Public Audit Committee

Meeting date: Thursday, June 29, 2023

Official Report 618KB pdf

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Major Capital Projects

I welcome everyone back to this morning’s meeting of the Public Audit Committee. The second principal item on our agenda is consideration of major capital projects. I am delighted that we have four witnesses from the Scottish Government to help us with our inquiries on major capital projects: Alison Cumming is the director of budget and public spending; Alison Irvine is the chief executive officer of Transport Scotland; David Signorini is the director of environment and forestry; and Kersti Berge is from the directorate for energy and climate change. You are all very welcome.

We are particularly interested in focusing on the Government’s approach to net zero and the whole agenda around climate change targets. We are a little pressed for time, so there will be no opening statement—we will go straight to questions. Bill Kidd will ask the first couple of questions.

I thank the witnesses for being here today. With regard to the Scottish Government’s “Infrastructure Investment Plan 2021-22 to 2025-26: Progress Report for 2022-2023”, to what extent do the budgetary challenges impact on the delivery of programmes under the net zero and environmental sustainability theme?

I will take that. If colleagues want to come in on anything specific afterwards, please do.

We manage the entirety of the capital programme across all portfolios. Members will be aware that, last year, we had an emergency budget review that necessitated some capital savings. Given the nature of that review, one element involved considering what savings were practically possible in-year and another element involved applying a strategic lens to protect the areas of greatest priority and greatest potential impact.

The capital position overall has been impacted by the overall fiscal position. The capital funding outlook is very challenging. We had negative consequentials in 2022-23, which means that we often have to prioritise in-year. However, ministers are clear when taking decisions about prioritisation that projects that support net zero are one of the top priorities and should be protected to the extent possible, but they are subject to the considerations that I gave about in-year savings. Sometimes, we have to consider what can practically be paused or halted at that point in the year.

On the basis of what you have said, we assume that those financial issues and others are the reason why interim emissions targets have been missed so far. Will delays to delivery of, or scaling back, the net zero and environmental sustainability programmes have a further impact on the Scottish Government’s ability to meet emissions reduction targets?

I invite my colleague to respond.

I will build on what Alison Cumming has said. Budgetary challenges are very real, and they come at a time when we need to invest significantly in the net zero transition for pay-off well down the road. That said, the Scottish Government has increasingly invested in the net zero agenda. In the capital spending review back in 2021, there was a significant step-up in our net zero-related investment. In the revised CSR allocations that Alison Cumming talked about, there was a commitment to invest £5 billion in rail infrastructure, because investment in public transport is a critical component of the net zero transition. We have also committed to investing £1.8 billion in heat in buildings, and there is additional funding on top of that.

We recognise that this is a challenge. You are correct that we missed the most recent emissions targets—it was a fairly narrow miss, but it was a miss nonetheless. We will continue to focus closely on net zero as we work out capital funding allocations.

Public sector funding plays an important role, but we are increasingly looking at how we can even more effectively leverage in private sector funding to support the transition.

It was a narrow miss but a miss anyway. The latest analysis shows that emissions from transport and buildings increased during 2020-21. How will the use of that information impact plans for future infrastructure investment to tackle such problems?

Our three biggest emitting sectors in Scotland are transport, industry and buildings. If you look at our capital spending allocation, you will see that we have more devolved powers in areas such as transport and buildings, which are the areas on which our capital investment in net zero is significantly focused—our spend is targeted at those areas. As I said, there is £5 billion for rail infrastructure and £1.8 billion for decarbonising our buildings, which represents a significant step-up in this parliamentary session compared with previously.

It takes time to deliver the investment and for the investment to have an impact on emissions reduction. A lot of what we are doing—not everything—has substantive lead times before emissions reduction will be delivered.

Like most people, when I think of emissions, I think of transport—vehicles and suchlike. Most people do not think too much about emissions from buildings. A lot of buildings—the majority, I suppose—are not under the direct control of the Scottish Government. In what ways can the Scottish Government have an impact on addressing emissions from those buildings?

