Transport, Infrastructure and Climate Change Committee

Meeting date: Tuesday, March 8, 2011

Official Report 596KB pdf

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Transport (Major Issues)

Item 2 is a further evidence session with Keith Brown, Minister for Transport and Infrastructure, and his colleagues Jim Barton and Frances Duffy, on a range of transport issues. I invite Charlie Gordon to kick off.

I will start by asking about high-speed rail, on which we last heard ministerial evidence in September. Will you update us on how the Scottish Government’s representations to the UK Government are going in relation to the current proposals for high-speed rail?

Most recently, I had a conversation with the Secretary of State for Transport on this issue. I made it clear to him that, in Scotland’s view, Scotland must be a fundamental part of high-speed rail if we are to get real benefits from it. Successive reports have shown that the economic case is significantly stronger when it includes Scotland. We have said that we are very disappointed that the UK Government has excluded Scotland from the first stage of its plans for high-speed rail.

The discussion that we had before on alternative methods of transport when Heathrow was experiencing problems underlined that point—I made that point to the secretary of state. I made the same point in the context of the recent withdrawal of bmi services from Glasgow airport. High speed 2 could have helped that situation, but its absence—and the absence of any immediate prospect of it; obviously, the timescales for it are long—would be a major factor if we were to have airport disruption, too. We have continued to press the UK Government, not least through the conversation that I had with the secretary of state.

I have subsequently written to Philip Hammond, saying that, as we need to plan in the interim for the continuation of high-speed services to Scotland on high-speed and classic lines, it would be helpful to have a more detailed estimate of London to Scotland journey times. When I had my conversation with him, we seemed to have different journey times in mind. Times are crucial in achieving modal shift. Until HS2 has completed its appraisal of the likely route of the phase 2 extension to Manchester and until it has identified the location of the line’s interface with the west coast main line, it is unclear to us, at least at this stage, whether a three hour 30 minute journey time can be delivered. Those points have been made to the secretary of state and have been followed up in writing as well as verbally.

Some time ago, the committee took evidence from campaigners against the proposed third runway at Heathrow airport, who made the point that cancelling the runway makes sense only if high-speed rail goes all the way from London to Scotland. Is the present Secretary of State for Transport aware of that view?

I think so, although he has not said as much to me. The issue of a third runway at Heathrow is a matter for the UK Government but, like you, airport operators still feel very strongly about it and have raised its importance not only with me but with the secretary of state. Its link with HS2 is pretty obvious and I do not think that the secretary of state will be unaware of it.

Like you, I am sure, I noticed that, very recently and in advance of any formal consultation on HS2 construction, Philip Hammond announced more than £200 million for mitigation measures in areas of England that might be affected by the project. Do you, like me, see that as a sign of serious intent on his part?

I think that you have to. I cannot imagine why anyone would spend that kind of money speculatively. I know that certain people in the industry remain sceptical of the project.

I should perhaps mention something of interest in my conversation with the secretary of state. Previous correspondence and publicity seemed to suggest that Scotland would have to bear the costs of HS2 down to Manchester—I believe that the most recent estimate was £15 billion—but he made it clear that that was not the case. He did not go into much more detail other than to make the welcome clarification that the UK Government would be responsible for taking the line up to the border. That sort of funding which, as you say, amounts to £200 million just now, shows serious intent.

You said that you are pressing the UK minister on end-to-end journey times, which could improve incrementally as each stage of high-speed rail, including HS2, is built, and you also mentioned the running of high-speed trains on classic or conventional lines, presumably north of HS2 or any other section of high-speed infrastructure. Could any gauge clearance issues inhibit Scotland from benefiting from improved journey times in such a scenario?

The fact that you have asked the question suggests that there might be, although I am not aware of any. Perhaps Frances Duffy might be better able to answer that.

That is a good question and we are pressing HS2 for more detail on—and to carry out more detailed consideration of—how the first phases will link back into the classic line. I do not think that it has carried out a significant amount of work in that respect. Given its indications that, with the first phase to Birmingham, we should begin to see improvements in journey times all the way up to Scotland, it is key for us to understand how exactly that will be delivered and to be able not only to see how the high-speed line fits back into the classic line but to find out what rolling stock will be in place. After all, the UK Government has committed to high-speed trains going all the way north from the beginning on the new and classic lines so we must ensure that we have the right trains to make what are quite ambitious improvements to journey times. Ministers have discussed getting more detail from HS2; it is carrying out some consultation work in Scotland over the month and we will be pressing it on these matters.

