Transport, Infrastructure and Climate Change Committee, 09 Sep 2008

Meeting date: Tuesday, September 9, 2008

Official Report 205KB pdf

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Finance and Sustainable Growth

Item 2 is evidence from the Cabinet Secretary for Finance and Sustainable Growth. Welcome back, Mr Swinney. We are a bit pushed for time. I have already asked members to keep their questions short, so it would be much appreciated if answers could be to the point. I invite you to introduce your colleagues and to make some opening remarks.

In the interests of brevity, I will skip my opening statement; I suspect that the committee can live without it, in the nicest possible way.

It is a pleasure for me to be with the committee again to continue our dialogue on the issues within the committee's remit. On my left is John Ewing, who is the director of the Scottish Government's transport directorate. On my right are Dr Malcolm Reed, the chief executive of Transport Scotland, and Philip Wright, the deputy director with responsibility for climate change and other relevant issues under the Scottish Government's director general environment.

Thank you. Members have a number of questions. If we do not have time to address some of them today, we will forward them to you by letter.

My first question relates to the strategic transport projects review. Can you give us an update on the progress of the review?

The strategic transport projects review has been under way for some time. The drafting of the summary report on the review has started; ministers expect to receive that in the course of the autumn. The Government will update Parliament on the emerging findings of the review well before the turn of the year.

It has been suggested that a list of the projects that are being considered in the review should have been published. Why has that not been done?

I reassure the committee that there is no shortage of projects under consideration in the strategic transport projects review. The review involves a comprehensive analysis of a long list of projects that have emerged. When preparing for the review, Transport Scotland took what can only be described as a broad canvas of projects. Necessarily, it has looked broadly across Scotland at the range of transport interventions that are possible or have been suggested by other bodies. We have considered extensive material that has been submitted by regional transport partnerships as well as material that has been submitted by local authorities and a variety of other players. I reassure the committee that there has been no limitation on the range of projects that have been considered.

If we published a long list of projects, we would be in danger of debating and judging what should be on that list rather than making progress on assessing what major strategic interventions we could undertake to improve the transport network and to deliver some of our aspirations for transport infrastructure, modal shift and other issues. It is appropriate for us to draw up a list, to consider it and to publish the material that we have considered as part of the process.

Stakeholders who want to take part in that discussion have an opportunity to do so only after the review has been published and put before Parliament, when they might well find out that the project they wanted to argue for has not even been considered. Surely if we could debate which projects are or are not under consideration, the discussion would be wider and the process more transparent.

There has been no lack of opportunity for people to suggest projects for inclusion in the strategic transport projects review. The invitation to make such suggestions—and, indeed, the interest in doing so—has been very broad and, in the consideration of the projects, a variety of factors has been taken into account by Transport Scotland and will, of course, be taken into account by ministers.

As I said, there has been no lack of interaction over projects that might be suggested. However, we have to reach conclusions about which projects will go forward. I accept that, around the country, people will be disappointed, because not all projects will be able to go ahead. After all, the aspirations and ambitions for transport improvements far outweigh the resources available to deliver them. Difficult decisions have to be taken, but I believe that the decisions taken in the process support the Government's overall direction and the implementation of the national transport strategy. That strategy, which was a product of the previous Administration, has been accepted by us as a logical, sound basis on which to proceed with the STPR. We will make our decisions within that context.

There will obviously have to be a tremendous amount of scrutiny of our choices and decisions and, as a result, they can be subject to challenge.

I want to explore the question of consultation a little further. Last year, the committee highlighted concerns about Transport Scotland's lack of consultation with Parliament and key stakeholders prior to the making of major decisions. Since then, decisions on the extension of the ScotRail franchise and the procurement of new rolling stock have been made without any consultation. As we have heard, to date there has been no consultation on the strategic transport projects review and, as far as I can ascertain, discussions with local authorities and regional transport partnerships have been patchy at best. Why is that situation continuing and what do you propose to do about it?

Apart from the two examples that you cited with regard to the ScotRail franchise and the procurement of rolling stock, I am not sure that I can recall any other circumstances about which the committee raised concerns over a lack of consultation. Perhaps I can address those two issues.

On the ScotRail franchise, under an option in the contract that we inherited from the previous Administration, we could extend the contract if doing so was judged to be in passengers' interests. Government ministers—not Transport Scotland—took the decision that such a move was appropriate, because we felt that if we did not address the situation the franchise operator First ScotRail would be incentivised to carry fewer passengers. I cannot understand how anyone could consider such a situation to be in passengers' interests. We therefore decided to extend the franchise under the option in the contract that, as I say, we inherited. I should point out that there was consultation over that provision before the contract was put in place, and the Government took the decision simply because it felt that it was in passengers' interests.

As for the procurement of rolling stock, the Government has an obligation to ensure that there are trains available to run on the Airdrie to Bathgate line when it is commissioned in 2010. If we had not procured new rolling stock, I am not quite sure what we would have been able to send along that line; we certainly would not have been able to send trains that could transport an adequate number of passengers.

We now have a contract for rolling stock that provides greater capacity for introducing trains on the west coast lines around Glasgow. As a result, more passengers will be carried, there will be greater capacity to meet demand on some of those routes and rolling stock can be put on to the Airdrie to Bathgate line.

