 I welcome everyone to the 27th meeting in 2015 of the Infrastructure and Capital Investment Committee. Everyone present is reminded to switch off mobile phones as they affect the broadcasting system. As meeting papers are provided in digital format, you may see tablets being used during the meeting. No apologies have been received for today's meeting. Agenda item 1 is a decision on taking business in private. At agenda item 1, the committee will consider whether to take item 3 consideration of options for an inquiry into the circumstances surrounding the recent closure of the fourth road bridge and item 4 consideration of its work programme in private. I propose that, given the significant public interest in the closure of the fourth road bridge, we take item 3 consideration of our approach to an inquiry on that issue in public. Are members agreed? Members are agreed. I would now ask if members are content to take item 4 consideration of our work programme in private. Are members agreed? Members are agreed. Agenda item 2 is Scottish Water annual report on accounts 2014-15. The committee will take oral evidence on Scottish Water's annual report on accounts for 2014-15. I welcome from Scottish Water Lady Susan Rice, chair, Douglas Millican, chief executive, Peter Farrah, chief operating officer and Joanna Dow, chief executive of business stream. I invite Lady Rice to make a short opening statement. Thank you very much, convener, and thank you for inviting us to give evidence today. I'm delighted to be here for the first time as chair of Scottish Water, and you've already introduced my colleague, so I don't need to do that, and thank you. You'll know I became Scottish Water's chair in June, taking over from Ronnie Mercer, and I suspect he was here a number of times and you came to know him well. I hope the same holds true for me. One thing I've been quite struck by in my first months with Scottish Water, and I've been saying this almost to anyone I speak to, is just how customer-focused the company is. Many companies use those words. This company actually delivers it, and I've really been struck by it. I'm very pleased to report that Scottish Water has continued its strong performance, achieving its highest-ever customer service and customer satisfaction. The business is now one of the top-performing water companies in the UK, and we recently won the Business Insider Award for Scotland's best large employer. Two independent reports have also highlighted our progress over the last five years in delivering high-quality services for the people of Scotland, with levels of customer service now matching the leading companies in England and Wales. I'll just give you a quick synopsis of some of those headlines, because this performance includes a 31 per cent improvement in standards of service, a 12 per cent increase in customer satisfaction, achieving 92 per cent, a 25 per cent reduction in the amount of water leaking from pipes, a 60 per cent, 60 per cent reduction in pollution incidents, and 950,000 customers benefiting from improvements to their water supply, including the upgrade of nearly 3,000 kilometres of water mains and improvements at 58 water treatment works. I have to say, because I'm so new in, I can boast very happily because I can't be given any credit for this very good performance. My colleagues get the credit. When we last appeared before you, it was to talk about plans moving forward, and as of April earlier this year, our new journey began. We've now entered, as you know, the next six-year regulatory period, with a plan that's had strong customer input and challenges us to turn their expectations into reality. You'll be aware that charge levels are crucial for our customers, and one of our key drivers has always been to increase service levels but also reduce costs at the same time. Our customers have told us they want stability in their charges and we're responding to that with prices that will fall in real terms across this period. In addition to this, our customers have challenged us to move the bar even higher in terms of service. We've introduced a new customer experience measure, which, together with new tracking and monitoring systems, will enable us to react quickly and make changes far faster than before. We're continuing to deliver significant levels of investment with £500 million a year to further strengthen Scottish Water Services. These are aimed at continuing to improve drinking water quality and environmental performance, boosting the resilience of our water network, reducing the number of customers potentially affected by sewer flooding and taking action to reduce our carbon footprint and create an increasingly sustainable business. To achieve this, we've introduced a new delivery model and we're working in partnership with three new alliance partners. We've also appointed a framework of smaller rural contractors to support our alliance partners and our in-house teams at a local level. This investment programme will continue to support construction jobs and create apprenticeships right across the country. As part of this investment, we've started work in Glasgow to deliver one of our most unique projects, a £100 million tunnel, which will be wide enough to fit a double-decker bus—I assume that means it's high enough too—and will be the longest tunnel in Scotland. We'd be delighted for the committee to visit the site next year to see this genuinely unique investment scheme. I switch hats very quickly, and having told you about Scottish Water, I'd now like to speak about business stream. I'm very pleased to say that business stream as well has steadily increased customer satisfaction levels over the past seven years, achieving our highest ever satisfaction levels this year. By introducing innovative services supported by continued investment in customer service improvements, we've helped customers to save over £133 million to date. However, that's not to say that we haven't faced some significant challenges over the past year. In addition to downward pressure on retail margins, competition in the market has also greatly increased in part due to the impending market opening in England, which has encouraged other retailers to test the market north of the border here in Scotland. I would note that this is at the time when we can't yet do the same thing south of the border. We were very disappointed at the outcome of the recent public sector tender as well. We lost by the narrowest of margins on cost and scored highest on service, and while we accept the decision, you can probably understand our disappointment, especially given our strong track record of delivering savings of over £36 million to the sector over the term of the existing contract. Despite these challenges, however, we're very much looking forward. Over the past year, we've focused on preparing ourselves for a more competitive future, both in Scotland and in England. We've organised our business to make us more responsive to the needs of all of our customers. We've identified new ways to increase both revenue and profitability. We're building a pipeline of quite exciting leads and opportunities in Scotland and in England, and we're looking forward to the English retail market fully opening finally in 2017, which will become a key component of our future commercial growth plans. Our experience in operating in a competitive market here is already paying off, as this summer we successfully secured three House of Fraser stores, including their flagship store in Oxford Street in London. We remain the leading supplier in Scotland. We'll be looking to build on that position while acquiring more customers in England, ahead of and beyond market opening. By continuing to offer innovative services and maintaining high standards of customer service and competitive pricing, I believe that, while we're certainly facing challenging market conditions, we're ideally placed to take advantage of the opportunities that lie ahead. Thank you very much, and now we're quite happy to take questions. Thank you very much, Lady Rice, for that opening statement and also for your invitation to the committee to view Scottish Water Facilities first hand. Perhaps I could kick off by asking, you outlined the high level of performance of Scottish Water in your opening statement, and you referred to a 31 per cent improvement in standards of service. What exactly are you measuring when you quote that figure? I'm measuring a complex suite of measures. Peter, you're looking at me, so do you want to give some of the detail? We measure customer service in a measure called OPA, which is overall performance assessment. This was a measure that was made up of 17 different performance measures, all weighted and turned into a score. That score was first implemented in the English and Welsh companies a number of years ago, so it was a great benchmarking tool to be able to compare service across the whole of the water sector. We've continued to improve our OPA score over this period. In fact, the 31 per cent that was referred to refers to that OPA score, which was 306 at the start of this regulatory period, and ended up last year at 400. Just to give an indication of where we've moved in this period, when Scottish Water first started this OPA measure, we were the lowest performing water company in the UK, and the score of 400 that we've just achieved takes us up to a leading position in terms of that benchmark, with only one other water company in England and Wales having achieved consistent scores above 400 Wessexwater. We've moved from the lowest position to a leading position in that. I'll resist the temptation to ask what Wessexwater are doing right that Scottish Water aren't. Perhaps I could ask about the domestic water charges, which are due to increase by 1.6 per cent for the next two years, and the consumer price index minus 0.3 per cent for the following three years. Given the historic low inflation rates, are you confident that income will be sufficient to support service provision and investment over the coming five-year period? The whole way that the plan is structured is that inflation is a risk that we need to manage in terms of the cost of operations, but the way that pricing is linked to inflation gives customers a great degree of protection. In the last regulatory period, customer prices fell by 10 per cent, relative inflation in this period fell by nearly 2 per cent, 1.8 per cent relative to inflation. The challenge then is down to us to manage inside the financial envelope that clearly a lower level of inflation will deliver us. We've got a track record in doing that in the past, we've got plans for the future, it'll be tough, but we will manage our way through it. That's a yes then. When Scottish Water last appeared before the committee asked about the historic private finance initiative contracts that you had inherited from the predecessor Water Authorities, you suggested that any benefits in buying out those contracts would be considerably outweighed by the cost. Is that still your view? That is still very much the case because of the way that they are structured. As we move through this regulatory period, increasingly we are looking to what we will be doing as we come towards the natural conclusion of