In addition, the UK Government appears to be proposing a Y-shaped network in which high-speed rail on its way to the west side of the country would branch over in the direction of Yorkshire and link to the east coast main line. Are there any potential issues for Scotland and its service from the east coast main line and, for that matter, the west coast main line, given what we have just said about high-speed trains running on classic lines on the west coast? Could there be a downside to high-speed trains travelling on conventional sections of the west coast and east coast main lines?

I cannot immediately see a downside. I cannot see the point of introducing high-speed rail if it is going to mean a decrease in service, but we need to press the UK Government on that so that we can understand the potential impact on the west coast main line and, in a later phase, on the east coast main line.

What I have in mind is any trade-off that might not necessarily meet with our approbation. We have already heard that East Coast has made some rather strange decisions about Scotland lately.

We have recently had a commitment from East Coast that it will continue its throughput of services all the way up the east coast from Edinburgh. One of our continuing priorities will be to ensure that the development of any new services does not weaken the position of cross-border services. We are looking for better services and more of them rather than fewer.

Would I be right to suggest that, given that the majority of the capacity problems are in the south of the UK, the HS2 proposal offers the possibility of increased services rather than simply swapping a service on the existing line for one on the new line, albeit that many of us would like it to come all the way to Scotland sooner rather than later?

There is a potential for that and we have to make sure that we capture it.

I turn to the minister to ask about the relationship with the UK Government. You have indicated that there is an on-going dialogue. Has that been easy to maintain? On the parliamentary side, we have found that it is pretty difficult to engage with the UK Government on these issues. We have repeatedly asked the secretary of state to come to give evidence and take part in a discussion with us, but we have had no joy as yet. Do you have a view on why that might be? Could the Scottish Government impress on the UK Government the importance of parliamentary engagement?

I would be happy to do that. So far, our conversations have been fairly courteous and helpful, although they tend to be quite rushed because we are trying to squeeze a lot into a short time. A number of phone conversations have not taken place because of pressures on one side or the other. My discussions with the secretary of state have been quite relaxed, not just on high-speed rail but on winter resilience when COBRA was brought into effect at the same time as we had the SGoRR meetings.

I have made the point to the secretary of state that a cost of £15 billion for HS2 is about half our current budget. Also, the Chinese minister for railways told me that his latest high-speed rail link, for the 1,250km from Beijing to Shanghai—the trains travel at more than 300km an hour—cost £5 billion. That is for 200 trains leaving each end each day. I accept that different pressures apply in China, but £15 billion for Scotland is a very large sum for whoever has to spend it, and I have made that point to the secretary of state.

The secretary of state seems to be willing to take such points on board. Our discussions on Network Rail have also been quite useful, but more engagement would certainly help. I am more than happy to put to the secretary of state the convener’s point about parliamentary engagement, which would also be useful.

As there are no further questions on high-speed rail, we will turn to Network Rail.

What involvement has the Scottish Government had with the UK Department for Transport and Network Rail on the restructuring of Network Rail?

16:15

The most recent involvement was a discussion with the secretary of state in which I made clear to him that the forthcoming ScotRail franchise renewal and the extent to which Network Rail in Scotland is currently devolved could be considered as opportunities for us to go further—that touches on matters to do with the continuing rail value for money study. I suggested that we should push that process as far as it can go and that we should leave ourselves open to exploiting the opportunities that are presented by the fact that the franchise in Scotland is coming up for renewal in the next couple of years. We could perhaps do something quite different here.

Those are the discussions that I have had with the secretary of state. Frances Duffy might want to add something about any further or previous discussion.

We have had a number of discussions on the proposals at official level, not only with the Department for Transport but with the Office of Rail Regulation and Network Rail itself, so we have been made aware of their thinking. That is part of a process that partly came out of Sir Roy McNulty’s rail value for money study. Over the past couple of years, the regulator has also considered capacity within Network Rail to adapt and respond to local pressures and have a better understanding of the costs of running the railways in different parts of the country.