I am not quite sure what consultation we could undertake on that issue. I suppose that it could be only at two levels. First, should we get the rolling stock? The Government took the view that we should obtain it, because we need it to run on the railway that we are constructing. Secondly, we could consult on the bids that we received. As members know, we are heavily constrained by European Union regulations on the tendering process that expressly prohibit such consultation, because we must make judgments on the basis of value for money and fairness to all tenderers. On those two points, I do not accept that the level of consultation was not what it should have been.

I invite Dr Reed to say a little about the mechanics of the consultation exercise on the strategic transport projects review. As I told the convener, we have taken a broad view of the projects that could be included in the review, which Transport Scotland is considering carefully. There has been no lack of dialogue on that.

We consulted RTPs and some local authorities extensively on the technical basis of the review. We shared the evidence base that we have gathered about flows on the strategic corridors and, as the cabinet secretary suggested, we took full account of the aspirations that have been laid out, not only formally through regional transport strategies, but through direct communications to us from many local authorities throughout Scotland. I confirm that the list of eligible projects is as full as it could be.

I accept Mr Swinney's comment that a broad invitation was made to park projects with Transport Scotland—to suggest them. However, I would have liked more dialogue about the process and the evidence on projects. Dr Reed said that he has had dialogue with RTPs and some local authorities, but I hope that consultation of all local authorities has been adequate. I seek reassurance about that. At times, the perception is that Transport Scotland is not drawing on expertise in transport in other areas.

At all times, I encourage Transport Scotland to be fully engaged in dialogue locally and I have every belief that that is happening in the discussions that take place. Members will appreciate that we have received from regional transport partnerships their draft strategies, which the Government has considered carefully. The first iteration of those strategies contained many propositions that are being considered in the strategic transport projects review, so we have tried to gather as much input as we could.

It is difficult to rationalise one major strategic project in one part of the country versus a major strategic project in another part. People have different views about the right interventions to make. In taking decisions, ministers must strike a balance that satisfies Scotland's national interest and delivers on the aspirations of the national transport strategy and on the Government's wider priorities on modal shift and connectivity, which lie at the heart of our efforts in the review.

Will the public have an opportunity to influence the final outcome of the strategic transport projects review? Transport involves a long-term process in which a 10-year aim leads into another 10 years. It is important to have continuity. I know that it is difficult to fathom what might happen in the future, but we are conducting the same exercise with climate change. Should the public have a say at least in the process that will lead to the outcome and what it connects to?

Ultimately, somebody must take decisions. With Parliament's consent, it will fall to ministers to decide on the issues. To be frank, that is what we are here for. I am happy to have discussion and dialogue in considering the strategic transport projects review, and to come to the committee to discuss some of those issues.

On the participation of the public, as I said, we have gathered a great deal of information and feedback. There has been no lack of consultation and discussion about what should be in the strategic transport projects review. Whether we are able to satisfy all aspirations is a different matter altogether.

Mr Gibson raised a point about a continuum of transport projects, and I could not agree more about that. Within the strategic transport projects review—this is why we accepted the previous Government's national transport strategy—we are essentially taking forward a number of interventions that will support some of our wider aspirations for transport in the spirit of a consistent policy direction. Those aspirations are, I think, shared by members across the chamber, although there will be different views about particular transport interventions and the priorities that should be attached to them. We are therefore trying to establish as broad a consensus as possible on the review, although I accept that not everyone will like the individual choices that are made. If we do all that we can to encourage a sense in Scotland's public policy that our transport investments are operating in the same direction, we will give much greater certainty to transport planning and much greater reassurance to communities that there will be a continuous period of transport investment.

I thank the cabinet secretary for agreeing to discuss the projects further once we have the outcomes of the current round, and to look beyond the 10-year span of the review.

To follow up on your answer, cabinet secretary, you talked about building a consensus on the outcomes of the review that is as broad as possible. I presume that, as a minority Administration, the Scottish Government would expect to get majority support from the Parliament, as a bare minimum.

I have not considered whether Parliament will vote on the strategic transport projects review. I do not believe that there is any requirement for Parliament to vote on it. However, I will seek to establish a broad consensus about the importance of the interventions that the Government is making during the period ahead.

There are several areas of Government authority where the requirements that have been built into legislation seem to imply an assumption that the Government has a majority, but, clearly, that is not the case with all Governments. If the Parliament took a view on the strategic transport projects review, I presume that you would accept that view.

I would consider Parliament's conclusions carefully, as I do on all occasions.

You mentioned the ideas that people have put forward, and my colleague Mr Gibson spoke about the timescale involved and the fact that the review could take a bit longer. Will you consider some of the projects that could make quick but substantial differences to local communities and Scotland's economy, but which will need investment and discussion about doing things differently?

The nature of transport infrastructure planning is that interventions are long term and take a great deal of time to prepare. I have noticed that those who are involved in transport planning and implementing a major strategic transport project, whether in a local authority or in a Government agency, take a long time to prepare to ensure that the interventions take their course. As a consequence, we must accept the need for a fair amount of forward planning for developments.

If there are short-term windows within which individual interventions can be taken forward, the relevant public bodies will look to progress those propositions. However, in my experience, it is not easy to decide one day that we will have a major transport improvement and the next day get on with sorting it. It is not quite as simple as that.

I understand that such interventions cannot be done in a matter of days and that there are various issues to think about. I realise that increasing the amount of freight transported by rail, for instance, cannot be done overnight and that there are implications for road use and other issues around modal shift.