I will take that question, too, as it is still in my area.

That can be done in a number of ways, partly through regulations and partly by providing support for individuals and businesses. Again, we must leverage private sector finance where we can.

We have just laid regulations to require zero-emission heating in new builds. Subject to those regulations being passed, that measure will have a significant impact. We also intend to consult this year on a bill to regulate for improved energy efficiency and zero-emission heating for homes and domestic buildings. That gives a sense of the kinds of things that we are doing on the regulatory front. Using the regulatory tools applies across many areas of emissions reduction. We will need regulation, along with financial support. On financial support, as I mentioned, we have committed to investing £1.8 billion overall in the current parliamentary session.

I can go into detail about how we will achieve the emissions reduction in buildings, although I do not need to do so now. In Scotland, it will be done mainly through heat networks and heat pumps. We have a number of loan and grant schemes to support individuals, companies and housing associations to decarbonise their buildings.

I was wondering about help for private citizens to enable them to address these issues.

Shall I say a bit more about those schemes now?

We are a bit pushed for time, so we cannot go into too much detail about particular projects. We have questions about specific projects, so we will come back to those in the course of the discussion over the next three quarters of an hour.

Willie Coffey has some questions.

Good morning, everyone. Could you make a few comments on the impact that the current economic situation is having on the programme? I am thinking in particular of issues with supply chains, inflation and so on.

As we reported in the medium-term financial strategy that was published in May, the Office for Budget Responsibility has forecast that we will have a 7 per cent real-terms reduction in our capital funding between 2023-24 and 2027-28. That is what we expect.

We have seen significant pressures from construction inflation, which peaked at 25 per cent last summer. It is still high, although it is coming down, and we are now finding that the higher price levels are, in effect, baked in—we are not going back to pre-shock levels. That will undoubtedly have an impact on our ability to deliver the infrastructure investment pipeline as originally intended, to the original timescales.

That is why ministers intend to do a further reset of the capital spending review, which will be published alongside the budget for 2024-25. That gives us an opportunity to reset the pipeline and to extend it by one year, to 2026-27, in recognition of the fact that things will take longer to deliver. As flagged in the policy prospectus, that will enable us to direct our capital investment at the Government’s top priorities, including reaching net zero and sustaining public service infrastructure.

The inflationary environment, with the impact flowing through into the UK Government’s funding decisions, is having a significant impact on the extent of what our investments can achieve in Scotland and the pace at which that can be delivered.

What might be the impact on those programmes? You have said that the Scottish Government will try as best it can to protect and prioritise net zero projects. Is that the expectation? Can members take that as an assurance that net zero projects in the capital programme will be given priority as far as possible?

10:15  

They will be given priority. We have budgetary tools that will help us to provide advice on prioritisation. Net zero is a priority alongside public service infrastructure, so we cannot direct the whole capital budget to net zero; there needs to be a balance. As Kersti Berge said, we are looking at the range of measures and models that might be available to help to maximise investment from different sources across the range of projects and programmes in the infrastructure investment pipeline so that we can supplement the public capital that is going into them.

Are you able to give the committee any hints about the potential projects that might suffer from delays, pauses or even cancellation? Can we draw you on that to give the committee an inkling of what that might look like?

It will probably not surprise you that I cannot be drawn on specific projects this morning, because the decisions have not yet been taken. We are working through that prioritisation with ministers and bringing them the evidence about which investments can have the greatest impact on emissions reduction and other priorities.

When will the Parliament see all that?

It will be when the draft budget is presented to the Parliament. The Deputy First Minister and the Finance and Public Administration Committee are engaging on the date for the draft budget. It will depend on when the UK’s budget statement is given in the autumn. I expect it to be roughly the same time as it was last year, which was December, but it is subject to the UK’s timings.

Many thanks for that.

Craig Hoy might also have some questions on this area.

