Rural Economy and Connectivity Committee

Meeting date: Wednesday, February 1, 2017

Official Report 603KB pdf

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Rail Services

Item 2 is an evidence session with the Minister for Transport and the Islands on rail services in Scotland. The session was originally scheduled for 18 January but had to be postponed. It forms part of a series of regular updates to the committee to allow it to monitor rail network and rail service and performance issues. Before we go any further, I ask members whether they have any interests to declare.

I have an interest that is in the register: I am an honorary vice-president of the Friends of the Far North Line.

The same.

I am honorary president of the Scottish Association for Public Transport and honorary vice-president of Railfuture UK.

I welcome the Minister for Transport and the Islands, Humza Yousaf; Bill Reeve, director of rail at Transport Scotland; and Gary Bogan, head of the Scottish Government franchise management unit.

We have a huge amount to cover this morning. I would appreciate it if members could keep their questions as short as possible and witnesses could keep their answers as succinct as possible. I invite Mr Yousaf to make an opening statement.

Thank you, convener. On that note, I will keep my opening remarks brief. First, I offer the committee my sincere apologies for my absence at the previous meeting, which was unavoidable due to illness.

When I last appeared before the committee, in October, we shared a mutual desire to see a focus by the ScotRail Alliance on improving performance to the levels that we expect and, more important, that the passenger expects. I had demanded a performance improvement plan that was intended first to stabilise and then to improve performance. At that meeting, I reported that the moving annual average—the public performance measure—was 89.6 per cent against the contractual trigger of 90.3 per cent. That moving annual average has improved to 90 per cent by period 10, which is 0.3 per cent away from the target that will lift ScotRail out of improvement plan territory. There are encouraging signs that the current four-week period could see a further increase in the moving annual average.

According to our latest information, more than 86 actions in the performance improvement plan have been completed; of the remainder of actions, the vast majority are under way. Shortly before Christmas, members will have noted that we thanked passengers for their patience during a difficult period with the offer of a free week’s travel to season ticket holders. I believe that that offer is a demonstration, alongside our tireless work on the performance improvement plan, of our commitment to ScotRail’s passengers and services.

Further discounts will be offered to weekly and less frequent travellers, whether for work or for leisure, particularly those using the ScotRail smart card for journeys. All that is backed by £3 million of funding—£1 million more than many were calling for. At the time of the announcement, I made it very clear that we would bring forward further details of the scheme in early 2017. I was clear at that stage that there would be a contribution from ScotRail as well as from the Scottish Government. Members will shortly see more details on that, confirming £3 million of funding and giving a little bit more detail on the offer for monthly and annual season ticket holders and for weekly ticket holders.

I will conclude with a few remarks on another topic that has had a fair bit of coverage since I last appeared, which is the further devolution of Network Rail. I am strongly of the view that greater devolution of Network Rail’s functions to Scotland would deliver better outcomes for passengers and taxpayers. I have, therefore, charged Transport Scotland with establishing an expert panel to provide practical advice on how we can achieve that outcome in a manner that fully accords with Network Rail’s reform agenda, as set out by the United Kingdom Secretary of State for Transport, Chris Grayling, last summer.

I am, of course, happy to answer any questions that you or members may have.

Thank you. The first question is from Stewart Stevenson.

I have just looked up the PPM figures; at the moment today, ScotRail is running at 93 per cent, which is 4 per cent ahead of the Great Britain figure. I look at the figures every day, and there has been only one day this month when I have found that ScotRail has been behind the GB figure. Does that tell us that the performance recovery plan is working? If we end the day with 93 per cent, for the sake of argument, presumably that will replace in the moving average a day a year ago that was rather worse than today’s, and hence will contribute to improvement—or are there still issues that we should be concerning ourselves with?

I thank Stewart Stevenson for that question—he went into the technical detail of PPM and I would expect no less of him.

As I said in my opening remarks, since the introduction of the performance improvement plan, first we saw stability, and now we have seen improvement over the last few periods, which is encouraging. The situation is not where I want it to be—there is a target of 90.3 per cent to reach for ScotRail to no longer require a performance improvement plan and the average is still 0.3 per cent away from that.

As I hope that Phil Verster explained when he last appeared before the committee, the reason for the moving annual average is to take into account seasonal variations. It is a rolling average that is calculated between periods. The point of that is that, if you had a very good period 11 last year, you would have to have a better period 11 this year in order to see some element of improvement. Period 11 last year was fairly good and therefore making huge leaps in performance improvements might be challenging. If performance stays at the relatively high level it is currently at, we should see some upward movement at the end of this period, too.

I also note that performance of the sleeper service—the other franchise—is running at 100 per cent for the fifth consecutive day. Of course, there are only five trains in that service.

Yes, but it has a long route.

Indeed.

Let us move on. Abellio and Transport Scotland are both engaged in improving performance, but do they have particular issues at the top of their list in order for them to continue to improve performance?

