have gone up a much higher percentage. We see the tonnage going up, but we also see the volume going up. We can imagine that those things are quite light and they add quite a lot to bulk. In some respects, it helps the waste processing. All of our clinical waste goes through our clinical waste processes. That reduces the density of waste, which makes it easier to go through machines and shredders and processes for treatment, but it has increased the volume. You imagine that we have the big 700-litre, wheelie bin things that we use in hospitals. They would take about 75 kilos and the quality would be about 45 kilos now. That increases the kind of movements to deal with that waste. There are a couple of things that are directly impacted on that. We are working closely to understand how we can reduce that and improve that in the future. Does anybody else want to come in on the question of the environmental impact of the types of PPE that have been manufactured and used? I invite Willie Coffey to ask a couple of questions now. Willie, over to you. It is probably too early to gaze ahead beyond the pandemic, given where we are, but I invite Mary and Caroline to say a few words about the remobilisation plan that you have been asked to work on. Mary, you gave us some great examples in your opening remarks about some of the achievements that we have managed to see. You particularly mentioned the digital aspect of using teams and so on. It is part of the remobilisation plan and the getting back to business as usual. Will we retain some of those good elements of practice that were forced upon us but have turned out to be very advantageous for the way that we all work and the staff are having to work? Will you give us a little flavour of how you see that going ahead and whether we will retain the best of what we have seen that came out as a result of Covid? Yes, absolutely. We have undertaken a programme called Future Ready, which has seen a tremendous engagement from across our staff internally. In fact, yesterday I had a Future Ready question and answer session and we had more than 900 of our staff participating in that process. The positive aspects of staff engagement that we have experienced around working virtually and digitally has been really positive. What our staff have told us is that around 90 per cent of them would prefer to continue to work from home into the future. Some of them are not wholly working from home but in a hybrid type scenario. We really are working towards making that happen and making it so for them. We have all processes in place. We rolled out all of the equipment that they would need from that. There are some things that we need to iron out and that dynamic process of risk assessment and learning is on-going, but really we do see ourselves embracing that. Clearly within NSS we have a number of services that are inseparable from the people who deliver them. For example, our warehousing staff and logistics staff need to be in the warehouse in order to be able to make the distribution happen. We have a substantial amount of front-line staff in the Scottish National Blood Transfusion Service who have had to change their ways of working. What we are seeking to do is harness the best of their learnings to make sure that their work environment has improved. For example, the Blood Transfusion Service has been able to bring in a necessity brought in an appointment system. That has had some real benefits for donors who know when they are going through the process of blood donation, but it also means that we can match the pointing of people with specific blood groups to the demand that we are seeing for blood groups across the sector. We are keen to embrace the changes that we have experienced and to continue to work for them because it has been so positive. The other thing that is perhaps unseen—I was speaking to a member of staff—we need to learn how to lead in different ways. Many multinational companies have already had leadership from a distance, but it is new to us in the NHS and in our working environment. I am really amazed by how staff have felt empowered and able to step forward and bring forward their new ideas. I was speaking to a member of staff the other day and we are going to hear more about her story. When she joined us just about a year ago, she identified the need for managers to be able to get together and to have a community of practice. She developed a team's channel called the Management Hub that offers opportunity for training for shared experiences. We have a water cooler place that opens up in the morning that people can drop into and have informal conversations that we may have been missing. We are testing and trying out new ways of working that support our staff in delivering their services in different ways. One of the things that I would really labour is that we have been able to be much more accessible to our staff. There is no way that we would have been able to have 900 people in one room for an hour in a question-answer session. To begin to see them having the dialogue and answering their own questions as a community has been phenomenal. That is pretty amazing. The technology works did it with 900 people online at the same time, did it? It is a great point that you make about inevitably because of the situation that we were in, we had to pretty rapidly develop new skills and expertise as a consequence of the situation that we found ourselves in. Do you very much see that it is not going to be a one-off and we will go back to normal? You are going to retain, enhance and embrace all those skills and expertise as best you can. I would imagine that it will inevitably lead you to changing the way you want to work and the staff want to work in the future and to, hopefully, embed those practices and skills and experiences as you go forward. Yes, I completely agree, and that is what future ready is all about. It is about taking a digital first approach to the way that we deliver our services and really empowering staff to make their decisions. Work is not necessarily or not always where you do it or when you do it. It is what you do and what you produce, so we are well rehearsed on that and we have teams who are willing to take that forward. I think that it is not just something that we would like to do. It is something that we need to do. We made a reference in a low-maid reference to the fact that we need to transform and change because there are financial benefits to this way of working. We no longer have people travelling up and down the M8 corridor between Glasgow and Edinburgh to attend a meeting, so we are more productive in our time and we still have all the benefits of delivering services in a new way. It has also allowed us to collaborate much more freely, so the fact that we can all jump on and off a team's meeting and still get work done is really positive. It is not just a wish and it is not just from an experience point of view. It is actually something that we need to do for both our financial sustainability and, indeed, for climate sustainability going forward. I recognise that, convener, on one of those who also does not need to run up the M77 and the M8 every day to come to Parliament. It is a huge advantage for me. Finally, I want to invite Caroline first. Yes, thank you, Caroline. I will expand a little bit on what Mary said, but I will apply that across the context of the broader NHS and social care system. I think that digital, the use of