Official Report 440KB pdf
Item 3 is the main business of the afternoon, and is further evidence taking on the draft budget 2011-12. I welcome the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, and his colleagues David Middleton, who is the chief executive of Transport Scotland, and Bob Irvine, who is the deputy director of the Scottish Government’s Scottish Water division. I invite the cabinet secretary to make an opening statement.
Thank you, convener. It is a pleasure to be at the committee to discuss the contents of the Government’s draft budget for 2011-12.
Our first area of questioning is on transport, after which we will move on to climate change. Obviously there is some overlap between the two, but that is the rough structure that we will follow.
I will follow the structure of the question in my response by saying which areas we have taken up and which we have not taken up.
The intention to rule out changes to the concessionary travel scheme was a fairly early commitment from the Government. Are there any other aspects of the IBR’s recommendations that have been ruled out in that way, before consideration?
I am sorry—I should have added the position on Scottish Water to my first answer. The independent budget review ruled out the concept of privatisation. It indicated that it did not think that mutualisation of Scottish Water was workable and it raised the concept of a public interest company. The Government has made it clear that we have a different agenda on Scottish Water. Our thinking on that will be set out in due course.
You have touched on issues that are part of this committee’s remit. I assume that other recommendations in the IBR, for example the road user charging proposal, are receiving active consideration, if they have not been ruled out.
The Government has not advanced any proposals for road user charging and we have no plans to do so. That is a contribution to the debate from the IBR. At the time of the IBR I said that I would give an initial reaction on a range of items, which I have done, and that the Government’s budget would essentially be our response to the IBR. For example, the Government’s budget sets out provisions in relation to pay and head count. Those were fundamental issues considered by the IBR, which set out the argument that if there was general pay inflation in the Scottish Government and its associated bodies, there would be greater pressure on head count.
Are you saying that the Government has ruled out considering the feasibility of a road user charging scheme?
The most accurate way that I can explain it to the committee is to say that the Government is not taking forward work in that respect; it does not form part of our programme.
And you do not intend to consider the feasibility of a scheme, as recommended.
I do not have any plans to do so at this stage.
One of the objectives that the IBR mentioned was that a road user charging scheme would contribute to the maintenance costs of the road network. It made some other comments about the balance between building infrastructure and maintaining existing infrastructure. This relates a bit to the lessons that might have been learned from last year, given the condition that the road network was in after the very tough winter. As we go through another very tough period of weather, we are all reflecting on the impact that that will have on the road network. What general approach have you taken to ensure that we have sufficient resources for road maintenance and that building infrastructure does not take away from that?
The budget document does essentially what the IBR talked about by striking a balance between the maintenance of existing infrastructure and the construction of new infrastructure. That balance is of course reflected in the thinking behind and contents of the strategic transport projects review. Within the review was a range of capital new-build projects that we could take forward to enhance infrastructure, but equally there was the distillation of a set of arguments around the maximisation of the effectiveness of our existing infrastructure and what it would contribute towards the economic health and prosperity of the country. The balance that was struck in the STPR and reinforced in the independent budget review report is also evidenced in the way in which the Government has structured its programme. Yes, there are some new-build transport projects; equally, there are other investments to sustain the existing network and to ensure that it is able to meet the expectations of people in Scotland.
I just want to think a bit more about that balance between maintenance of the existing network and new infrastructure build, particularly in the context of the series of cuts that we are expecting over the coming years. The road maintenance budget is being reduced. Quite apart from the weather conditions this week and last week, there will be people who are thinking about the lessons that could have been learned from last winter and who might be given pause for thought. Are you confident that a reduction in the road maintenance budget will not come to be regretted by those who see damaging conditions that simply are not being put right?
A number of different changes are made in the Government’s budget. We are increasing the budget line for structural repairs for example. That is one element of what the Government is bringing forward. The position on routine and winter maintenance is that the budget is essentially flat in cash terms—the budget has been maintained. I did not rehearse for the committee some of the budget reductions that we are facing. I think that I rehearsed the position on capital, but we are experiencing a cash-terms reduction in our resource budget into the bargain.
But overall the budget for maintenance of the motorway and trunk road network is going down.
Overall, at a global level, that is correct, but we must acknowledge that we need to replenish some of the infrastructure that is part of the trunk road network to ensure that it can meet demand and expectations in the years to come. That is part of the difficult balance that we must strike.
Some people will be a little disturbed to think that you have looked at what happened last winter, tried to learn some lessons and concluded that the maintenance budget for trunk roads and motorways can be reduced without giving rise to further problems. Are you completely confident that that particular decision will not be regretted?
Yes, because as I stressed to you a moment ago the routine and winter maintenance budget has been maintained at a time when we are facing a cash reduction in our budget. That is the clear and direct budget line that affects the issues that you raise. Last year, the budget for routine and winter maintenance was £61.6 million; this year, it is £61.5 million.
That is a real-terms cut when we are seeing an increased need.
There is an acknowledgment of the fact that we are facing a cash reduction in our budget. There is any number of suggestions about how I could spend more money on particular items, but I do not often hear suggestions about how we could spend less on other items, so I have had to strike a judgment in the decisions that we have arrived at on the budget.
I was going to mention the new Forth bridge next; as you are asking for areas where you might save money perhaps that is good timing. What other spending, either on maintenance or on other infrastructure, will be affected, delayed or deferred because of the enormous investment in the new Forth road bridge?