The improvement plan is split into three broad sections: infrastructure, which comes under Network Rail, and rolling stock and operations, which are the responsibility of the train operating company. As members know, there are 249 actions and even more initiatives that feed on from those points and give them emphasis and priority. As the performance improvement plan details, some of those actions will take a long time. For example, kilometres of cables for signals cannot be replaced overnight, as members will understand.

The focus is on those three broad areas: infrastructure, rolling stock and operations. As I said, we are seeing some improvement. Phil Verster and the team have told me that there is also a focus on those initiatives that improve the passenger experience. For example, we saw a reduction of about a third in skip-stopping between period 9 and period 10. That is also positive.

Good morning, minister. I acknowledge the information that came from your answer to Mr Stevenson’s question but, nevertheless, the public will be interested to know what, if any, sanctions have been applied to Abellio for failing to meet contractual punctuality and cancellation targets. Are you able to outline those?

Yes, I can. First, it is worth saying that it is in the train operator’s best interests that performance is as good as it can be. Reputational damage means that fewer people take the railways and, if fewer people use the railways, that will have an impact on profit, so there is an inherent self-interest for the train operator. From speaking to Phil Verster, the management team and numerous members of staff right the way through to staff at stations, conductors and drivers, I know that they are hugely committed. Nobody is being lackadaisical about this. They understand the reputational damage that has been done to the railway, but they also want to ensure the best passenger experience.

On the other sanctions that can be applied, it has been well rehearsed in public that, if performance dips below certain levels, the contract can be terminated. Even if it did not get to quite that level, performance is one of the issues when we get to discussions around the break point in 2020. Discussions will take place before that and performance will be one of the measures that are considered. If performance is consistently not matching up to where we expect it to be or is not improving, that will be part—I must stress that it is a part—of the consideration.

On top of that—and this will be the last thing that I will say about this, because I know that the convener wants us to be succinct—if the Office of Rail and Road feels that a train operating company is not making all the efforts that are practically possible to achieve that performance improvement, it can investigate.

The final final thing that I will say is about standards on the railways. People know about the service quality incentive regime, which is a robust auditing regime that has been lauded across the UK. When ScotRail falls behind on certain criteria, it has to make a financial contribution, and it has done so. The SQUIRE fund is sitting at £2.06 million, once deductions are taken into account.

09:15  

Jamie Greene wants to drill down into the contractual obligations.

The minister answered quite a lot of my question in his previous answer so I will not dwell on it too long. It is important to understand what specific actions you can take if there is consistency in failing to meet the targets. Is it true that if ScotRail rises above the 90.3 per cent target, the improvement plan stops? That was quite unclear.

If Abellio ScotRail continues to fail to meet the target but is still some way above the contractual default limits, what action can you take if the company is in that sort of no man’s land?

That is a really good question ,and I will come back to the point about the performance plan.

On the second question, I go back to the fact that it is in the train company’s interest to make a profit. I will read from the ORR’s latest letter, which talks about the fact that it will meet the ScotRail Alliance again next month and says:

“it remains the case that, if at any point you fail to provide evidence that you are doing everything necessary (to the greatest extent reasonably practicable) to deliver the performance improvement plan or achieve your regulated performance outputs, then we may initiative a formal performance investigation.”

ScotRail is not at that stage and I should emphasise that it is demonstrating improvement in the moving annual average and the reduction of skip-stopping. On a number of measures, ScotRail is on the correct trajectory. The letter from the ORR recognises the company’s recent efforts and the upturn in performance.

On Jamie Greene’s question about a no man’s land, as he described it, we can do a number of things. We can continue with the performance improvement plan, or the ORR could conduct a formal investigation. However, I go back to the point that it is outwith the train operating company’s interests to allow its performance to fall to that level and we have no evidence of that happening. Performance is on the right trajectory.

Jamie Greene’s very good first question was about what happens with the performance improvement plan if, at the end of the railway year, ScotRail is out of improvement plan territory at 90.4 or 90.5 per cent. There might be a change in personnel at the top of ScotRail and I would have a discussion with ScotRail. Because some of the actions in the performance improvement plan are due to continue into the next railway year, which is beyond the end of March, it would be sensible for us to keep monitoring the plan as a live document. That is my opinion of what we do once we get to that stage, but first we have to focus on getting to 90.3 per cent and take it from there.

Minister, you are giving very full answers and we appreciate that, but I ask you to appreciate that we are less than a quarter of the way through our questions and time is of the essence.

I have a short question that will require a short answer. Do you believe that you will reach the target of 91.3 per cent by the end of March?

The first target is 90.3 per cent to get out of performance improvement plan territory. As Phil Verster said a couple of weeks ago, ScotRail is confident that, by the end of the railway year, it should achieve that 90.3 per cent target. It will be later before it gets to 91 or 91.3 per cent.

So it will not reach the target of 91.3 per cent by March.

It is aiming to reach 90.3 per cent by the end of March, not 91.3 per cent. That has been made clear on a number of occasions.