I am sorry—perhaps I did not answer your question appropriately. On your example of freight intervention, the Government has made provision in its budget plans for shifting freight from road to rail and for encouraging that shift. A number of projects have been approved in that context. Some of those projects are relatively easy because incentivisation can be put in place; in other projects, weight restrictions on lines or bridges or height restrictions on bridges can be slightly problematic, so those projects may take longer to address. However, the facility certainly exists to address them and the Government has approved a number of grants to assist the transfer of freight from road to rail. That has been a welcome development.

The new Forth road bridge has been out of the news for a month or two, but I see in the Government's programme for Scotland that there are likely to be significant announcements on the new bridge in December. What will those announcements cover and what is the hold-up? Why cannot we have them earlier?

As I just explained to Cathy Peattie, a tremendous amount of preparation must go into any transport intervention. I think that a neutral observer—I am sure that Mr Johnstone is at the front of the queue in that respect—would recognise that the Forth replacement crossing is a significant capital project. It is therefore essential that we undertake the preparatory work effectively and ensure that our decisions are based on extremely robust evidence and reliable information.

You asked about the forthcoming announcements. We will make decisions about funding, about the preferred legislative route, about the bridge design and about the route and layout of the connecting roads. I expect those decisions to be the subject of an announcement to Parliament before the end of the year.

Thank you for that answer.

Returning briefly to the issue of funding, is it appropriate for the Government to delay, or at least to appear to delay, the process of announcing the preferred funding route when so many in the Parliament are concerned about the impact that that may have on funding for other projects? When will you be able to tell us the exact structure of the funding mechanism that will be used to build the bridge?

The Government has at all times said that we would come back to Parliament in the later part of 2008 with information on the funding vehicles. The Government will come back, as we programmed, to give Parliament the information in that respect. We are operating entirely to the timetable that we set out when I announced last December the approach that we were taking to the construction of the Forth replacement crossing. We will set out the information to Parliament. I committed to doing exactly that, and that is the information that I will bring back to Parliament in due course.

We look forward to receiving it.

I have a similar question on the legislative mechanism. Can you give us any information on that? Obviously, we would expect the committee to have some role in looking at the issues when they come forward. Can you give us any information on the nature or timing of the bill that will be introduced?

There are a number of potential legislative routes that may be brought forward to enable the Forth replacement crossing. I am assessing the advice that I have been given on those routes. The Government will make decisions on that and share them with the Parliament, as I said, before the end of the year. Obviously, I would be happy to discuss them with the committee.

Reports from the Forth Estuary Transport Authority suggest that the main cables of the existing bridge are deteriorating more slowly than had been initially thought. FETA also makes positive comments about the effectiveness of dehumidification, which it expects to extend the life of the bridge considerably. Every time that we have discussed the issue in committee, you have said that the case for the additional bridge is based on an assumption about the lifespan or usefulness of the existing bridge. What does the news from FETA do to the business case for the additional bridge?

The information that I have seen so far will have no significant impact—if any at all—on the business case for the Forth replacement crossing. FETA has undertaken further analysis of the rate of deterioration of the cables. From the latest published data, it is clear that the rate of cable deterioration is at the better end of the previously predicted range—it is not as fast as was envisaged. We might therefore avoid any restrictions on the current bridge in 2013, when a restriction on heavy goods vehicles was originally planned. FETA has been clear that we will not know how effective the dehumidification work has been until the cables are reinspected in 2011-12. That poses a difficulty for ministers. We cannot wait until 2011-12 in the hope either that the rate of deterioration has decreased or that there will be no lingering difficulties. The FETA analysis says clearly that there will be a modest delay in the application of restrictions, rather than that there will be no long-term problem with the current Forth bridge.

The price tag for the additional bridge is still around £4.2 billion—the figure suggested by the Government. I will maintain for a moment the kind of wide-eyed optimism that lets people believe that the initial price tag will be the same as the final price tag, but I have been looking around to try to find another bridge that has cost as much. Germany and Denmark have been reported as looking into a joint venture involving a bridge of some 12 miles that would cost nearly £1 billion less than ours. Is the additional Forth bridge the most expensive in history?

No. The price tag that you have quoted is in a range based on outturn prices in 2016, and the range is from £3.2 billion to £4.2 billion. The price includes the extensive road connections required to provide access to the bridge, and there will be multimodal capacity, which members of the Parliament have clearly said is important, because it will open up an entirely new prospect for transport links between Fife and other parts of the east of Scotland. The bridge offers a comprehensive transport solution, involving road design and the establishment of multimodal facilities. I wanted to put things in context.

It is reasonable to point out that the road connections would not be necessary if we were not building the bridge. If we are going to build the bridge, we have to consider the overall price tag. Can you tell me of a more expensive bridge anywhere?

I cannot give you a like-for-like comparison of the cost of the construction of the bridge and the cost of bridges in other parts of Europe or the world. I do not have that information in front of me. I have given information about the cost of the bridge, the ancillary roads—which are significant in improving connectivity to a number of parts of Scotland—and the multimodal element, which I had thought would be welcomed as a positive contribution to modal shift.

That is a separate issue, and I am sure that we will discuss it another time. However, I presume that, in anticipating making a spending commitment of several billion pounds at least, the Government examined how much bridges around the world cost. If that work took place, could it be provided to the committee in writing?

At the Government's request, individuals with significant experience of major public infrastructure investment activity undertook a peer-group assessment. They arrived at the judgment that we had taken all the correct steps in the preparatory work for the bridge and that that work had been well founded. Cost comparisons will obviously have been made and if there are appropriate comparisons that I can make available to the committee, I will certainly do that.