I have said that there are a number of smaller schemes and road improvement projects that we would ordinarily have liked to take forward but which we will not be able to take forward as a consequence of the significant reduction in capital expenditure that we have experienced and the fact that we have to take forward major capital infrastructure projects, the largest of which is the Forth replacement crossing. Two factors have an impact: one is an issue that we have to address—the necessity of building another Forth crossing; and the other is the response to the reductions in our budget that have been applied by the United Kingdom Government.
In that context, is it not overwhelmingly obvious that we should check whether it is necessary to press ahead with spending what is an astonishing amount of money by first waiting to find out how the dehumidification is working on the existing bridge?
I agree that it is an astonishing sum of money, but what is also astonishing is the sum of money that would be lost to the Scottish economy if we waited several years to see whether the dehumidification work was successful, found out that it was not successful and then had to take a decision in a hurry and in far from ideal circumstances to close the Forth bridge. If we had to do that, the disruption to Scotland’s transport networks, and subsequently to the economy, would have a permanent impact on the Scottish economy.
I have heard no one argue that there should not be a road crossing. However, I have also heard no one argue that the bridge is likely to be closed in the near future, only that it may be closed to certain types of heavy goods vehicles. Is it not at least possible that the engineering reports on the existing bridge that we will get less than a year from now will say that we do not need to do anything for a good 10 years? At that point, people may want to rewrite this budget.
With the greatest respect, that is a hypothesis.
It is a credible one.
It is a hypothesis that is not based on the evidence that is before me at the moment. Your description of the sequence of events is correct. If we do not get decisions on the Forth bridge correct, use of the bridge first by HGVs and, ultimately, by private vehicles will be restricted. If at any stage we needed to repair the bridge significantly, we might be able to do that by closing one carriageway permanently, so that the bridge was restricted to single-carriageway operation. That is the very least that could happen, but I am not absolutely sure that it is a credible option. If the bridge needed to be repaired, it is likely that it would have to be closed for a prolonged period to enable that to happen. My point remains that that would be very damaging to the health of the Scottish economy.
I have one further question. The Scotland Bill that has been published at Westminster contains proposals for borrowing powers, although my initial reading of the bill suggests that the Scottish Government will require Treasury permission to exercise the powers for which the legislation provides. Is that reading accurate? What is the Government’s assessment of the likely impact of the Scotland Bill on its ability to make decisions on infrastructure investment in roads, bridges, railways or anything else?
My reading of the provisions is slightly different from yours. I read the bill as setting a Treasury limit on the volume of borrowing and an annual borrowing level. I do not think that it is as prescriptive as you imply or that Treasury approval will be required for specific projects, with one exception. I do not understand why, under the proposals in the bill, the borrowing provisions must take so long to be enacted; that could be done a great deal more quickly. However, the Treasury suggests that a pre-payment arrangement might be put in place, by agreement between Her Majesty’s Government and the Scottish Government, to manage the Forth replacement crossing. We will pursue that possibility.
I start with a brief question about the air services budget, in which there is a slight move from resource to capital of around £200,000 in cash terms. Can you tell us a bit more about what that involves?
I think that it relates to infrastructure for some lifeline services. I cannot be any more precise than that, but I will provide you with a specific answer.
There will be best-value issues around the air discount scheme. Are you on the case and are you satisfied that it still represents best value? I know, for example, that it is very much your intention in the year under discussion to strip out some of the business-related travel claims pertaining to the air discount scheme.
Clearly, in the current financial climate we have to assess and consider all public expenditure very carefully. Best-value issues must be considered, but so must questions of equity. I gave evidence this morning to the Equal Opportunities Committee, and many issues about equity emerged. The air discount scheme obviously contributes to addressing some of the costs that are faced by our residents in more isolated communities.
Three supported air routes between Glasgow and Barra, Tiree and Campbeltown are categorised as a public service obligation. Are you satisfied with the robustness of that designation?
I am.
So you do not have any worries that there could be future difficulties with the European Commission.
We must be mindful of ensuring that we comply properly with any obligations that are applied by the European Commission. Obviously, if there are issues to be addressed in that regard, the Government must address them.
My next question links concessionary travel and the bus service operators grant. The figure of £185 million for concessionary travel seems to be £5 million above the original cap that you told the committee about in a previous evidence session. However, the figure for the bus service operators grant appears to be £5.7 million less than the figure of £66.5 million that you gave to the committee earlier this year. Can you clear up those sums?
The sums on concessionary fares and the bus service operators grant that appeared in the budget are the sums that were negotiated with the bus operators as part of the Government’s approach to providing the necessary financial control that we would expect over the concessionary travel scheme. Those numbers are the ones that I offer the committee today. If reconciliation of those numbers with numbers that we raised previously is required, I am happy to arrange for that to be done.
I wonder whether there has been an element of rebadging around the £5 million or so, cabinet secretary. For example, in the Official Report of 18 March you said that you would
I think that I said to the committee previously that, taking BSOG and the concessionary travel scheme together, there was a net saving to the public purse. Clearly, though, we will be happy to ensure that there is clarity about that.
It may just be a question of detail.
The expenditure relates to software upgrades to ensure the operability of the smart concessionary travel system.
I see. Is that likely to be an annual or periodic requirement? The item seems to be lumpy, if I can use that term.
That is a fairly accurate term to use. We hope that the item will not be too lumpy, if I can carry on that usage. The upgrade is certainly not annual.