You will reach 90.3 per cent by the end of March.

Well, it is not me—it is ScotRail that is aiming to reach 90.3 per cent. When Phil Verster was before the committee a couple of weeks ago, he was reasonably confident that it will reach that target. I am not saying that it will be an easy target for ScotRail to reach, but we are pushing it to reach 90.3 per cent by the end of the railway year, if it can. However, as long as it is showing an improvement trajectory, that is what I want to keep seeing.

That was not a yes or no answer.

Phil Verster is leaving and Alex Hynes is arriving. Do you have any comments on that?

I wish Phil well in his new endeavours. I have enjoyed a good relationship with him. For a period of around four to six weeks, he was phoning me every day at 7 in the morning, at my insistence, to talk about the morning peaks. At that time, I probably spoke to Phil more than I spoke to any of my family or friends. I built up a good relationship with Phil, who continues to be committed to the railways, and I wish him well.

I have heard some very good things about Alex Hynes. I do not know him personally, but I have spoken about him to people in the railway industry and he comes with a formidable reputation.

I appreciated the fact that Phil Verster was pretty open and straightforward, and he had a very good handle on the practical aspects of how things were actually going. He gave us what I thought were good answers at committee meetings. I hope that you can reassure us that Mr Hynes will be equally open and frank with the committee.

That is certainly how I expect him to be not just with the committee but with passengers, which is vital in his role. He has a good reputation on those fronts, and I look forward to that work continuing.

Let us move on to a slightly different subject.

Good morning, minister. I want to ask you about project delivery. An Ernst & Young report stated that the original funding of £1,131 million had increased to £1,520 million, which was an increase of £379 million. However, when we asked Phil Verster about those figures, he reckoned that that was not an accurate figure and that the correct figure for the rise in project delivery costs was £293 million. Which figure do you recognise?

Both figures are technically correct; they just relate to different periods. Of the five major projects that the Ernst & Young report looked at, some began towards the end of control period 4 and will end in the early part of control period 6. The total of £379 million takes into account that entire period. The figure of £293 million or thereabouts, which Phil Verster cited, relates just to control period 5. Technically speaking, both figures are correct; they just relate to slightly different periods.

Okay. I understand that.

I kind of understand that, but it seems like statistics and—I cannot remember what the other thing is.

Damned lies.

I was not going to accuse anyone of that.

Thank you, convener.

It would help the committee if we could see exactly how those figures break down. That information could be supplied to the committee after the meeting.

I am sorry to have interrupted you, Peter.

That is fine, convener. I understand that, if the figures relate to different periods, that analysis could be correct.

The Ernst & Young report also made a number of recommendations for action by Transport Scotland. Can you provide an update on the implementation of those recommendations to date? Where are we with them at the moment?

I will write to the committee with further details if it wants me to, but Mr Chapman understands the situation. I am pleased that there is some understanding of it, but I will try to lay it out—

I take it that you are not suggesting that I need to lift my intellectual level to that of Mr Chapman.

I certainly did not want to suggest that, convener.

I will leave you to answer Mr Chapman’s question.

Yes, I can give you an update. The Ernst & Young report made a number of recommendations, a significant number of which were for Transport Scotland, and I am pleased to say that all those recommendations are being implemented at the moment. They can be broken down into three broad areas. The first area is ensuring that there is better-quality reporting by Network Rail. The second area—which is probably the most important—is the governance of current projects, including the establishment of the major projects portfolio board, which is chaired by the chief executive of Transport Scotland, Roy Brannen. Because he chairs that board, he has an overview and, therefore, there is a little bit more accountability between Network Rail and Transport Scotland.

The third heading is improving how we develop and deliver major projects for the future. Control period 6 is coming in 2019 and lasts until 2024. The way we do major projects is simply not fit for purpose. Therefore, through the high-level output specification—HLOS—process, we are consulting to determine a better way of delivering major rail projects.

Those improvements are well under way. They come under those three broad categories. We will continue to make the improvements that follow on from the recommendations that the Ernst & Young report highlights.

Are you content that, as we go forward, you will produce more accurate figures than we have received in the past? That must surely be the aim.

Absolutely. You are right that that must be the aim, because the way in which it is currently done is simply not fit for purpose. Of course I cannot promise that there will not be a single overrun on a single project in the future, but we should without doubt aim to have better cost estimates when projects are at the developmental stage and into the future.

Good morning, minister. You wrote to the Secretary of State for Transport in November 2016 asking for control of Network Rail to be devolved to Scotland. He wrote back to you and basically said no because the UK Government did not believe that it should go beyond the Smith commission recommendations. Will you explain what benefits full devolution of Network Rail would provide to Scottish rail passengers and freight users? How would Network Rail be structured, regulated and funded if it were devolved?

