Rural Economy and Connectivity Committee

Meeting date: Wednesday, March 8, 2017

Official Report 516KB pdf

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Major Transport Infrastructure Projects (Update)

Good morning, everyone. Welcome to the eighth meeting in 2017 of the Rural Economy and Connectivity Committee. I remind those present to turn off their mobile telephones. No apologies have been received.

Item 1 on our agenda is evidence on major transport infrastructure projects. I welcome Keith Brown, the Cabinet Secretary for Economy, Jobs and Fair Work. We received an update from Mr Brown on 14 December regarding various projects. The minister is joined by Michelle Rennie, the director of major transport infrastructure projects in the Scottish Government, and Graham Porteous, the head of special projects at Transport Scotland. Minister, you asked to attend the meeting and we would welcome an opening statement from you.

Thank you very much, convener, and thanks to the committee for the chance to provide an update. At the last discussion that we had, committee members made it clear that they would like to be kept updated as frequently as possible and to take cognisance of any emerging issues, which is why I asked to come back to the committee. In particular, I will mention the Forth crossing—I know that members will hear about that subsequently—and the Aberdeen western peripheral route, but I will also mention where we are with most of our transport projects. It has been a busy time and significant works have been undertaken across all projects over recent months.

I will start with the AWPR. Since we last had a discussion about the 58km Balmedie to Tipperty project site, further progress has been made during 2016 and early 2017. I advised the committee previously that phase 1 of the project at the Aberdeen airport site opened in August last year, ahead of the contractor’s planned autumn target, and it is already being used and providing benefit to local people. In November last year, the contractor, Aberdeen Roads Ltd, advised us that it was unable to complete the Balmedie to Tipperty section by spring this year as originally planned—it is seasonally affected work. I alerted the committee to that change in December and I would like to provide a brief update on the progress that the contractor has made since then.

The Stonehaven southbound slip roads are expected to open in spring this year, which will bring early benefits to the people of Stonehaven by taking long-distance traffic away from the town. At the major bridge over the River Dee, the south pier is now complete and the north pier is in progress. Once the north pier is completed, the works to install the bridge deck will commence. Those works, which will include the slip forming of the concrete deck using a balanced cantilever approach, are due to begin by late spring. Road surfacing works recommenced last week in the southern section and the road foundation works are due to recommence this week. The fast-approaching spring season will also see the recommencement of the remaining earthwork operations.

There was some discussion and some press activity in the media last night about utilities, and it is worth mentioning that the project is unusual in as far as we were well aware of the pressure on utilities. Therefore, I asked all the utility providers to come to a meeting in advance of the contract being let so that we could discuss the ability to ensure that utility diversions, where necessary, were undertaken as smoothly as possible. That was an exceptional action; we have not done that in any other project. There are elements of commercial discussions with the contractor that I cannot divulge but, in addition, it is true to say that we have helped out with one or two substantial utility diversions—one in particular—at the contractor’s request. I will not go into the details but, at the request of the contractor, I wrote to the utility provider—not a public utility provider—to help out. Utilities will always be a major feature of such contracts.

As I notified the committee in December, there was a delay in relation to completing the Balmedie to Tipperty section but, despite the revised programme for Balmedie to Tipperty, our advisers have independently confirmed that the overall programme of delivery for the works by winter 2017-18 remains achievable. There will be challenges with that, as there are with all successful major projects.

Sound project management and, of course, sufficient resourcing by the contractor are required in addition to a willingness to resolve any issues between the parties in a sensible way. We undertake discussions on those things, as we do in all major contracts. They can sometimes result in tensions, of course, but we and the contractor are trying to do everything that we can to ensure that we complete the overall project on time.

In relation to Balmedie to Tipperty or any other delays, I think that I talked last time about whether a penalty was paid by the contractor, as that issue arose. It is worth repeating that that is not how it works; the contractor just does not receive any money. It will receive money for the airport section, which I mentioned earlier, as it is in use. Essentially, the penalty is that the contractor does not receive funding.

To conclude on the AWPR, Transport Scotland and I continue to work together with ARL to deliver the benefits of the project as soon as possible.

I will try not to anticipate too much of what members will hear from those who are involved in the Queensferry crossing, but I am sure that members will have seen that the final deck closure was completed on 3 February. Members will hear more evidence later about the progress that has been made, but I can say that things such as the waterproofing of the deck surface, the surfacing of the deck to take traffic, and work on the wind barriers are now being undertaken. Members will hear more about that work later, so I will move on to other projects.

Design work is well under way on the 11 road schemes that make up the 80 miles of the A9 dualling programme, which is one of the biggest transport infrastructure projects in Scotland’s history. Members might be aware that some residents of Kindallachan, Guay and Dowally have had concerns about some of the proposed options for dualling, on the ground that there would be negative impacts on the villages and their properties. The preferred route for that section was made public in December, and the online option was chosen, but residents remain concerned. In fact, they made representations in the public meeting after the Cabinet meeting in Pitlochry on 6 February. I spoke to residents, and members of Transport Scotland’s senior management team subsequently spoke to residents by telephone on 7 February to address concerns.

Residents of Birnam and Dunkeld remain in discussion with Transport Scotland on a co-creative process to capture community input into the route options design and assessment. We envisage that commencing after the local government elections in May to allow further progress towards identifying a preferred option.

On 31 January, the academy 9 programme launched a Scottish credit and qualifications framework module that will assist teachers who are involved in science, technology, engineering and mathematics to raise awareness of the A9 dualling programme in the areas of engineering, ecology, geology and sustainability. The academy 9 glow blog, which recently went live, features extensive material on the A9 programme for use by teachers and pupils. We look forward to supporting its use in schools across the length of the A9 in the coming years.

On the Kincraig to Dalraddy section of the A9 dualling specifically, traffic is already using the southbound carriageway, which some members might be familiar with. We remain on schedule to fully open the 7.5km stretch this summer to improve the safety of the route and provide better access to and from the Highlands.