Was it an unpleasant surprise?
Let us just say that I could have done without it.
If Parliament agrees to that item for next year, can you estimate how many years it will be before we are asked to endorse something similar?
I cannot give a definitive figure, but I know—
But the item will not appear annually.
It will definitely not appear annually. I can say that Parliament would expect to have effective and operational smart card technology to enable us to manage the concessionary travel scheme properly.
Does the smart card technology have potential uses beyond transport that could impact on the budget in future years?
The concessionary travel card could be used for other purposes, if that was desired by the Government. We have no plans to roll out any other provision that is associated with that.
So nothing is planned that would have a financial impact.
That is correct.
The ferry services budget will increase by about 20 per cent in real terms, whereas investment in vessels and piers will be nearly halved and support for the road equivalent tariff will be down by about a third. Why does support for ferry services continue to increase at a level that is well above any measure of inflation?
The budget must catch up with the reality of where the ferries budget is going as a consequence of several factors, but principally the cost of fuel, which is the significant element in the changes with which we wrestle. In this financial year, we are finding resources to support the actual costs of running the ferry network. The 2011-12 budget reflects some of that challenge, which the Government is addressing.
I understand well the point about diesel. What increases are being given to support the network? We have talked about a general increase that is well above inflation.
That relates principally to the increase in fuel costs—that is the factor that we wrestle with. Other costs will undoubtedly rise, but we are working with the operators to maximise the efficiency of their contribution to the cost of the ferries budget.
Is sufficient capital being made available to ensure the upkeep of the fleet and the onshore infrastructure?
Part of the challenge that we face, to which I suspect that we will return time and again in our discussions, is that capital expenditure will be under enormous pressure. Capital expenditure will reduce by about 38 per cent in the four years of the spending review, which is a huge decline.
I understand that perfectly, but we know, for example, that over the next five or six years we will need 100 new ferries to deal with the problem of our fairly old stock. Have there been any discussions in Government about or has any thought been given in future programming to finding a dedicated facility in which we can build ferries for our own services? Could we, in considering the potential for dedicating a new site for such activity or using existing firms, compete with other high-cost centres such as Finland and Norway?
Much as I am attracted by Mr Gibson’s concept, I have to point out that we would have to address the dreaded state aid implications of such a move. My firm view is that there is no reason why we cannot repeat in shipbuilding the superb performance of Scotland’s strong manufacturing sector with regard to the manufacturing agenda, and I am sure that opportunities will emerge in that respect.
I take it that your thinking will include the consideration of overland routes that cut out extra infrastructure costs and the need, in some cases, for very large vessels. MV Finlaggan stands as a very good example of how the islands have been traditionally served but, in the long term, other cheaper ways might well be found. For example, people on the Shetland Islands have been thinking about tunnels, although I am not suggesting that that would be appropriate with regard to capital costs.
I accept that point, given the effectiveness of fixed links in different parts of our island communities. Interestingly, in view of the ability of fixed links to capture energy, there could be cross-collaboration with wave and, in particular, tidal sectors. There is a lot to explore in that respect.
Indeed.
Yes, I think that it does.
I take it that there will be an assessment of how the costs have been reflected in the prices that carriers charge for things and so on.
The RET pilot’s effectiveness is being assessed. That work will be published and form the basis on which we will assess our approach to RET.
Going back to the new Forth road bridge, I suggested that the decision was premature and that it might have been better to wait for information that will be available next year to inform any decision. Does the same argument not hold true for RET? You have said that you think that it represents value for money, but that an assessment is being carried out. Should we not wait until we have that assessment, or rather should the pilot not have been designed differently to ensure that budget decisions were informed by something that had been assessed rather than by what you thought about something before it had been assessed?
We have a programme that is under way and we are obviously interested to see the impact that it has had. The initial assessment is that it has had a beneficial impact on the communities that have been affected. Part of good policy making is to be in a position to consider the effectiveness of programmes in determining how they should be taken forward in the years to come. We have the pilot, and we will do the assessment in a fashion that does not interrupt the ability of the scheme to operate and, crucially, have what certainly appears to me to be a beneficial impact on the economic prosperity of the Western Isles and other communities.
Is there a short-term, interim extension to the scheme pending the assessment, or has the Government done anything that would lock in a subsequent Government and prevent it from making changes even if the assessment showed that those changes were justified?
We have not locked in any future Administration. We have extended the RET pilot.
Until?
By an extra year.
Okay. Thank you.
We turn on to motorways and trunk roads—if the slip roads are actually open. I want to look at the reduction by three quarters of the network strengthening and improvement budget, which has been mentioned before, and think about how the Scottish Government can continue to fund major trunk road improvement projects, such as the Baillieston to Newhouse one, given the current budget restraint.
The Baillieston to Newhouse proposal has been subject to a public local inquiry and it awaits a ministerial decision. If the ministerial decision is supportive of the work that is envisaged, it will be undertaken as part of the non-profit-distributing programme that I set out in the budget statement.
So we can expect that some of the large items that have been mentioned, such as the M74 Raith interchange, the associated network improvement project and the Aberdeen western peripheral route, will feature under that newer form of finance.
There is an explanation of the contents of the NPD programme on page 42 of the budget document. It covers a range of transport projects along with education and health projects.
That should help us to achieve more for every pound that is spent than has been achieved under some previous methods of calculation.