Before I delve into detail about a couple of infrastructure projects, I want to go back a bit. The Cabinet Secretary for Finance has said that there will be a prioritisation exercise in relation to infrastructure spending. You have said a little bit about how you will approach that in relation to net zero and public services. Is it therefore safe to say that road projects will be given less prioritisation than perhaps net zero? Can you see a conflation of the two in relation to road infrastructure helping to achieve net zero objectives?

My colleague Alison Irvine might want to say a little bit about roads. Overall, there is no presumption against investment in roads in the prioritisation framework that is coming out soon. There is still a clear need to invest in road projects, and ministers have made some specific commitments in that regard. We will look across the piece at net zero and other areas of our public service infrastructure in which we must continue to invest.

As I said, Alison Irvine might want to say a bit more about the planned investment in roads projects.

There are various reasons why we will want to invest in transport infrastructure. Ministers have been clear about their net zero ambitions and the prioritisation that comes with that, which is why we spend more than half of our transport budget on public transport and other sustainable modes of transport. That is all set out in the investment hierarchy that we adopt.

In that context, people still need to get about, and there are other reasons why we might want to invest in our road network. I am thinking about road safety, severance issues, air quality and connectivity issues in particular.

Has that prioritisation exercise changed since the Bute house agreement?

The Bute house agreement contains some specific commitments in relation to investment, particularly in net zero schemes. The infrastructure investment plan and the original capital spending review predate the Bute house agreement and have net zero as a clear priority. We will look at the full range of projects in the pipeline and the Bute house agreement as part of the prioritisation that lies ahead of the capital spending review reset.

My next question might be one for Alison Irvine. You will be aware, particularly in relation to South Scotland residents in the Scottish Borders, West Lothian, East Lothian and Midlothian, of the £120 million planned potential intervention at Sheriffhall roundabout to relieve congestion at what is now a very congested pinchpoint. In 2020, it was held up quite significantly by a campaign that was led by the Green Party, with a local public inquiry getting under way earlier this year.

Do you have a revised timetable for the Sheriffhall intervention? Is it perhaps one of the areas for reprioritisation? After all, at any given time of the day, cars can be sitting idling in huge tailbacks, which will be having an environmental and economic cost. Where does something like Sheriffhall fit into the broader prioritisation exercise, given that one party in the coalition is clearly opposed to such interventions?

I will deal with the specific issue of Sheriffhall and then talk in more general terms about the rest of your comments.

We have completed the public inquiry work on Sheriffhall and are awaiting the response and the decision that has been made. Because we are in that position, we are not able to determine a programme at this point in time.

More generally with regard to Sheriffhall and a number of other projects that we have in the transport portfolio, I go back to the comments that my colleague Alison Cumming made at the start of the evidence session about the squeeze on the capital budget. The prioritisation exercise will need to come through before we are able to say anything one way or the other about a whole range of projects in the transport sector as well as in other sectors. I am sorry if that does not answer your specific question, but it is probably as clear as I can be at this point in time.

As far as the presumption of priorities is concerned—and given the 7 per cent reduction in the capital budget that you have talked about—would it be safer to say that you can see investment flowing away from those sorts of projects towards public transport, net zero and public services? With regard to managing my constituents’ expectations, is that the kind of expectation management that we should be engaging in?

Perhaps I can take you back to one of the very first questions that your colleague Mr Kidd asked in relation to the climate change targets. Transport is the sector with the biggest emissions in Scotland, and it was one of the sectors in which we saw quite a significant rebound from the previous year, because activity levels had been vastly subdued during the pandemic. You can see how stubborn—if I can use that word—transport emissions are and how challenging it is to reduce them.

This is not just about the infrastructure—although that, as well as giving people alternatives, is really important—but about changing behaviours and drawing other policy areas into the mix. I am thinking, in particular, of how transport interacts with land use planning. All of that needs to come together. I would not want us to think that we will be able to solve the transport climate emissions challenge purely through infrastructure, because a whole number of dynamics play into it.