A prior information notice—or PIN—for the construction contract for the 9.5km section between Luncarty and Birnam has now been published, and we hope to hold an industry day in the coming weeks to discuss the scheme with potential bidders. Preparatory works to facilitate that construction will begin later this year, and the main works contract is scheduled to commence in early 2018.

Design work continues apace across the rest of the route between Perth and Inverness, and a series of exhibitions are under way, which allow local communities to view the preferred routes for the lengthy 24km section between Dalraddy and Slochd and the 16km Crubenmore to Kincraig scheme. That is a further 40km of the A9 dualling programme.

Finally on the A9, work is under way to identify contractors to carry out a series of advance works across the entire A9 route in preparation for future construction. It is expected that the opportunities will be of particular interest to small and medium-sized businesses, including locally based businesses that would like to be part of that innovative and ambitious programme.

Our other big programme is, of course, the A96 dualling. There has been a contract notice for design work. The estimated prices for the two projects—they can be only estimates at the early stages of both projects, given that many contracts are still to be let—were similar, at around £3 billion.

A contract notice for the design work on the 26-mile stretch of the A96 from east of Huntly to Aberdeen, also known as the eastern section, was published on 24 January. That major contract marks a further milestone on the road towards the dualling of the A96, with all the investment and improvements that that will bring to the north-east and the Highlands. Our timescale for that is 2030, with the A9 being done by 2025.

Transport Scotland has also completed the development and assessment of the preferred option for the dualling of the 31km stretch of the A96 from Inverness to Nairn, including the Nairn bypass section, and it published draft orders for the scheme on 29 November for formal comment. The objection period ran for nine weeks, ending on 31 January.

Effective engagement with affected parties is a key part of the statutory process and it has been my experience that the more discussion that we have in the earlier stages of the process, the smoother the rest of the process will become. In many cases, that means that we can enjoy the support of those affected parties. As with all projects of that nature, we will engage directly with the objectors to resolve objections. I have spoken to some local members of the Scottish Parliament who have raised issues about the project. Only when the objectors have come forward will we be able to see whether a public local inquiry will be required to consider the objections that we have received and that have not been withdrawn. Ultimately, ministers will consider the outcome of all the consultations and objections that have been raised, including the recommendations of independent reporters, if that happens.

The objections that we have received so far are being assessed. However, in the event that we cannot resolve them all, we expect that a public local inquiry will happen late this year or early next year.

On the M8/M73/M74 motorway improvements project, the focus of construction has now shifted to completing the various structures across the project. We opened the 560m Raith underpass to traffic on 16 February. I do not know whether the committee has had a chance to look at it but it is an impressive development. It provides a direct link from the A725 Bellshill bypass to the A725 East Kilbride expressway. We have had substantial feedback from local people about the benefits that it has brought them. The development has received positive media coverage and is delivering benefits to the users of the A725.

The full benefits of the interchange will not be obtained until the works on the M74 are complete. We have now reached the stage of construction at which it is necessary to connect the new offline infrastructure, which is now almost complete, with the existing online road network. There is a significant height difference there, which is why we have had to put in place a 10-week diversion that is projected to add an average of 10 minutes’ delay. That is unavoidable at this stage of the project but we are now two or three weeks into that 10-week period. Although there have been delays, the diversion has been effective. The diversion route allows the tie-in of the new M8 motorway. Traffic on surrounding roads has been heavier but the diversion itself is performing well and officials continue to work closely with the Scottish Roads Partnership to ensure that traffic management measures are removed at the earliest opportunity, when it is safe to do so.

The last time that I came to the committee, members, including Mike Rumbles, expressed interest in the Laurencekirk bypass. That project is being taken forward by my colleague Humza Yousaf. The committee will have received an update after our previous discussion, so I will just say one or two words about that.

We announced the £24 million package for the design and construction of the new grade-separated junction at Laurencekirk. That was part of a package of additional investment alongside the Aberdeen city region deal. Transport Scotland appointed design consultants for the scheme in September, and is taking forward the next stage of design development for the junction improvement, which is the options assessment. Thereafter it will proceed through the relevant statutory procedures.

The on-going essential design and assessment process to identify the preferred junction layout is programmed to be completed in 2018. The detailed assessment of the preferred option will follow that, culminating in 2019 with publication of the draft orders for formal comment. Obviously there is still a lot of development work to be carried out but we will continue to push through the preparation stages to deliver the scheme as soon as possible. That will deliver improved road safety and economic benefits to road users and the local community in the wider north-east.

With that, convener, I conclude my remarks and thank the committee again for the opportunity to provide an update. I am happy to take questions on any of the issues.

Thank you. The first question is from Peter Chapman.

10:15  

Thank you for the update, cabinet secretary.

The committee papers say that the AWPR scheme is to be finished by the winter of 2018. That could be read as the winter of 2017-18 or the winter of 2018-19. For the avoidance of any doubt, which is the date by which you are to complete the work?

The winter that we are referring to is 2017-18. The work will go into the spring of 2018. That was the timescale that the former First Minister announced at the start. It is the winter that we are about to face—not the one that we are coming out of and not the one after that, but the winter of 2017-18.

Are you on target to meet that timescale, and are you on budget to do so? Anecdotal evidence suggests that the project is running well over budget. Can you give us any clarity on that?

I can. I mentioned in my opening statement that we have had the project independently assessed as achievable on time. That is what we intend.

In terms of the budget, Michelle Rennie can say what we have actually spent so far. The project is paid for over a period of time through a unitary charge, which does not kick in until we have possession of the roads. Some expenditure will have been incurred on the roads that are already open, but the bulk of the expenditure will not begin until the remaining roads are opened. There is not an increase in the budget. We have not started to pay the charge yet.