There is quite a lot in that question. I am pleased that the Scottish Government’s general aim is to secure the devolution of Network Rail and gain the benefits that would accrue from that. That aim is shared by some of the other political parties around the table. I will read out a quotation from Reform Scotland, which is an independent think tank. Tom Harris, the co-author of the Reform Scotland report and a former Labour transport minister, said:

“we need fundamental change to the governance of Network Rail. The Scottish Government is responsible for the strategic direction and funding of the Scottish rail network, but this responsibility cannot be properly exercised while Network Rail remains answerable to the UK Government.

Reform Scotland believes that Network Rail in Scotland should be fully accountable to the Scottish Government, and that means it must be devolved.”

Various reports into Network Rail—the Shaw report, the McNulty report and others—have made similar overtures on the devolution of Network Rail. The point is that the principle is not only well-established across the Scottish Government but shared by many experts in the rail industry.

The benefits could be split into three broad categories. The first relates to timetabling, which is essential for rail delivery. Timetabling is currently done in Milton Keynes, and we think that it would be much better if it were done in Scotland, closer to Transport Scotland and the Scottish Government.

The second benefit relates to the delivery of major projects, which we just talked about with Mr Chapman. Infrastructure projects are still reserved to the Government down south whereas, if the responsibility over major projects were held in Scotland, we could align them much more closely with the aims and objectives of the Scottish Government and Transport Scotland. There would be a clear line of accountability and considerable efficiencies could be made.

The final benefit would be the devolution of headquarters functions, largely in relation to legal, property and capacity issues.

The three broad categories of benefits therefore relate to timetabling, major projects and HQ functions.

I am a little bit confused because, when we asked Phil Verster specifically about that, he said that there would be absolutely no benefit from control of Network Rail moving to Scotland. My gut feeling is always to go with the man on the ground who makes the system work. Will you explain to me why you are not taking his advice on that?

09:30  

Phil Verster is employed by Network Rail, and Network Rail has a standard view on this. I have spoken to Mark Carne about it. I do not want to misrepresent him—he can speak for himself—but it is fair to say that he does not quite share the same level of devolution ambition that we have up here in the Scottish Government.

If someone is employed by Network Rail, they rightly and understandably speak on its behalf. I would not expect Phil Verster to speak on behalf of the Scottish Government and say what our ambitions are.

My point remains—I say this respectfully—that this is the position of not just the Scottish Government but other political parties and respected think tanks, and it appears in various reports on Network Rail. I can explain only our rationale for our aims and ambitions; people who represent other organisations can do that on behalf of their organisation.

I accept that. However, when Phil Verster was here he was representing everyone, although he may have been employed by Network Rail. If you look back at the Official Report of that meeting, you will see that he said that there was a very good working relationship between all the organisations, which were pulling together as a team and making it happen. He stressed that it was a team effort and that he could see no benefit in the devolution of Network Rail. Maybe it is a political suggestion.

A point that was put to Phil Verster was that Network Rail had been the cause of some of the problems, delays and performance issues. Given that Network Rail’s performance in 18 other areas is worse than it is in the ScotRail area, which suggests that the operators in those 18 areas are performing better than ScotRail, would devolution actually make a huge difference to performance?

I accept the convener’s point. I do not want to say that the alliance has not been successful. The alliance model is creating relationships that were not there previously and I note that the UK Government’s Secretary of State for Transport wants to replicate it across different franchises in England and Wales, so there are some positives there.

I say to Rhoda Grant that it is still an indisputable fact that 54 per cent of delays are attributable to Network Rail, as the Reform Scotland report highlighted. The only conclusion that I can reach is a simple one. We know that 54 per cent of delays are attributable to Network Rail, we are paying £100 million towards its headquarters costs and it is responsible for major projects that we know have a cost overrun in the hundreds of millions, yet—

Yes, but—

Let me finish this point. We know all those things, yet Network Rail is not directly accountable to us. That is just not an acceptable situation.

I am not arguing with that; I am arguing with the idea that devolution would bring about a step change in performance. Network Rail’s performance is worse in 18 other areas, which suggests that ScotRail is behind the other companies, and is itself failing.

There is no doubt that, on some measures, about 37 per cent of delays were caused by the train operating company. However, it remains the case that 54 per cent of the delays were down to Network Rail. I am not saying that if we had devolution we could magically click our fingers and everything would be okay; I am saying that having a direct relationship with Network Rail would help us to overcome some of the issues and help to tweak up performance.

I get frustrated when I hear from passengers who are understandably frustrated with signal faults and track failures, and I hear about those things day in and day out. I understand why passengers get frustrated—it causes me to get frustrated, and I wish that there was some direct accountability and that I had direct control over Network Rail, so that we could have a closer relationship and tweak up—

But you have direct control over ScotRail and that is not making a difference.

As I said to the convener, the alliance is creating positive relationships. I just think that further devolution could make even more of a difference.

If I may, I will leave that there. Further devolution is something that some people aspire to. I accept your aspirations, but they may not be reflected everywhere.

One—

I am afraid that I am going to leave it there. We move on to John Mason for the next question.