Does the devolution of power to Network Rail’s regions have any policy or financial implications for the Scottish Government?

The policy implication is simply that there is more discretion for the route manager—I think that that is the right term; Ron McAulay, from whom you just heard, has a different title, but I think that Network Rail is to be organised in relation to routes—to take on projects that are not of a huge scale without reference to the centre.

The administrative functions will be more centralised. Although there is generally a move towards decentralisation, some of the back-office services are being centralised in Milton Keynes.

The changes mean that Network Rail Scotland will have more discretion so that the Scottish Government will be able to have direct discussions with it and agree certain projects within certain constraints without reference to Network Rail at a UK level. Some of that ability existed already, of course. Scotland was probably the most devolved part of the UK because of the decision that was taken under the previous Administration, so the changes pursue that further and give more discretion to the local Network Rail.

However, as the proposals stand, a major project would have to go back to the centre for approval.

Are there any financial implications?

It is the same thing. Financially, Network Rail would be able to move more quickly to agree projects if they had agreement from us. The further devolution would not have a dramatic effect on the regulated asset base or some of the big capital constraints and opportunities but would mean that Network Rail would be more fleet of foot. If the Scottish Government agreed to take forward a particular initiative in a particular location, it should be able to happen more quickly, which will have a financial benefit as well.

You talked about how far the devolution of Network Rail could be taken. Would the Scottish Government consider vertical integration of train and infrastructure operations in the future?

In Roy McNulty’s rail value for money study, there was a simple diagram that showed that, the closer we get to vertical integration, the more efficient it becomes. That was very interesting. It is not the only kind of integration that we could have but, should that be decided on, the ScotRail franchise provides opportunities for much more integration in future. It is tied up with other factors, such as the length of the franchise.

I asked officials—Frances Duffy in particular—to produce a number of scenarios that we could consider. We started off with 26, but we are reducing them rapidly because that is more than I am able to understand. That goes to show that the number of variations of what we could do is huge. Vertical integration is one of the options that we are considering.

In the short term, devolving greater accountability to the route manager in Scotland will provide them with an opportunity to work more closely with the franchise operator on ways to ensure greater efficiencies and better ways of working, with an effort to ensure that we derive better value for money from our railways in Scotland as well as improving passenger service.

I see that there are no further questions on Network Rail. Before we leave railways, I will ask one further question. In written answers, I have been told that the Government has had some discussions with potential stakeholders about the viability of a not-for-profit bidder for the franchise. Can you give us an update on that?

I can certainly tell you about the options that I am aware of. I have had a number of discussions with trade unions in which the not-for-profit model has been raised as an option. It is, in any event, being examined as one of the possible options for the franchise.

There was some confusion initially about a publicly owned option and a Scottish Government option. Scottish Government ownership is not an option: legally, we cannot do that. Public ownership and not-for-profit trusts are options, and a number of other options are being considered. Those options came up in my discussions with trade unions, but there may be other options that I am not aware of.

There have been no specific discussions with other stakeholders. We are aware that, as the minister said, there are about 26 different ways in which we can align the rail service in Scotland, whether those involve vertically integrated, public sector, private sector or not-for-profit models. There are a variety of options, which we are pulling together and expect to be included in any consultation.

We must move forward for 2014 onwards. We are setting out not just the new franchise for rail services but the high-level output specification for Network Rail. That is very much an opportunity to bring all those ideas together and to look at the other options for driving up value for money and improving rail services in Scotland.

Does the Government place a priority on developing a public or not-for-profit model as an option, to the point at which that could become a realistic possibility?

We want to see what the options are first, before we place a priority on it, but it is quite clearly a possibility. More or less anything is possible, with the exception that I have mentioned of the Scottish Government owning the service, as it is not permissible for us to do that. The things that you mention are possible, and we are not just mentioning them as a line. Work is being done on that option.

We will move on to talk about the condition of the road network. According to Audit Scotland, the proportion of trunk roads in Scotland that are in an acceptable condition has fallen from 84 per cent to 78 per cent. Is that principally due to things freezing and thawing? Is the weather the main issue, or is it also to do with the amount of expenditure that local authorities and Transport Scotland are putting in place?