Thank you. I would appreciate that and look forward to finding out whether humanity has ever built a more expensive bridge.

I apologise for my late arrival, which was due to urgent constituency business.

The Minister for Transport, Infrastructure and Climate Change, Stewart Stevenson, recently announced a timetable for delivery of the Waverley railway, which is the new name—actually, an old name—for what we used to call the Borders rail link. However, it is not clear from where the funds for its construction will come. Will the cabinet secretary explain who will be responsible for funding its construction? If it is the Scottish Government, what budget line will it be funded from?

The Minister for Transport, Infrastructure and Climate Change made it clear that we are taking forward the preparations for the Borders rail link through a non-profit-distributing mechanism. We will establish a vehicle to provide for that investment on a model that has worked in a number of different scenarios and will, as a consequence, raise the relevant funds to deliver the project.

I am aware of the family to which the NPD model belongs because you told Parliament about it in the recent past. What are the different allocations of funding within such a model? What is the allocation vis-à-vis the Scottish Government, for example? I presume that the national taxpayer, alongside the local taxpayer, will be involved in paying for the railway.

Scottish Borders Council and Midlothian Council are making financial contributions to the rail connection. The Scottish Government will also provide financial support as part of the package, but that will be done under the auspices of a not-for-profit vehicle, which is a tried and tested vehicle for the delivery of public infrastructure.

Will that be over 60 years?

It is unlikely to be over 60 years. I think the period will be shorter than that, although such decisions will be part of the procurement of the not-for-profit vehicle.

So—there is no suggestion that the project could be funded over 60 years. To use a comparison with personal finance, in the most recent parliamentary debate on the project, I equated that to paying the minimum amount on a credit card each month for a very long time rather than ever getting round to paying off the balance.

If that was your concern, Mr Gordon, I would have thought that it was not particularly well founded in the approach that we are taking to the Borders railway or, indeed, in the approach that is taken to many capital investment projects, which are paid off over time. If we paid off all capital projects within the financial year in which they had to be commissioned, not many of them would run their course.

With respect, cabinet secretary, you are putting words in my mouth: I certainly did not make that suggestion.

The inference is that the costs should be paid off either in the year in which the project is commissioned or over a period of time. I am simply making the point that not many capital projects would be paid off within the year, on the basis of our current infrastructure programme.

In my involvement with capital projects, 25 or 30 years would be norm. You are saying that—

I said that I did not expect a 60-year period to apply; I think it will be shorter than that.

So, you are telling us that since the debate in the chamber about the project, its financial model has been refined and is as far forward—potentially—as any other of the strategic projects that we were discussing earlier.

The Borders rail link is not a project that I have in mind as being part of the strategic transport projects review. The Borders rail link is a current capital commitment for the Government to deliver. We have said that construction work on the Borders rail link will start before 2011. An operational decision has been taken to progress the project. The strategic transport projects review is considering longer-term interventions over the period 2012 to 2022.

I am aware of that. We are both aware that capital projects can slip, and it is always sensible to have two programmes—one above the line and one below the line. If something goes wrong with the one above the line, you move down below the line to use the one that you prepared earlier.

I have said already in response to a number of members that there is no shortage of capital projects for investment in transport infrastructure for the Government to consider. The development path on the Borders rail link is taking its course, as was announced to Parliament by the Minister for Transport, Infrastructure and Climate Change. We will take the project forward on that basis.

So, there are no problems with the project.

None.

We have to move on at this point.

When you announced the Scottish Government's review of the concessionary fares scheme earlier in the summer, you said that you propose to extend the scheme for elderly and disabled people, and that the current eligibility criteria will be maintained. Can you confirm that, and can you provide us with details of the nature of the review and an insight into the type of improvements that you anticipate?

The terms of the review were published on 4 July. We indicated that the eligibility criteria for all those people who currently benefit from the scheme would be maintained, which means free travel throughout Scotland, at any time of the day, on any bus routes for any number of journeys. That was the context within which the Government made its announcement.

With regard to extending the scheme, we have already done so to include injured forces veterans. That is one example of how we can develop the scheme. The Government will carefully consider the material that comes back to us in response to the review, and we expect to consider emerging proposals towards the end of 2008.

I am interested in community transport, which I know can be difficult. At the moment frail, elderly and disabled people face discrimination if they rely on community transport, and often have to pay over the odds to ensure that the various types of community transport are maintained. Are you considering that situation? Are you aware of any proposals to change it by supporting such people or by ensuring that they have free transport, as others in similar circumstances have?

I recall discussing that issue when I came to the committee last October, and I have reread the material that we discussed at the time. At that stage I indicated to Cathy Peattie that the Government would be prepared to consider such propositions. The review that we are undertaking is the appropriate place for such consideration. I have not seen any of the material that has been submitted on the review so far, but if such material is submitted, the Government will of course consider it.

I have two queries about what is happening to the bus service operators grant. Given the increase in fuel prices, is there a possibility that you will reinstate the full fuel duty rebate to the level that bus operators in England and Wales enjoy? If you will not do that, are you aware of community transport operators' concerns about your proposal to realign the fuel duty rebate as a reward for environmental improvements, bus efficiency and so on. Commercial operators are in a better position to upgrade their buses than are community transport operators, who express significant concern that they will be further disadvantaged if they cannot access BSOG—or son of BSOG. Can you offer safeguards or guarantees on that?