That is correct. The Scottish Futures Trust is doing an excellent piece of work on ensuring that we maximise the value for money of this approach to investment.
Thank you.
We are in a situation where we have to face reductions in the budget. I do not particularly want to make the reductions, but I have to face up to them. We have to accept that we will not be in a position to do everything that we would ordinarily like to do. That is essentially what the budget does—it sets out our priorities and choices, and indicates what we are able to do. Although there are reductions in the budget, a very substantial sum of money is still being expended within the budget to invest in the future of Scotland.
I will take this chance to ask David Middleton about the overtaking lane at Moy on the northbound carriageway of the A9 trunk road, which I passed on Sunday. It seems to have been designed wrongly and has been coned off. What happened in the design and delivery of that imperfect arrangement?
As it relates to the 2011-12 budget, that is.
That might well be, if it has to be sorted out.
I do not want to say definitively what the issues are around the junction. We monitor accidents and close calls on the network carefully. The chief road engineer and other road engineers were concerned about near misses, which they think might have arisen from the design of the junction, so they took the decision to make adjustments and study the traffic flows and the recent evidence. When we have reached a conclusion, we will tell the relevant members and the public what our next step will be.
The next step might fall into the next budget period, given the time that it will take to assess the situation.
The overtaking lane was constructed in accordance with established design standards. The fact that the issue is being addressed demonstrates the need for us to keep under constant review significant issues in relation to safety, which concerns us all.
I welcome the freeing up of traffic. I hope that the problem will not take too long to sort out.
When Rob Gibson asked about the implications of the Government’s decisions on trunk roads and motorways in the context of emissions, the cabinet secretary replied that, because of the cuts, there are things that we cannot afford to do. Is that answer not a wee bit worrying from a Government that was committed to getting its climate change targets in place, and which has been told year after year by this committee that prioritising the motorways and trunk road infrastructure locks in high-carbon behaviour? If even the Government that introduced the targets will not make the right decision when times are tight, how can we think that every subsequent Government between now and 2050 will do so?
With the greatest respect, I am not sure that I am often told by the committee that investing in the motorway infrastructure is the wrong thing to do.
We have frequently criticised the balance between high-carbon and low-carbon transport investment.
I recognise that sentiment on the committee. However, members of the committee have also demanded that we do this, that and the next thing to the motorway and road network, into the bargain.
On 12 December.
That is on Sunday.
Do you accept that if, as a result of spending decisions, road traffic levels increase, emissions will be higher, whether or not rail traffic also increases?
I suppose that the strategic challenge is that people in our society want to move about. They want to travel. I very much regret that many people could not do that easily yesterday, which was unfortunate. We must create the basis on which such a lifestyle can be sustainable. That is the focus of many of our interventions.
Does that not say more about the past 100 years than it says about the Airdrie to Bathgate line?
At least we are doing it. That is a good thing.
Let us move on.
I want to move on to the area of other transport policy and projects. Why is the Scottish Government supporting the development of infrastructure that will help with the roll-out of electric cars? What specific work will that expenditure deliver?
The work will enable us to make the transition that I have discussed with the convener, which is about making our journeys as citizens more sustainable and taking steps to reduce carbon emissions. We are talking about new technology and new areas of activity. The Government sees it as part of its role to encourage the development of such infrastructure in Scotland.
There are different ways of making such changes, but what specific work do you expect that expenditure to deliver?
I may have to get a bit of help on some of the detail but, essentially, we are looking at how we could put in place the infrastructure that would allow a credible electric vehicle network to operate. We would do that through a pilot, to test out what the infrastructure would comprise, how the technology could be deployed and what issues its deployment would raise, and to identify what lessons needed to be learned as a result.
Do you have any details on that pilot?
I can certainly share details of it with the committee in writing.
Thanks very much.
Those discussions are under way. We will, of course, advise the committee when they have been concluded.
So you have nothing to add on that.
No. The discussions are under way.
That is not reassuring at all, but we will wait and see what details we get.
I would like to ask a supplementary on that. When do you expect to conclude those discussions? The committee will be drawing up its report on the budget soon. We have received written as well as oral evidence from a number of organisations that, over the years, have consistently made the case that more needs to be spent on walking and cycling. To date, we have not had a favourable report on the Government’s record in that area. If it was appropriate to maintain ring-fenced funding for the cycling, walking and safer streets budget at the beginning of the Administration, why would it be inappropriate to ring fence such funding now?
I know that ring fencing causes a sharp division of opinions, but we must ensure that we take the correct steps to guarantee that resources are deployed as effectively as they can be to work in unison with other areas of public expenditure. That is part of the discussion on ring fencing. Those discussions with COSLA are under way and I will be happy to give the committee an update on their contents as soon as that is possible.
Is the Government taking a different view on how to deliver the CWSS work from the view that it took at the beginning of its term in office?
No, we are not taking a different view. We are having a discussion with COSLA about those matters.
Is it correct that your approach is about how to ensure that that funding remains ring fenced?
Yes, that is the approach that we are taking.
Will you be able to report back to us before we report to the Finance Committee?
I cannot give you a guarantee on that, but I will report back to the committee as soon as I can.