I do not have the figures for what we have spent to date, but we are still within the total scheme cost of £745 million at this point.

I am pleased to hear that.

There are one or two other issues that I need to bring up. I get complaints almost daily from farmers along the AWPR. Getting to the bottom of the compensation claims that they are putting in for damage done to their property seems to be an absolute minefield.

This issue was brought up with Humza Yousaf when he met the folks in the north-east but it has not gone away. No farmer expects to make money out of the scheme. Equally, no farmer should be left out of pocket because of the scheme, but that is exactly what is going on now. Relevant claims are being kicked into the long grass. It seems to be taking forever and a day to come to a conclusion and, in the meantime, serious amounts of money are outstanding.

The sad thing is that there was a real sense of good will between the farming community and the contractors at one time. That has completely and utterly disappeared. They do not want to work along with—

Please come to a specific question, and, before you wrap up that question, please also make a declaration that, as I am sure that the cabinet secretary is aware, you are a farmer.

I need to make that declaration because I am speaking about farmers. I apologise for not doing so.

I have two questions. The fencing is completely inadequate. I have been fencing all my life and I know about it. I can assure you that sheep will not be held in by the fences that are being provided along this road. The fences will hold in cattle, but they will not hold in sheep.

Second, we need to get the claims sorted out a lot more quickly than we are doing.

I know that there are issues. I have talked to some landowners about this specific issue in the past and it is probably right that such issues come to me rather than to Humza Yousaf.

The process has been set for many years and has an element of independence built in to it. There are proper legal procedures in place, through the district valuer and the Land Tribunal for Scotland.

It is not the intention to delay compensation unnecessarily. I have made the same point that Peter Chapman has that people should not be left out of pocket. That should be the basic principle that applies. When there is a delay for perfectly understandable reasons involving either party, we will do whatever we can to help with that.

Peter Chapman can refer the individual cases that he knows about—I have probably seen some of them—to Transport Scotland and myself. If there is something that we can do that does not undermine the independent legal process that has to be gone through, we will undertake to do that on a case-by-case basis. I make that offer if he wants to get in touch about the cases.

Cabinet secretary, I welcome the final comment in your opening statement, which is not the least comment and was about the Laurencekirk junction. I appreciate it and I know that other committee members, particularly Mairi Evans, will also welcome it. It is really good news.

I will focus on the Aberdeen western peripheral route. We are in March 2017, so you are saying that we should expect the project to be complete by March 2018. Will you confirm that? There is always a little bit of uncertainty about what we mean by the seasons.

I agree with the year but not necessarily the month. A season is a bit more elastic than a month but, as I said to Peter Chapman, we are talking about spring next year. We intend to finish by the end of the winter next year.

That is great. I compare it to your forecast for the Forth bridge, for which we have a specific month. I get questions about what month we are looking forward to the AWPR opening. It is approximately March next year.

Approximately, but it could be a month either side of that. Even May is sometimes referred to as spring in some places. It is possible that it could be earlier or later than March, but we intend that it will be finished in that period.

This time next year, we should be happy.

Yes, I think so. That is our intention and the contractor’s intention.

I know what you mean about the Forth replacement crossing. The December date that was mentioned was never the contract completion date but we hoped to have the bridge finished by then when we were told in 2005 that the state of the Forth road bridge’s cables meant that we would have to stop HGVs travelling on the bridge by 2017. That is why we said that the new bridge would be finished at the end of 2016. As it turned out, because of the work that was done on the cables, that was not necessary and we still anticipate that we will finish the project by its contract completion date, if not earlier.

We are joined briefly by a delegation from the Committee on Roads and Transport in the Senate of the Parliament of Kenya. We welcome the delegation to our committee. We will have some discussions later.

I will focus on the Balmedie to Tipperty project. The reason that we were previously given for its rescheduling was, in essence, the weather. Are the works that are planned to be undertaken in the forthcoming winter as weather dependent as the ones that were delayed by the winter that is pastn, or are we at the stage at which there may be not zero potential impact but a substantially reduced weather impact on the project?

It is probably unfair to blame the weather. It is more true to say that the works were not as advanced as planned before the winter came in. The earthworks were the specific problem and those will certainly have been completed before the next winter.

To ensure that I am getting that right, I ask Michelle Rennie to confirm.

That is correct, cabinet secretary, but it would not be correct to say that the weather will have no impact on a 58km job in the outdoors in the north-east of Scotland. We need the right kind of weather for the activity that is under way at the time. For instance, heavy rain is detrimental to earthwork activities, so undertaking earthwork activities in the winter is risky to productivity. Equally, if we are laying road surfacing, very low temperatures can be problematic.

There is no particular weather risk at this point but we will be working outside and we are always susceptible to the weather.

What sort of activities are likely to be undertaken in that more adverse weather period that we occasionally call winter?

As I mentioned in my opening statement, the earthworks are being recommenced. Beyond that, we would be into the preparation of the surface and the surfacing of the road.

We will also be completing the structures over that period.

Is that in the winter of 2017-18?

That is right.

There is still weather risk, but we are beyond the major impacts that would stop all the work when the earthworks cannot be done.

I receive advice from Transport Scotland, which talks directly to the contractor. I would be firm about telling the contractor that it cannot say to me that, although it was quite close to doing so, it was unable to get quite as far as it hoped to before the winter and that the works would have to continue on substantially into next year, then use the same excuse the following year. I do not anticipate that happening, but it would not be acceptable to me; I would be very firm in that regard.

After your previous appearance, I looked into the difficulties of doing earthworks in the winter. It made me smile to see that earthworks have continued apace up the A9. Indeed, they have been going on every week that I have been driving up and down the roads. Carrying out earthworks does not seem to be an issue on the A9, but it seems to be an issue on the Aberdeen road. Will you comment on that?

That is absolutely what the contractor has said to us. Perhaps Michelle will comment, because she has a bit more experience in constructing roads than I have.