those contracts. For example, the first contract serving in Vanessa and Fort William expires exactly six years from now. We're already starting to get into the thinking and the planning around what the options might be on that one. Beyond that, towards the tail end of the next regulatory period, we've got two large contracts in Glasgow, one on a wastewater treatment plant and one on the sludge processing plant that handles about half of Scotland's sludge. We're now starting to get into the thought and the planning because those will be key components that we'll feature in our business plan from the 21 to 27 period. There's clearly a widespread view within wider society that private finance initiative contracts generally do not deliver the best value for the taxpayer, but that's not a decision to have those contracts or sign those contracts. It isn't one that can be laid at your door. I'm interested to know if there's anything more that you can do in terms of the tighter management of the contracts in order to deliver savings for the taxpayer. Is that something that you're looking at perhaps in conjunction with the Scottish Reuters Trust? I know that that type of work is being done within the health service. We've got very active management of all our PFI contracts. If anything, over time that's been a progressive journey that we've gone on. We're obviously respecting the fact that the contracts do place all the delivery obligations on our PFI companies. We're doing that largely to make sure that we're getting the maximum performance that we can out of the contracts. We get learning too. For example, we're now doing a series of deep-dive audits on the PFI wastewater treatment plants to make sure that not just the reported compliance is good, but the underlying health of the operations and processes is sufficiently strong. One of the key aspects of those contracts is not just the performance that you have to deliver over the 20 or 30 years of them, but the assets need to be handed back to us in a certain condition at the end. Those audits are really key to making sure that we're getting the service now, but also making sure that we'll be getting assets that are fit for purpose at the end of the contracts. Okay, so deep-dive audits to deliver the service and also to ensure that the asset is maintained, but what about cost savings? The scope in them is more marginal. If I just explain how they're structured, effectively the way the contracts are, just to give the context here, we've got nine PFI contracts. One that is for sludge treatment disposal, the other eight are for wastewater treatment across 20 sites. I'll just talk about the wastewater treatment. The way they're structured is that there is a defined catchment that they serve, so we've got one here in the city of Edinburgh that's a plant down at Seafield, but there are also four plants up the Amman Valley into West Lothian that are all part of that contract. There's a defined catchment set, so the PFI company has to take all the wastewater in that catchment, and they get paid by reference to the volume of wastewater in the Edinburgh case that goes through the flow meter at Seafield wastewater treatment works. That tariff, that unit tariff, was set in the contract back in 1999. Where the scope for saving is that if we discover for example that there may be elements of the service that might no longer be required or maybe goes above and beyond the absolute required legislative standards, then there are situations like that that we've explored. Could we lower our requirements in order to deliver savings? Another example might be that— Have you been able to quantify those savings across the nine contracts? I mean, again, it's been a progressive over time where we've taken opportunities. I mean, it is at the margins relative to the overall cost of the contracts, but if I give you one example that we keep under review, is on any of our large wastewater treatment plants, the largest ones will get sampled 24 times a year by SEPA to make sure that we're complying with a discharge licence, but on the PFI contracts they're set up so there's three, six, five day sampling, which on one level is very good, because it makes sure that performing every single day, but clearly there's a cost associated with that. That's the sort of area where if we're confident in the performance of the contractor, we can enter into a conversation to maybe lower the frequency of sampling and therefore generate savings that we can benefit from. Is that sort of example, but it is at the margins? That's a very fruitful answer, a very helpful answer, but are you able to quantify what the savings have been? Is that information that you would be able to share with the committee? It certainly could be shared. It might be quite a complex calculation, but it would be going back over, certainly in the Scottish Water Life, the 13 to 14 years of Scottish Water into each contract and trying to work out what was delivered at various points in time, but if the committee would appreciate that, we will certainly go about providing that information. Thank you very much. I've got one final question before I hand over to my colleagues, and that's about the publication this week of the report of the Commission on Local Tax Reform, which made reference to water and sewerage charges. If I just quote from that report, it says, we consider it confusing that vulnerable households in receipt of 100 per cent council tax benefit only receive a reduction of up to 25 per cent in the water and sewerage charges that are built alongside them. In terms of your wider responsibility to the community that you serve, do you have a view on that? To put that into a broader context, we've got a set of charging arrangements in Scotland that generally work extremely well and are certainly very well relative to water and de-utility charging anywhere else in the United Kingdom. If you look at the progressive nature of the charging structure, we've got customers, some customers who are paying up to four times as much as others, very progressive charging structure. There's a lot of inherent affordability protection built in for those in the lowest council tax bans, but the issue around the 25 per cent discount is one that has been the limit of what the Scottish Government has been able to do historically under the arrangements for benefits with Westminster. The Scottish Government has not been allowed to offer any more than 25 per cent discount historically, but this is an area that the Government recognises that it needs to keep under review. Therefore, it has commissioned a long-term charging review, which it announced when it set the principles of charging a year ago. The Government is absolutely looking at what are the options over the longer term to make sure that charges are as affordable as it can for all of our customers. I'll leave it there for now and I'm going to hand over to my colleague Adam Ingram who has some questions. Following on in that theme, I'm interested in debt recovery. I understand that you've had some discussions with Citizens Advice Scotland. They point out that, of course, Scottish Water doesn't directly bill and collect charges from customers that are via local authorities. Does that place any limitations, what limitations does that place on your engagement with customers? We have a huge engagement with customers as we have discussed with the committee on previous occasions. We have took customers very much views into account in the setting of our plans and priorities for this regulatory period. We have an active programme of engaging with customers and communities across Scotland to understand the views, listen to the views and make sure that, as far as we can, we can reflect their views and preferences in our future plans and priorities. I have never been a particular subscriber to the view that, just because you bill a customer, somehow that gives you a different level of relationship. Clearly, it is very topical that the report was published earlier this week and that is clearly a matter that will be under significant view for the future. I would like to place on record that the current arrangement has worked well for the generality of water customers, because it is a very efficient system to be sending out a single bill and collecting a single bill for dual services. We contribute more than £18 million a year to local authority costs to help with that billing and collection activity. In terms of the whole area of collection, I would like to place on public record credit to local authorities across Scotland, but I have been absolutely struck that, even since the recession struck in 2008, year on year, their collection of water charges has increased. That is a direct benefit on every single water customer in Scotland, because, as their collection levels rise, our bad debt cost falls and the benefit for that flows back to every single customer. However, how do you support those on low income and benefits to pay their water and sewerage charges and how do you deal with people who get into debt? In terms of the generality of support, at the moment, that is all set through the Government's principles of charging. We have the council tax-based system of charging and up to a 25 per cent discount for those who receive council tax benefit or single. Nearly half of homes in Scotland receive some form of reduction in the water and sewerage charges. It is about nearly £140 million a year or equivalent to a 15 per cent premium built into the average charge level. There is huge support built into the system as a whole. In terms of individual customers, it is clear that local authorities manage that on a customer-by-customer basis. However, we have been working with local authorities to see what measures they can put in place to help with that. For example, you are probably aware from the report that the citizens advice has produced for you of the water direct pilot that we have been running in Fife. In 2013-14, Fife Council made 4,600 applications, nearly 12,000 last year and 9,700 so far this year. That has been a very effective tool for effectively helping customers to pay their water charges through a direct transfer via the Department for Work and Pensions to Fife Council and then on to Scottish Water. The report that we have had from Fife Council is that it has only had a handful of complaints in relation to that. Clearly, there will be some people for whom it is very difficult, but in general terms, it is a system that is working well even for some of the most vulnerable customers. Obviously, we talked a little earlier about how you rank, along with companies in England and Wales. In England and Wales, water companies have a direct relationship with customers on these types of issues. My understanding is that they have a range of more targeted measures available to them to offer greater support and protection to those in debt from water and sewerage charges and to help them to recover that debt. Have you looked at their systems and given any thought to introducing that kind of system into Scotland? I will come back to a couple of my earlier points. First, this is a matter of where we implement Government policy. Secondly, the Government is looking at what are the