That is fine.

My final question is on oncology-enabling projects at the Edinburgh cancer centre, which have been delayed by approximately a year, with the cost probably 10 to 15 per cent over budget. Can you flesh out the reasons for the delay and the increase in budget?

I am sorry—I do not have that detail to hand today, but we can write to the committee with that information.

No problem. Thank you very much.

We are trying our best to be strategic this morning and not to get too much into pork-barrel politics, Mr Hoy.

I call the deputy convener.

Good morning. In the third year of the IIP timeframe, reported spend on the programmes under the net zero and environmental sustainability theme appears to represent only around 13 per cent of total planned expenditure. Is spending expected to reach the amounts that were envisaged when the IIP was published, even with a one-year extension to the programme?

In overall terms, I reinforce the point that the decisions that were taken by ministers in the 2023-24 Scottish budget reflect £2.2 billion of low-carbon investment in Scotland, which is the highest amount spent on low-carbon capital investment to date. I am just highlighting, by way of illustration, that the decisions that have been taken up to now show the commitment to increasing investment in low-carbon capital.

We cannot comment on specific sums today, because the prioritisation exercise is still under way, but, through that prioritisation, we are seeking to focus on the outcomes that can be delivered through particular programmes and to look at how those programmes can maximise the impact on net zero objectives, in particular—in due course—around emissions targets.

Which specific programmes are likely to experience lower than expected spend or to require extended timeframes to achieve delivery on the scale that was originally anticipated?

Those issues are being considered by ministers at present. The outcomes of those decisions will be presented to the Parliament in the capital spending review reset alongside the draft budget.

Has progress on net zero and environmental sustainability programmes been affected by lower than anticipated uptake among private sector and local authority partners? If so, what is being done to address that?

We have encountered underspends on particular schemes where demand has not picked up quite as quickly as we anticipated that it would when we set the budget using our original projections.

I can say a couple of things on buildings decarbonisation. This was in the period when we still had a bit of Covid overhang. When it comes to people looking to get folk in to install a heat pump or energy efficiency measures, there was a period when that was a bit slower than we had hoped that it would be.

Some of these initiatives are fairly new. In relation to the scale of investment and support for the heat network fund, it takes a little while to get the pipeline up and going. To go back to the capital funding programmes that deliver heat decarbonisation and energy efficiency measures in people’s homes, we have seen a steady uptick in take-up. Last year, there was a significant increase on the previous year.

On decarbonising homes, we are increasing our public awareness and marketing work to increase uptake. Taking buildings as an example, there is a clear upward trajectory in those areas.

I have a quick question about target setting. When you set targets for transport or any kind of infrastructure, who sets the targets and ensures that they are specific, measurable, achievable, relevant and time bound, rather than being pulled out of thin air? I am looking at some of the figures—for example, it was initially planned that £495 million would be spent on bus priority investment but, so far, only £26 million has been allocated. I know that you say that you are still reviewing things to see where you can make savings.

On housing, there seems to be an 11-year plan to build 110,000 houses by 2032, which works out at about 10,000 houses a year. According to that, it looks as though we are 12,517 short, although I recognise that we have still to get to the end of this financial year. Are there workings in the background that show how many houses you expected to build each year? Is there more information that can be shared so that we know where we are in the investment programme?

Overall, for any capital investment programme, there is a business case to support the investment decision and, alongside that, a delivery plan that is subject to internal governance. Ultimately, ministers take decisions on where targets are set, based on the advice and evidence presented by civil servants.

If the committee would like additional information on the affordable housing supply programme, we can provide that. As you said, it is a 10-year-plus programme. There are plans for how the investment will be phased over the period, and I understand that we remain on track to deliver the overall target at the end of the period.

I will pick up on that theme. Sharon Dowey mentioned the bus priority improvements under the future transport fund. I presume that that involves building bus lanes and ensuring that buses get priority in traffic, even across the Sheriffhall roundabout.