If I am allowed a supplementary on the previous question, the minister said that—

No. I ask you to move on to the question that we identified earlier, purely because of time.

Actually, I think that we are doing okay for time, but I accept your ruling, convener.

The ORR in particular has suggested that the timescales for the Edinburgh to Glasgow improvement programme and the interlinked development of Queen Street station have slipped. Can you comment on either or both of those projects?

Yes. The TAWS—Transport and Works (Scotland) Act 2007—process that we are currently going through is complex; we know from previous experience that TAWS orders are rarely straightforward. There was a slight delay of about three months in receiving the TAWS submission from Network Rail, which has had a cumulative effect. As you know, we have to go through the statutory steps, such as holding a public local inquiry.

To answer your question as succinctly as possible, passengers and commuters will want to see, as the key outputs, quicker journey times of around 42 minutes and longer trains. Eight-car trains are scheduled to be on the network for December 2018. I am determined to reach, and I know that ScotRail and Network Rail are focused on reaching, that deadline for longer trains and shorter journey times.

When are we expecting the work on Queen Street station to begin?

Phil Verster was correct to say a couple of weeks ago that—as was identified in various reports that we have put out—there could be a risk of slippage in the end stages of development. That would mainly affect the aesthetic redevelopment of Queen Street station and should not affect the platform extensions for longer trains or the delivery of shorter journey times, but there may well be a level of slippage.

We are working closely with Network Rail and other stakeholders to try to identify what the level of slippage may be. Phil Verster was correct when he told the committee a couple of weeks ago that there could be a risk of slippage.

At that meeting, Phil Verster said:

“We expected the TAWS unit to report back to the minister in July of last year, but the revised date for the report back is January or February this year.”—[Official Report, Rural Economy and Connectivity Committee, 18 January 2017; c 19.]

When will the report be submitted?

The TAWS report has been submitted to me as the relevant Scottish minister, although I emphasise that there was a delay in our receiving it. Before I make the order, I have tasked officials with going back and speaking to stakeholders to give them a further opportunity to comment on the modifications to and various nuances in the order.

When I met some of the stakeholders last week, I said that we are looking at making the order within weeks as opposed to months, and we should be able to do that shortly. I do not want to make the order and then receive more objections in response to the modifications and nuances that have been introduced in it, which would cumulatively delay the project even further.

The report was delayed by six months. Does that mean that the start of the work has been delayed by six months?

The report was delayed by three months, really. We received the submission after that and there was therefore a cumulative delay, but that does not mean that there is automatically a six-month delay. As I said, I am working with Network Rail and other partners to determine a better timetable. The key point for passengers and commuters who want to see longer trains and shorter journey times is that we are still very much focused on reaching the December 2018 deadline.

Thank you, minister. We will move away from Glasgow and go further north.

We will indeed. Good morning, minister. My question is on the Aberdeen to Inverness line and the Highland main line. Going back to the Network Rail monitor report and looking at the progress on both those lines, are you satisfied that we are ensuring that we get the best value in the development and delivery of those projects, given that there has again been some slippage and an escalation in costs?

Yes—we are still there.

As I highlighted when that slippage occurred, I am disappointed when slippage takes place on any of our projects, but the detail of the Ernst & Young report still stands.

Does John Finnie have a follow-up question? He indicated that he may have.

I do not on this occasion, thank you.

We will leave that point there. Richard Lyle has the next question.

I return to the rolling programme of electrification. Is it Network Rail or the Scottish Government that does the work? Who is responsible for electrifying the railway?

We fund the work, but Network Rail carries it out.

There are three electrification projects. The Rutherglen to Coatbridge project was completed in 2014, and the Stirling-Dunblane-Alloa line and the Shotts line—in which I am very interested—are both under development.

The ORR has stated that the Shotts budget

“remains at risk due to a number of emerging risk factors including mining remediation, land risk, access arrangements and further compliance issues.”

The ORR has also highlighted concerns about risks to the budget for the Stirling-Dunblane-Alloa electrification project. Can you outline what Transport Scotland is doing to minimise the risks to the budgets of those projects?

I understand the member’s specific interest in the Shotts line. On the back of the Ernst & Young report, which found that there were cost increases, the main recommendation that we took forward was to establish the major projects portfolio board. The board gives the chief executive of Transport Scotland, who reports directly to me, an overview of all the projects and provides a level of involvement and scrutiny that did not exist previously. The delivery date for the Shotts line is still March 2019, and it is correct that the cost has increased from £80 million to £160 million.

In my view, that is an unacceptable increase. It is a Network Rail increase, and we know that electrification projects across the UK have suffered cost increases; in fact, some of them have had to be scrapped because their cost has spiralled. Network Rail will give its own answers as to why that is the case, and the ORR will give its thoughts, too—they will involve compliance issues and other matters. However, we are keeping a very close eye on the Shotts project through the major projects portfolio board and we expect its deadline to be met.

Did I mishear you there? Did you say that the cost for the Shotts line has doubled?

