Public Audit Committee

Meeting date: Thursday, February 24, 2022

Official Report 658KB pdf

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Section 22 Report: “The 2020/21 audit of Scottish Canals”

Agenda item 3 is a review of the section 22 report arising from the 2020-21 audit of Scottish Canals. I welcome our witnesses for this part of the meeting. The Auditor General for Scotland, Stephen Boyle, is joining us in the committee room. Graeme Greenhill, who is senior manager in performance audit and best value at Audit Scotland, and Joanne Brown, who is a partner with Grant Thornton UK LLP, are online. I think that Grant Thornton UK LLP carried out the audit on the ground with Scottish Canals.

I invite the Auditor General to give an opening statement.

Thank you, convener, and good morning to the committee.

I prepared the report under section 22 of the Public Finance and Accountability (Scotland) Act 2000, to draw Parliament’s attention to challenges that Scottish Canals has had in valuing its assets during 2020-21 and the resultant disclaimer of opinion that was issued by its external auditors.

By way of background, I note that on 1 April 2020, the status of Scottish Canals changed from public corporation to non-departmental public body. That change came with a requirement to follow Her Majesty’s Treasury’s accounting guide, including the methodology that is to be used to value canal infrastructure and inland waterways.

Although the required valuations for investment properties and land and buildings were conducted, auditors found that Scottish Canals did not get valuations for about £51 million-worth of specialist assets. Those assets included dredging equipment, lock gates and canal basin widening works. A subsequent valuation that was aimed at estimating the cost of replacing those assets in their current condition and for existing use raised concerns about the accuracy of Scottish Canals’ fixed asset register, among other valuation flaws. That meant that auditors had to issue a disclaimer of opinion on the accuracy of Scottish Canals’ financial statements, because insufficient audit evidence was available to conclude on the overall valuation of the canal infrastructure and inland waterways. That remains a very unusual step for an auditor to take.

Scottish Canals will now, during 2022, undertake a new valuation of the canal infrastructure estate in its entirety. A key part of that work will require Scottish Canals to review its fixed asset register to ensure that all assets are appropriately recorded and categorised. That will be a substantial piece of work, but it is necessary in order to provide sufficient evidence to support future judgments and estimates of asset valuations. It is also needed to support the preparation of Scottish Canals’ medium-term financial strategy and delivery of its asset management strategy. The Scottish Canals board now needs to assure itself that the organisation has sufficient skills and capacity to deliver that complex project, and that it provides appropriate support and challenge to ensure that the project is delivered according to plan.

As you have noted, convener, I am joined by Joanne Brown, who is a partner with Grant Thornton and is the external auditor of Scottish Canals, and Graeme Greenhill, who is a senior manager at Audit Scotland. We will seek to answer the committee’s questions among the three of us.

Thanks, Auditor General. As usual, feel free to call on Joanne Brown and Graeme Greenhill as appropriate. If they wish to come in at any point, they should put an R in the chat box function and we will ensure that they are called.

Sharon Dowey will ask the first question.

Page 3 of the report states:

“Scottish Canals consists of a board comprising a chair, a vice chair and between one and four members appointed by Scottish ministers. As such, it operates on a day-to-day basis independently from the Scottish Government, but for which Scottish ministers are ultimately accountable to the Scottish Parliament. Scottish Canals’ chief executive, as accountable officer for the organisation, is also personally accountable to the Scottish Parliament for ensuring its resources are used economically, efficiently and effectively.”

What support, if any, did the Scottish Government provide to the board of Scottish Canals when the organisation’s status was changed from public corporation to non-departmental public body? Was it the level of support that you expected?

The overall accountability is clear: the accountability for preparing an annual report and set of accounts rests with the organisation and the accountable officer. As you know, the “Scottish Public Finance Manual” sets out personal accountability through this committee of the Scottish Parliament.

The change of status was not sprung on Scottish Canals as a new requirement. Let us look at the chronology. In its annual audit report on the audit concluding in 2019, Grant Thornton noted that the change was pending. The change stemmed from a decision that was made by the Office for National Statistics, which, having reviewed the functions, operation and status of Scottish Canals, deemed it to be more adequately described as a non-departmental public body than as a public corporation. Therefore, there was awareness of the project going back nearly two years.