Both things are true. Expenditure has increased, but not in line with inflation, so you could say that there has been a reduction, as I think Audit Scotland’s report makes clear. Our hope had been that the improved practices and technology would help to make up that gap for trunk roads, although not for local authority roads. I make no allegations about any particular local authority, but it was a truism when I worked in local authorities that, in extremis, you could look at the roads budget if you needed to fill a gap elsewhere. That was fairly widely practised in local authorities; perhaps Charlie Gordon would be able to tell us whether that is his experience, too.

The report makes the case that it is a false economy to do that. Huge amounts have been spent: £600-odd million has been put into the roads network. Obviously there are budget pressures for local authorities and for us, so expenditure has not increased in line with inflation. That is bound to have had an effect on the quality of the roads, as have the past two severe winters.

How does Transport Scotland intend to respond to the issues that the report has raised? You have talked about what has been done, but what is going to be done?

We have announced the roads review, which accepts the report’s central recommendation that there should be such a review. What we think is most important to the review, which takes some of its cues from the report, is the need for more collaborative working by authorities. The only example of that being formalised is Tayside Contracts, and that has been the case since reorganisation in the mid-1990s. However, collaboration in other councils has not gone down that route. It is clear to us that further efficiencies can be achieved by councils doing that, so we want to look at that area.

It is also clear to us that the Scottish Government can collaborate better with local authorities. For example, if a trunk road meets what is called a surface road—a non-trunk road—and the lighting on the trunk road is under a different contract from that for the local authority road, there are obvious ways in which we can make savings. In addition, if we know from our planned programme of works that we are carrying out work in a particular area, there are bound to be synergies that we could tap into with local authorities so that the same people carry out the road works in that location. When I appeared before the committee previously, I mentioned three projects around the M8 that had been bundled together. There is great scope to achieve efficiencies by bundling projects together. The idea of councils working more effectively with each other and the Scottish Government working more effectively with the councils is one strand.

I am regularly inundated with suggestions about how things can be done more efficiently, but I am not that able to tell which ones are runners. For example, my uncle, who is a roads engineer, was on the telephone today trying to tell me about the latest way of dealing with potholes and so on. Dozens of similar suggestions have come to me, and Transport Scotland gets them regularly as well. There are also technological advances driving efficiencies in other countries that we want to consider as well. It is generally recognised that, whatever scenario we try to paint, resources will be severely constrained going forward. We must therefore consider other ways of driving efficiencies in the system.

It is right to review the possibilities, and that will be done over the coming months. There will be a summit in autumn so that everyone can have their say.

We did not quite get the detail of the review’s remit and timescale, or who would conduct it. It is due to report by the autumn, then.

Yes. The terms of remit are being considered just now and we are having discussions with one or two stakeholders before we finalise it. I have given you the broad outlines of what I would like to see, but we want to agree the remit. Jim Barton is in the process of doing that just now.

We have had preliminary discussions with SCOTS, which is a key agent in the process, and with COSLA, and we are talking to SOLACE. Those organisations are the same ones that constitute the Scottish salt group, so we want to get them together to consider areas of synergy and whether better ideas may come from new products.

Whether we consider the trunk road network or the wider Scottish road network of local roads and so on, the condition of the roads impacts on everybody, whichever mode of transport they use on a daily basis. Is there not a case for shifting some of the Scottish Government’s spending priorities from new projects into maintaining and repairing the road network on which people depend on a daily basis?

You can make that case, and we can offer the defence that we try to find a balance in that regard just now. Whether it is the right balance is open for judgment, but £640-odd million currently goes to roads maintenance. That is a huge amount of money, which is more than for any project other than the new Forth crossing.

Engineers will tell you that, whenever a road is excavated, it is weakened. The point is to try to drive more efficiency from the money that we currently spend. I will meet with the Scottish road works commissioner shortly to discuss that issue. Some of the roads attrition is due to public utilities excavating a road for a particular service. They rightly pay to restore an excavation, but it will have weakened the entire road. It is worth examining whether we should try to ensure that what we get from public utilities is enough to cover the eventual resurfacing of a road to restore its original integrity.