I have a supplementary that mixes up transport and equal opportunities considerations. It would be interesting to carry out an equality impact assessment on the investment of resources in the development of electric cars. Who will win and who will lose? Electric cars are a wonderful technological advance, but which people in the area to which the small pilot relates will benefit from it? I am talking about all manner of groups; to take a direct example, we know that car ownership levels differ between men and women. If the budget for cycling, walking and safer streets is cut in absolute terms, you should carry out an equality impact assessment.
I am a bit surprised by Marlyn Glen’s line of argument on electric cars. If we do not explore new technologies—
I accept absolutely that we should do that, especially given the industries that are located in Dundee.
I was about to make exactly that point. I thought that it was curious that a member who represents North East Scotland should not be keen on electric vehicles, given that most of the batteries come from Axeon Technology in Dundee.
It is not at all odd. At this morning’s meeting of the Equal Opportunities Committee, we discussed how we can mitigate the effects of decisions that we take in the budget. The budget line on the future of cycling, walking and safer streets has an impact on many people. I hope that the cabinet secretary understands how seriously I take that and that he takes it seriously. I also hope that he will re-examine whether the matter has been assessed properly from an equalities point of view.
The other argument that is deployed to the Government and which we have taken seriously is that we should undertake a carbon assessment of the budget. This is the second year in which we have published such an assessment. If we do not take steps in the fashion that is suggested to develop new technologies such as electric and low-carbon vehicles, the carbon assessment of the budget will not indicate that the Government is taking steps to shift emphasis in the way in which, I imagine, Parliament would expect it to do to meet many of our obligations under the Climate Change (Scotland) Act 2009 and other pieces of legislation.
I will repeat what is obvious. Active travel—walking and cycling—has the least impact on the environment, so it is very important that we promote it. We will return to the issue.
Budget decisions below the level of £25.1 million are yet to be taken. I am happy to share further details with the committee once they have been arrived at.
My apologies for my late and slightly dishevelled appearance. I have just arrived from the Isle of Lewis by train—partially by train, I should say. I pay tribute to the work of Scotland’s railways in operating today.
Our position on regulated rail fares is that they are set to increase at the current level of the retail prices index plus 1 per cent. The United Kingdom Government has taken a stance that regulated fares should increase at RPI plus 3 per cent. If my recollection is collect, the mechanism of RPI plus 1 per cent is an implicit part of the franchise—I am pretty sure that it is but, in any case, it has been the model that we have maintained for some time.
Is Scotland trying to keep the existing balance between taxpayer and passenger support for the railways in a way that is not happening elsewhere in the UK?
I certainly think that it is important that the balance is kept. As the budget numbers show, the railways are expensive to run, but I think that we all appreciate that they provide a very good service on which we all depend, so we have to strike the balance between what taxpayers and individual transport users pay. Using RPI plus 1 per cent is a reasonable approach that strikes the correct balance between the two factors.
Finally, it is often commented that the railways in the UK in general compare unfavourably in price with railways on the continent. Is that a fair criticism and something that you ever see changing?
The committee can see the numbers that are involved and the scale of public investment. I suppose that there are three variables. The first variable is the cost of travel—the prices paid by individuals. They could go up, which would help to meet the cost of railways, but the Government has made its position clear that increases for regulated fares should be based on RPI plus 1 per cent.
You said that increases in rail fares in Scotland based on RPI plus 1 per cent are an implicit part of the ScotRail franchise. Are they a contractual part of the ScotRail franchise?
You will have to let me confirm that to you in writing, Mr Gordon. I cannot quite recall the foundation of the use of RPI plus 1 per cent—whether it is a Government specification or a contractual element—but I will confirm that to you.
Can you tell us notionally what the effect would be on the draft Scottish Government budget for next year of fare increases in ScotRail of RPI plus 3 per cent, as per the UK Government?
Yes, we can give you an illustration of that.
If there are no further supplementaries to the rail and transport questions, we will turn to the climate change questions.
I do not think that it is.
We will come to the carbon assessment later, which deals with the Government’s in-house and business emissions. However, what impact will the budget have on emissions in Scotland? Will the level of emissions go up or down? Can you quantify that?
Last year’s analysis of the 2010-11 draft budget showed an emissions total of 8.2 million tonnes of CO2 equivalent—
Sorry—perhaps my question was not clear. I was talking not about the carbon assessment, which deals with the Government’s in-house emissions, but the impact on Scotland as a whole. Has that been assessed?
Let me just—
The carbon assessment does not count the emissions that arise as a consequence of, for example, building a piece of infrastructure. There will be questions about the carbon assessment later, but I am wondering about the wider impact on Scotland.
All the budgets are a balance. We are taking steps to construct a new Forth replacement crossing, which, once it is completed, will open up an infinitely superior public transport corridor for the communities in Fife and the Lothians, and for wider Scotland. There is a balance there.
Some of the witnesses from whom we heard evidence took the view that climate change has lost out to other priorities in that competition. How would you respond to that?
I do not accept that. There are a number of different elements; I have just mentioned the rail franchise and the implications of the concessionary bus travel scheme, and we have discussed those. We have not talked about the climate challenge fund—that budget line is not under the portfolio for which I am responsible, but it is part of the climate change agenda. There was a lot of concern that the fund was going to disappear, but it is not. There are a range of different areas in which there is a strong and positive explanation of what we have been able to deliver.
I want to ask about one of the pieces of work that the Government is due to undertake next year. This month, the Government is due to publish the public engagement strategy, so one would assume that it will act on that next year. I have been trying to find out through parliamentary questions whether funding has been allocated to pay for the implementation of the strategy but, so far, I have not managed to ask the right question that would get me the answer that I am looking for. Where in the budget is the funding for the public engagement strategy shown and how much resource has been allocated to it?