Yes. The cost for the electrification of the Shotts line has increased from £80 million to £160 million.

Why? I know that we did a lot of mining in Shotts, but not as much as that.

That has been a problem for the electrification projects, but it does not take away from the fact that cost increases should not happen. As I said to Mr Chapman earlier, there has to be a better way of developing and delivering major rail projects. For me, the current model is broken and we need to have another way of doing things. That is why we have put out a consultation, which is due to close in February, around how we deliver major rail infrastructure projects. I understand your shock over the cost increase for the Shotts line, which I find unacceptable.

But you still say that the Shotts work could be completed by March 2019.

Yes, that is the current position.

I was slightly surprised to hear about that cost increase.

Aren’t we all?

Minister, Phil Verster told the committee that the electrification of the line to Dunblane is being delayed by issues related to the Victorian pedestrian bridge at Stirling that crosses platforms 2 and 3. If you have not been briefed to give an answer now to my questions, a written answer would probably do. What is the current timetable for the Dunblane work? Could the Dunblane and Bridge of Allan trains not come into the Alloa platform in order to avoid that pedestrian bridge, and then make a little crossover to take them back to the main line? Has that possibility been considered? As I said, you might not be able to say much about that just now, so a written answer to the convener would probably do.

I think that I would accept Stewart Stevenson’s suggestion that a written answer on the specific details of his questions might be appropriate.

Yes.

I will get the committee clerks to write to you about that.

Okay. I am happy to provide written information.

You expressed some surprise, convener, about the cost increase, but I point out that that figure has been in the public domain since the publication of the Ernst & Young report.

On Stewart Stevenson’s first question, the target for the completion of the Stirling-Dunblane-Alloa line is still December 2018. I am happy to write to the committee on his wider point about the pedestrian bridge and his alternative proposal.

Okay. We will move on to the next question, on which Rhoda Grant will lead.

09:45  

I would like to ask about the proposed free week’s travel. When will that happen and how will people claim it?

Following this evidence session—I wanted to give the committee some detail first—more information will go out from me and from ScotRail about the £3 million initiative for the free week’s travel that season ticket holders will get in the summer.

When we announced the initiative in December, we said that further details would come in early 2017. I can now say that the deal will include extra incentives for season ticket holders who move from the paper-based system to the smart card system. We want season ticket holders and others to do that, so an annual season ticket holder on the smart card system will get not only a free week’s travel for them, for a friend or for a member of their family, but two off-peak return trips to anywhere in Scotland. A monthly season ticket holder on the smart card system will get a free week added to their next season ticket purchase plus one off-peak return trip to anywhere in Scotland. A weekly season ticket holder on the smart card system will benefit from a complimentary one-day return ticket to anywhere in Scotland. A further offer for leisure passengers is in the pipeline for later in the year.

People will be able to claim their free week’s travel in the summer period. However, at least six to eight weeks in advance of that, ScotRail will heavily advertise when people can claim that free week’s travel, so there will be plenty of time for passengers and commuters to take advantage of the offer.

Is the offer for smart card holders and not for all season ticket holders?

No—the offer is for all season ticket holders, but there will be additional incentives for smart card holders. We want to incentivise people to transfer from the paper-based system to the smart card system. The initial deal will be for annual and monthly season ticket holders, but I have also mentioned offers for people with weekly passes and less-frequent travellers who do not have season tickets.

There will be additional incentives for people to be on the smart card system rather than the paper-based system. Getting people on to that system is a shared aim across the political parties and stakeholders.

We heard from Phil Verster that he did not know how that is to be delivered or what systems will be used. Why was the offer announced before a plan was drawn up for how you would deliver it?

I do not accept that premise in the slightest. The broad principles of the free week’s travel were well established in advance of our announcing it. There was £3 million for it, including a contribution from ScotRail and a contribution from the Scottish Government.

Phil Verster said that ScotRail did not know how it was going to deliver it.

I do not accept that in the slightest. The principle was that there would be £3 million, including contributions from the Scottish Government and ScotRail, for a free week’s travel that would benefit monthly and annual season ticket holders, and for incentives for weekly and less-frequent travellers. That is what was announced, and every time I made that announcement—in public and in any written communication—I said that more details would be released in early 2017.

Opposition members wanted us to make the full details of the initiative available on 2 January, when the fare rises were introduced, but we did not do that because the fares system is very complex. If you read the newspapers this morning, you will see that the Rail Delivery Group is saying that there are 16 million different fare algorithms and that it is working to simplify that situation. The system is complex, so we are working with ScotRail and will be able to announce the details as we go on.

So you do not know how the offer is going to be delivered because it is complex.

No—that is a complete misrepresentation of what I said. I said that the details are well established. We have the funding in place and we have said that people will be able to claim in the summer. I have given details of some of the incentives and discounts, and further details of the incentives for weekly and less-frequent travellers will be given in due course. We are living by the commitments that we made earlier this year.