16:30

We always have to keep under review what we are spending on new projects. I know that we disagree on the Forth crossing, but we consider it to be essential. With what we have done on the M74 and M80 and what we are about to do on the M8, all of which are large projects, and with the completion of the Forth crossing—which is probably the largest of all—large parts of the road network will be near completion. There are still major issues on other roads such as the A96 and the A9 but, once those major projects are complete, we will be able to see whether we can spend more on maintaining what we have. At that point, the balance will inevitably shift.

Part of the aim of the new projects is sustainability. Today, I opened the Airdrie to Bathgate railway line, which has a new cyclepath along its entire length. I also recently met representatives of the active travel groups, which are interested in having other forms of transport on the existing road network, and I took their points on board to the extent that the roads review will also cover footpaths. We are mindful of the different interests of different road users.

I am sure that the minister understands that I was not calling for the cancellation of footpaths and cycleways, but he has also mentioned not just some of the most expensive roads projects but some of the most expensive capital projects of any kind. As for the £600 million figure that he referred to, the Audit Scotland report suggests that the cost of the backlog is nearly four times that. Is he suggesting that we are simply not going to spend that money until the existing capital projects are built and that only then will we come back to repair a road network where every day between now and then people will be damaging their vehicles or be at risk of falling off their bikes because of potholes? Even the buses are getting damaged because of the state of the roads.

We will continue to spend money on maintaining the roads, by which, of course, I mean the trunk roads. As I have said, we have managed to find additional moneys in our budget for that work. In that respect, the Scottish Government is no different from a council, which has a fixed budget and must allocate resources according to priorities. I think that, as far as potholes and other such matters are concerned, we will see a substantial improvement in the trunk road network. We are not expecting people to wait five or six years until we complete the Forth crossing before we improve the roads; all I was saying was that some of the larger projects, which have to be financed in an almost absurd way by paying for them as they are done, put pressure on budgets. I am not denying any of that. As with our approach to the £800 million cut to this year’s capital programme, we have had to make choices. However, from this vantage point, it looks like those pressures might be alleviated in 2015-16, by which time the Parliament might have different borrowing powers or, indeed, something more that would open up opportunities for more substantial work to be carried out. However, we are not going to forget about maintaining the roads in the meantime; £647 million is a huge amount of money but, regardless of that, I think that we can drive out more efficiencies to ensure that we improve whatever we do.

Is there any requirement to look again at the allocation of investment in the road network in different parts of the country as a result of the damage that has been done by the weather and other factors? Do we have to look again at where the urgent need is, or are we using the same funding formula for different parts of the country?

We are using the strategic transport projects review as the basis for investment. If your question is whether the level of investment in maintenance is being looked at again, my answer is that we will want to examine that. Local authorities will answer for themselves but, as far as we are concerned, all of our work on trunk roads is based on where the need is. In the worst weather, we were sometimes responding within 15 minutes to the report of a pothole on a trunk road because, given the speed of the vehicles using those roads, such a matter is very serious. Of course, that is not to say that everything was dealt with in the same time. The principle is that we deal with such matters in the places of most importance and where the need is greatest.

Different local authorities will make the case that they are not getting all the local authority funding that they need from the Scottish Government. However, given the current backlog of repairs, should such allocations be based not just on mileage or types of road but on the current condition of roads?

When we allocated the additional £15 million, we asked COSLA how it would like it to be allocated—COSLA is a representative group. We anticipated that it would use the traditional allocation formula and that is how it turned out. I do not think it would be right for us to go past COSLA and to say to particular authorities that they should get more or less. That would be a tricky minefield.

Indeed.

You made it clear that the additional trunk road funding would be allocated on precisely that basis—length of road and need or road condition. That was it. Why would you allow other, extraneous factors such as the number of people over 75 or the number of school pupils in an area to influence that allocation, when it is clearly targeted at one particular thing—fixing potholes?

The simple reason—which is not an extraneous factor—is local democracy. That is the basis on which we allocate funding. If COSLA wants to tell us that it does not think that we are doing that in the right way and that it has a different proposal, it can do so. We said that to COSLA when we allocated the funding. We believe that it is right that local choices are made by local authorities. If it is the case that the funding formula is wrong in some respect—that would apply to all sorts of headings, such as social work and housing—COSLA has the right to say so. We asked COSLA that question fairly recently. In the meantime, we have worked with COSLA to allocate the money on the basis of the current funding formula.

