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Chamber and committees

Transport and the Environment Committee,

Meeting date: Wednesday, May 10, 2000


Contents


Budget Process

The Convener:

We shall now discuss the Executive's annual expenditure report, "Investing in You". I understand that some officials will join us for this part of the meeting.

I refer members to the relevant extracts from "Investing in You" and the committee's covering note on the annual budget process, committee paper TE/00/11/2. Members will recall that, after initial consideration of the draft budget figures before the recess, we sent various questions to the Executive for clarification. We have received a response from the Executive, which has been circulated to members.

The minister is attending today with a number of officials, who will be able to answer any further questions or points of clarification that we may want to raise. We want the Executive to respond to questions on areas of interest to the committee, so that we can have a focused discussion on those issues and other matters that might be raised.

Before inviting comments and questions from the committee, I invite the minister to make a short opening statement.

Sarah Boyack:

I welcome this opportunity to discuss our spending plans with the committee. With me are Bob Tait, from the transport division, David Reid, from the finance department, and John Graham, from the rural affairs department.

Publication of our annual expenditure report, "Investing in You", marked the start of a much more inclusive budgeting process. The report sets out the Scottish Executive's plans for 2000-01, which the Parliament approved earlier this year. It also begins a consultation process to inform the new spending budgeting round that is beginning and, through the process of the spending review, we will set out our spending plans for 2001-02 and 2003-04. We regard the report as a source of information that will allow the Parliament, the committees and interested parties to understand and scrutinise our plans. The report not only seeks to explain the spending, but tries to link explicitly individual spending programmes with individual objectives.

I hope that our replies to the questions that the committee submitted have helped to clarify the background and have provided supplementary information. I hope that we can explain more clearly the strategic policy priorities in the two programmes in my portfolio.

On transport, our spending priorities follow our strategic priorities. We want a transport system that protects and improves the competitiveness of our economy, puts the needs of people first, and recognises the needs of the pedestrian, the cyclist, the public transport user, the motorcyclist and the car user. We want the system to provide choice for all people, whether they live in large urban communities or remote rural communities. We also want it to protect the health of people and the environment.

On roads, I announced last month our plans for £444 million of investment on our trunk roads and motorways over the next two years, leading to March 2002. That is an increase of 22 per cent on the past two years. There will be 49 projects costing £500,000 or more across the country and many others costing less. We will also repair and maintain our network, after years of neglect.

Links to the south of Scotland are important, so I am pleased that Gus Macdonald has confirmed that the Department of the Environment, Transport and the Regions is to build the last remaining section of the M6 to motorway standard. That completes the motorway route from Scotland to the south.

We are supporting public transport with £55 million from the public transport fund, which has funded 33 public transport improvement schemes across Scotland, many of which are designed to increase the attractiveness of alternatives to the car. Bids for the third round have been invited. Bus operators now get back 70 per cent of the fuel duty that they pay. That is a record level of subsidy for us in Scotland.

We are implementing the devolution settlement on rail, which will include new powers for defining the requirements for the Scottish franchise. Rail investment is on the increase, largely due to funding from Westminster and the private sector. The results of that are already evident: the Glasgow-Edinburgh train travels every 15 minutes; there are new stations in Fife and new trains across the network; and passenger numbers are on the increase.

We have allocated £15 million for projects to take freight off roads and on to rail or inland waterways. That should lead to the removal of nearly 6 million lorry miles from our roads in the year to March 2001. There are more awards in the pipeline.

We are trying to keep rural Scotland connected. We want to keep our most remote and vulnerable communities in touch through our lifeline ferry and air services, in which we have invested at record levels. We have allocated £22 million for new Caledonian MacBrayne ferries, the first of which I launched on Monday in Troon. We recently purchased Stornoway airport.

Our rural transport fund works with £14 million. It has enhanced public transport across Scotland, community transport projects and new petrol station projects. We are also committed to widening accessibility. In total, we plan to spend £370 million this year.

Protection is an integral part of our commitment to place sustainable development at the heart of our policy framework. Part of our environmental protection agenda is driven by our domestic needs and priorities, and part by the obligations and commitments that we have as part of the European Union.

I want to highlight some key issues. Our programme for government gave us domestic commitments on improving access to the countryside and establishing the first national parks in Scotland. The plans in the report provide a start for both those projects.

In financial terms, our work is dominated by our obligations to Europe. There are a range of environmental commitments; I am determined that we should be diligent in their implementation, because they will have a major impact on safeguarding and improving our environment.

On water, the need to implement speedily our key directives and catch up on maintaining our infrastructure means that the pace of investment cannot be relaxed, as I recognised in the recent water charges review. It is unacceptable that 65 per cent of sewage in the north of Scotland flows directly, untreated, into the sea, so water industry finance will continue to make a large call on the environmental programme.