options for charging in the longer term. The Scottish Government is acutely aware that it wants to take all possible steps and for us to implement them on its behalf to support the most vulnerable customers in Scotland. However, we must not overlook the fact that our starting point is so much better in England because we have a progressive charging structure that fundamentally protects the most vulnerable, far more than the charging arrangements in the water companies in England and Wales. We have a really good starting point in Scotland. Mike, have you got a supplementary question? No, I haven't. That's fine, but I'd like to move on to your questions. I have a question about Scottish Water International. Scottish Water was here talking to the committee almost exactly a year ago. You mentioned that the international business was involved with three major contracts. Could you give the committee an update on that and say whether it is secured any additional business over and above those three contracts in Qatar, Ireland and Calgary that you discussed at last year's committee meeting? The good news is that Scottish Water International continues to progress well, so we carry on with our contract in Qatar and that is working very successfully. In Ireland, we continue to support Irish Water, who are going through some fairly challenging times with the whole creation of that new water business. In Calgary, we completed our first assignment successfully and we've now won a second major assignment that has kicked off there in the last month. On top of that, probably the major territory where we've made most new progress in the past year is Australia. We've been delivering services in Adelaide, in South Australia. We've got a number of other quite interesting prospects across Australia and as a result, we've now relocated a member of staff and his family to base themselves in Adelaide, both to serve our existing contract in South Australia and also to do business development work across that territory. It's been a strong year for international and some good prospects going forward. That's very encouraging. Can you maybe just explain a wee bit more what that means for Scottish Water customers here in Scotland and for the Scottish public at large? For Scotland as a whole, a starting point will be that we have had nearly 70 staff involved in delivering contracts, putting in bids and involved in competitive activity. One of the key benefits of that is that it is giving our staff real good commercial skills of benefit to when they work back in Scottish Water delivering services for our customers here in Scotland. Secondly, and I hope that over time it may give opportunities for us to effectively partner with other Scottish businesses who are looking to export overseas. So far, that's not been a particularly rich seam because they're primarily involved in consultancy work but that is always something that we are open to. One of the other things that we've started in the last year with support from the Government is an innovation testing service for testing new water technology and new wastewater technology. We're working with Scottish SMEs in that area and it may be that over time we'll get the opportunity through an international business to create opportunities for some of those businesses overseas. Now just moving on to talk a bit about the horizon business because, as you'll know, there was a strategic review carried out in 2014 and a business recovery plan implemented. Can you give us an update on that subject please and on the performance of the horizon business? Yes, no, thank you. I mean, horizon has had another good year and its activities are about three or four key areas of activity. There's a lot of work to support development, new development in Scotland, either survey work or supporting new infrastructure going in the ground where that is a requirement for the developer to put in place. That's a key enabling activity in there so we had about £6 million worth of business that we did in that space. We do a lot in waste management and there are probably two main streams of that. We've got a food waste recycling plant at Cumbernauld but we also take quite a bit of third-party waste into our waste water treatment plants across Scotland. One of the most significant areas in the past year has been work that we've been doing up in the Shetland Islands to support development at Salamvo, where we've been taking more waste into our Larwick waste water treatment plant. To give you a sense of scale, there's about £7 million of revenue in that waste site. Other activities that we're involved in are things such as exporting water out onto North Sea platforms. We get rental income from telecoms masks and towers and we've done a small amount of lead pipe replacement work on behalf of local authorities. Thank you very much. That sounds very reassuring. I'm glad to hear that it's all good. I'm moving on at speed then. Lady Rice said in the opening statement about the contract that was awarded to Anglican Water and that she felt that it was an arwing on margins that she lost the contract on. However, we understand from the Scottish Government that it was £5 million per year more than what Anglican Water was awarded. Can you explain how the business stream is bid for the Scottish public in the third sector water contract was as high as that? To reiterate Susan's point, we were very disappointed to lose it. The scoring of the contract was based on a mix of quality and price and, on the quality aspect, we scored maximum scores, so we scored by far the highest on that section. On price, the figures that have been published are the total savings that will be generated for the public sector over the life of the contract. The £5 million per annum is the annual saving that will be delivered. As Susan referenced in her opening statement, on price, we lost by the narrowest of margins. Over this last four-year period, we will have delivered £36 million worth of savings to the public sector. Our proposals under the new contract were to exceed that as well, but, obviously, in the round, we did not quite get there. What impact, then, might the loss of that contract have on the future business stream? I think that we, as a business, operate in a competitive market. As much as we are public sector-owned, we operate in that commercial environment. In that environment, we accept that we will win and lose customers. I think that the key challenge for us is how we respond to that loss and we intend to do so positively. Over the past 12 months and, indeed, beyond that, we have been preparing the business for any potential outcomes, so good or bad. Over the past 12 months, we have been looking at our business, we have been trying to create a structure in the business that makes it fit for future, so not only for development within the Scottish market but, as we mentioned at the start, in the English market when it opens too. To reassure the committee that we have not sat back and waited the outcome of that contract, we have very much been working behind the scenes to streamline the business, to look at the processes that we deliver for customers and to make those as efficient and effective as we can. Citizens Advice Scotland gave us a briefing when it spoke about business streaming. To be honest, a lot of what they have said was reflected in my case load, my personal experience of working with business stream and, unfortunately, it has not been a positive experience. What they said was that the difficulties have had in the past that I understand that they are working with business stream now to go through those things, but flat penalties are applied to cover late payments and third-party debt recovery no matter what size of the organisation they are in. Therefore, for SMEs and smaller organisations, that can be disproportionate to the outstanding debt and can have a significant impact on that organisation. Do you recognise that? I mean, as I said, we understand that you are working closely together now, but do you recognise that that has been a problem and that it is something that you do wish to address? We have been working very closely with Citizens Advice Scotland over the past six months on this particular issue. I think that, unlike Scottish Water, we do bill customers direct and there have been issues in the market since the market opened seven years ago where we have identified a number of customers who have never previously been charged for water. As we identify those, we bring them into charge. That creates a situation where customers are then billed for a period of time going backwards as well. What we have done as an industry is to recognise that and limit it as far as possible the amount of back billing that we do. There is no getting away from that. When a customer lands with a bill and it is unexpected, it is unexpected. We do our very best to work with the customers to find a resolution for that. We offer customers a range of alternative payment terms for them to clear that outstanding balance. In Citizens Advice Scotland's report, they mentioned that we take legal action against customers to recover outstanding debts. I wish to reassure the committee that we only use that in exceptional circumstances and when we have exhausted all other debt recovery processes. It is not in our interests or customers to take legal action. We only do that as a last resort. We apply debt recovery charges to customers' bills. At the moment, that is a flat charge, but I seek to reassure you that when applying that charge, we look at the balance of the customer's debt that is outstanding. We would never apply that to a customer's bill where, for example, the debt recovery charge was greater than the value of outstanding debt, so we take that into consideration. When you work through those things—for example, I have all of the Citizens Advice Bureau getting a charge and they were not aware that they had never paid before—on the first letter, I wrote and they wrote to 18 months for a response. Is that something that happens across the board or was that a one-off? That is clearly not acceptable. As an organisation, we strive to provide a great level of customer service consistently. Obviously, there are times when we do not manage to achieve that, so I can only apologise for that on your behalf. As an organisation, we strive to deliver great customer service. Our stats are improving year on year, but we will not always get it right for customers, but that is excess of 18 months. That was one-off. Finally, Lady Rice touch on the opening of competition in England in 2017 and saying that there is a key component of your plans for the future. However, what plans does the business team have to move into that? Have you got something established just now that you hope to implement come 2017? The market in England is scheduled to open in April 2017. The market in Scotland has already been open for seven and a half years, so we are very much looking forward to that market opening. At the moment, English Water companies are able to take customers in Scotland when we are not able to do likewise down south. To date, the market is open for a very small number of large customers, so about 27,000. Over the past couple of