When we look at the budget headings, we see that the planned expenditure on that was £495 million, but only £26 million has been spent. There is £300 million in the budget for Scotland’s heat network, but only £6.4 million has been spent. There is £26 million in the budget for the low-carbon manufacturing challenge fund, but only £750,000 has been spent. There is a planned spend of £180 million on the emergency energy technologies fund, but only £10 million has been spent.

I do not want to miss out Mr Signorini. The peatland underspend has been a bit of an issue as well, has it not? I know that Rhoda Grant has written to the cabinet secretary, who has confirmed that the underspend on peatland restoration in 2020-21 was £12 million and that it was £7.4 million in 2021-22. Why is there such slow progress in those areas?

10:30  

Shall I kick off?

Sure.

Let us talk about the bus priority fund. I will relate this answer back to the question that Ms Dowey asked about the role of other actors.

When the bus priority fund was launched, the £495 million was to set a signal of ambition from ministers about how important buses, bus priority and the bus sector are to the people of Scotland and the contribution that buses make to the transport offer. Since the scheme was launched, we have found that there have been fewer schemes that have been what I would describe as ready for construction than we had hoped.

A lot of work is currently going on with local authority partners, the Confederation of Passenger Transport UK and the Convention of Scottish Local Authorities throughout the country that involves looking at a whole range of business cases. That is predominantly where the £26 million that has been allocated is going to. It is anticipated that that will give us a pipeline of projects that we can start to roll out.

I will stop there.

To go back to Sharon Dowey’s point, I presume that those figures were not just plucked out of thin air. I presume that they were informed assessments of what was likely to be needed in order to help to meet the Government’s target.

Absolutely—they were informed. We are now, with all the various partners, trying to pull together the evidence base and the business cases for all the offers that we have on the table to ensure that the outcomes are delivered. That might seem painful in terms of the timescales, but it is really good governance.

As you all know as politicians, once you try to take away road space, whether that is for bus priority or active travel, quite a lot of community consultation and engagement and views need to be taken on board. That is the right approach, because we need to bring people with us as part of the journey to overall climate emission reduction.

I get that, but I also take cognisance of the fact that the previous First Minister declared that we have a climate emergency. That suggests that some fairly urgent action should be taken rather than a gradualist approach.

I do not know whether Mr Signorini can speak a little about what is happening with peatland restoration and why there is a hold-up there.

I am happy to do that.

In summary, peatland restoration is in a phase of trying to build capacity, create demand and get to the delivery levels that it needs to get to. We are in the early stages of a 10-year programme. It is about the generation of demand for projects; a good process to get those projects assessed and approved, and the due diligence done; and the people, equipment and skills.

We have made progress in the past year. Some 7,500 hectares have been restored. That is 38 per cent up on the previous year, so there is a step change. We are building contractor capacity. It is quite a skilled operation. Machinery is needed, and we are investing in training and capacity building. The fact that we can say that the programme is a 10-year one gives the private sector confidence to invest in those skills and that machinery.

I acknowledge that we are below where we would want to be, but we have made progress in the past year, and we have confidence that we have the right analysis of the situation.

Okay, but to again go back to Sharon Dowey’s point, why set a target if it is not an informed target that is realistic and achievable? I think that that is a legitimate question that we are posing this morning.

Another area relating to the restoration of nature is the investment in woodland, forestry and so on, which again is not quite meeting the target. Does that take the shape of grants to private landowners and to some of the equity funds that are involved in the carbon offset racket?

Forestry is perhaps a more mature operation, but it has plateaued over the past three or four years and, to meet the targets, it needs to increase again.

As part of the climate change plan, the statutory targets for emissions reductions are turned into individual targets. They are very ambitious, but they have to be achievable.