On the first part of the question, I understand—contrary to what Alison McInnes said—that the reimbursement rate for BSOG was not increased in Wales following the increase in fuel duty rate in October 2007. That is, of course, the position that the Scottish Government adopted. I made available more resources for BSOG in decisions that we could call supplementary to the published budget last year, before the budget was agreed by Parliament.

The increase in fuel duty in October 2007 and the decision not to uprate BSOG at that time resulted in an increase in bus operators' average operating costs of about 0.5 per cent. We must consider the decision in the context of financial support from the public purse to the bus industry, which will be in excess of £280 million each year. I will shortly discuss the issues further with the Confederation of Passenger Transport and I will listen carefully to and consider the points that the CPT makes. Mr Stevenson has also had discussions, into the bargain.

I am afraid that the question about the reconfiguration of BSOG to deliver environmental benefits bore all the hallmarks of a "damned if we do and damned if we don't" attitude. We have at some stage to take action to improve fuel efficiency in our transport industry. We can all consider fuel prices and the costs that are borne as a consequence. The Government is taking prudent steps to ensure that we take appropriate action.

The matter is of genuine concern. I accept that there is a need to move to more fuel-efficient engines and so on and that there is willingness to do so. However, community transport operators are in a difficult situation: it takes them a long time to raise the funds that they need to buy new buses. Will you discuss the issue with the Community Transport Association?

I am pretty sure that Mr Stevenson has already discussed the issue with community transport providers. I have certainly had such discussions in my constituency. However, we will continue dialogue on all the issues.

Do you plan to update the national transport strategy and its associated documents? If you do, what do you intend to do and when?

As I said in answer to questions about the strategic transport project review, when we came into office we took the view that there was merit in maintaining the national transport strategy that we inherited from the previous Administration, which we felt provided a robust approach to transport decision making and gave us clarity on the direction that policy should take.

It is important that wider Scotland can see our transport aspirations over a reasonably long period in order that we can ensure that people understand how they can fit into the transport policy, and that they have the proper expectations about how that policy will be delivered. Consequently, the strategic transport projects review is considered in the context of the national transport strategy. We have no plans to revise that strategy, although we will obviously advise the committee if we plan to do so.

Community transport and buses have just been mentioned. Will there be help for people in different sectors and in areas with smaller populations—which contribute enormously to the country's economy—to fine tune the transport strategy in the recognition that a distinction between commercial and non-commercial decisions about transport provision is artificial? Will such help be available in order that the Government, which serves the whole of Scotland, applies a transport strategy to outlying areas in the mainstream?

The Government is ever more aware of such issues, having visited a number of outlying parts of Scotland this summer. I visited the island of St Kilda on holiday and the island of Foula in Shetland on Government business. Those islands share many similar challenges that relate to their peripherality. The Cabinet met in four locations in different parts of the country, and we experienced community transport provision during our visits. The First Minister and I travelled to Skye on an excellent little ferry that went from Glenelg to Kylerhea, which a community interest company provided.

I am glad that Mr Gibson has given me the opportunity to make a point about community transport operators, which is also relevant to what Alison McInnes asked about. We should not always see the solutions to challenges that community transport providers face as transport-funded solutions; there are also social-enterprise-funded solutions for which the Government provides. We have made clear our aspiration to encourage the emergence of more social enterprises around Scotland; indeed, I saw good examples of social enterprises in the peripheral parts of our country. The Glenelg to Kylerhea ferry, which is run by a social enterprise, was a memorable trip. I offer that as an indication of the Government's willingness to engage in the creation and support of ventures that meet particular needs in remote parts of our country.

I agree with what the cabinet secretary has said. I suspect that the majority of community transport operations in Scotland are community enterprise operations. That may be another way of progressing things.

It is easy to think of such projects within a transport portal, but there are other ways of looking at them, particularly in the light of the funds that the Government has created, such as the Scottish investment fund, which is designed for investment in the sustainability of social enterprises. Obviously, members will know about appropriate ventures in their localities that might benefit from such opportunities.

On a big enterprise, can you please provide an update on the negotiations to secure a new operator for the Rosyth to Zeebrugge ferry service?

The Government takes that ferry service extremely seriously. Obviously, we regret the fact that Attica decided to terminate on 13 September the ferry service that it has provided. Members should not underestimate the scale of the challenge of trying to put in place a replacement service. One of the challenges that we have had to address in progressing matters is that there are no readily available vessels waiting to provide replacement services.

Another particular challenge has been the fact that an operator would have to come in and provide a service during the winter months—the Maritime and Coastguard Agency applies particularly strong regulation of vessels that can sail on the North Sea in those months. The enormous challenge in securing an alternative service on the route is based principally on the fact that vessels that can provide such a service are not readily available. Fuel costs are also a significant factor to be wrestled with.

Since we received notification from Attica that it intended to discontinue the route, the Government has made a tremendous effort. We have worked collaboratively with Forth Ports plc, with Fife Council and with government and other authorities in Zeebrugge in trying to identify an appropriate replacement service. Work is on-going and I do not want to underestimate the scale of the challenge that faces us. I assure committee members that our officials, representatives of Forth Ports, Fife Council, the Zeebrugge authorities and ministers of the Scottish Government are making enormous efforts to secure a replacement service. We are working with all our energy to try to bring that about.

It would be helpful, convener, if the cabinet secretary would keep the committee up to date on developments.

Yes, indeed.