years, we have taken a really tentative approach to acquiring customers in the south, so we will only do that where we feel that we can genuinely offer value for the customers. As Susan mentioned earlier, House of Fraser was a good win over the summer. With House of Fraser, we are very much helping them to reduce the amount of water that they consume as a business. They are focused on environmental benefits, and we have been able to help them to deliver those. I would say that until the market opens, we will continue to do that, so we will continue to target customers where we think that we can deliver value for them and us. Once the market fully opens, yes, we have ambitious plans to secure customers in that market. At the moment, there is still a number of unknowns, so the regulatory environment is still developing, so there are still a number of areas that need to be fleshed out. I could not say to you today that we intend to target 10 per cent of that market. I would not wish to say that publicly anyway, but we definitely have plans to move into that market on scale. I want to talk about targets. We have already heard in the opening remarks quite a lot about the overall performance assessment scores and how your target for this year was 380. You have achieved 400, and over the period you have come from being one of the poorest performing companies to being right up there at the top competing with the best. It has been a very useful comparator or comparison tool as you made that change. Now that you are at the top, how useful is it? I think that it is a very pertinent question, and it is one of the things that we debated long and hard with the customer forum as we were agreeing our business plan for this period. Where we landed was to say that we need more than just a single measure. We need two or three measures now. OPA is all about measuring the physical service that we provide to our customers. We want to make sure that our service stays at a high level. We have agreed that a set of performance targets with the customer forum are reflected in the agreed business plan of regulators in the Government around OPA scores in this new period. We have changed a couple of the measures to make them slightly more fine in their assessment. We have agreed a set of scores. For example, in this year, we have to achieve a minimum score of 380. That is not exactly the same as 380 in the old scoring system, but we aspire to get as high as we can and ideally to get above 400. That will be a good health check over the years. Are we maintaining the physical service that we provide to our customers? The new area that we brought in is on the customer experience side. That is all about looking not at our view of our service out, but what is the customer's view of the service that we provide? There was a reference that Lady Rice made in her opening remarks to the fact that, in the past period, our customer satisfaction rose to 92 per cent, which was a great performance. That single measure itself, we have now made more sophisticated, and we have made it as one of six or seven elements that now features part of a new customer experience measure. I might pass over to Peter to talk about that, because we are really using it now to drive performance in the business. When you look at what customers are looking for, there are the three key things that we measure for that. There is the physical measure of our products and services that Douglas mentioned, but more and more the industry and other sectors are moving into customer experience. How do customers feel about the service that we are providing? That is where we started with the customer experience measure that Douglas just talked about. On top of that, I am part of a group called the Institute of Customer Service. I am a vice president in that. The Institute of Customer Service does an annual survey, which is called the UK Customer Satisfaction Index, where it surveys organisations across 13 different sectors on how their customers feel about the service. It covers questions on professionalism, quality and efficiency, ease of doing business, timeliness, problem solving and complaint handling. We are part of that survey, and I am pleased to say that we have now done four rounds of that survey. We are the leading water company in the UK in terms of that satisfaction index. It is things like that that will be more valuable to improve the service going forward. The OPA measure that Douglas talked about earlier is what we are calling a maintenance measure. We need to maintain that at the right level, which is a leading level, but we will endeavour to continue to improve our service based on the new customer experience measures that we have. If I can just indicate our aspirations in this area, at the moment, the 13 sectors in the UK Customer Satisfaction Index table, utilities are the poorest performing sector of the 13 sectors. We have no desire to be the best of a bad bunch, as we call it. Our aspirations are to match the service levels that are delivered by some of the organisations at the top of that table, so different sectors. The one that we have particularly targeted, because it is another essential product in service like water, is food retail. We are targeting that as a potential area to head for. We are going to use the different experience measures that we have created in this regulatory period to help us to move up there. The impression that I am getting from that answer is that, on the way up, OPA score was a target to measure improvement against. Now that you have got to the top, it becomes almost a baseline from which you want to increase on that. The WICS sets the target. Are you confident that your relationship with the commission is going to allow you to operate on that basis? There is no danger that they may set targets that take in directions that you do not want to go in. There is a lot of care and thought that went into our plan for this period. I say that this is quite different. This is a business plan that we proposed through a process of negotiation agreed with the customer forum on behalf of customers, and with one minor exception that the commission then effectively reflected in its final determinations, it is absolutely based on what matters to customers. One of the things that we give a lot of thought to about targets is are they driving you in the right direction, or is there a shadow effect? Because you are pushing after one target, could you, in some sense, be actually not addressing something that is of just as much importance to customers? That is why a huge amount of thought has gone into this. It is a question that we will always stay open to. The really good thing about the new customer experience measures is that they take into account the number of times customers have to contact us, the number of complaints that we get, the satisfaction or dissatisfaction with their services experience and their general perception. We get lots of data on a daily, weekly, monthly basis, the way that we then use to drive the business forward. If at any stage we got to point where we felt that perhaps one of our targets was in some way inappropriate, we would be absolutely having a discussion with the customer forum and our regulators on whether we should revisit that. We are now nine months into the start of the new period, and we are seeing lots of benefit by driving our business off the new set of measures that we have set for this period. What is the subject of targets again? How have you done in meeting the 12 ministerial targets that were set for the end of this year? We are only nine months into this year, but with our targets for this new period, generally we are on track. You mentioned complaints, and in previous years we have looked at complaints as another measure of performance to some extent. How many complaints did Scottish Water receive in 1415, and how many were satisfactorily resolved? That is another area that we really focus hard on. It is another link back to the customer experience measure that we talked about. One of the real benefits of putting in place, as we have now, is a real-time customer experience measure where we survey customers in real time. When we get any dissatisfaction back from that, one of the real benefits of that is that we can go in and resolve that issue quickly before a customer puts pen to paper and writes a complaint in. Through focusing on improving the service and the satisfaction, it is really helping to drive down complaints. In terms of the number of complaints, in 1415 we had around 1500 complaints, but that was 29 per cent down from the previous year. Over the period of the five years of our regulatory period, our complaints have reduced by 64 per cent, so they were running at 4100 per year in the first year of the plan, down to 1500. This year we are seeing even further improvements in that, and our complaint levels at the moment, on a monthly basis, are the lowest that we have ever seen. What kind of proportion are we ending up with a public service ombudsman? Again, that is another good news story for us. At the moment, what happens is that if we do not deal with the complaints adequately, they get referred to the Scottish public sector ombudsman, and this year the ombudsman has referred four complaints back to us. That is a significant improvement from last year, where it was a living last year. Again, if you look at the five years of this regulatory period, in the first year there were six to eight complaints referred back to us, and that has reduced now down to four. That tells me that my team, who are dealing with the complaints, is doing it in the right way and resolving the majority of those complaints so that they do not need to be referred back to the public sector ombudsman. It is an impressive set of figures in terms of dealing with and reducing complaints. Is it something that you feel has further to go in reducing complaints, or are there new areas that you might wish to operate in? No, absolutely. With 1,500 complaints, it is still too many, as far as I am concerned, and we will continue to drive improvements in this area. One of the benefits of having those measures in place is that we find out quickly, as a leadership team, where the pinch points are in the business that we can go in and focus, whether that needs further investment, better operation and different resources. It gives us that ability to continue to improve the service that we are providing. We will be striving on until we reduce complaints to an absolute minimum. I would like to ask some questions about climate change and sustainable development. I notice from your report that you have decreased by 3.3 per cent over 13,000 tonnes of carbon dioxide equivalent from last year and that you are now generating 10 per cent of your own electricity from the installation of renewable technologies. What I cannot tell from the report is whether that is meeting your targets and expectations in this area and what you continue to do to reduce those levels? To put that into a broader context, over many years, we have made huge investment and strives to improve the quality of water treatment, particularly on waste water treatment. That has had a major benefit to the aquatic environment, but one of