We cannot make a general statement about earthworks. Obviously, some earthworks happen during the winter period.

The AWPR had a specific issue to do with its geographical location, the number of watercourses in that area and the impact on those watercourses of the previous winter and spring. The contractor and the various environmental bodies agreed that they would cease earthworks operations during the winter to mitigate the effect on the watercourses, so that we could avoid any of the incidents that we had previously experienced.

If you have been travelling up the A9, convener, you will have seen there is one bit of earthworks still standing right next to the river—it was certainly there the last time that I was there recently. The burn runs through the area and the bridge has to go across it. That would suggest that that is the common factor.

Watercourses are important. Obviously, the Spey and the Spey catchment are affected in the same way as other rivers. I just wondered whether there was a correlation.

In your opening statement, you said that you got the public and private utility companies together ahead of the contract to try to iron out problems. Who is responsible for that? Is it a ministerial, Transport Scotland or contractors’ responsibility?

It is a shared responsibility. Transport Scotland has a role. I suppose that it exercises its powers on behalf of ministers. We have a different relationship with Scottish Water, because it is the public utility.

Given where the AWPR goes, especially when it comes close to urban areas, we knew that there would be utilities diversions. Actually, we knew that that would be the case from the Edinburgh trams project. If you think about the timing, we were looking at AWPR right in the teeth of that issue with the trams project, when people were digging up roads without knowing what was under the surface. Therefore, we took a very different, precautionary approach.

Michelle, do you have anything to add anything on the point about responsibilities?

You are correct. As you can imagine, there are complex interfaces between utilities and all infrastructure projects. Planning work and preparing the projects, including agreeing the likely diversions that need to take place, is done over a period of years. All that work happens well before we ever award a contract.

At the point of award, the responsibility for managing those utilities falls to the contractor, because it is important that he is able to liaise directly with the utility companies and to make sure that their programmes tie in with his programme for completing the works.

Cabinet secretary, you also mentioned an issue with one of the private utilities. That would appear to be a complex matter to sort out. For example, if Transport Scotland were doing the groundwork—for want of a better phrase—with the utility companies and an issue occurred when the contractor took over that added costs to the project, who would be responsible for those additional costs?

The contractor. However, I am not sure that I would agree with the role of Transport Scotland in that example. Again, I have to caution that I am not able to be completely free with all the facts because there is a commercial relationship here. However, I will give my understanding of the issue and will hopefully not go too far in doing so—Michelle can correct me if I do.

The contractor had issues with a private utility when trying to achieve the diversion that was sought. The contractor came to me and specifically asked me whether I would intervene on its behalf regarding that one utility. We are not obliged to do that, as Michelle has said, but we did so. My understanding is that, if additional costs arise from elements to do with diversions, that would fall to the contractor. I am happy to be corrected, however.

10:30  

The issue here was not one of cost; it was one of timing. It was about ensuring that the utilities were adequately resourced in order to meet the programme that the contractor had set out. On that occasion, the contractor was given a bit of additional support from us and from ministers to assist with his discussions with the utility company.

Was that financial support or back-up?

No.

If the work adds a financial cost, who would bear that, or are you not at liberty to say? If you are not, when will we get that information?

There is no suggestion at this time that those diversionary works will generate additional cost.

Okay. However, one imagines that, if they cause a delay, the cost will then fall to the contractor because it is not getting its payment for that part of the route. It is not online. It would expect a payment then. If the contractor feels that that is not their problem, and that it has done everything that it could to mitigate it, does it have recourse to the Scottish Government for additional funding?

The short answer is no, it does not. The contractor who has signed undertakes to pay the unitary charge fee at that time. It is up to the contractor to manage its risks during the construction and the contract. Under different contracts, contractors can raise issues through different dispute or legal processes if they think that something is outwith their control, but that is not the case in this particular case.

It is the contractor’s responsibility to manage its risks. As you have just said, its risk comes if it does not complete. Crucially, it comes down to when the road is available. We will only start paying for the road when it is available, and it is up to the contractor to manage the risks.

It is not quite as clear cut as us saying, “Just get on with it and get it done—it is your problem.” As the example that you have mentioned highlights, we have that discussion with the contractor and we try to help out. The earlier example that I gave involved being proactive and getting all the utility companies together, telling them how we wanted to get the road done, and that there had been a long delay before the road was started, due to legal processes. We get involved in that, but it is the contractor’s risk to manage. Would it be right to say that?

Yes. The biggest risk for the contractor is time, because time costs money and whatever the contractor can do to mitigate the time effect on his programme is important to him. That is where the support that it has received from ministers comes into play. It is critical for the contractor that the utility diversions happen when they need to happen to allow it to proceed with the work, and that they do not hold the contractor up in any way.

I wish to follow that up, so that I understand it. You are saying that there were discussions with the utilities and that there have been issues, but they are all resolved and they will not stop the project completing on time.

I would not say that they are all resolved. The contractor will still have to talk to all the different utilities. Many of the diversions have taken place, but there will be further diversions still to take place through the contract. The contractor has to manage that process.

Just to tie you down completely on that, are you anticipating, or are you aware, that any of the diversions that are required for the utilities will delay the project in any shape or form?

I think I have now said two or three times that we expect the contract to be completed on time. I do not take a wee look at it and make a judgment myself; that comes from the independent assessors of the process, and they are saying that it can be achieved on time.

There will be further risks to manage. We are perhaps still in the most crucial phase of the project. We may consider the Forth crossing and, to some extent, the M8 bundle, although it seems to have got through that part of the process and is now coming towards the very end. This is a crucial part of the programme, but it is up to the contractor to manage the risks, and we will help it to do that to complete the project on time. We currently expect it to be completed on time.

Given that the project is in phases, do you expect any phase to be delayed, albeit that the overall contract should be completed on time?