On environmental protection, the larger part of our spending consists of grant to the Scottish Environment Protection Agency. As the committee's question noted, the grant has been progressively reduced, because income from charging schemes has increased. Full cost recovery will, in the main, be achieved from this year, 2000-01. We are giving SEPA additional tasks—implementing the water framework directive, the landfill directive and other aspects of our national waste strategy—for which we need to make appropriate provision.

On natural heritage, we are providing for Scottish Natural Heritage's steadily increasing work in implementing nature conservation commitments. As I have mentioned, there will be spending in the early years of national parks to allow park authorities to create visitor facilities and, more generally, to encourage access to the countryside, so providing the opportunity for people to take part in recreation without spoiling our natural heritage.

In all, we will provide some £280 million from the assigned budget in support of our environmental policies.

That has taken some time, convener, but it was a rapid summary of where we intend to spend. I hope that it will be useful in informing discussion of the detail of our programme.

Thank you. That will be useful in our questioning. It was somewhat remiss of me not to introduce Kenny Gibson to the minister and the rest of the committee. He is here from the Finance Committee.

The Local Government Committee.

Sorry, he is here from the Local Government Committee. He is interested in the issues raised in our questions. I welcome him and apologise for not introducing him earlier. The floor is open for questions to the minister.

Helen Eadie (Dunfermline East) (Lab):

I thank the minister for her introduction. My question relates to equality of opportunity. When reading the committee papers, I came across Engender's response to the consultation document. Section 4.6 of their submission says

"The category ‘Motorways and Trunk roads' needs to distinguish between on road safety schemes and maintenance, and between new roads and existing roads.

We are concerned that expenditure on roads continues to dwarf spending on public transport, presumably included under ‘Other Transport', despite the stated priorities. Due to the fact that women are more frequent users of public transport than men, and have less frequent access to a private car, this balance disproportionately benefits men."

Will you comment on that point?

Sarah Boyack:

The research programme that is under way in the transport division includes research on the transport needs of women, to discover whether there are gender issues that need to be addressed in our mainstream policies.

On the balance of expenditure, the £444 million on roads and motorways is over a two-year period. We also spend something in the region of £200 million on rail through the ScotRail franchise.

Money is also coming through the rural transport fund. Yesterday, I launched the project Teviot wheels, in Jedburgh, which is specifically for providing accessible transport. Some 72 rural transport schemes and 350 extra public transport services are being supported in rural Scotland through the rural transport fund.

It is important to add together all the facts and figures. I am not saying that we could not do more, or that we do not need to review our policies, but it would be helpful to indicate that there is a balance between public transport investment and investment in our roads. Of course, buses use roads as well. The issue is how we implement our approach across these policies. I welcome the greater scrutiny that Engender is putting us through, which is healthy.

Janis Hughes (Glasgow Rutherglen) (Lab):

You will not be surprised to learn that I want to ask you a question about the M74 northern extension. The discussions that you have had with local authorities concern whether the Scottish Executive will be able to assist with funding. Has that been taken into consideration in this budget proposal?

Sarah Boyack:

I shall ask Bob Tait to update us in a minute. This budget does not include an allocation for that. We are now at the stage of discussions with the relevant local authorities; discussions are on-going at an official level. We are entering into a comprehensive spending review for subsequent financial years in which we are considering many priority issues. However, there is nothing programmed in for this budget. Bob, can you say a few words about where we are with the M74 northern extension?

Bob Tait (Scottish Executive Development Department):

The decision in the strategic roads review was to ask Glasgow City Council and South Lanarkshire Council to progress the scheme. They have chosen to do that by establishing two working groups: one to examine technical issues, such as the size of the proposal, and the other to consider affordability and the financial issues. Good progress has been made by both groups and I expect the councils to have a report from the consultants, KPMG, by the end of this month. That report will take into account both the size and the affordability of the proposal.

When the minister met Councillor Gordon and colleagues in December, she made clear that the Executive would make a contribution to the overall scheme in respect of that part at the Fullarton Road end that connects to the existing motorway. During the working group discussions, I have been able to confirm that.

Thanks for your answer. That is useful information. As the proposal stands, planning permission for the extension runs out this year. If no provision is made in this budget, will that create problems with planning permission?

The issue of planning permission is not directly related to the budget. We can provide a detailed answer to that question in writing, after today's meeting, if that would be helpful.

Okay. Thanks.

Mr Tosh:

I have lots of detailed questions to ask. If I am not able to do so today, I shall lodge some parliamentary questions—I know that the minister always looks forward to those. First, does "Investing in You" include the budget consequentials in its figures?

No.

I presume that you will give us an update at some stage, when you have fully worked them into the accounts.

Sarah Boyack indicated agreement.