the impacts of that is that it has driven up very significantly our demand for chemicals and our demand for energy. Historically, there may not have been a lot of waste water treatment. There are now very modern treatment facilities that are quite energy-consumptuous. Against that background of a rising demand for energy, what we have been doing is looking at every opportunity to drive down the amount that we need to consume and the amount that we need to purchase. We have a continual drive on energy efficiency. We have looked at opportunities for renewable generation, particularly where we can generate energy at the point that we need to consume it. If, for example, we can generate hydropower at a water treatment plant or generate wind energy in a waste water treatment plant, that reduces the amount of energy that we need to buy in from the grid. Beyond that, we have taken steps to make our land available for larger-scale wind development, so there is a huge amount that we are driving on across all those fronts. You obviously have a lot of sites and a lot of estate within Scottish Water. Have you done any surveying of that with the look to what solar energy could be doing in those areas? We have done a significant amount of work on renewables over the years. During this period of 10 to 15 years, we have more than doubled our renewable-installed capacity from about 20 gigawatt-hours to 45 gigawatt-hours. That includes 27 hydro schemes that we have in operation, 18 small-scale wind turbines, 17 photovoltaic solar sites and two combined heat and power sites. We are continuing to drive that. It has had an impact recently with the reduction in the subsidies that has been announced. We are doing an assessment of our programme at the moment to see what the impact of that is. For example, wind subsidies will be reduced by about 60 to 80 per cent. Solar has a similar cut. Hydro is a bit less at 14 to 30 per cent. We think that there will still be a small number of PV schemes that can work, but we are doing an assessment of that at the moment. The opportunities are potentially broader than that. Just last week, we launched a UK first of a scheme in Galashales to generate heat from sewage. It is a scheme that will provide 95 per cent of the power for Borders College in Galashales. We will see how that works, because it may have some impacts on the wastewater treatment plant. We will see how that works, but clearly that has the potential for rolling out more broadly. I have a final question on consumer behaviour. Obviously, we know that water is a scarce resource and it is expensive, but I wonder whether there is a significant difference in the consumer behaviour in Scotland compared to other areas of the UK where there have had significant water shortages and hose pipe bans. How changing consumer behaviour might reduce costs in those areas? If we look at water efficiency, we are running a water efficiency trial at the moment to look at consumer behaviours to see what are the things that we can pull to get people to change their behaviours. That is linked to our TV campaign that you have hopefully seen, which is encouraging customers not to waste water. More and more, we are looking at customer behaviours and trying to get customers to change their behaviours to help us, but telling them that, by helping us, we can then help them by keeping their charges down and improving the service to them. The most significant aspect is on the wastewater side, where we can get blockages in the sewer system that can cost for us to go out and repair and fix but localise flooding for communities. We are doing quite a bit of work both nationally and in certain local areas to highlight to customers or consumers the steps that they can take about the things that they do not put down the toilet or the sink. To let the pipes run free, it saves us money and reduces the incidents of localised flooding. Can I ask you a few questions about incidents? You will be aware that the drinking water quality regulator highlighted three major incidents, which you will be aware of. Just for the record, they were in Dumfries and Galloway following a disinfection failure in my region in Llarg with Elevated Aluminium in 2014 and in Fortrose, in my region, again, a microbiological failure. What lessons have you learned from those major incidents to stop similar incidents happening again in the future? I do not know who is best. I will take that. One of the first things to say is that we clearly have a significant number of assets across the country. We take 318,000 water samples every year to guarantee the quality of the water that we provide to customers, and of those 318,000 samples, 99.9 per cent of them pass the very stringent water quality standards. Unfortunately, with the number of assets that we have, we have many thousands of water and wastewater treatment works, 100,000 kilometres of pipes and sewers, and things go wrong from time to time. The key thing when that happens for us is to make sure that we respond quickly to minimise the impact on customers and to take the learnings from those incidents and make sure that we learn from that and make sure that they do not happen again. That is exactly what we do in those incidents that you have referred to. We prepare detailed investigation reports, which we submit to the Drinking Water Quality Regulator. In conjunction with them, we agree an action plan, which has defined owners and timescales on it. We go out and deliver those actions to deliver the benefits. A number of those actions in conjunction with the Drinking Water Quality Regulator involve us taking the learnings and applying it across our whole asset stock across the whole country. The regulator also mentions that there has been an increasing number of complaints about the discoloration of drinking water, and that was picked up in the annual report by the regulator. What is your view on that and what actions have you got to try to turn that around? Discoloration in samples is a significant increase on that, but we have been working really hard on that. This year, I am pleased to say that, since that report came out, we have reduced our discoloration complaints by 30 per cent, so we have a very significant water quality improvement group running. We have been running now for the past 18 months, and that is one of the specific areas that we have focused on. Last year, it was too early in that programme to start to see some benefits, but, as I said, I am really pleased to report that we are starting to see the benefits coming through now with our 30 per cent reduction in discoloration complaints. Clearly, that has an impact on customers, and because we want to significantly improve the service that we provide, we will be working hard to continue to reduce that. Are you positive by the time that the next regulator report comes out that you will be turning this around and seeing a reduction in discoloration complaints? Absolutely. The regulatory report for this year finishes on 31 December. We are now into December, and at this stage, we have a 30 per cent reduction in that number with a few weeks to go. Right across our water quality performance, we have seen 11 months of data, and we are by far our strongest performance that we have ever been in. It is just worth building on Peter's earlier point. We do, as Peter said, lots of learning from an instance, but over the past few years, what increase we have been doing is not just looking at where things have gone wrong, but at risks right across the whole water supply system. We are looking at the steps that we can take to absolutely minimise the risk to customers of having any problems with their drinking water quality. That systematic approach of looking at the risks right across the supply system and taking the steps, whether those are investment steps or operational steps, or building to future plans, is what is really at the heart of driving our improved performance that we are seeing coming through in 2015. You would be aware from the citizens advice report that they are very concerned about ensuring that there is consistency across Scotland, and we avoid the sort of cliched issue about postcode lottery, where you get a better service in one part of Scotland than you do in another. We have seen that in other areas of delivery, such as in health. What is your view on that, Mr Milligan? I think that this has been one of the real benefits of the creation of Scottish Water in 2002, because, since then, the whole approach has been to make sure that, as far as we can, we are delivering the same level of service for the same price wherever you are in Scotland. Practically, how is that done? When we come into developing a business plan for a period like the 15-21 period, we are looking at where we are trying to get standards to. It may be that, in terms of the aspirational level of standard, in many places we are already there. Therefore, we are targeting investment at those places where perhaps performance is a bit lower than in some other places. That is why, over time, in some of the regular periods, there is a lot of investment in rural areas. At the moment, for example, we have a lot of investment going on on the wastewater network in Glasgow, and it is all about, over time, absolutely trying as far as we can to make sure that it is the same high-level service whether it is urban or rural, mainland or island. We talked earlier about the customer service and the customer satisfaction score. We take those scores right down to a regional basis, a team leader basis and down to individual operators. I did some work on that recently, which shows that, if you look at our customer service regions, we have a fairly consistent, 92 per cent satisfaction across the company. Orkney is currently sitting at 100 per cent, Inverness 97, Shetland 90, Sky and Fort William 97, Glasgow 91, Edinburgh 89 and Ayrshire 92. They are all round about similar levels, which shows that the service that we are providing across the country is fairly consistent. If I remember correctly, you took over from three water authorities before, and I had some involvement with Nozzawine in the previous life. When you took over the three bodies, was it very apparent to you that there were still huge inconsistencies across Scotland in terms of the delivery of service? Oh, absolutely. We have gone on a huge journey. I think that I was best summed up by a phrase that the Watering Commission put in its report in October. When they were looking back on the five years, they talked about that over the life of Scottish Water, we have delivered a remarkable transformation. Those two words sum up the journey that we have gone on to literally transform performance and service across Scotland over the past 13 years. In the area of the relationship with the regulator and what happens, we had a major incident in the Motherwell area where people had a loss of water supply for a number of days. I have to say that at the time, I do not think that the Scottish Water or the local authority could have done anything else to support the residents than what was done at that time. My problem is what happens after that, because I wrote for a full explanation as to what happened why it had occurred. I was told that a