The Balmedie to Tipperty section has obviously been delayed. We brought ahead the airport junction one. There are no particular phases where we expect a change. Things can change over time, but we are not expecting any changes to phases. Is that right?

That is correct.

As a matter of public policy, wayleave is granted to utility providers to facilitate their being able to put their utility connections over land and water. Is it a matter of public policy that the implicit deal is that, in exchange for that benefit, the utility companies have to play ball with public projects thereafter? Does that present opportunities for the longer term? I think that wayleave has been around for more than 100 years, so it is not new. That implicit deal exists, and utility companies should take close care to support public projects, given that they are in receipt of a public benefit.

I do not want us to get into a big discussion on wayleave, or a debate about what we class as a public benefit—housing or whatever—and whether that should change. It would be good if you could answer Mr Stevenson as briefly as possible, cabinet secretary.

It might be better to let Michelle Rennie speak about the implicit agreement.

Utility companies have a number of statutory obligations arising from things such as the New Roads and Streetworks Act 1991, including a duty to engage. Difficulties always arise in situations in which one party is reliant on a third party’s performance of its duties for it to perform its own duties. That will continue to be the case.

We will now move on to questions on Prestwick airport.

Most of us are positive about Prestwick airport. We want it to succeed as it provides jobs, carries freight and has potential to develop, given the size of the runway and so on. However, as we know, it made a loss of £8.7 million in 2015-16, which is covered by a loan. If it continues to make losses, for how long will the Government keep lending? Is there a limit to how much should be given in loans to the airport?

Shortly after we purchased the airport, we made clear through the business plan that was produced what we would do in terms of loans. We also said that our intention is to see the airport return to profitability and then to return it to the market, because we were not necessarily looking to look to add to our portfolio of airports. Of course, as you said, if we had not purchased the airport, the social and economic implications for jobs in Ayrshire would have been substantial, and those costs must be balanced against what we have invested in the airport

I cannot speak to every part of what Prestwick is doing in terms of trying to turn around the current situation, because of commercial confidentiality, but we are satisfied that there is evidence that the airport is trying hard in that regard. For example, Chevron—a company from the north of England—has taken space at Prestwick, and some of the businesses that surround Prestwick are adding to a real aviation hub, which gives us some confidence in the ability of Prestwick, along with other airports, to bid to become a spaceport. If we were not happy with what the airport was doing, we would ask serious questions. We do not just hand over the money from a never-ending pot and leave it at that, and the management of Prestwick airport is well aware of that fact. A huge amount of work is going on. In the past two or three weeks, I have been talking to management about specific commercial opportunities.

It is true to say that there are real difficulties in terms of passenger traffic. That was a problem before the purchase of the airport and, because of events since then, it has proven difficult to boost that traffic. However, Ryanair still operates from the airport and there has been some success in terms of freight and the maintenance, repair and overhaul operations.

We always said that this was going to be a long process. There is not a never-ending pot of money. We analyse each request for finance, especially capital finance, and ensure that the taxpayers’ money is being looked after. There are a number of irons in the fire, which we hope will bear fruit.

It seems to me that if it were just to break even, that would be a huge success. Therefore the chances of it making a profit of £8.7 million to pay back the past loss and the loan do seem a bit remote. That surely has to be a doubtful debt. Has the Government made provision against that debt or is it being held at full face value?

We made provision in the budgets going back for, I think, the past three years—on a three-year basis—for those monies to be handed over. Despite what you say about the difficult nature of that, we still hold to the original intention that the investment by the taxpayer will be paid back. There is no intention of our writing off that debt at this stage; we intend that it will come back. We understood—and the record will show that in various committees of the Parliament we said—that that was going to be a long-term process and that it was not going to happen quickly.

Thank you.

Jamie Greene has a question.

John Mason has summed up the rationale behind our questioning, but I want to drill down into the numbers somewhat.

As part of this year’s budget, loans of around £9.4 million are in line for Prestwick airport; anecdotally, though, we have heard that the airport will require around £40 million in total before 2021-22—or, some have suggested, even sooner than that. Cabinet secretary, I am intrigued by your terminology in that respect. You have said that it is “a long process” and that

“There is not a never-ending pot of money,”

but I think that we should be a bit more robust in our analysis. How long is “a long process”? Are we talking about a two-year, five-year or 10-year plan?

I can see that the cabinet secretary appreciates the management’s efforts to try to turn the business around, but what is he doing to measure its success or lack of it? Are there specific measurable annual targets that the management has to hit in order to secure a further year’s funding? Has the Government said, “Look, guys, you’ve got three years to turn this around”? It seems to me that there is a lot of loose wording but no very specific plan for Prestwick airport.

We were very specific initially when we bought the airport, and secondly, when, at our request, a business plan was drawn up, which was submitted to the Parliament’s committees. At that time, we made it very clear that it could well take more than 10 years for the airport to be turned around. This is not something new, and I am not making it up; that is what we have said, and we have been very clear about it.

We have also made it very clear that if an opportunity arises to take the airport back to the market beforehand, we will do that at the earliest opportunity. Even with the sums of money that have been used so far, there has been substantial benefit in having saved all the jobs that are there and with regard to the impact on the airport. I also note that the decision enjoyed cross-party support at the time.

As for the on-going scrutiny of the Scottish Government, I appreciate that the Parliament wants to have its own scrutiny of all this—and quite rightly so—but I point out that we have officials from Transport Scotland on the holdco board, which examines these matters on a regular basis. If someone were to ask the Prestwick management whether they felt that they were getting sufficient scrutiny from me personally, what they would answer would be up to them, but I think that they would say that they were. I regularly have very robust discussions with them.