Can I drill down into the information that you have just given to Rhoda Grant? Can you explain how much of that budget is coming from ScotRail and where it is coming from?

I will read from the press release that will be issued shortly. Cathy Craig, who is the commercial director of the ScotRail Alliance, says:

“We are pleased to be contributing £1.8 million of Squire funds for this significant benefit for passengers. This is a sincere token of our appreciation for their patience and understanding as we progress one of the biggest infrastructure improvements for Scotland’s Railway since Victorian times.”

That quote from ScotRail shows that £1.8 million will come from the SQUIRE fund. The other £1.2 million will come from the existing Transport Scotland budget.

Mike Rumbles wants to drill down into the actual use of the SQUIRE fund but, before we go there, there is something that I want to understand. When he came before us, Phil Verster said that the fund had about £800,000 in it. That is the amount that he said was available. You are looking for another £1 million from the SQUIRE fund. I want to follow the logic of that so that I understand the situation. The SQUIRE fund is made up of contributions for when ScotRail fails. I do not understand the position: you are saying that the money will come from the SQUIRE fund, and you want ScotRail to improve, but you need it to fail in order to be able to use the fund. Could you explain that to me?

Yes I can. That is an incorrect understanding—based not on your understanding but on what was said in committee a few weeks ago. In fairness to Phil Verster, he predicated what he said on the caveat that he was speaking form memory and was not entirely sure, which is why the figures that were used were slightly incorrect.

The SQUIRE funding sits at £2.06 million, once we deduct the £834,000 that is being spent on particular station improvements that have been agreed between ScotRail and the Scottish Government. Once we deduct that, the unallocated funding is £2.06 million, as I said in Parliament last week. There is an agreement between the Government and ScotRail to use £1.8 million of that. That will leave about £200,000 to be spent, and the fund is topped up every four weeks.

Do I want ScotRail to meet all the robust criteria so that it does not have to pay SQUIRE funding? Absolutely, I do. If it does that, however, there will still be £200,000 or thereabouts left in the SQUIRE pot. Realistically, however, we know that the funds will continue to come in because some of the improvements will inevitably take time. That is the position that we are in.

I will move on to Mike Rumbles. The critical point here—what concerns me, and what may concern Mike Rumbles—is that the SQUIRE fund was set up for specific purposes. There are no trustees or management structure for it, so it is difficult to see how the fund is being properly used. Could you explore that, Mike?

I will follow on from the convener’s point, before asking another question. When he came here, Phil Verster was quite clear, and he surprised committee members—he certainly surprised me—when he said, in relation to the SQUIRE fund:

“The contractual position is that the decision about where to invest it sits with Abellio ScotRail”,

not with the Scottish Government. He said that he had—I quote—“not agreed to” the £1.8 million and 48 hours later, he resigned. Now you are coming to the committee to say—to quote you again—“We have the funding already in place.” [Laughter.] I do not know why members are laughing; this is a serious point.

They are laughing because your insinuation is absolutely incorrect.

It is incorrect?

It is absolutely unfair to suggest that, after Phil Verster came to the committee, he somehow resigned as a result of that. That is the insinuation that you made, and it was an incorrect and false one to have made. To be frank, it was a crass insinuation to have made.

Excuse me!

In fairness, minister, you have a right to disagree, but I would always seek to ensure that comments made in the committee on disagreements are not too personal. I therefore ask you to withdraw that, and perhaps to answer the question that Mike Rumbles has asked.

Okay. I certainly do not agree with the insinuation that was made about Phil Verster choosing to take on another opportunity in Network Rail.

The question was about the contractual position and on spending SQUIRE money. On the £834,000 that has been allocated, ScotRail will generally come up with propositions and there will be a discussion with Transport Scotland, and the proposition will then come to Scottish ministers. Transport Scotland and ScotRail come to agreement on where to spend the money. Contractually speaking, it is up to the Scottish ministers how the money should be spent but, generally speaking, and as we have always done, we decide that in consultation and in discussion with ScotRail.

Let me ask whether I have got something wrong here. Phil Verster comes to the committee and says, to quote from the Official Report, that

“The contractual position is that the decision about where to invest it sits with Abellio ScotRail”.—[Official Report, Rural Economy and Connectivity Committee, 18 January 2017; c 27.]

You have just said that it is up to Scottish ministers. I am not insinuating anything. I am making a point that I would like you to address and I am trying to get to the facts. Phil Verster came to the committee and made that point, but you have come to the committee and made the opposite point. Do you agree that there is obviously disagreement between the two of you?

There is no disagreement. If you read Phil Verster’s remarks, you will see that he said that he was working from memory. I ask Mike Rumbles to bear that in mind. I do not imagine that Phil Verster has a photographic memory of the contract in his head. I am more than happy to provide the member with the wording of the contract.

That would be very helpful. Phil Verster was obviously wrong when he said that his understanding of the contract was that it was his decision and not yours.