digital technologies and having really timely access to data are some of the key things that we have learned during this pandemic and that we have really benefited from. Having that daily access to data around what is happening with the pandemic has been critical to informing our decision-making and the public messaging. As we start to think about what implications that has for us going forward, Members will be aware of the significant pressures that the NHS and our social care systems are experiencing at the moment. We announced a £300 million package of investment in October. Key to understanding the impact of that investment is having that daily data in relation to just managing the system. It is management information around where we are, around which of the bits of the system, because this is a complete system. We focus on A&E weights and they are really important, but they are a barometer in relation to how the rest of the system is working. Increasingly, we are becoming very heavily dependent on and using data in a really good way that helps us to understand what we need to do to make improvements to the system. In the short term, that is working. In the longer term as well, I am thinking about our NHS recovery plan that was launched in August. We are absolutely looking at some of the digital innovations that could take things like nearly the video consulting system that was available. It was tried and tested pre-pandemic, but it was not really being used. Now it has been rolled out and has been enormously successful, not just in enabling people to engage with their GPs and enabling people to see their consultants, but also being used in care homes and enabling people in care homes to get medical consultations at a point when it was difficult for people to move around and also to keep engaged with their families. There are lots and lots of things that we can start to deploy digital technology and innovation to support that recovery. Telecare is actually probably one of the most common care supports across Scotland. As that gets transitioned to digital technology, it provides us with a real opportunity to be much more proactive in starting to predict when people might have issues such as falls, for example, and therefore be able to take preventative measures that stop people from having to engage with acute services in the first place and enables them to be supported to stay in their own homes, which is really important. We have learned a lot in terms of what we have been able to roll out really quickly in the face of a threat, but we have also learned a lot about how quickly we can pull together existing data sources and join them up. Then there are also the opportunities from the testing network that we have developed. Unfortunately, that is still very much live and in use in terms of combating both the old variants and the new variants of COVID. We are also in the background planning for how we can use that network of infrastructure and how we can use it to support the health of the population going forward. There are some really exciting opportunities there. Thank you. Thank you so much Caroline and to Mary for those responses and thank you to all of the staff that have done such a magnificent job for us. Thanks, convener. Thank you and so say all of us. We've got a limited amount of time this morning and so I've just got a couple of very short final questions, but just to say to Mary and to Caroline, if there are points you feel as though you've not had an opportunity to make that on reflection or you want to make, then please don't hesitate to put something in writing to us to capture anything that you think would be useful in our deliberations. Mary, you said in your opening statement about the procurement arrangements and the legal framework and all that. I think that you said that it was all back to normal. Obviously, as a public audit committee, we're always concerned to make sure that contract notices are uploaded within the legal framework, that they're published and they're published within legal time frames. I wonder Mary, could you confirm, almost in a yes or no answer, whether that is now the case? Yes, it is now the case. Some of our notices were delayed and that was surely down to volume of work and pressures placed upon the teams that are there and the rapidity at which we were doing things, but we are all now completely back into normal ways of working. One of the other things, Mary, you mentioned in your opening statement, although Caroline Lamb might also have a view on that, was the Louisa Jordan facility, which was put together in a rapid time frame and was a 300-bed facility with the option of expanding to 1,000 beds. One of the things that just occurs to me as we approach the pressures of winter is what's happened to that equipment? Where have those beds gone? Where has the rest of the supporting equipment ended up? I don't know whether Mary or Caroline can answer that question or both of you. We maintain an active inventory of all of the equipment in all the parts and some of those pieces have been distributed already to hospitals and some of the items are stored in our additional two warehouses. I'm not sure if Caroline wants to come in and make any further comments in that regard and if you want further detail specifically around it, Gordon Beatty can let you know exactly what's gone where. Thank you, Caroline. Do you want to come in? Yeah, absolutely. Again, it's an absolutely tremendous job done in establishing the Louisa Jordan so quickly. I am hugely grateful that we didn't have to use it for Covid patients. However, it was great to have that facility and we made enormous use of it for our patients for diagnostics and indeed for the vaccination programme. I think Mary's answered the questions in terms of what's happened to a lot of the equipment. I guess, convener, you would expect me just to remind the committee that actually it's not just all about equipment, we also need to have the staffing to support those beds and that equipment. We are in the context of running not just a health service that's trying to cope with a lot of backlog and unprecedented demand at our front door and still running the biggest ever vaccination programme in Scotland with an additional acceleration that's just been announced. Staffing is a bit more of a staffing that we need to focus on at the moment rather than the equipment, but it's great to have that spare equipment as well. Okay, thank you very much and on that note, I won't bring in Gordon Beattie, because I think we'll finish on that. I just want to say that I think that Carol Lam's point is absolutely correct and one of the things which this committee does concern itself with on a regular basis is workforce planning. If there are staff shortages or staff issues, then that's something that we are keen to learn about and to encourage organisations to address and keep as a priority. As Willie Coffey said, without the staff, the efforts would not have been as monumental as they have been and will continue to need to be as we look to the future. I thank everybody once again for joining us this morning to give us evidence. Mary, Caroline Gordon from NSS and Caroline Richard from the NHS and the Government directorate. Thank you very much indeed for your time this morning and for your evidence. It's been very helpful to us. I'd now like to close the public part of this morning's meeting and go into private session. Thank you.