I should also say that I cannot allude to some of the efforts that the management are making, as some of them are commercially confidential. Members will know that, until a deal is done, we cannot make some of these things public, but believe you me, there is, on our part, absolutely close and robust scrutiny of what they are doing. Members will probably have seen a number of parliamentary questions on the subject; those questions also have to be answered, and indeed I will often use such questions as a basis for saying to the management of the airport, “Look, in addition to the questions that I am asking you, here are other questions that you have to be aware of.”

I accept that there is a real public interest in this, because a substantial amount of public money is being used. We are not doing that lightly; we examine every request for finance. We gave an undertaking, at the very start, that the process would be a long-term one, and I do not think that that has changed for us.

I appreciate that answer. Thank you.

Good morning, cabinet secretary. With regard to the portfolio that you have mentioned, the Scottish Government owns a number of airports through Highlands and Islands Airports Ltd. Will you explain the rationale behind your comment that, if you were able to succeed in turning Prestwick airport around, you would take the airport to the market? If something in public ownership is profitable, why would you dispense with it? That makes no sense to me.

We do not see our role as having that kind of ownership of such an airport. It is quite distinct from the Highlands and Islands airports that you mentioned, which are not profit making and which, as we have always accepted, require Government support. Certainly during my time as Minister for Transport, we have provided substantial additional funds to those airports to help improve them.

We never got involved in Prestwick airport by design. We were faced with very substantial job losses—not just direct jobs, but indirect ones—and the purpose of our investment was to prevent that. We made clear the basis on which were going in, as we were obliged to do under European state aid rules, which also oblige us to make a return on the investment. It was not part of our design to own that airport and we believe that if, as we expect, we can turn it around, it should be returned to the market. That has always been our intention, although I know that there will be different views on that.

10:45  

I understand that. Is it your position that state aid rules compel you to return the airport to private ownership?

I would have to check whether we are obliged to do that, because of the case that we made for taking over the airport at the time, but we are obliged under state aid rules to make a return on the investment. That might well be achieved by returning the airport to the market.

That return could, in turn, see investment directed elsewhere in the airport portfolio. That seems to be out of kilter with the Scottish Government’s direction of travel in relation to ferries, the public sector bid for rail and the interesting announcement at the weekend on bus travel, which I and my party fully commend. Surely this should be about trying to maximise income for the public purse.

It has been standard for Governments of different stripes in both Scotland and the United Kingdom to act when there is market failure, but if that market failure is corrected and there is a market case for somebody else to come in and make that investment, we can, apart from anything else, use that investment instead for the airports that Mr Finnie referred to.

There is only so much money to go round. If we want to spend our money on the airports that we wanted to be involved with in the first place, whether they be Stornoway, Shetland or other smaller airports in the Western Isles, we cannot spend it on other airports. We said that our intention was to save the jobs at Prestwick and return the airport to being a viable proposition for a private investor, and that is what I think we should do. We need to concentrate on the things that we have to do.

And all the public money expended on Prestwick will be recouped prior to its being returned to private ownership.

No, I do not think that that is true; what we have said is that we have to make a return on the investment. If there was a prospect of the airport being taken over, any deal would have to allow us to repay the taxpayer for the investment. However, I do not know how that would happen because that is not in prospect—we have no offer to take it over just now.

It is a reasonable question, and we will need to develop it further to find out how the investment is worked out and what level of return we might expect. However, that might come later. The cabinet secretary’s comment about his constant scrutiny of Prestwick airport’s management team fits in neatly here, because it is our intention to ask that team to come and speak to the committee in May and help us inform our views on this matter.

I will leave that section of our questioning there and move to Stewart Stevenson for a very brief question on the Forth replacement crossing.

We have heard a bit about this already, so perhaps only a brief answer is required. We are close to completing the project. Are we still on time and on budget?

I do not want to steal David Climie’s thunder, but we are still looking at coming in around £245 million below budget. We have had discussions about the extent to which that is attributable to lower than expected inflation as well as good project management. Maybe David Climie can speak to this, but I would say that, to the extent that there has been any change, there has been no deterioration, and we are not expecting the budget to change for the worse.

As for timing, David Climie will be able to say more than I can about this, but the latest from the contractors—with whom we are in pretty regular dialogue, just as we are at Prestwick airport—is that they still hope to finish in May. It will be towards the end of May, which was the intention, and they are still confident of finishing before the contracted completion date, which I think was mid-June.

It is also true to say—and again David Climie can speak at greater length about this—that there have been higher than expected and more sustained wind speeds, which have caused particular problems with the removal of the cranes on the towers. That was probably not on the critical path before, but it is now. One crane has been either completely or partially taken down, and the other two will be taken down concurrently to make up for lost time.

Some of the other things that have to be done with regard to the windshield and the surface are not so susceptible to weather, unlike the lifting of the final piece of deck, which was somewhat delayed. As we have always said, the delays that we have had have been due to weather, not to any other reason that I am aware of, and there has been no deterioration in the budget position. I have made it clear to Transport Scotland and the contractor that I do not want this work to be done at breakneck speed and that, if it is brought into question, health and safety should be the priority. David Climie will be able to give more information on this, but the latest position that we have from the contractor is that it expects to finish in May, although that will be challenging.

When I was minister, they told me that the figure would be £3.4 million or £4.3 million, so we are doing a wee bit better than that.

What can you tell us about the plans for opening the bridge, both formally and in practice?

I cannot tell you much yet, other than that substantial discussions are going on in Transport Scotland. As Michelle Rennie is heavily involved in that, she might be able to say more. We have had a huge number of expressions of interest from members of the public and organisations, and there is a huge focus on it. The plans are being considered now and I assure Stewart Stevenson that we are undertaking that work with the same kind of diligence that we displayed for the arrangements for the Borders rail opening, which was a very substantial piece of work in its own right.

As you can imagine, we have had a number of suggestions and requests from the public about the sort of thing that they would like us to consider and the sort of people that they would like to be involved, and we have had a number of requests from charities. We have had a whole plethora of options. We are well under way with things and we hope to arrive at, and come forward with, a conclusion in the next wee while.