As I said, responsibility rests with the accountable officer and board of Scottish Canals to reflect that change in its accounts. However, as you would expect, there is always interaction with the sponsoring body. Joanne Brown might wish to say more about those conversations.

Joanne—do you want to come in?

Thanks. I apologise—I was stuck on mute.

Representatives from the sponsor team in Transport Scotland routinely attend the Scottish Canals board. The board discussed on a number of occasions the organisation’s change in status to NDPB. As I understand it, when the change was first announced, which I think was around September 2019, a number of discussions took place with the sponsor team. As the audit matters arose during the audit later on last year, there were further conversations with Transport Scotland, in its sponsor role.

Was the issue a lack of understanding on the board or a lack of guidance from the Scottish Government? If the board knew in 2019 that the change was going to happen, why did it not take action?

From an external audit perspective, it was known that Scottish Canals becoming an NDPB would, under the FReM, require a change in how Scottish Canals accounted. We had a number of discussions with Scottish Canals’ management and, later on, shared a paper with them outlining some of the issues that they would need to consider in changing to accounting under the FReM. There was a lack of understanding in Scottish Canals about the need to get the £51 million-worth of specialist assets valued to comply with the FReM, so when the organisation picked up the change to accounting under the FReM, that balance was missed.

Okay, thank you.

For clarity, FReM is “The Government Financial Reporting Manual”. I just want everyone to be clear about that.

10:45  

Good morning, Mr Boyle. Thank you for joining us on what I understand is a busy morning.

I am looking for clarification. Your report provides information on Scottish Canals’ financial performance for 2020-21. However, it is not clear from the report whether you have any specific concerns about Scottish Canals’ financial performance, or the information that you set out is in the report in order to provide the broader context of the overall situation. Will you clarify your position on that?

It is, largely, the latter rather than the former. In preparing the section 22 report, the principal objective was to draw Parliament’s attention to the challenges that Scottish Canals has had in valuing its specialist infrastructure assets and the resultant disclaimer of opinion. As I touched on in my opening statement, that is a very unusual move and there are important steps that Scottish Canals needs to take in the current financial year to resolve the matter.

Nonetheless, we draw attention to the overall financial position of Scottish Canals and, as the report mentions, the need for it to develop a medium-term financial strategy. The nature of Scottish Canals’ activity is management of Scotland’s inland waterways. For many years, the organisation has been involved in regeneration activity, which influences its income arrangements. In valuing its estate, it is important that Scottish Canals captures what that means for its revenue projections and for its call on Government grants, as part of a medium-term financial strategy.

We provide the information largely as context, but the matters are not entirely unrelated.

Thank you. Colin Beattie has a couple of questions.

Looking at the big picture, is there a governance issue?

The principal conclusion that we reached was that Scottish Canals needs to take some significant steps in the current year to resolve the issue that led to the disclaimer of opinion. I do not wish to labour the point, but that was a very unusual step for the auditors to take. I say that knowing that in the past couple of weeks the committee received another report that had a similar disclaimer of opinion. However, it has been many years since an auditor has taken that step because of insufficient evidence.

We note in the report, and I mentioned in my opening remarks, that the board of Scottish Canals will want to assure itself that the issue can be resolved during the current financial year. However, it is also true that there were two years or so before the accounts were signed off in which steps could have been taken. We know that the organisation has—like all others—as the committee has already heard, been dealing with the effects of the Covid-19 pandemic and that there have been changes in personnel in Scottish Canals that have interrupted its progress. What we are saying in the report that we have published is that there is a real need for the board of Scottish Canals to track, monitor and be assured on progress.

Joanne might want to say a bit more about the timeline for this year’s audit, the signing off of the accounts and the steps that the board will be following in the course of the year.

Thanks—

[Inaudible.]—there is something I want to ask. I was going to ask what the role of the external auditors was, because they must have been advising the board all the way along. Were they ignored? Did they not give sufficient advice, guidance or clarification? Perhaps Joanne Brown can give us a bit more information on that.

I am sure that Joanne will want to say a bit more about the role that she and Grant Thornton have played. However, I will just say that it is not the auditors’ role to provide advice to the board of Scottish Canals, but to provide an independent audit. As you will know, the public audit model in Scotland is to provide assurance and to support public bodies to improve, but it is ultimately the responsibility of the accountable officer and the board to ensure that the accounts are well prepared.