If you are saying—as I think you are—that some councils have longer road networks and smaller populations, that can be reflected in how they spend their money. Instead of spending money that they would spend on another area, they can spend it on roads if they want to do that. It is a question of individual priorities. I am not saying that there are not pressures, but the councils can make that choice themselves.

As there are no more questions on the road network, we will move on.

I have a few questions on the Edinburgh trams. I will not revisit the work of the Auditor General for Scotland or the Public Audit Committee, but could Transport Scotland offer technical assistance to TIE in delivering the Edinburgh trams project, as has been suggested by Audit Scotland?

In principle, there is nothing wrong with that, but there could be practical implications. TIE has legal responsibility for the project, so if it were to do something on the basis of advice from another party, there may be an issue of legal obligations.

Given that today is the first day of the mediation process, now is not the best time to consider an expansion of Transport Scotland’s involvement in the project or any change to the governance arrangements. We should let that process go ahead and—we hope—deliver a positive solution before we look at changing the governance arrangements, which would include the provision of technical advice by Transport Scotland.

You might give the same answer to my next question, which is on the implications of phased delivery of tramline 1A for Scottish Government grant funding for the Edinburgh trams project.

I think that those matters were covered fairly extensively by the committee that you mentioned. All I say in response is that there has been continuing investment of £45 million from the City of Edinburgh Council. We signed up to provide £500 million, part of which has been paid in phases. We have been asked whether we should have withheld payment because of a lack of progress. To be honest, we think that that would not have been in anyone’s interests and that it is right that the funding continues.

It is worth restating that although my party and the Scottish Government did not support spending £500 million on the trams, we want to see the project completed. On the phasing of the contract or other issues that might intrude, day 1 of the mediation process is not the best time for the Scottish Government to stick its oar in. We want to give that process a fair wind so that we can achieve what we all want to see.

That is fine. I would not want to go through all of Audit Scotland’s report, as we would be here all night.

As there are no further questions on the trams, we will move on to the Forth replacement crossing.

Why was contingent liability not discussed during the passage of the Forth Crossing Bill?

The issue has been discussed confidentially in another committee and has found its way into the public domain. The contingent liability did not feature as part of the budget and, strictly speaking, it is not a budget figure for expenditure that we expect to incur.

A commitment was given for a provision should an incident occur that might affect the likely end cost. To that extent, the measure is like an insurance policy. The provision was made against the annually managed expenditure budget for the relevant year.

For those reasons and for security reasons—which I do not want to rehearse, unless the committee presses me—the contingent liability was not previously made explicit.

Is the Scottish Government likely to have to pay out under the agreement?

That is extremely unlikely, but please do not ask me to quantify that. I do not know whether Jim Barton wants to say more. I have experience of a similar situation near where I live, which involves T in the Park. I have seen the health and safety predictions for that event, which are always a theoretical possibility but have a very low probability.

What the minister says is right. We do not expect the scenario to materialise.

If the situation did materialise and if a payment had to be made, where would the funds come from?

As I have said, the Government must stand behind the provision—that is the whole point of the liability. The Government would have to find the funds from its resources.

Does the minister wish to bring to the committee’s attention any other contingent liabilities or other issues that relate to the Forth crossing?

There are certainly none of that scale. However, I am happy to check for any other substantial liabilities and to give that information to Rob Gibson.

Are there any that the minister does not wish to bring to the attention of the committee? [Laughter.]

No. I am not aware of any others. If, on closer examination, I find any, I will be happy to pass them on.

I have to admit that I am a wee bit puzzled about the minister’s first answer to Rob Gibson, on the reasons why the contingent liability was not dealt with during the passage of the Forth Crossing Bill. The pipeline’s existence is no surprise to anybody. People who live in the area or who use the river know where it is. I am a little puzzled about the timing. Why could the matter not be considered in private or in public when the Parliament debated the bill?

The discussion with BP has taken place mainly in the past 18 months and much of it has happened latterly. At stage 2, the detail was not available to pass on to the Forth Crossing Bill Committee. The engagement with BP has been detailed.

You say that the pipeline’s location is well known, but people always try to avoid raising the profile of such matters, although I am by no means saying that that justifies not providing information to a committee. Information was produced when John Swinney gave evidence, but not enough meaningful information was available at stage 2 to be presented. John Swinney has provided the information at the first available opportunity.