Suffice it to say that we want something that involves as many people as possible, because we accept that this is a major iconic structure and a new Scottish landmark. People want to be involved and they are very enthusiastic about it; indeed, we have had, to date, about 68,000 visitors to the site in one form or another. We want to be as inclusive as we can about opportunities.

You will be aware of one suggestion that I passed on, which would involve an interest from the north-east of Scotland. I commend it to you without providing any particular details at this stage.

I am very concerned that that “interest” is suggesting that you be at the opening, Stewart. I am sure that that would not be the case, cabinet secretary.

Your use of the word “hope”—I think that you said it twice—caused me concern, cabinet secretary, and I am sure that the committee will want to pick that up with the team as part of the next item. Mike, did you have a quick question on that?

My question is more for the cabinet secretary than for David Climie, who is here to talk about matters on a more technical level. I am concerned about the estimates for the number of vehicles using the two bridges in the first year compared with the current level. Has there been any reconsideration at a political rather than technical level about allowing cars and HGVs to use both bridges? I am a bit concerned about congestion levels.

Returning to the previous point about the opening, I think that a lot of people will want to be able to commemorate the final time that they took their car over the Forth road bridge, as it is currently constituted.

A number of people have written on the very issue that Mike Rumbles has asked about. The proposal for having the public transport corridor on the existing bridge was written into the act that the Parliament agreed. We have always looked at—and will continue to look at—how quickly and efficiently we could bring it into operation in certain circumstances and in the event of a problem on the new bridge. Of course, we are not anticipating any problems and I hope that none will arise. We should also bear in mind that additional wind protections have been put in place to ensure that there are no closures to high-sided vehicles.

Would a new act of Parliament be needed if you wanted to do that regularly?

I will let Michelle Rennie answer that question, as it is a bit more technical, but the original act, as Stewart Stevenson will know, was very clear about the basis of the public transport corridor. It might well be—at least, I think that it is the case—that we can satisfy that requirement but potentially still use the existing bridge in certain circumstances. There has been some examination of that issue.

That is correct. I do not have a lot to add to what the cabinet secretary has said.

I think that we should leave the bridge, as our next item is an evidence session on it.

Richard Lyle has a question on motorways further south.

Good morning, cabinet secretary. Under your stewardship, there have been many excellent projects over the past number of years, including the dualling of the A9 and the A96 and the M8, M73 and M74 motorway improvements.

I would like to get some short answers to some short questions. First, it is expected to take up to eight years to finish dualling the A9. Could we have done it any quicker?

No. There has been some discussion about whether we put this timescale in place because we had to get the resources—the money—to do it. However, when you examine the project and consider some of the processes that I have talked about such as public inquiries and design consultations, the answer to your question is no, I do not believe that it could have been done any quicker than that.

The A96 dualling is not expected to be finished until 2030, which is 13 years from now. Could we have done that any quicker?

I would like the officials to answer that, but I should say that there is no space to truncate things, given the correlation between the work on the A9 and the A96. Apart from anything else, if we had done the two projects at the same time, things would have got a bit too crowded. As I have said, Michelle Rennie might be able to answer that question.

A major factor is the availability of the supply chain. When you go to the market to construct these projects, you do not want to flood it. If you can avoid that, you can achieve a value-for-money construction cost for the projects. It is important for the civil engineering industry in Scotland that we are able to provide a pipeline of projects when we can. With three big projects finishing shortly—the AWPR, the Queensferry crossing and the M8, M73, and M74 motorway improvements—we feel that it is a timely moment to bring forward the A9 project and, after that, the A96 project. Taking that approach works in a variety of ways and sustains the industry in Scotland.

It has certainly been fantastic to see over the last number of years the amount of work that has gone on and the number of construction jobs that have been created. I have been to some of the projects; I had the distinction of going under the M74 at the opening of the new Raith underpass, and it was quite marvellous. At least, it was marvellous for a few days before it flooded. Why did that happen?

There was a snagging issue. You will know the Raith underpass better than me; it is substantially under the water table and a big part of the project was the installation of water pumps to allow the construction works to take place. As you know, the underpass is substantially below ground and, essentially, a large structure—not, I should say, a pail—was put in place to prevent water from coming in. As you have rightly said, a few days after the opening, there was an issue with water ingress, which they have stopped. They are now doing further work to find the source of that. The structure itself remains under the water table. The pumps have gone, but, as I have said, the water ingress has stopped and further investigations will be carried out.

Each project is different; if you remember the M74 project, you will recall that a lot of that project was on stilts and that some parts of the surface collapsed. That was not at all unusual. You get snags, but the important thing was that at Raith, the problem was fixed very quickly.

Again, on anticipated timescales for finishing work, when do we expect the M8, M73 and M74 project to be finished? What is the anticipated timescale for getting it all cleared away?

The answer to both questions is the same: I think that we said that it would be finished this spring, and that is what we intend to do.

You have quite rightly mentioned the number of projects that have been undertaken—and you could also have mentioned the Haggs to Stepps project as well as the M74 itself. Those projects, like the Borders rail project, have been done on time. Yesterday I was in Berlin, where the airport is six years overdue and hugely over budget. We have a pretty remarkable record. Huge infrastructure projects, especially rail projects, are hard to bring in on time, but we have a pretty good track record in that respect.

11:00  

I can see that the end is in sight, and I must say that the new projects have helped me, my constituents and the people of Scotland tremendously. A couple of days ago, I had to use a diversion, which was quite interesting. However, I could see the point of it. Does anything else have to be done to ensure that the projects are completed?

We can never take our foot off the accelerator with such projects. A lot of work has been required with the contractor to ensure that the M8 project is completed on time—indeed, that is true for all contracts. It is pleasing to see the project coming on in the way that it has, and it has provided a lot of employment. As I think I said the last time I came before this committee, the M8 project has perhaps not had the attention that it deserves; it will mark a major transformation in central Scotland. Of course, the Queensferry crossing has dominated the agenda.