On forestry, there is a lot of read-across to the peatland restoration. It is about skills, capacity and the process of application for and approval of grants. Last week, the cabinet secretary announced a whole set of actions and investments in that skills and capacity area.

I turn to Alison Irvine for a particular area of interest, which is the whole question of net zero targets and what we are doing on transport. As you rightly say, that is first and foremost about getting people on to public transport. However, one of the other goals that the Government has set is on electric vehicle charging networks and so on. I noticed recently that an announcement was made that the Government was withdrawing from the EV charging network ChargePlace Scotland and leaving that to the private sector. Is that correct?

Those would not be the words that I would use.

Choose your own words, Ms Irvine.

If I may, I will choose my own words.

I cannot remember which member asked about the role of various actors in that aspect. There is a role for Government and, particularly on EV charging, Scotland has a good track record of leading the way, which is why we have the most EV charging points per head of population in the four UK nations. However, there comes a point when the role of Government is to give other actors the space to invest because, as is well recognised, the Government cannot afford to do this on its own, and should not do so, so there are opportunities there.

The work that we are doing on EV charging is about enabling. We recognise the great work that has been done and the great work that ChargePlace Scotland is doing, but we realise that, to get the pace and scale of investment that we need on EV charging, we must change the way that we do that. That work is under way now. At the moment, ChargePlace Scotland’s network of chargers is a mix of those that Government has funded, those that local authorities have funded and those that are privately funded. It is now about working with local authorities or, depending on the area, in a regional context, to understand the needs and demands across the various types of EV charging—whether that is retail or residential—and to produce a plan that gets us to the point where we have the EV charging network that we need.

We are in a kind of transition—that is how I would describe it.

It is reported that £65 million of public expenditure has been invested in the EV charging network. What happens to that? Do we get it back?

That is the level of investment that gives us the EV charging network that we have on the ground. I would describe that as pump priming. I do not think that it is as simple as saying that we will get it back. It is about where Government is best able to use its investment capabilities and its legislative and direction capabilities to effect behaviour change.

Who will own those charge points in the future?

I cannot answer that question, but I am happy to write to you if I am able to give you the detail.

Thank you—fair enough. Just one other thing from me before I go to Bill Kidd again, and that is a question about the assessment and cost benefit analysis that is made on road improvement projects such as on the A83 or whatever it is. How do you reconcile that with the net zero targets? What criteria is used in order to say, “Yes, that’s going ahead,” or, “No, that is not going ahead.” What criteria is used in order to say, “Yes, that’s been prioritised,” or, “No, that’s been deprioritised?”

Prioritisation takes place at different levels. At the overall Scottish Government level, we will take into account prioritisation of large-scale projects in relation to determining the allocations that go to different portfolios. Then, at portfolio level, there will be further more detailed prioritisation taken on the projects in that area. Alison Irvine may want to say more on the strategic transport projects review 2—STPR2; I hope that I got the letters in the right order—and the work that has gone into Transport Scotland’s very detailed methodology of looking at transport projects overall.

Ranking projects across different policy objectives is obviously not an exact science. Based on the recommendations of the Infrastructure Commission for Scotland, we are investing in developing a new investment hierarchy and prioritisation approach for the next capital spending review, and the Scottish Futures Trust is working with us to develop that. In the meantime, we are looking at individual value-for-money assessments through the business cases that are produced for different projects. Ultimately, there will always be an element of political prioritisation of the projects that are considered to be value for money.

I have a request, which I am really making on behalf of the clerks and the Scottish Parliament information centre, which is to do with the fact that quite often these programmes have a change of name, especially in the domestic marketplace—Kersti Berge knows exactly what I am talking about. The request is, can you make sure that we can follow the thread of where different programmes go when their name changes, so that, when you produce these major capital projects updates for us, we can see what is what?

I invite Bill Kidd to ask a couple more questions.

On the basis that you get nothing for nothing, there has got to be funding for all that infrastructure. The IIP progress report noted that

“The Scottish Government is committed to sustainable deployment of revenue financed investment and capital borrowing to ensure there is no undue financial burden on future policy choices.”