That is true, but I would be surprised if the external auditors did not have a role in providing the information that the board needed to enable it to comply with whatever was required in relation to the assets.

I accept that point. As Joanne Brown mentioned, the Grant Thornton external audit report on the 2018-19 audit identified a significant task that was pending. I think that it is safe to draw the conclusion that it was not an event or a requirement that emerged late on during the current year, and that conversations will have taken place regularly with the auditors. I heard Joanne say a few moments ago that they prepared a paper on the matter. It is probably best for Joanne to set out how Grant Thornton has discussed the requirement with Scottish Canals.

I will pick up on that last point before I comment on the project plan that Scottish Canals has developed to address the issues. As the Auditor General set out, in our 2019-20 external audit report, we highlighted a management action plan in which we noted the risk to Scottish Canals in the transition to accounting as an NDPB and what that would mean, given the significant work that was involved in restating the financial statements. There was a management response, which was captured in that report.

We raised the matter as a significant audit risk in our 2020-21 external audit plan, which we presented to the organisation’s audit committee—again, setting out the work that was required to restate the financial statements, and the impact on the financial statements of Scottish Canals due to its change of status.

As I mentioned, in December 2020 we shared with management a paper that set out the various accounting requirements under the FReM and where we recommended that management pay particular attention in undertaking and drafting the financial statements for the year ahead.

As the Auditor General outlined, many things are, to be honest, management decisions. We are there to independently audit the set of accounts and the decisions and judgments that are made by management. However, from an external audit perspective, the subject routinely came up in conversations with the accountable officer and finance team throughout the year and throughout the audit work.

Scottish Canals has started to produce an indicative timeline and a project plan that sets out the various activities that it needs to undertake during the current year in order to resolve the issues on which we have reported. They include updating the fixed asset register and consideration of the nature of the assets that are held and how they will be subjected to valuation. That timeline takes Scottish Canals through to December 2022, when it anticipates that audited accounts will be signed.

That is an indicative timeline, at the moment. The board is still to have sight of the plan and to sign it off. We will work closely with Scottish Canals on that, as we go through our planning for the audit this year. As you would expect, we will stay close to the actions that Scottish Canals is taking to rectify the issues that have been identified.

Auditor General, turning to a slightly different aspect, I note that the report makes it clear that the cost of running Scottish Canals exceeds the funding and income. Paragraph 11 says that, in 2020-21, the income was £18.8 million and the outgoings were £22.7 million, so there was a net negative of £3.9 million. What are your views on the financial sustainability of Scottish Canals?

One of the requirements of external auditors of public bodies in Scotland is to express a judgment on their financial sustainability and their financial management, governance and leadership arrangements, as well as any opinion on the financial statements.

Building on my response to Mr Hoy, I note that we have not identified core financial sustainability issues with the business of Scottish Canals. The main thrust of the report that we are discussing today is based on the valuation concerns and the need to tackle them. However, we make the connection that the business of Scottish Canals is to maintain Scotland’s inland waterways, which requires considerable on-going maintenance investment. The organisation has played an important role in the regeneration of Scotland’s canals.

Scottish Canals is in the process of updating its medium-term financial strategy. That will be the key judgment point, first for the board of Scottish Canals, which will make its own assessment of its financial sustainability, and the audit perspective will follow on from that. We are not raising a red flag about the financial sustainability of Scottish Canals today but, like any public body, Scottish Canals should keep that under close review.

The report also states that there is a £70 million maintenance backlog. That is a heck of a lot for an organisation of this size and with the resources that it has. How on earth did the backlog reach that level?

Joanne Brown may want to say more about the background to that. Having a maintenance backlog is not unique to Scottish Canals. That is a regular feature for public bodies that manage large, complex asset bases. How they keep those assets up to date and in the expected condition is by prioritisation. Valuations and reviews of maintenance requirements have arrived at that figure as the cost of returning all assets to their ideal condition.

Scottish Canals will have to make a choice, just as it has made one about prioritising its investment in past years. Whether it invests £70 million, or more, will depend both on the financial strategy that it produces and on its delivery of the estates or asset management strategy that accompanies that.

Joanne Brown will give the background and to talk about decisions made in the years preceding this report.

Scottish Canals has had an asset management plan in place for some time. That plan has typically spanned 10 to 12 years and is reviewed and considered annually.