full report had been done and it had gone to the regulator, but it was at that time confidential. I do not know if that was because there may have been a prosecution as a result of the investigation, but my frustration is that it goes into the regulator and then I hear nothing back as a representative. When it goes to the regulator, where does Scottish Water sit at that point? How long do you expect something like that to be resolved by the regulator and reported back to the public, mainly because it is about, as you were talking about, the risk, but it is also about consumer confidence, about what has happened and whether the likelihood is that it will happen again? I will pick that one up. First of all, just to start off on this, fortunately, incidents of this magnitude are extremely rare now in Scottish Water and that is a significant change from many years ago. That is mostly down to the huge amount of investment that we have carried out and this significant water quality improvement programme that I talked about earlier that we have been implementing. That is still at the stage that it is with the regulator, but I will give you some information on that. In this incident, some hydrocarbons entered our water supply in the form of diesel and mineral oil and impacted around about 6,000 properties in the Carfin, New York hill and Chappahall areas. We have identified the most likely external sources as two third-party bylaws infringements, one that was historical and one current at the time of the incident, both of those from around about the Newhouse industrial estate. The contaminated water was drawn through our pipe work due to a depressurisation event that occurred while we were preparing for a routine repair of a large diameter pipe that was leaking. Although that incident caused enormous inconvenience to our customers, it was relatively short-lived, with normal service restored to the majority of the customers within 24 hours and to all 6,000 within 36 hours. We achieved that through the implementation of our very robust emergency plans, which involved around about 200 Scottish Water employees and our contractors being out working 24-7 to do a number of things to restore the service and provide alternative supplies to our customers. Some of the things that we did were extensive flushing operations to move the contamination quickly out of the system. We delivered 600,000 litres of bottled water, which is 100 litres per property affected, which is a huge amount of water, and the majority of that was delivered to the doorsteps of the properties. We did significant customer and stakeholder communications through that, which included letter drops again by Scottish Water staff through the letterboxes of the 6,000 affected customers, to warn them at the start and to tell them that the incident was over at the end of that. I think that the important thing is that, throughout the incident, we liased with the consultant in public health medicine and, after the event, NHS Lanarkshire confirmed to us at the level of contaminant and exposure, given the short duration, it did not present a directress to public health. We talked about learning earlier. We have taken significant learning from this event. We have made significant improvements to our network in the area to ensure that it does not happen again there. We are applying that learning across the whole of our network in Scotland to make sure that, if there is anything similar, we will pick it up and make sure that that does not happen. We have submitted a detailed report to the Drinking Water Quality Regulator, and we are awaiting the outcome of their investigation to see what further learnings there is for us to implement after that. We have also done significant work to rebuild the trust in the community. For example, we have a full community plan where we have had school visits, dropping events, we have had councillor, MSPs, stakeholder briefings, community group meetings, and we have also conducted 360 doorstep interviews where the majority of the customers indicated through that that they were satisfied with the response and the handling of the incident from Scottish Water. How long do you have a timescale at which point the regulator might make a ruling on this incident? I cannot answer that. I do not know if we have any further information. Certainly, from my last conversation with the regulator, she is still conducting her investigation and clearly she needs to be satisfied with all the elements of that before she comes to her conclusions. I have got one other specific exceptional incident that I would like you to provide some feedback on, and one of a more general nature. The specific one is a significant loss of water supplies to an extensive area around Rutherglen and the south side of Glasgow, in March 3 this year. What was the learning from that particular incident? I do not have the specific information on that. All I can say is the general thing that any incident that we have, whether it is a loss of supply or a water quality incident, our first priority is to restore the service to customers. After that, we then do a very detailed investigation into every incident to understand whether it is capital maintenance issues, whether it is an operational issue or an operational maintenance issue, so that we can then look at changing our plans, changing our investment to target these. I am sorry, but I do not have the specifics on that particular incident. I will follow up with the specific learnings that we took out of that and how we roll that across the business. The other more general point is in terms of the variable weather that we have in Scotland, which seems not to be getting any better. In particular, there has been a number of incidents of flash floods, particularly in our road infrastructure. What engagement does Scottish Water have with that type of incident? Do you have a strategy for dealing with it? Let me give you an overview, and then Peter can elaborate on some specifics. The challenge of the weather will always be with us in different forms. The other challenge that we will always have is the fact that some of our infrastructure will fail from time to time. The whole direction that we are going on is how we either anticipate problems or understand weather or asset problems and take action before any customers are affected. Our whole approach is to notwithstanding what the challenges that we might have is how we keep customers in service. Whether that is keeping customers in water supply, perhaps when there is a burst pipe or the power has gone out of a water treatment plant, or how do we stop customers from flooding perhaps when it is lashing down with rain. That is our whole approach. I will pass to Peter to amplify some examples of how we are doing that. That has been at the heart of a lot of progress that we have made over the past couple of years. I will start with the specifics. The recent flooding that we had—we had 22 assets that were affected by the flooding. The worst one was the hoit wastewater treatment works, which was under about a metre of water. The main inlet sewer to the works was washed away when the banks of the river Teviot broke away. The really good thing about that is that, because of our robust emergency plans, we had that work. Considering that all of the electrical and mechanical equipment is submerged in water up to a metre, we had that work dried out and back operational again within three days, which is an absolute credit to the staff that we have down in the borders there, dealing with that. Talking about flooding in general, our customers have told us that flooding from our assets is a high priority for them, and that has been very carefully built into our plans going forward and significant increased investment for that. However, sometimes the capital fixes to resolve some of those issues take a long time. I particularly remember that with the Edinburgh situation. I am pleased to say that the high level of rainfall that we have had has not affected that area. Because those take a long time, hydraulic modelling and capital fixes, what we have implemented is a hotspot process in which we have identified areas that are subject to flooding issues, and we give a red flag service to those customers. I will give an example of some of the things. The first thing is that all of the hotspot areas are all red flagged on our customer contact system so that if anybody phones up, they are immediately escalated to one of our senior members of staff to deal with, because they have had a history of issues. We put additional support in place for those customers, so we have staff who immediately go out to help customers when that happens. We have equipment, pumps and tankers that go out and are there in advance of any flooding that happens. We can actually determine that because another part of that is that we put monitors into our sewers in those hotspot areas to give us advance notice. As Douglas said, we are trying to get ahead of the game, so we have monitors that go to our intelligent control centre and steps in Glasgow and that alerts our local people to get out there and start to help customers before the flooding actually happens. There is a significant amount of things that we do to help those customers until we can get our flooding solutions in place. When we are talking about roads, in particular, you would have a close relationship with the likes of Transport Scotland for trunk roads and local authorities for the local roads. Yes. When there are flooding events such as this, there is a multi-agency setup in place where we work with the local authorities, the police and other services together so that it is co-ordinated in the right way. I will ask about the roll-out of your ambitious infrastructure works that you have planned over the next five years. Where people live near the worksites for those major projects, I am thinking perhaps of the Shieldhall strategic tunnel on the west coast of Scotland. What mechanisms are in place to ensure that there is appropriate feedback from customers and dialogue with the local community to ensure that there are any problems or issues or concerns that arise during the works that they are properly considered and action taken as appropriate? I will set a bit of context on that. The work that we are doing in Glasgow at the moment on the environmental improvement programme is a huge amount of it that is really close to customers' properties. If we take the Shieldhall tunnel as an example, the site compound and where the tunnel boring machine will be launched to drive its three miles upstream is absolutely adjacent to customers' properties. To give you a sense, the distance between where the works are going on and the customers' properties is less than half the distance between us across the table. It really is right at customers' front doors, and it is not just there that I can take you to other projects across Glasgow where we are absolutely in the face of the community. Whether it is those projects specifically or more generally, we have radically changed the whole approach that we are taking towards capital investment by absolutely seeking to put communities at the heart of how we deliver our improvements. I will give you one