Does the Scottish Government intend to make greater use of its capital borrowing powers to support infrastructure investment in the face of a declining capital budget, and are there any plans for any of the programmes under net zero and environmental sustainability to make use of revenue financing?

Taking the first point on capital borrowing, our capital borrowing policy is set out each year in the medium-term financial strategy. The fiscal framework that was agreed with the UK Government allows us to borrow up to £450 million in any year, but there is also an aggregate limit on the outstanding debt at any time of £3 billion, which means that we cannot borrow at that full amount every year, remain sustainable and have borrowing available to us.

The policy has determined that borrowing £250 million a year over a 15-year term is the sustainable level at which we would never breach that £3 billion ceiling. Our policy is to anticipate up to £450 million each year when we set the capital funding envelope for the budget, £250 million of which would come from borrowing, and £200 million of which would be to recognise that there may be some other flexibilities in the year—for example, from consequentials from UK Government funding changes—so that if they do not come to pass, we still have the scope to increase borrowing.

The Government is, within the terms of operation of the fiscal framework, making full use of its capital borrowing powers in planning its capital expenditure. The capital borrowing framework will be subject to consideration in the fiscal framework review that is under way between the Scottish and UK Governments.

10:45  

Overall, given the financial challenges that I outlined earlier in the session, we will need to look creatively at what approaches—that, importantly, represent good value for public money—can be deployed to support the available capital funding, given that our capital funding, subject to borrowing, is essentially determined by UK Government decisions.

At the moment, I would not rule anything out in relation to looking at different funding models, whether those are revenue-financed models or, as my colleagues have referred to, they are ways of incentivising more private capital investment in some areas within the net zero investment space. All those matters will be weighed up and considered at part of the capital spending review.

That includes the plans for any programmes under net zero and environmental sustainability being covered in the same way.

Yes, in exactly the same way.

I would add that ministers will, obviously, be very thoughtful of the learning from previous revenue-financed capital schemes, and taking into account value for money will be at the heart of any decisions when it comes to using different funding or financing models.

Willie Coffey has got another question.

Thanks very much, convener, for letting me come back in here.

The convener asked about the A83 and how you balance investment in things like road infrastructure against an overall gain for net zero, and how you demonstrate that. Am I right in saying that the Rest and Be Thankful is on the A83, and that, in 2020, that section of the road was shut for 200 days? If you are investing in a repair, an upgrade, a programme, a project or whatever to solve that problem, are you ultimately able to demonstrate that there is a net zero gain because there would not be a 59-mile detour for vehicles for 200 days in a given year? Do you do that kind of balancing? Can you demonstrate to the committee that that is what is going on?

The A83 is a really good example of how, in the transport appraisal process and decision-making process, you need to draw on a range of factors to help inform decisions. As you rightly said, the A83 has been subject to quite significant landslides. That is a result of climate change—we are seeing increased rainfall, which is effecting the stability of the mountainside. I note that that road is fundamental in providing access to vast swathes of Scotland, so there is an impact any time that it is closed.

All those factors are drawn into the appraisal—the business case, effectively—to help ministers to make informed decisions. Ultimately, the decisions on how they prioritise that are for ministers. That is how that is done. Yes, the climate impact that is associated with a road improvement programme is part of that mix, but it is not the only part.

Thank you. That was very helpful.

Can I ask each of you if you have got any reflections on the recent Audit Scotland report that spoke about the extent to which there is joined-up working across Government in pursuit of net zero targets?

I will read out a couple of the conclusions from the report. The Auditor General said:

“The Scottish Government does not routinely carry out carbon assessments or capture the impact of spending decisions on its carbon footprint in the long term.”

He also said:

“The Scottish Government does not assess how far the policies outlined in the Climate Change Plan Update will contribute to net zero.”