Would it have been appropriate at least to flag up the fact that the contingent liability would be dealt with later, so that the MSPs who scrutinised the bill were aware of that known unknown?

I return to the point that it is fair to say that the Government was not keen to flag up the issue, for the reasons that I have mentioned. I was not involved in the detailed process, as I did not take up my post until recently.

John Swinney has acted in good faith. When the commitment was about to be entered into, he brought it to a committee’s attention. That was the right way to deal with that. For the reasons that I mentioned, the liability had—initially at least—to be dealt with confidentially.

I find this very strange. The minister will be aware that I represent Falkirk East and live in Grangemouth. It is said locally that if you want to put a hut anywhere near the pipeline, you will not get planning permission. I would have assumed that there would have been discussion about the pipeline, because the minister will be aware of the issue around planning and local authorities. For example, Falkirk Council could not put a housing development near the pipeline. I am therefore surprised that the pipeline is suddenly an issue and that it had not been considered or flagged up earlier.

16:45

The issue was recognised. I know exactly the situation that Cathy Peattie is talking about. On the north side of Bo’ness, for example, the ability to carry out any development is obviously hindered by the pipeline there. I mentioned T in the Park in that regard as well. So, the issue is well known about. What I am saying is that the discussions with BP on contingent liability happened within the past 18 months. They were detailed discussions, which were affected by worldwide changes in the insurance market.

On the point that people should have been aware of the pipeline, they were aware of it. However, there was a conscious decision not to be as public about the issue as with other issues, for the obvious reasons that I have mentioned already. However, at the first point when the Government was engaging in a commitment on contingent liability, that was reported to the Parliament’s Finance Committee on, I think, 22 February.

It is a bit disappointing that things took so long. I understand how delicate such matters can be, but anyone locally can probably give you a map of where the pipeline is. It is no mystery.

I am not saying that it is a mystery; neither is it a mystery where the pipeline is at the T in the Park location or in Bo’ness. For the best of reasons and with the best of intentions, it was deemed best not to raise the profile of the pipeline issue.

Is the £100 million contingent liability contained in the range of costs that were previously made known to the committee for the main project?

No, it is not part of the project’s costs. It is a contingent liability, so it would not form part of the costs for that reason. We are undertaking the contingent liability as a result of an agreement with BP in order to carry out the works. We fully expect that the project’s costs will remain within the previously agreed range of between £1.75 billion and £2.25 billion. However, the contingent liability cost is not included in that.

I accept that the contingency is an unlikely one. I am sure that everyone would hope that an incident of the kind that is possible does not happen. Can you confirm that £100 million would be the liability for each such incident? Whose responsibility would it be to put right any environmental damage from a discharge from the pipeline if the cost exceeded that figure?

I ask Jim Barton to respond to that.

My understanding is that £100 million is the liability that is required to be made as a result of an incident. I understand that the liability will cover any environmental issues, but we will need to come back to you on that.

So, the suggestion is that nothing could happen that would cost more to put right than the liability amount.

We will need to come back to you on that.

That would be appreciated. There are no more questions on the new Forth bridge, so we move on to the final issue.

The European Commission’s investigation into Scottish ferry services ended in December 2009. We were told by your predecessor that the Government was moving to begin the tendering process on 31 December 2009. In fact, the tenders were not issued until 18 February 2011, so an inordinate amount of time has been lost in that regard. I am interested in getting to the bottom of why that happened. Did Transport Scotland lose its way on the tendering? Did a political imperative drive the delay? What exactly is behind the prevarication on the tenders?

First, it is worth saying that although the tenders were issued only recently, the tendering process started quite some time before that—a number of months before that, in fact. However, it has been made public that we sought to engage with the European Commission on a number of issues that mainly arose from concerns over possible anti-competitive outcomes from the tendering process. We were unable to speak too much publicly about that discussion with the Commission, but it caused us to hold off until it was dealt with, which happened only recently. As soon as that was the case, we moved to issue the tenders.

Do you genuinely believe that the tenders can be awarded within such a short period? It is only about three months before there could be infraction proceedings from Europe.

Yes, I do believe that. I have asked officials that question on a number of occasions, and have been assured that it can be done within that time.