example to try to bring that to life. On the north side of Glasgow, we have a flooding project at Elmvale Row. It is a £12 million scheme, two large tanks that are being sunk. Each of the tanks is probably diameter-wise about the size of the room, but there was also a lot of work to be done on replacing sewers around the streets. About the distance between us today is the distance between the tanks and a primary school. We worked with that primary school to see how we could minimise the disruption to that school. We planned our work and started our sewer replacement work. The first day of the school broke for the summer holidays, and we were out of the streets by the time the kids came back in August. That is a real example of how we adapt our plans to fit in with the needs of local communities. If we take the Endurance Street, which is where Shildell Tunnel is, some customers are so close to the works that we have offered to relocate them while the work has gone on. We have done a huge amount of engagement work, so we are aware of what is going on and of any specific concerns that we need to be aware of. All the time, we have a team of people who are out, engaging with individual customers or communities. The work has to happen, but the way in which we do it can absolutely be programmed to try and minimise inconvenience. For example, in that project, we have built a separate road to ensure that all the heavy goods vehicles do not come through the residential community, but come through an industrial estate. Thank you, Mike. Did you have a question? Thank you, convener. I have a constituency original question. I would like to thank Lady Rice for her very kind invitation to go out and see some of the exciting new Scottish Water developments, but I would like to issue a reciprocal invitation. I would like to invite Lady Rice to come to North Argyll and see some of the delights of North Argyll, but I would also like to do my very best to persuade her, convener. The delights are definitely worth seeing, but I would also like to look at one of the disappointments. I am referring to the Seal Island sewage works, which not even the most optimistic of accountants would describe as an asset, but I think that they would describe it as a liability. It is defective, design-wise, both aesthetically and operationally. The execution of the work—bear with me on this, please, because I live on with a couple of miles away, so I and my neighbours in the community experience this long painful process, and they are still in pain. However, the execution of the work was shambolic. I am being generous when they describe it as shambolic. Some of the drainage pipes had to be dug up and relayed because they fell the wrong way. The water would have run backwards rather than the direction that it was supposed to run in. No building wants were applied for by Scottish Water in respect of the individual household connections, and yet they must know—you must know—that building wants are required and understand why they were not applied for, because they would never have obtained building wants. To be fair, the blame for this unhappy project must be shared with Argyllun Bute Council, which is the planning authority for turning a blind eye in planning terms and in terms of their obligation to implement building regulations and overseeing that. I wonder how you were able to persuade them to turn that blind eye. I need to describe it. I will be as quick as I can, convener. You set out in the first instance to deal with a very minor environmental problem, and you have created what amounts to a local environmental disaster. In terms of lessons learned, I am reminded that this is a small-scale version of the debacle of the Cambleton sewage works not only a few years beforehand. It is incredible to me that you are now seeking to repair this, to remedy the situation based on a plan that seems to be equally ill-conceived. You cannot build a good house on bad foundations. I thank you for the invitation to Argyllun. I spend a lot of time in the Western Isles. I have been through Argyllun, but I will look at the diary. I know about the situation, but I do not personally have a lot of the detailed history, and Douglas, I think, could help you there. We deliver in a regular period over 3,000 projects, many of which we deliver really, really well. When I look back across the history of Scottish Water, the scheme that Mr Mackenzie is referring to is one of the worst schemes that Scottish Water has ever delivered. Let me place it on public record that I apologise for the disruption and for the way in which that work was carried out eight years ago. Let us be very clear about that. This first came to my attention ahead of a public meeting that we had an open in June 2014. In fact, Peter and I went down there that day, and it was a beautiful day. It was a stunning part of the world, but I saw the legacy of the work that we had done, and I am not proud of it at all. It is so good that I took my wife back there last autumn and wanted to see the beautiful air, but it is for me to show her how we used to do things. I have stood on many platforms and have put up pictures of Clack and Seal to show what a stunning part of Scotland is and to show that it is my case study example of how the worst we ever did in the past is exactly the opposite of what we are endeavouring to do in the future. In terms of the actual plant, it is complying with its superdischarge licence, but it is suboptimal in its performance, and we are looking at how we improve it in the future. Thank you very much. I am sure that my constituents will be really gratified that you have made a public apology. In fairness, you will acknowledge that I did write to you recently and give you forewarning that I was going to raise this issue today. I suspect that—I hope that this is something that you have offered to meet with me—I would like to take you up on that invitation again, because I think that there is some more work required to get remedy this situation in a proper way. My misgiving—that is why I raise it and why I feel it is of concern to the committee—is that this is a very shiny, glossy document, but when I lift the bonnet of Scottish water and I see that the carburetor is made out of an old beer can, then I have got to conclude that it might polish up quite well this vehicle, but perhaps further work is required. In fairness, I appreciate that you have inherited these difficulties. I think that you still have challenges, and I think that that is a matter of general consent to the committee. The one further point that I would raise is that, just as I have showed good faith in writing to yourself in warning you that I would raise this, I hope that I have shown good faith to the Scottish water staff that I have engaged with now over a number of years. I am not persuaded that they have been fully truthful with me at all times in attempting to deal with or describe the nature of the problem. When they are not less than truthful with a member of Parliament, they are less than truthful with the whole Parliament, with the institution of Parliament. I hope that we can get on to more transparent footing, given your apology. I thank you for that apology. That can be the beginning of rebuilding a better series of communications in relationship with the community and then, from there, seeing what we can do to remedy the project properly. I will give you an opportunity to respond to that. I will try to be brief three or four points. First, I think that, in terms of the difference between the paintwork and the engine, I think that our performance stats and the trajectory that we are going on show that we are operating extremely well, but we can get better. In terms of the specifics of engagement, we set a really high bar for ourselves. On the front page of our annual report, we have a vision as a business to be trusted to serve Scotland. At one level, that reflects the trust that the customers have in us. It is a bar that I set for every one of our employees that they must day in and day out be seeking to be trusted in all their interactions. If there has been any degree of failing on that, I apologise, but I know the people who have met you. I am sure that that would not have been their intent. We will remedy that in our communications in the future. The other assurance that I will give you is about the future improvements in your community. Because of the past sensitivities and the contentious nature of the future, no decision will be made without full consultation agreement with CEPA, Scottish Natural Heritage, Marine Scotland and, once we have a recommended position, I will take that through the Scottish Water Board before any decision is made. The board will approve that. It will not be an individual project manager. Do members have any final questions for our panel this morning? In that case, it only remains for me to thank our panel for the attendance this morning and for me, as convener of the committee, to place on record our appreciation to Scottish Water for the level of engagement that we have with your senior leadership and senior management teams. We very much appreciate that on the on-going dialogue that we continue to have with you and the productive outcomes that we are able to achieve on behalf of constituents, notwithstanding some of the more critical feedback that there has been this morning. Thank you very much again for your attendance. I am now going to suspend this meeting to allow us to change over. I now resume this meeting of the Infrastructure and Capital Investment Committee. Agenda item 3 is consideration of the fourth road bridge. The committee will consider its approach to an inquiry into the circumstances surrounding closure of the fourth road bridge. Last week's meeting of the committee was decided to place consideration of an inquiry into the closure of the fourth road bridge on to its agenda for today's meeting. As convener, I asked the clerks of the committee to prepare a paper for us to consider options for a focused inquiry into the issues surrounding the closure of the fourth road bridge. Subsequent to that, I received a letter from David Stewart MSP requesting that the committee carry out an inquiry into the closure. In addition, the Minister for Transport and the Islands Derek Mackay MSP has indicated that the Scottish Government stands ready to co-operate fully with any inquiry. Clearly, the closure of the bridge has led to significant disruption for commuters, businesses and visitors. It has also led to a number of questions being asked and differences of opinion being aired on how the situation has arisen. That is clearly a matter of significant public interest. I firmly believe that the committee has both a duty and a responsibility to carry out its function as a committee in seeking to ask questions of the key stakeholders and to elicit answers on behalf of the public. The paper that has been circulated by the clerks to members has indicated that the focus of any inquiry should be one that is narrowly focused and limited to the core issue of the structural defects. We all understand that the closure has brought frustration to travellers and has had a significant impact on businesses and the local economies in Fife and