May I ask a final question, convener?

We still have more questions to ask. If I may continue with the cabinet secretary’s analogy, Richard, please check in your rear-view mirror before you launch into your question and make it short.

Yes, convener.

Peter Chapman asked about complaints. Cabinet secretary, have you had many complaints from people who operate alongside the projects, and how are we doing in resolving them?

We have had complaints, not least from you and from others. We cannot undertake huge projects without concerns arising, especially with regard to diversions during a period of construction, when people cannot take the route that they are used to taking. We have tried to be as sympathetic as we can be, and we will continue to do so.

Thank you.

I want to get all members’ questions in, so I encourage short questions and answers.

I will make my questions as short as I can, convener. First, are there plans to dual the A9 north of Inverness? The current plan is to dual only as far as Inverness.

Secondly, the public inquiry on the Berriedale braes project has concluded. When will that work start, and when will it be completed?

On your first question, we currently have no plans to dual that road. We always examine trunk roads to see where we can improve them, but I think that the road usage is such that it would be hard to justify such a level of investment. The road should certainly be improved, but not to dual standard.

I do not know the answer to your second question, because my colleague Humza Yousaf has taken over that project. It is not one of the major projects, but it is important locally and I was pleased to be able to bring it forward when I was transport minister. Either we can talk to Humza Yousaf and ensure that we provide the committee with a written update on where we are now that the public inquiry has concluded or Humza himself can come to the committee.

He is coming on 29 March. We can make sure that we ask that question then.

Cabinet secretary, you mentioned the Laurencekirk junction. A couple of weeks ago, an engagement event was held in Laurencekirk with Transport Scotland and Amey, and I understand from talking to people who were there that it was well attended and well received. Indeed, I think that Mike Rumbles attended it. The event went a long way towards addressing a lot of the concerns that people have contacted me about, including, for example, the project length and its different stages. What plans are there for future engagement with the community in Laurencekirk and the wider community in Aberdeenshire and Angus, who will be affected by the junction?

That will be for Humza Yousaf to take forward. My involvement was due to the issue being worked into the Aberdeen city region deal, in which I have been involved. Michelle Rennie might say something about the issue, but what I can say is that having been involved in such matters for a number of years now, I take the view that, although it is sometimes difficult, the more engagement we have, the better the final result and the more people accept it.

Over the next year or so, we hope to undertake more work on an options assessment for the junction, and as we do that, we will continue our consultation with local residents and communities. That will allow us to start the statutory process during that period. Built into the statutory process is a process for engaging with local communities, which enables us to receive formal and informal feedback to help us to adjust our designs and make them more acceptable to the communities.

John Finnie has a question, and Stewart Stevenson might be able to get one in at the end if he is quick. John, I must ask you to brief.

Cabinet secretary, you will not necessarily have this information to hand but if you do not, perhaps you or your officials can provide it. With the A9 and the A96, we have £6 billion-worth of projects. Although rail lines roughly mirror the general route of both those roads, only very modest expenditure has been made available to upgrade them. Has a timeline been prepared with the projections of modal shift from rail to road—unfortunately—and its implications for the road and rail networks?

That sort of ties in to another question on railways. Stewart Stevenson, can you add your question to that? Perhaps they could be answered together.

My question is quite simple: in planning for the Inverness to Nairn dualling, are you interfacing with the planned new railway station at Inverness airport?

The short answer to Stewart Stevenson’s question is yes, that is being taken into account.

On John Finnie’s question, Humza Yousaf will take that forward, although obviously there is a relationship with the major projects that I am involved in. In relation to the city deal, the improvement works for the Inverness to Aberdeen line are meant to be complementary. I think that the investment is around £270 million but, as I have said, Humza Yousaf is taking that forward.

I am more than happy to come back to John Finnie and the committee about the extent to which we are taking modal shift into account. For example, two new stations have been proposed for one of the lines at, I think, Kintore and Dalcross, obviously with the intention of encouraging people to use trains rather than roads in those locations. Modal shift has been taken into account, and I or my colleague Humza Yousaf will come back to you in writing, if that is okay.

I am under pressure to allow one more question, and I am minded to let Mike Rumbles ask it.

My question is about Laurencekirk. I know that you have been on top of this issue for many years, and I know that you have to go through the process of options, but the fact is that there is only one practical option for drivers approaching the road from Fettercairn: the southern junction. Everyone knows that that is the one, and it is where all the Government’s junction activity has been focused. Is there any way of speeding up the process?

I assure Mike Rumbles that we are going as quickly as we can. In order to complete the statutory processes in a robust way that ensures that we do not have to revisit them and add more time to the programme, we need to give proper and due consideration to the options.

I am definitely going to end the session there. Thank you, cabinet secretary. Would you like to say anything else before you leave, or are you happy that you have made all the points that you wanted to put across?

I am happy, convener. If it is okay with you and the committee, I will come back to you when we have substantial updates. We cannot always be as open as we would like to be about developments, as some of them are commercially confidential, but we are not trying to keep anybody in the dark. Sometimes we are not able to say as much as we would like, but we want to keep the committee as aware of things as possible, especially with regard to the projects in which you have previously expressed an interest. I see giving evidence to the committee as the preferred method for doing that—although of course if there was something substantial, we would go to Parliament, and that is what I will continue to do.

As I did the last time that I asked to speak to the committee, members should not think that there will be some great revelation. However, we will try to keep the committee as updated as we can, especially now that some substantial projects are coming to their conclusion.

I thank the cabinet secretary, Michelle Rennie and Graham Porteous for attending the meeting, and I suspend the meeting briefly to allow for a changeover of witnesses.

11:08 Meeting suspended.  

11:11 On resuming—