The funding for the public engagement strategy will come out of general programme budgets, some of which may be in certain portfolios. For example, in my budget line on page 105 of the budget document, there are elements of expenditure on climate change. There will be budget lines on some aspects of sustainability in Richard Lochhead’s portfolio. Elements of support for the public engagement strategy will also be funded out of the Government’s administration budget into the bargain. Operational decisions will be made about where the support will come from, depending on the balance between programme costs and core administration costs.
How much resource will implementation of the strategy require? The strategy must have been written now, as it is due to be published in the next week or two. You must have some sense of how much it will cost.
That is a question that is probably best left to the public engagement strategy, once it is finalised.
Do you believe that, in relation to transport, the draft budget has optimised the carbon value-for-money potential?
Essentially, I have been trying throughout my evidence to set out how the Government has taken a set of decisions that address fundamental realities that we have to consider in terms of our public infrastructure. Principally, that discussion has revolved around the Forth replacement crossing and the requirement for the budget to take account of our duties under the Climate Change (Scotland) Act 2009. In that respect, I consider that that test has been passed, but I am happy to consider Mr Gordon’s observations on the issue.
You will appreciate that there might be seen to be a difference between a balancing act and optimisation. If it turns out that there is a reduction in, for example, local funding for cycling and walking, many people might think that that is not only not optimal but not balanced.
I am sure that we will consider these questions during the budget process.
I will ask you a more specific question about the freight facilities grant. Some freight operators perceive that it has been reduced from £10.3 million this year to £2.9 million. That would seem to be the case when one looks at table 7.12 on page 99. I gather that some of the funds may have been moved into other categories. Historically, since 1997, something like 33 million lorry miles per annum have been avoided by the use of the freight facilities grant and related grants. Where is that money going? Is there a cut of the level that is perceived by some in the freight industry?
This is one of these quite difficult issues. The first thing that I have to say is that the budget has been reduced. This is one of the areas where I have had to take some money out of the budget. That sometimes happens in difficult areas and I acknowledge that that is the case here.
I will put to you what some members of the Freight Transport Association put to me about the budget at a recent meeting. There is no lack of aspiration or, indeed, applications to draw down money from the freight facilities grant, but members of the FTA find that, when they get into the detail, the grant criteria are drawn up in such a way that they sometimes find it difficult to qualify, even though they felt initially that they could. As far as the industry is concerned, there is no lack of aspiration to shift freight off the road but there may be bureaucracy that is drawn rather too tightly.
I would be happy to explore some of those points—perhaps it would be more appropriate to say that Mr Stevenson would be happy to explore them. The grant cannot be so bureaucratic if a range of projects have made it through and are operational; it must be possible for schemes to develop. I suspect that what might be an issue is that there are bound to be state aid questions in this area. That is why many criteria, conditions and requirements have to be satisfied to ensure that we have a compliant scheme. However, if the industry has a particular perspective on this, I would be only too happy to consider it.
Finally, cabinet secretary, and do not take this the wrong way, but is the aspiration to move freight in a different way from the Highland Spring plant at Blackford, which I believe is in your constituency, liable to make it through the gate for the next financial year?
I am afraid that Mr Gordon’s encyclopaedic knowledge of parliamentary boundaries has let him down, because the Highland Spring plant is in Roseanna Cunningham’s constituency. I cannot give a specific observation on the Highland Spring plant.
Presumably, it would be nae loss whit a friend got.
Well recovered.
I want to ask you about the housing and energy efficiency budgets. Clearly, there has been a significant reduction in the housing budget overall. What impact will that have on the energy efficiency action plan, the need to retrofit hard-to-heat homes in Scotland, of which we have very many, the home insulation programme, the energy assistance package and other work on fuel poverty?
The capital budget has reduced by about 25 per cent in the first year, which is the level by which the housing budget has been reduced. If we take into account some of the wider programme budgets in this area, I think that the reduction is closer to 19 or 20 per cent than 25 per cent. Again, I come back to the difficulty that, where we have budgets reducing overall, we must find savings in some areas of government.
What resources will be available for those programmes?
I do not have all the detail in front of me, but I am happy to furnish the committee with the details in writing.
I would be grateful if we had that as soon as possible. I would have thought that you would expect to be asked that question when giving evidence on the budget to the committee that deals with climate change.
I apologise for not coming with the information. You asked a specific question on housing, which was not on my radar screen today.
Okay. The various strands of work—the energy assistance package, the home insulation scheme and other attempts to reduce energy use in the home—are a central part of the Government’s approach to climate change. If you could provide information about the impact on the budgets for those activities in the coming year before we draw up our report to the Finance Committee, that would be appreciated.
We will certainly do that.
Some in local government have expressed concern about their ability to meet the expectations on them—whether now or once the public bodies’ duties are in force—to reduce emissions. What is your reply to those who say that local government is being landed with many duties but does not have the resources to meet those duties?
The answer lies in whether we consider that we address such challenges only by allocating a dedicated sum of money to enable a change or outcome to be delivered. The key point is how we use the resources that are allocated to guarantee that we deliver the outcomes that are envisaged by the duties to which you referred, for example.
I presume that you disagree strongly with those in local government who argue for a delay in implementing the climate change targets.