elsewhere. However, the clear advice from the clerks is that it would be more useful for this committee to focus its inquiry on the structural defects identified and whether they could have been avoided or dealt with differently. That is not to say that these other related and hugely important issues should not be fully investigated either by ourselves or another committee of the Parliament at a later stage. The clerks have provided a very helpful paper setting out a suggested approach, which includes a proposal that we take evidence from Transport Scotland and AME officials and engineers, representatives of the former 4th Estuary Transport Authority, a panel of independent engineering experts and the Transport Minister in a series of evidence sessions that would begin next month. I invite comments from members on the suggested inquiry approach. I thank you for your fair and very impartial summary of the issues. Members will have my letter. As you have said, the closure of the bridge has caused a lot of frustration for commuters and businesses in Scotland. I am sure that we all agree, even though we are of different parties, that the immediate priority is the safe reopening of the bridge as soon as possible. Along with the convener and the clerk, I went to the technical briefing on Monday, and I am very grateful to our officials for setting that up. Donald Johnson is also on attendance. I am sure that all the committee will want to put in record our thanks for all the amazing work that has been done to get the bridge open. When we went on Monday, it was absolutely freezing conditions. I think that we would all agree that working tirelessly in those conditions is well beyond the college duty. I would like to put in record all the committee's thanks for that. What should the elements of the inquiry be? I have laid out the key elements in my letter, and I would agree with the approach that the clerk has taken on a work plan. First of all, I would like to make a plea for an independent technical adviser, particularly with an engineering background. Every committee that I have served on, and I am sure that all the other members are similar to me, every inquiry that I have looked at in this Parliament and others, we have always had an adviser. On this particular one, I see the focus providing technical advice on how we interpret and absorb all the information that we will receive both in a written sense and, of course, we are going to take oral evidence as well. I believe that, without a technical adviser, a report in its recommendations may suffer a credibility gap with the public. Secondly, and I have touched on this in my report or my letter, I think that it is really important to invite the former bridgemaster and chief engineers from FETA, the fourth estuary transport authority, former conveners and key officials from the relevant local authorities. There are more, of course, than just two that make up FETA, but the larger ones are Fife and the City of Edinburgh Council. Thirdly, it is important that we do an analysis of the maintenance and repair works deferred or cancelled. Fourthly, an assessment of previous safety warnings issued by FETA, if any. Fifthly, it is important that we also touch on the implications of the handover from FETA to AME, because that is quite crucial. I think that I have also touched, convener, in my letter on the capital and revenue streams funding the bridge. Members will know that we probably need to focus particularly on the post-toal regime. I think that I mentioned in the last meeting, convener, my understanding is that the tolls revenue when we had tolls went straight into FETA and that went straight into maintenance, but the other aspect that I wasn't aware of until I spoke to some ex-FETA staff was that they also borrowed on the basis of expected toll income and that also went into the maintenance budget. There was quite a good if I can put that way cash cow, but I will make it quite clear that this is not an issue for me about whether we were foreign against tolls. That is not the issue that I wish to raise. It is merely what happened in the pre-toal period and that was that funds flowed in to provide maintenance. Finally, convener, could I suggest that the final selection of witnesses should involve consultation with all committee members before you, convener, make the final decision, which, of course, is your right as convener? I hope that that is some helpful points to get us going in terms of the inquiry. I agree with everything that has been said so far. I have a concern about the timescale, and if we start to look into the detail of the contracts and the financial side of it, I think that that might put a pressure on us. That is purely to do with the capacity, I think that that work needs to be done, whether we have the capacity to complete that in this particular inquiry or in this particular committee. I am not sure about that, so I am just raising that as a small concern about the general scope. Everything else was points well made. My only concern about the committee paper is that I do not understand why we are limiting what we are doing to 10 years. I do not see any, I do not know why that was taken from. If we are going to do that, we should be looking at what has happened since the section of the Parliament, given that it has been such a long-term infrastructure project. Thank you, Clare. Who else wants to come in? Alex? Just very briefly to recap on what I said last week that, in response to the minister's statement, the Conservatives requested that some form of independent inquiry take place, notwithstanding the fact that we still think that that is appropriate. I think that it is entirely appropriate for me to support David Stewart's position and what he said earlier about taking forward an inquiry at the committee. I think that the paper that is set out gives us a good steer as to what we need to be doing. In terms of timescale, I think that we have little option but to seek to complete this process and get something, get a report into the public domain while this Parliament still sits, and any delay against that timescale would run the risk of not completing the process. I do not think that that would be credible given the level of interest and concern that there has been around the issue. I pretty much agree with what has been said before. If we are going to do this, we need to be mindful that we do not have much time and that the committee has other work. I would be in favour of examining the scope without ruling anything out, but we are able to have a fairly short, focused inquiry that delivers a report sooner rather than later. The minister has indicated his wish to be transparent. He has demonstrated that, in arranging the technical briefing on Monday, unfortunately, I was not able to attend it, but the committee did not request that. The minister arranged it of his own volition. That was an important step in demonstrating that transparency. I look forward to the inquiry to see what we can discover about this unfortunate problem. I am happy with the paper and we have to recognise that we do not have all that much time, so we need to get on with it. The one thing that I did not address was the issue of a technical advisor to the committee. David Stewart is absolutely right that we would benefit substantially from a technical advisor with specialist knowledge. However, I acknowledge that, in this area of expertise, Scotland is a small pond with a few big fish in it. As a consequence, it may be very difficult to establish a truly independent advisor. In that respect, I would concede that we may have difficulty in achieving that objective. I think that that would be a very helpful discussion. I just sum up where I think we are at in terms of where we have agreement across the committee. Then I invite members to agree what our approach should be. I think that it is clear that there is agreement that the scope of the committee's inquiry should be focused on the core issue of the structural defects, which led to the closure of the fourth road bridge, but that would not prohibit us from looking at any of the issues that have been highlighted by members this morning, but it would preclude us from having a broader inquiry into the economic impact of the closure and the travel disruption that has taken place. However, I think that that is necessary in order to meet the timescales that all members have rightly said are necessary to be adhered to by this committee in order to do our job effectively. Therefore, I invite committee members to agree that the scope of our inquiry should be limited to the core issue of the structural defects, which led to the closure of the bridge in December 2015, to the issue of a general call for evidence. Agreement at the timetable for evidence taking in consideration of a draft report should be taken forward by the committee. The clerk should explore the option of identifying and approaching an individual with suitable qualifications and expertise who can act as a technical advisor to the committee while acknowledging the constraints of timescales and other constraints that might apply in that regard. We should delegate authority to myself as convener to agree and finalise witnesses subject to appropriate consultation with all members of the committee. We should delegate authority to myself as the convener to seek approval for the payment of any witness expenses and finally to the development of an inquiry media plan. Are we agreed? Yes, I have a chair after that. Just a clarification about the timescale that is mentioned in the committee report about just 10 years. I think that there is agreement among members that if we can broaden the timescale beyond 10 years, we should do that. I am perfectly happy to be here. I have a further question. I am in agreement of the three other comments. Is it the intention of the committee that, once we have the draft report, that, as other committees, we seek time to debate this in Parliament? I am very conscious, obviously, of Parliament coming to an end in March. My experience in other committees is—and the clerk will be well familiar with the procedure—that, normally, you would need to seek approval of the convener's group. Useful and constructive suggestion. It would be a matter, ultimately, for the convener's group and for the parliamentary bureau. Having undertaken that important piece of work on a matter of significant public interest, we would want there to be— My advice for what is worth, convener, is— I have just raised the point why there is debate within Parliament. My advice for what is worth, convener, is, in previous experience and reports, I would certainly get to your talation and now, by which I mean, I would be raising this early doors with the Parliamentary authorities. I would be raising this. Can you have my assurance, convener, that I will raise that at the earliest opportunity with the Parliamentary authorities? It is important to get a window in March, otherwise, as a committee, to make other reports, we might not have the opportunity to debate it. Can I seek the agreement of the committee to adopt the approach that is outlined? I agree. Thank you. Are there any further points? In that case, we now move into private session.