Ministers will be delighted to do that. I assure the committee that we have put an enormous amount of effort into trying to secure alternative provision.

Thank you.

I turn to the interface between transport policy and the climate change agenda. Figures that were published at the end of August reveal that more cars than ever are on Scotland's roads. It could be argued that recent major transport policy decisions on matters such as the abolition of bridge tolls, the M74 completion and the Forth crossing, which we have discussed, will further encourage car use. The Government has also been seen to have been back-pedalling on public transport projects such as Aberdeen crossrail, which could provide viable alternatives.

We have also heard that the carbon balance sheet for transport in Scotland, which the cabinet secretary committed to producing, will not now be made available until 2010-11. When will we see the development of transport policies that have at their core the need to coalesce transport around what is perhaps the most important strategic policy responsibility in your portfolio: climate change?

I contend that the Government is taking forward a series of interventions to secure that balance. I remind Alison McInnes of Government investment in a wide variety of public transport projects to encourage modal shift, which are at the heart of what the Government is doing to encourage greater use of public transport and reduction in car use. The interventions exist and the Government is working to deliver them.

Obviously, the interface is at its sharpest with the production of the Scottish climate change bill, which will be introduced in November. In it, we will set out the obligation under which Government must operate to deliver progress towards reducing emissions by 80 per cent by 2050.

My question is also on transport and the proposed climate change bill. As you are well aware, more than 20,000 people took part in the bill consultation, many of whom stressed the importance of including in the bill aviation and shipping—both of which are key transport issues. Do you share the view that it is difficult to have a climate change bill without including in it the major issues of aviation and shipping emissions?

That was a material point in the consultation exercise and the feedback that we received. Obviously, ministers are considering the contents of the consultation responses—all 21,000 of them. Once we have considered the responses, we will set out the provisions that we intend to include in the bill. That would be the appropriate time for me to conclude my consideration of all the issues, including aviation and shipping.

Can you give us an update on the timescale for the bill's introduction? To repeat the question that I asked in the chamber last week, will we be able to say by the time of the next intergovernmental conference—at the start of December—that the bill has been introduced?

I am pretty optimistic that we will be in a position to make the Poznan declaration—if that is what we will affectionately call it—and that the bill will be introduced by that time.

Is that just being optimistic?

No, I am fairly confident.

It is not simply optimistic to consider that the bill will be introduced by then.

For clarity, let me put on record that I am confident that, by the time of the Poznan gathering, we will be able to say that the bill has been introduced in the Scottish Parliament.

I am delighted to hear that.

Let me explore another issue. It has been suggested that the bill will be used as a vehicle for other measures that are perhaps related to climate change but are not directly related to the target framework. Such measures could possibly include waste and energy issues. To what extent will other measures be included in the bill?

We are still considering the bill's contents, on which further decisions are yet to be made. Parliament will be advised of the bill's contents when we publish it, which I expect will happen in late November.

In particular, you previously told the committee that, in the light of Sarah Boyack's proposed member's bill on energy efficiency and microgeneration, you would discuss with her

"how the provisions that she proposes to introduce … might be best incorporated into the Government's climate change legislation."—[Official Report, Transport, Infrastructure and Climate Change Committee, 2 October 2007; c 178.]

I stress that those discussions were to be on how, rather than whether, that might be done. Can you update us on how those discussions have progressed?

I have met Sarah Boyack to discuss those matters and I am in the course of arranging further discussions to take forward some of the issues that she has raised. I remain open, as I said to the committee last year, to considering the inclusion of some or all of those provisions, depending on their final shape, within the climate change bill.

So that is still being progressed.

Yes.

That is encouraging.

Mr Swinney, I am aware that you are not responsible for the United Kingdom's Climate Change Bill, but I know that you and your staff have had a dialogue with the Westminster Government about the contents of that bill, on which this Parliament has already considered a legislative consent memorandum. What is your impression of the extent to which opinion forming in Scotland has had an effect on the format of the UK bill, such as on the inclusion of all greenhouse gases rather than just CO2 or the inclusion of stronger annual targets? I know that your party was keen on such targets in its manifesto.

I am not clear about the question. Is the question what effect we have had on the UK Government's bill or what effect the UK Government has had on our bill?

What effect has Scottish opinion had on the UK bill?

From our point of view, we have had constructive discussions with the UK Government about the formulation of the bill. The Secretary of State for Environment, Food and Rural Affairs and I discussed a number of issues on the contents of the bill and, at official level, there has been a pretty constructive dialogue. The process has been constructive. Obviously, parts of the UK bill have been amended that the UK Government was not satisfied with, but those are issues for the UK Government to determine.

Let me move on to an issue for which you have direct responsibility and in which you have an interest. The Scottish Government introduced the climate challenge fund. What is the Government doing to promote it? Do you agree that it is important that the fund is shared out throughout all of Scotland, particularly in rural areas? Finally, how can we ensure that every penny spent on the fund maximises greenhouse gas reductions?

I will take the last point first. Reducing greenhouse gases has to be at the centre of any interventions that we make in distributing the climate challenge fund. The purpose of the fund is to assist that process.

On the distribution of its resources, the Government obviously will want to see good projects and initiatives being supported. Ideally, that would happen throughout the country, but I do not think that we will apply a distribution mechanism to the fund. It will be driven by the projects and propositions that come forward.

On promotion, if my memory serves me right, we had the greatest possible publicity around the fund's launch, which involved a joint venture between the convener and the Cabinet Secretary for Rural Affairs and the Environment. We will continue to promote the fund in all of the normal ways in which the Government communicates.