Of course I do.
The committee and most witnesses have welcomed the Government’s production of the carbon assessment, but some witnesses have been concerned about the methods that have been adopted and an inappropriate level of assessment and have sought clarification. I will cover one or two of those matters. Does the cabinet secretary feel that it is appropriate to exclude the expected carbon outcomes of the Scottish Government’s funded policies and programmes from the draft budget carbon assessment?
I have always accepted—and it has been broadly accepted—that the carbon assessment is a novel piece of work. We are probably the first Administration to try to produce such an assessment. Our researchers have done innovative work to put together a methodology that enables the assessment to be undertaken. There is always room and opportunity for us to improve our analysis and to consider other questions as a consequence. The Government would be happy to explore any thinking from the committee on the question.
It appears that the draft budget was drawn up and then a carbon assessment made of the allocations. Is that the best way of going about setting budgets?
At a technical and operational level, it is correct that we set a budget and run the calculations at the end of the process, but that is not a true account of how we actually go about the budget process. In the process, I set the three major themes of our thinking—first to promote economic recovery, secondly to protect front-line services and thirdly to support the development of a low-carbon economy—against the backdrop of which, in a very challenging public expenditure climate, my colleagues were asked to consider their proposals. As a result, the thinking on how to address carbon emissions and make more of a contribution towards tackling climate change was an implicit part of the thinking that went through the different stages of Cabinet discussion. Ultimately, a numeric calculation had to be carried out. I am not seeking to suggest anything other than that, but it is not the full picture of the process.
How do you react to the suggestion, made by the committee and its witnesses, that the analysis of the draft budget’s carbon impact was too high-level and that level 3 assessment would have been more useful?
Unless I am mistaken—or unless my level 3 is different from the committee’s level 3—there is level 3 analysis.
I suspect that it is not different.
If the committee is asking me whether it is possible to provide a breakdown that goes to a lower level than the contents of the annex in the carbon assessment document, my answer is no.
Greater detail of the carbon assessment, which you have already offered, would be valuable in assisting the budget scrutiny process.
The carbon assessment is underpinned by a model that has been constructed to produce such analysis. This morning, I was telling the Equal Opportunities Committee how helpful we had found its input to the equalities budget statement, and I would be delighted to have further dialogue with this committee on the construction of the carbon assessment.
Do you intend to refine and improve the carbon assessment of the budget for future years?
As I have said, this is work in progress. It is a new area of thinking and analysis and in taking us as far as they have my officials have produced a very good piece of work. The proposition is stronger than it was last year but I have no doubt that next year’s will be stronger, and I would be delighted if the committee wished to have input into the process.
And we might be able to have a discussion about that post the budget.
Yes. I would be delighted to do so.
However, you do not have a sense of how it needs to develop next year. We have had this discussion each year. We recognise that this is a new area of work and that there is no magic wand solution that will be brilliant overnight, but we need to recognise that simply repeating the same general approach, which looks only at in-house business emissions and does not consider the consequences of the way in which we spend the Scottish budget, will not give us an understanding of how the climate impact of the Scottish budget is changing in time. We do not want to be having the same conversation next time, do we?
I am not sure that I follow the distinction. The carbon assessment applies to the cash budget over which we have control. There are the departmental expenditure limit elements, and we supervise the expenditure under annually managed expenditure. Those are the sums of money that we preside over. I am struggling a little to understand what further analysis we could do. If we take the budget of £2.2 billion for which I have responsibility at portfolio level as an example, we carbon assess that budget. I am not sure that I understand what further assessment we could do beyond that.
The Government recognised last year that there is a requirement for a mechanism that can better inform policy decisions rather than our simply assessing the impact of in-house emissions after the fact. Broadly speaking, we are still looking at a mechanism that suggests that £1 spent on peatland restoration has the same climate impact as £1 spent on motorway building, and that the Scottish Public Pensions Agency has a much bigger impact in terms of emissions than the motorways and trunk roads budget. We could forgive anomalies such as those the first time round because we were taking a fundamentally different approach, but do we not need to evolve the system into something that can better inform policy?
I am now with you, convener. I understand that point very clearly. Are there ways in which we can interrogate the information on the basis that £1 spent on motorway building has a different carbon assessment tag from £1 spent on peatland restoration? I am happy to explore that question. Another element of the new thinking that the Government is doing is looking at the carbon impact of individual policy developments. We can arrive at a conclusion that £28 billion converts into so many tonnes of carbon emissions. I suppose that what you are also driving at, convener, is that, among policy choices, policy A might have one carbon impact and policy B another, even though they have the same cost in pounds sterling. Where we fit that into our policy-making process is an interesting area of discussion.
The comparison that I would make is with equality impact assessments. If the Government produced an equality impact assessment that said, “We have not discriminated against anyone,” people would not take it seriously, but the Government is taken seriously if it says, “Here is the impact of our policies on a wide range of different equalities groups in society.” It is about the wider impact, not just what is done by the Government, the civil service or the agencies that we pay for.
That is where I become a little bit confused, convener. I cannot see what else we can assess apart from the £28 billion over which we have control and its carbon impact. There is a legitimate point of debate about whether we have got the right balance between what £1 spent on motorways costs in terms of carbon and what £1 spent on peatland restoration costs. I accept that some of our assumptions might be a bit on the blunt side. What I am struggling to get my head round is where the wider assessment of the wider impact of that would be. Once we have spent the money, we have spent the money. Perhaps we could—
There are longer-term consequences of the work that is done with that money.