As the Auditor General said, that asset management plan considers the historic nature of the assets. It also considers them according to risk, according to priority and according to the information that comes from inspection of those assets. Scottish Canals recognises the need to take decisions about how to invest in canal infrastructure, based on funding and on the sums that it can afford to put back into maintenance. There are judgments within the plan.

Scottish Canals must balance its longer-term asset management plan with possible one-off instances of asset failure in year, when there is a need to go in and repair that asset. The maintenance backlog is recognised in the asset management plan and as a risk on the corporate risk register. Scottish Canals continues talking to the sponsor team about how that can be funded in future.

I want to probe the fact that we are sitting with a report that has a disclaimer attached to the audit opinion. Paragraph 3 of the report says:

“Scottish Canals had not obtained a valuation for around £51 million of specialist operational assets which had been capitalised between 2012 and 2021.”

Would you have expected a public corporation—as Scottish Canals was during that period—to have had those assets valued?

We say in the report that £51 million of specialist operational assets did not have a valuation. Joanne Brown will take the committee through subsequent valuations that were obtained during the year and about some of the concerns that Grant Thornton had about the material that was presented and about how that related to information that was stored in the fixed asset register.

Part of the background to this is that the requirement on Scottish Canals for valuation evolved as it moved from being a public corporation into being a non-departmental body, with the additional obligations that that brought for how it recorded its assets and disclosed them in its financial report and accounts.

I am sure that Joanne Brown will have more to say on this, but what we have today is a disclaimer of audit opinion because the auditor was unable to obtain the necessary evidence to sign off the accounts. Joanne can take the committee through what went before.

11:00  

I am happy to pick up on those points. Because, as a public corporation, Scottish Canals was accounting primarily under Companies Act 2006 requirements, it was not required to have a physical valuation of the assets and the capital spend. Those assets were held at historical cost and then depreciated over their useful life.

However, under the FReM, the accounting treatment changed, and the organisation was required to have a valuation done. It identified and commissioned a valuer for land and buildings prior to our audit, and those assets account for circa £8 million of the balance on the balance sheet. However, it did not request a valuation for the £51 million of what were determined as specialist assets, and when that came to light during our external audit year-end work in May and June, we had conversations with management on the need for the valuation in order to demonstrate compliance with accounting requirements.

When we started to look at the detail of the underlying records for the £51 million, coupled with the valuation that Scottish Canals subsequently got in October, we had concerns about the suitability of the audit evidence and the management’s records. The descriptions in the fixed asset register made it quite difficult to understand the exact asset, and it is quite important in accounting terms for us to know whether an asset is a new one that is being brought in or an existing one that has been repaired or enhanced. Moreover, the fixed asset register had been set up in such a way that you would not have been able to tell whether old assets had effectively been written out of the register.

We also had some concerns about potential duplication and double counting between the valuation of the specialist assets and what was recorded in the fixed asset register. For example, a number of investment properties were subject to valuation. Although we were comfortable with those valuations, some of the balance that made up the £51 million contributed to the investment property, and we were unclear whether that was effectively a double count.

The asset register held a number of assets as a component of assets, which were then wrapped up into individual assets that the valuer sought to value last October and November. Within those assets, however, there were different types of assets, which raised an audit challenge with regard to whether the useful life of those individual components was the correct allocation and whether, therefore, the valuation basis was correct. The 51 specialist assets included infrastructure assets—bridges, roads, towpaths and so on—and specialist engineering such as rock piles and sea gates, but there was also a land element, which had a different valuation basis. As a result, the records that Scottish Canals had to support the valuation and to show the individual assets were lacking. There was also a challenge with regard to the subsequent valuation that it received in October or November, which obviously came later than our audit work.

Therefore, a number of factors with regard to the fixed assets and the subsequent valuation caused us concern. As the Auditor General has said, a disclaimer opinion is very unusual—I have signed only two, which you have seen—but we had to issue a disclaimer, because when we looked at the balances in the financial statements where these transactions would hit, we were unable to say whether they were materially or otherwise misstated. Capital could have been incorrectly treated and should have been expenditure instead; if the useful lives were incorrect, that would have an impact on depreciation; and there was an impact on revaluation reserves. The impact of the £51 million hit a number of the financial statement line items, which led us to think that this was pervasive across the accounts and to issue the disclaimer.

Thank you. That was really helpful.