Is the Government confident that the process will secure a vehicle and passenger service on the existing route?

It is possible, but I would not want to pre-empt the tendering process. You will know that the European Union has ruled that one of those services cannot be subsidised. That introduces an element of doubt.

I think that it has been announced today—I hope so, or I will be speaking out of turn—that there is now one fewer tenderer, as one has withdrawn. It will be for the tenderers to bring something forward. We have sought to encourage the possibility of both services being tendered for by community enterprise, with our putting some money behind that. We want to help to sustain the vehicle service alongside the passenger service. I hope that that can happen, but it is not possible to say at this stage.

We all know how difficult it is to build capacity within communities, and this is a very short timescale for a community to rally itself and become involved. Would it not have been more useful to start discussions with the community earlier?

We had to go through the process of talking to the European Commission, and we highlighted some of our fears in relation to competitiveness on the routes. We are aware—perhaps Alison McInnes is, too—that a large number of local people have been interested in the issue for some time. We have sought to provide financial backing, not to provide the service, but to help the community enterprise model to get off the ground. We have tried to enable, rather than to prescribe.

Is there a plan B? What if appropriate tenders do not come through?

We are obliged by the European Commission to go through a tendering process, and we are doing so. Obviously, we cannot determine the outcome of that process. We have lifted the restrictions on the current service, which we think will help in the tendering process and could provide a better service to local people. We are also examining closely the idea of having a ferry regulator, because of our concerns about competition on the route.

When would the ferry regulator be established? What is the thinking behind it?

As I have suggested, our thinking derives largely from our concerns about competition on the route. When there is no choice, with only one supplier, that supplier can then prescribe the price and people can be bound to it. Obviously, the same thing can happen with many forms of transport. That is not to say that one or more of the tenderers would act in that way, but we have been sufficiently concerned to ask officials to look into the establishment of a ferry regulator that would examine the issue for us. It was unfortunate that we were unable to convince the European Commission about that point during our discussions.

The ferries review has been going on for some time now: when this committee took evidence as part of our own inquiry into ferry services, we were aware that the review was running in parallel. Can you tell us the timetable for publication of the results of the review?

We are still involved in discussions, and we are still evaluating some of the responses. As you said, the review has been going on for some time. However, such things never stand still. Dialogue continues among stakeholders, and we are keen that that should lead to further progress. Responses to the review have come back to us, but other conversations are still feeding in to it. For example, there are discussions on single routes, unbundling and bundling.

The election will intervene, but I imagine that we will come to conclusions on the ferries review in the coming months. However, that will be for whoever sits in this seat afterwards. I hope that it will be me.

The need to come to a conclusion is increasingly pressing, as the new tendering process will start in the near future.

We are considering a number of issues—not least of which is the route between Gourock and Dunoon. We hope to resolve that without having to wait for the result of the ferries review.

In addition, we recently announced the purchase of a new ferry, and we are trying to deal with one or two other route-specific issues. The ferries review is not holding up resolution of some of the other issues, but the review will be the basis for the future provision of ferries. We are therefore committed to continuing with the review as quickly as possible.

I heard you mention a new ferry. I understand from councillors and others that Caledonian Maritime Assets Ltd will bring forward proposals for a large ferry to sail between Ullapool and Stornoway. Given that questions about design and modern applications of speedier potential have been asked in the ferries review, is it appropriate for CMAL to discuss that route with harbour authorities and councils when there is controversy about whether two smaller ferries could be a better option than the suggested one large ferry that would be run in a conventional fashion?

We have to try to stick to what is appropriate for me, and it is appropriate that I should not get involved in those discussions. I have heard of the discussions that are taking place, not least from Rob Gibson, but I want to ensure that we properly explore the available options. The single-vessel option has obvious efficiency and improved service attractions, but it also has disadvantages. For example, what if it were to be out of commission for whatever reason? It is right that we keep our minds open to that. There are conversations going on between Transport Scotland and Highland Council, and between Transport Scotland and Western Isles Council, which is how things should be. People should not close off options before a decision is taken. Of course, CMAL may simply be preparing the ground—or the water, I suppose—but we are still examining both options.

As there are no more questions, I thank the minister and Mr Barton for their time in answering questions on our agenda items.