Voluntary organisations and community groups clearly will play a vital role in utilising the fund in the next few years.

Yes. That brings me back to my point to Cathy Peattie about social enterprise activity and voluntary sector funds. We should not think that voluntary sector organisations that are interested in working on climate change issues or reducing emissions are restricted to applying only to the climate challenge fund. There are other opportunities for them.

I visit social enterprises around the country that are doing fantastic work in recycling. I was at the excellent recyke-a-bike venture on the road from Grangemouth to Stirling—at Fallin, I think—which is generating employment and utilising resources very effectively, and it is supported. I would cite that good project and many others as examples of how individuals who are concerned to make a contribution can do so through different routes.

There was some promotional activity at the beginning of the climate challenge fund. Are you confident that the promotional angle is being pushed sufficiently to ensure maximum uptake?

There has been a fair amount of publicity and communication about the fund. I will reflect on that point if there is a sense that more could be done. Obviously, we could always have more publicity about certain issues, but I will reflect on the point.

The Government's process of developing a framework for adapting to climate change seems to be a drawn-out affair, with one consultation under way and another planned. Will the cabinet secretary outline the thinking behind the approach and explain how it links into the work of the climate impacts programme that is to be released towards the end of the year?

The climate change adaptation framework will identify the principles and actions of Government and non-Government decision makers that are required to provide leadership, guidance and consistency of approach in adapting to climate change. A great deal of adaptation activity can be undertaken, and it is important that we ensure that people are adequately equipped with information to allow them to make the right judgments.

The consultation on the Scottish climate change adaptation framework will continue until 31 October. I am sorry if Mr Johnstone thinks that we are having too much consultation. I gently point out that we were accused earlier of not having enough consultation—

By somebody else.

Indeed—I would never accuse the member of inconsistency. I am simply making the point that we do our level best to consult as widely as possible. Part of the importance of the climate change adaptation framework is that it must involve a broad cross-section of society. We must recognise that we can all take actions to minimise energy use. That approach is significant, and it is important that it is taken forward effectively in all areas of government.

The Scottish Government has announced that energy use in schools will count towards the total emissions of local authorities under the carbon reduction commitment, which is the mandatory trading scheme that will encourage local authorities and large businesses throughout Scotland, England and Wales to reduce emissions. What steps are being taken to ensure that other non-energy-intensive businesses and public sector organisations know to register and prepare for the carbon reduction commitment?

Our approach to that is contained in our approach to the adaptation work. We have to acknowledge that business as usual will not deliver our climate change commitment, so we must put in place a specific set of adaptation measures to ensure that we are effectively equipped to deliver our commitment.

All areas of government—schools, hospitals and prisons—are now increasingly adapting their approach to building construction and energy use to take into account the Government's commitment. We have not completed that process, but it must be taken forward as a routine activity by all areas of government, so that our approach to tackling the issue becomes an essential part of all government decision making.

With regard to energy use in schools, has there been any review of the public-private partnership projects, of which there have been a lot in the past few years? Do we have to change the approach to schools in trying to save energy?

Issues will, without doubt, arise from those questions. Those who manage PPP contracts must, as part of the formulation of those contracts, guarantee that their contribution to reducing carbon emissions and energy use is maximised. I hope that buildings that have been built in recent times will have been built to high energy efficiency standards. That will be part of the test that the Government applies.

One would hope that that was the case for any building that was built recently, but it ain't necessarily so.

In the chamber last week, four out of five political parties put on record their support for the principle that the climate change bill should include annual rather than just long-term targets. Is the Government ready to take part in a debate about how such annual targets will work and what they will be, rather than holding out against them?

The Government has rightly been credited with bringing forward the most ambitious bill on climate change of any western European Government. The emissions reduction target of 80 per cent by 2050 is enormously ambitious. As I said earlier, we are reflecting on the consultation exercise that has been carried out, and as part of introducing the climate change bill we will make clear our conclusions. I am sure that we will have ample opportunity to debate the bill's provisions.

Yes, indeed. Another idea that received some support in the public consultation was that the bill should impose wider public sector duties beyond merely the duties on the Scottish ministers. Is that being actively considered?

Ministers are considering all aspects of the consultation exercise, and we will take the appropriate decisions in the context of the bill's introduction in November.

I want to ask about the national planning framework. What aspects of the consultation on the framework have led to further work on it?

We have received feedback from different parts of the country, containing propositions and developments that different groups and bodies consider should be designated as national developments. That has led to further thought on how we should proceed with the national planning framework. Work is continuing.

We have also heard a number of views on the approach that should be implicit in the national planning framework. As part of the consultation response, we are reflecting as carefully as we can before introducing the developed version of the framework to Parliament.

Do we know when the final version will be made available? Can we expect many changes?

There will certainly be changes. Off the top of my head, I cannot give the timescale for the framework. If the convener will permit me, I will write to the committee with the timescale.

Thank you—that would be appreciated.

Organisations with an interest in the climate change agenda have criticised the national developments in the consultative draft that relate to aviation expansion at Glasgow and Edinburgh airports. You told Alison McInnes that you were working on transport policies that were consistent with the climate change agenda. Is the issue being examined between the consultative draft and the final draft?

We have considered the issue carefully. We will reflect on it further before the national planning framework is formulated.