I am happy to write to Mike Rumbles on the contractual position.

It would be very helpful to find out exactly what the contract says. The main point that I am trying to get at—

Before Mr Rumbles goes on to his next point, I confirm that we would prefer that you write to the committee rather than to Mike Rumbles, and we will ensure that he gets that information.

The contract is in the public domain, I will extract that point and highlight it.

That would be very helpful. It is such an important point, because as you have said—again—the SQUIRE fund is used for station improvements. In my region there is a real issue about Insch station. I have written to you on that point and I am sure that you will reply fairly soon. I asked Phil Verster whether the SQUIRE money could be used for disabled access, for example, at Insch station. I am sure that it will be used for disabled access at other stations across the country, too. However, the point is that Phil Verster gave us the clear impression that the SQUIRE fund was for such developments, which is why he was not agreeing to your access to it—let us put it that way—for a different purpose. That is the disagreement that I am trying to get at. Is he wrong?

There is £1.8 million that is unallocated. The £834,000 from the SQUIRE fund is allocated. Therefore it is correct to say that the £1.8 million will not impact on projects that are being delivered. That fund continues to be topped up every four weeks—that is, every railway period.

In terms of compliance with the Disability Discrimination Act 1995 and work to make stations more accessible, one of the main funds is the access for all fund, which is a Department for Transport fund with a ring-fenced pot for Scotland. That fund, which amounts to tens of millions of pounds, is helping to refurbish and make more accessible about 25 stations in Scotland up to 2019. On top of that, the franchise contains a minor works fund, which is around £350,000 and is specifically to improve accessibility in stations. There is also SQUIRE funding that is already allocated. The £1.8 million is unallocated and the fund continues to be topped up.

Mike Rumbles has written to me about Insch station and I will reply in due course. I am happy to meet him to see whether we can put forward a proposal for the access for all fund in the future. There are some difficulties with that. The member has spoken to me about what he thinks is a more cost-effective solution. I will happily hear him out on that.

I want a final try at that point. I understand what you have just said about all the other funds and everything that is available for disabled access to stations, but Phil Verster was quite clear that the SQUIRE fund can be used for things like disabled access at stations such as Insch. It is in the Official Report. I hear what you said, minister, and I am not disagreeing, but the point that I am making is that the £1.8 million could be used for such work, but you are using it for something else. That is what Phil Verster said.

The £1.8 million is unallocated.

I know.

There is £834,000 that has been allocated and we are not touching that. For works on disability access and improvement to access, the correct funds would be the access for all fund and the minor works fund. The SQUIRE fund will continue to be topped up and even once we deduct for the fares, £200,000 will remain in the fund, as well as the top-up amount that is added every four weeks.

10:00  

There is concern about the management of the SQUIRE fund. Sometimes, it is used to do various things that are allocated for under the fund; sometimes, it is used to do things that are to help situations as they come up—and that might be to help the Government.

It would be helpful if you could make available to the committee information on—I have done research on this issue—management of the SQUIRE fund, such as who is responsible for it and who decides how it is spent.

I would be more than happy to do that.

When the then Labour-Lib Dem Administration held the previous franchise, SQUIRE money was just put back into a central pot—it was not ring fenced to reinvest back in the railways. We managed to get agreement to reinvest the money back in the railways. That was a significant step forward.

I will write to you about how decisions are made and on any other details about the management of SQUIRE. If, having done so, some detail is missing and you want to come back to me, please do so.

I emphasise that the main thing for the passenger is that, as I announced in December 2016, £3 million of funding is going towards a free week of travel and further discounts. I think that that will be welcomed.

This is not a political point by any means. I appreciate that £800,000 has been allocated to existing projects, and I dare say that some of the projects are good ones that will improve the passenger experience, but is free travel the best way to spend the balance of the SQUIRE fund—the £1.8 million? It is a straightforward question.

First of all, that is not the entire balance.

It is the lion’s share.

As I said, there will still be money in the SQUIRE pot, and the pot will continue to be topped up.

The free travel is a benefit for passengers who have had to suffer disruption. Some of that disruption was planned—for example, closure of the Queen Street tunnel—and some was not planned, including the November 2016 incident at Haymarket station, which caused huge disruption. The Government’s proposal is a good way to thank passengers and commuters for putting up with that disruption. The passengers whom I have spoken to about it have welcomed it.

We have not got to a couple of questions and our time is short because we have other witnesses coming this morning. We will write to you for answers to those questions. Would you like to make a brief statement on the evidence that you have given to the committee?

No, I have nothing to add, convener. I thank members for the questions. Obviously, we will follow up on what needs to be followed up. As I said, I was keen to give the committee a little bit more detail on the free week of travel before the information goes out more publicly. If there is any follow up on that. I am always willing to come in front of the committee or to provide any written submissions that are necessary.

Thank you for attending today’s meeting, minister. I suspend the meeting briefly to allow a changeover of witnesses.

10:02 Meeting suspended.  

10:08 On resuming—