I understand that Scottish Canals changed its status from being a public corporation to being a non-departmental public body, which led to a change in its accounting requirements, but does Scottish Natural Heritage or Scottish Water have a fixed asset register? Will ScotRail need to have a fixed asset register in the future? Where does Scottish Canals sit in the spectrum of organisations in that regard?

Any public body that manages assets should have a fixed asset register, as it is a core component in managing the maintenance and recording of assets. As Joanne Brown touched on, the register does not record just the overall asset that you can see; an asset is often subdivided into components—the different items that make up the asset—which may have different useful lives. That ought to link clearly and transparently to depreciation of the asset, the management of it and the associated financial reporting that is disclosed in respect of it.

It is usual and expected that that information will be recorded and kept up to date in a fixed asset register, and that those records will be accurate.

There are other circumstances in which a valuation might be applied prior to a change of ownership. That has happened in the past. With ScotRail, for example, where the ownership of the franchise is changing, would you expect some kind of fixed asset register to be provided on the transfer date, so that the Scottish Government, in taking on the assets, would know what Abellio was handing over to it?

In that context, yes. As you know, we have not yet done any work on that. The auditors—whether the outgoing or the incoming auditors—will look at opening balances, in order to be satisfied with the disclosures that are being inherited. Building on the discussion that we had earlier, the same applies to the incoming board and the accountable officers, who will also want such an assurance. Whether that is provided by external auditors or internal auditors, they will want to be clear about the assets and the liabilities that the organisation is inheriting.

As far as Scottish Canals is concerned, a fixed asset register is a vital component of the organisation, given what it does in maintaining Scotland’s inland waterways. It is a key feature of its work. That is why it is so important that there is a focus on resolving the issues that we have reported on today, that that work is done over the course of this year and that the reporting on that goes ahead as intended, at the end of December.

The value of the canal network in its entirety has never been disclosed in accounts produced by Scottish Canals. What is the reason for that? Is that because the network consists of old, Victorian structures that have never been properly assessed since they were built centuries ago, or is there another reason? Why is that?

The situation is largely as you described it. Before Scottish Canals became a non-departmental public body, it was not required to have valuations of the sort that it now requires to have, as an NDPB. There has been a change of status. Joanne Brown might want to say a bit more about the valuation methodologies that Scottish Canals has now that it has moved to a depreciated replacement cost and existing use model, and the requirements on it in that regard.

I do not wish to understate the significance of the work that requires to be done. In the report, we make the judgment that Scottish Canals must do a significant piece of work this year to resolve the valuation concerns that we talk about in the report. Therefore, there is all the more reason for there to be good governance and oversight of the project over the course of this year.

I will hand over to Joanne Brown to talk about the present and previous valuation arrangements.

That would be helpful.

When Scottish Canals came into existence in 2012, there was an asset register agreement between British Waterways and Scottish Canals, which involved the assets transferring to Scottish Canals with a nil net book value. In effect, the canal network and the canal assets were recognised as a heritage or historic monument type of asset that could not be subject to valuation and were therefore held at a residual nil value.

Over time, Scottish Canals has invested in the canal network and undertaken a number of repairs. As part of the repairs, the canal network has been enhanced. It has been challenging for Scottish Canals to think through some issues—for example, some of the spend this year in the specialist asset category was to enhance a reservoir, but the reservoir is not held on the Scottish Canals books and does not have a value attributed to it. The conversations are about whether the reservoir or the piece of work that was done at the reservoir should be valued and about what that means in valuation terms.

Scottish Canals is discussing with the sponsor team the challenge about how to put a value on a canal network—a canal is not quite the same as a trunk road and is not used in the same way. Ultimately, does the Scottish Government want a value to be attributed to the whole canal network and to have it on the Scottish Government’s books? Scottish Canals needs to have that on-going conversation so that it understands why it would want to have capital assets and hold them in the proposed way. Once Scottish Canals better understands the nature of the capital asset, it will be better placed to determine the valuation of it.

Over time, all the work is being capitalised. If that approach continues, it will inadvertently give the whole canal network a value. I am not sure that that is necessarily the intention, and Scottish Canals management are looking further at that.

There are still quite a few unanswered questions and we will need to consider how best to respond to them. Willie Coffey has questions to raise.