I have two brief questions on Scottish Water. The first concerns the charging regime. As you may have read in The Scotsman on Monday, the Society of Local Authority Chief Executives and Senior Managers was concerned about water and sewerage charging under a local income tax. As you know, the money is currently collected by local authorities on behalf of Scottish Water. However, SOLACE says that there is nothing in the consultation document on LIT to spell out how money would be collected. What are your plans for collecting water and sewerage charges if a local income tax system is introduced?

At the heart of the consultation process is the gathering of people's opinions on how best to proceed. In the consultation document, we have set out the basis of our approach to the introduction of the local income tax. The consultation period closed over the summer and the Government is considering the responses before formulating the abolition of council tax bill, which will be introduced to Parliament during this session. That is where we will set out our proposals for the future of the domestic water charging regime.

So it will be announced to Parliament in due course.

It will, yes.

But you cannot hint how the money will be collected.

The answer to that will be part of our response to the consultation exercise, which we are considering before introducing the bill.

I stress that the views that I referred to were those of SOLACE, which obviously carries some weight in Scotland—it is the society of chief executives of local authorities.

My second question on Scottish Water relates to climate change. You will know that water leakage has been a big climate change issue. If memory serves, last year Scottish Water lost half of all the water that it treated. At present, about a third of all treated water is lost. I concede that that is good progress, but do you share my concern that important climate change issues are involved? A lot of energy is being wasted, it is inefficient to lose so much water, and our record compares badly with the standards in England.

Those are fair comments. Scottish Water has made considerable progress in addressing a number of challenges over recent years, but Scottish Water would be the first to admit that it has not fully addressed them all. However, progress is being made. The tackling of leakage remains a major priority that Scottish Water's capital investment programme is designed to address.

Do you share my view that it is important that all sectors play their part in tackling climate change, not least the public sector? Scottish Water is a major player in the public sector in Scotland.

In my answer to Mr Gibson earlier, I said that every organisation had to contribute towards tackling climate change. That has as much relevance to Scottish Water as it does to any other aspect of the public services.

Long may Scottish Water stay in the public sector.

Will the cabinet secretary update us on the reaction to the charging principles for the non-domestic sector that were introduced in April?

The system has been applied. I am not aware of significant reaction on that point, but I am sure that I am about to hear about it if there is.

It was anticipated that there would be a reaction. What discussions are taking place about exempting voluntary organisations and churches from the charges?

As part of its announcement of the charging regime, the Government extended the scheme that was in place, which is comprehensive and applies to a significant cross-section of organisations in the country. We were encouraged by a highly effective campaign to ensure that that scheme was extended and we responded positively to it. There was a warm welcome for the Government's decision on that, but there have been no discussions on developing the exemption scheme further. We simply extended the scheme that we inherited, which was the provision that we were invited to make.

Has there been no comment on the opening of the non-domestic sector to competition? There were concerns that there would be difficulties with funding and the cost to the domestic sector.

I certainly have not noticed a particular reaction to that issue in my mailbag. However, if the committee has concerns, I will address them.

I draw your attention to Waterwatch Scotland's latest research, which was published at the start of this month and says that households in the lowest income bracket are now spending more than 3 per cent of their gross weekly household income on water and sewerage charges. It also says that water and sewerage-related debt currently stands at £282 million. The report recommended

"that the Scottish Government, in conjunction with industry stakeholders including WWS, undertake a review of the workings of the current permanent Water Charges Reduction Scheme, and that … the Scottish Government should work with the UK Government … to address the failure of current social security benefit arrangements"

to meet water and sewerage charge liabilities adequately. Will you undertake to carry out those two reviews?

I will certainly consider those two points for review. The social security issue that the report raises is not the only issue to arise in the social security system. There are many challenges in the journey of individuals into employability, which is difficult because of the social security system. I will certainly consider that matter and the suggested review of the design of water charges, which is material to my answer to David Stewart's question on the consultation on the introduction of a local income tax and the abolition of the council tax.

How do the Scottish Government's ambitions for expanding hydropower fit with Scottish Water's core objectives?

I cannot envisage there being any inherent conflict between those two objectives. The Government is working to maximise the opportunities for real and sustained development of the renewables sector in Scotland and is being successful in doing so. As the First Minister set out to the Parliament last Wednesday, about £1 billion-worth of commitments have been made to renewable energy projects in the past few weeks. The First Minister inaugurated the new hydro scheme at Glendoe. The Government remains supportive of the development of a broad range of renewable energy projects, and hydro projects have an important role in that.

Might run-of-river schemes, which might be part of the development of hydropower, interfere with the abstraction of water by Scottish Water for domestic and commercial water supplies? That must be taken into account.

All factors are taken into account when a licence is applied for to develop a river-based hydro scheme. In my experience, significant rigour is applied to testing propositions for such schemes. The Minister for Enterprise, Energy and Tourism has required officials to undertake such testing with greater efficiency and we have now had several announcements to bring long-standing applications for such schemes to a conclusion. However, the same rigour is applied in that process. There is no shortage of issues to be scrutinised as part of the judgments on individual licences. The issue of water abstraction and domestic water supplies would be a major part of the analysis.

That concludes our questions for the cabinet secretary. I thank him and his colleagues for spending time with us. We have requested further information in writing on a few issues and we look forward to receiving it. Several of the issues that the cabinet secretary will be working on substantially over the next few months will come to the committee, and we look forward to debating them.

I suspend the meeting briefly to allow the witnesses to leave.

Meeting suspended.

On resuming—