I accept that point.
And they do not show up in the current assessment.
We are in agreement there. I am back to understanding again.
Perhaps we will leave the point for now and take it up at another time. I hope that we will not have lost understanding again when we look at the next assessment.
How well aligned with the RPP is the draft budget 2011-12? Examples that we have been given in evidence include the lack of identifiable spending plans for peatland restoration and the reduction in Forestry Commission and Forest Enterprise budgets whereas the RPP contains ambitious targets for tree planting.
The Forestry Commission’s tree-planting activity does not have to be reduced just because its budget is going down. We are requiring many organisations to operate more efficiently. There are many costs that, in the environment in which we operate, will need to be reduced.
Are you confident that the budget will provide the necessary funding capacity for Scotland to realise the opportunities that have been created by the vision of a low-carbon Scotland?
We are taking steps to focus public expenditure on a number of areas of Government activity that will support those opportunities, principally through the work of the enterprise agencies, our environmental agencies and our work on public transport. There is a cohesion in all that that provides the necessary focus.
To what extent does the commitment to the second Forth road crossing over other transport projects restrict future investment in more carbon-effective transport projects and infrastructure?
I have acknowledged for some time that the Forth replacement crossing will dominate our capital programme. It will undoubtedly restrict our choices in a range of areas, not just transport projects.
Page 84 of the draft budget document mentions that the Scottish Government intends to
It is part of our general agenda to ensure that transport connections are more sustainable. That takes us on to the ground that we went over earlier, when we talked about electric vehicles.
I wondered whether that was it. Are we talking just about electric vehicles?
The use of the word “strategy” suggests that it should have a capital s to make it more formal. It is a range of initiatives. For example, I would put the low-carbon bus fund into that. We are talking about changing transport modes and assumptions about transport by the way in which we make our investments.
So, basically, there is nothing new in it; it pulls existing initiatives together.
There will be new initiatives, but the strategy is part of recognising that we have to develop the thinking and ideas that will realise our climate change ambitions.
Is that perhaps just a wee error—did somebody not mean to write “adaptation”?
I would probably describe it as a grouping of ideas or a theme of our work. In the RPP, we talk about the need to decarbonise transport.
That is a matter of mitigating climate change rather than adapting to it.
Perhaps Bob Irvine has something to say about the matter.
The requirements for adaptation are set out in the Climate Change (Scotland) Act 2009 as well, and, to put things possibly oversimply, transport is one of a number of sectors that have been identified which have to develop adaptation plans and strategies to deal with the changes and risk factors that are expected. They are to do with resilience against flooding and inundation, for example, and developing systems to cope with those things. Some time towards the end of the next year, I think, there will be an overall presentation that shows how all the sectors have presented a comprehensive adaptation strategy.
That is helpful. I want to be clear that that is separate from the low-carbon vehicles reducing emissions agenda.
Yes. There might be a role for low-carbon vehicles in the adaptation process, but mitigation is separate.
Will that assessment include Scottish Water’s work? Are there any details on that now?
The Scottish Water consultation document will be set out and it will be in the public domain shortly, in line with Mr Stevenson’s statement to Parliament.
As members have no more questions for the cabinet secretary or his colleagues, I will take the opportunity to fire in a final question. The Government relies on advice and challenge to meet its climate change objectives and to do so sustainably. What sense does it make to scrap the relatively tiny amount of funding for that role through the Sustainable Development Commission Scotland as opposed to maintaining that function, even if it had to be transferred to another organisation?
That decision was pretty much forced on us because the UK Government decided to dispense with the Sustainable Development Commission. I am pretty sure that there was no consultation on that, although it might have sent us a letter to tell us that that was going to happen. We were not involved in formulating what happened.
My understanding is that the management of a few additional projects that were not part of the SDC’s core function will be transferred, but the advice, scrutiny and challenge functions will be abolished. If that remit is being added to the work of an existing organisation, it would be useful to hear that. I am happy to join the cabinet secretary in blaming the UK Government, particularly in the absence of party colleagues of that Government to reply to that challenge, but the Scottish Government had a number of options relating to whether to transfer the SDC’s advice, scrutiny and challenge functions and keep them going in their current format, which would, I agree, have been difficult, or to transfer them to another organisation and maintain them. Parliamentary committees can challenge and scrutinise, but that is always done through a party-political lens. Is there not value in having a neutral, non-political and independent scrutiny and advice function? Why is it the right decision at this point to abolish that?
The point is that we are in a financial climate in which we must be ever mindful of how we use resources and identify the duplication of activity and where that can be tackled. You mentioned parliamentary committees. I have been to many parliamentary committees. You are right: politics percolates through the agendas of some of those committees at all times, but I cannot say that that has particularly been my experience when I have come to this committee.
We have had our moments.
You have definitely had your moments of challenge, but I am not sure that you have had moments of challenge in a party-political sense.
Are you suggesting that there is no value in the independent function that the SDC performed?
I am simply saying that, faced with how we could secure that without setting up an entirely different infrastructure, which would undoubtedly have cost us more money, the correct decision was arrived at.
Okay. Thank you. As there are no final comments on that, do you want to make any other points that have not arisen in questions?
No, thank you.
In that case I thank you and your colleagues Mr Irvine and Mr Middleton for your time. We will now move into private session.
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