The transition of Scottish Canals from a public body to an NDPB seems to have brought about many or most of the issues. Paragraph 10 of the report says that the decision to change the status from public body to NDPB resulted from a review by the Office for National Statistics. Did no one think that that would put a bit of a millstone around the neck of Scottish Canals? Joanne Brown described the substantial change in requirements. Being one type of body or the other makes a substantial difference to how the assets are accounted for. Did nobody think about that before the decision was made about changing the organisation’s status?

That is an interesting point. Graeme Greenhill can provide additional context and background. From the work of the committee’s predecessor, Mr Coffey might recall decisions that the Office for National Statistics made about other capital projects. Graeme Greenhill might say a bit more about the Aberdeen western peripheral route; the special purpose vehicle that went around that was a consequence of a call that the Office for National Statistics made.

The ONS makes its own decisions. Across the UK, it makes judgments on the status and activity of public bodies and it determines into which categories they best fall. The ONS judged that, by way of its relationship with the Government, Scottish Canals was better described as a non-departmental public body than a public corporation, but the knock-on implications of that were significant, as we see today. Joanne Brown described the complexities of the various valuation arrangements and what then fell on Scottish Canals.

Decisions that might initially appear to be relatively innocuous can have serious repercussions. It is worth hearing from Graeme Greenhill about how that has been dealt with previously.

It is not entirely uncommon for a body’s status to change as a result of ONS reviews, but it is fairly unusual. It tends to involve arm’s-length bodies that are at the boundaries of the public sector and have features of a trading nature.

One recent example, which Willie Coffey might remember the committee’s predecessor considering, was the special purpose vehicle that was set up to deliver the Aberdeen western peripheral route, which was part of the non-profit-distributing programme. The ONS was responsible for classifying, under guidance that Eurostat—the European statistical body—prepared, whether the privately financed projects were under public sector control or private sector control.

11:15  

Back in 2015, the ONS concluded that, because the public sector in effect had a veto over key aspects of projects and a share of the project surpluses, NPD projects fell under the public sector. That led to the Scottish Government halting NPD as a method of delivering private finance projects. It changed the way in which it was going to do private finance projects and introduced the mutual investment model to avoid having that kind of ONS review resulting in a special purpose vehicle being regarded as being under public sector control.

The ONS tends not to think much about the implications of its decisions in the way that Mr Coffey outlined. It tends to look at the wider picture and at where public bodies sit within national accounting boundaries.

Auditor General, I am still reading the report. That status change was made only in April 2020. We might argue that Scottish Canals would struggle to be able to deliver the extent of the fixed asset register re-evaluation in that timeframe. The more important question is whether Scottish Canals is getting on with that now. Are you confident that the organisation is aware of what must be done and of the demands that you have outlined in the FReM and that Joanne Brown described to us? Does the organisation have the skills and capacity to do the work now and as quickly as possible?

I can address both those points.

Although the status change happened in April 2020, there was an awareness of the implications of that change for at least a year beforehand. That might have allowed some of the circumstances that we are reporting today to have been avoided.

You asked whether we can assure you that all the necessary work will be carried out over the course of this year. Unfortunately, we cannot do that yet. Joanne Brown will want to say more about what she has seen. We know that this is a complex task. Scottish Canals recognises that there is complex work to do and has arrangements in progress to tackle the issue.

We have said a couple of times that the board of Scottish Canals will want to assure itself that the necessary skills are in place to tackle and deliver the project. Joanne already said that we will track and monitor that through our external audit work and will consider further public reporting as necessary. I will hand over to her to say more about how Scottish Canals is tackling that and what its intentions are this year.

I think that Joanne Brown has frozen. I do not think that we can fix that. Auditor General, do you want to say anything else?

We know that Scottish Canals is making plans to tackle the issue. That is a significant task, as we have said a number of times here and in the report. It must be carefully managed, with the right resources and level of expertise. Scottish Canals may not have that expertise in house and may need to bring in experts in the necessary subject matter to provide support for the valuation process. It is a big and complex project. Scottish Canals will want support from the Scottish Government and the sponsor team to deliver it, to manage it and to report transparently throughout the year. As I have said, we will continue to monitor it through our audit work and through Joanne Brown’s team.

Thank you. We are out of time. I thank the Auditor General for providing us with a useful insight into the report. I thank Joanne Brown, who joined us online, and Graeme Greenhill for their evidence, which has given us a lot of food for thought.

The meeting will now move into private session.

11:20 Meeting continued in public until 11:42.