Finally, he said:

“The Scottish Government does not know how much the policies proposed in the current Climate Change Plan Update will cost”.

Do you think that that is a fair assessment? We will start with Alison Cumming.

I point to the work that is under way in the joint budget review, which is looking at how we can improve the transparency of the decisions that we make and at the supporting evidence on how decisions are taken on allocation of resources—both capital and resource budgeting—in relation to impact on climate change and emissions. We are starting to make progress on implementing the recommendations of that review.

We have introduced a dedicated climate change narrative to the budget, and we are developing an enhanced taxonomy of Scottish Government spend to support the Parliament and others in scrutinising decisions.

We are making significant progress on how we can take the evidence base in to support the decisions that are taken in the budget, on applying that across all portfolios and on looking at ways in which the investment decisions that are taken—be they in the health, justice or net zero portfolios—can have the maximum impact on our emissions targets.

I will add two things to what Alison Cumming said. One is that this is genuinely hard and no country does it well, so there is not a template out there that we could take and deploy for our purposes. The work that Alison described is ours, and we look at what people are doing internationally to improve our methodology for assessing the carbon impact. Willie Coffey’s example of the Rest and Be Thankful is a good example of the detailed challenges that are involved.

The second thing that I will say is in response to the question about the Audit Scotland report on costs and the impact assessment.

We got new, really ambitious climate change targets in Scotland back in 2019. They were voted for by all parties; there was cross-party agreement on it. The year after that, we agreed to publish an update to our climate change plan. We are required by law to produce a climate change plan every five years, but given the increased ambition for our targets, we thought that we had better get on and set out how we plan to meet them. Normally, it takes a good two-and-a-half years to produce a full climate change plan, given that the climate change plan covers everything. That was an update, a sort-of interim climate change plan, and in the time available we were not able to set out very detailed information on costs and the specific emissions impacts.

We are now in the middle of our next full climate change plan—I am sure that we will be back at the committee to discuss that. The intention is to lay that in Parliament in November this year, and it will be scrutinised then. In that plan, which includes the work that we are doing currently, we will set out information on costs and emissions impact of the policies.

We are doing that work alongside the work that Alison Cumming described about how to improve our assessment of the emissions impact of our policy decisions—not only in the climate change plan, but also when we publish budgets and when we make policy decisions.

I can talk about the peatland and forestry aspects. To paraphrase Kersti Berge, it is hard, but we are making progress.

There is a lot of really good science on forestry and peatland. There are a lot of models around the carbon capture elements of our projects and the emissions that are avoided because of them. Again, we are at the start of that; we are in the learning phase. We are understanding and thinking about economies of scale as we scale up, so we are gathering a lot of evidence and data on emissions and the costs per hectare or per tonne of carbon. We are feeding into Kersti Berge’s climate change plan to support decision making.

To add to the “It’s hard, but we’re making progress” theme, we have updated our appraisal guidance to make the climate aspects of appraisal more explicit. That was done shortly after the last climate change plan. It also reflects our commitment to the 20 per cent reduction in car kilometres, so that that is taken into account. There is progress on that.

I have a couple of other things to add. Some of the technologies, particularly those in transport, do not exist at this time or they are very embryonic. It is therefore hard to work out how much the necessary action will cost. It is hard to know what it will look like and how quickly it can be ramped up, but we know that that is the area of innovation that we need to be in place in order to drive a degree of change, so we are doing everything we can, as Kersti Berge and Alison Irvine outlined.

Okay, thanks. When we return after the summer recess, we are going to take more evidence on that with the director general for net zero, so we will get his assessment of that.

Data, measurement and assessment are really important to the Public Audit Committee, as is the word that Alison Cumming used: “transparency”. With that, I thank Alison Irvine, David Signorini, Alison Cumming and Kersti Berge for being transparent and giving us their time and empirical observations about how things work in Government on those questions that are important for all of us; it is greatly appreciated.

10:56 Meeting continued in private until 11:21.