Mr Tosh:

Secondly, towards the beginning of that document, resource accounting and budgeting are mentioned. The proposal is to incur the capital expenditure over the life cycle of the assets. I imagine that that would make little practical difference to roads construction or local authority expenditure, which is broadly similar from one year to another, although it surely should have made a significant difference to the way in which we treat investment in water and sewerage, which is clustered around the first few years of the new century because of the EC deadlines. However, the presentation of the information seems to focus on the expenditure in those years rather than on making capital provision over the 40 or 50 years for which the assets might exist. That has forced the water boards to rely on the consumer to generate income for them. At the moment, consumers' bills are increasing sharply, essentially because of conventional capital budgeting. Why has there not been an attempt to build in the resource accounting and budgeting process for water and sewerage at this stage, to spread the cost to consumers and not hit them with historically unique levels of investment and expenditure?

My third question relates to the capital expenditure that is set out in these tables. Much of the roads expenditure would more properly be treated as capital expenditure than as current revenue expenditure, but it is all being funded from revenue. I understand that that may relate to the fact that the block grant for the Scottish Executive comes in the form of a revenue grant from Westminster. Can that be tracked back somehow to the borrowing practices of central Government? It seems strange that we should be funding major capital works from revenue.

Fourthly, how precisely can this committee get at the substantive figures for the Strathclyde Passenger Transport Executive payments, which are now included in "Investing in You", and the ScotRail payments, which will be available in next year's budget? How do we work out how you establish the annual payments? It seems to me that the figures for those are just given to us—from the document, I could not determine a formula for calculating the annual payments.

Finally, at a previous meeting I asked about the location of the challenge fund for transport for local authorities. I have read "Investing in You" fairly carefully, and I could not find the figures in the transport section. Neither could I find them explicitly in the local government section. I assume that they are contained somewhere in the local government section, but I would like that to be spelled out. For future reference, wherever the aggregate figures are placed, they should be disaggregated so that someone looking for challenge fund figures can find them easily.

As a postscript to that, I should say that one of the link groups wrote to me asking a question about challenge funding for transport, but I could not find the figures. I had to advise my correspondent that they were probably located somewhere in the local government section. That shows that people are interested in that level of detail; it would be helpful if it could be spelled out more clearly.

Sarah Boyack:

This is the first time that we have done this exercise; the feedback and questions we have this year will inform next year's budget process. The questions that Murray Tosh has asked are of two types; some relate to the presentation of what is contained in this document, whereas others relate to the detail of how we arrive at the figures.

The location of the SPT payments should have been made relatively clear when at a previous meeting of the committee we discussed the Special Grant Report No 4 on Grant in Aid of Expenditure on Rural Public Passenger Transport for 2000-01.

I ask David Reid to respond to Murray Tosh's second, third and fifth questions, which were about accounting processes.

David Reid (Scottish Executive Finance Department):

Mr Tosh's questions arise from the move from cash budgeting to resource budgeting. This year's report has been produced in the old cash terms, because the transition from a cash budget to a resource budget is not yet complete. As part of the conclusion of this year's spending review, we will change the baseline numbers from their current presentation to a resource-budget presentation. This committee will have a particular interest in resource budgeting and accounting when it is finally adopted because, as Mr Tosh pointed out, it has an interest in two substantial capital programmes: the Executive's trunk roads programme, which involves not only capital spending but maintenance of our substantial roads network; and the investment programme for the water authorities.

The changeover from cash budgeting to resource budgeting should not have an impact on the outside world. This is about the way in which we present budgets, take decisions on them and manage them in the future.

However, as for the charges that are paid to water authorities and how the investment programme is funded, the charges should not be significantly affected, apart from some technical changes at the margin. It might be useful if, at some point, we provide the committee with further specific information on how resource budgeting will operate. We are still developing the process and have still to make a number of decisions about the details of the system.

John Graham (Scottish Executive Rural Affairs Department):

The increase in water charges is not driven just by the Government accounting system that is currently in operation. English water companies use broadly the accounting system to which we are moving and charges had to rise substantially over a period to meet the same investment demands that we are now confronting in Scotland.

Murray, do you want to pick up on any points?

Mr Tosh:

No, I am quite happy that we will receive further explanation. I do not really see the benefits of moving on to the new style of accounting if it will not spread the costs over a longer period of time. However, that is more a general financial issue than a matter relevant to the committee this morning. The question of the challenge fund money has not yet been addressed.

David Reid:

The challenge fund money, the public transport fund money and the remainder of the previous challenge funds that are going through the system are covered in the local authority capital spending programme, which is dealt with on pages 110 and 111 of the report. At the bottom of page 111, there is a reference to the fact that the two funds are included in what is called the single allocation to local authorities. The single allocation is top-sliced to make provision for those funds and the rest is distributed on a formula basis.

Mr Tosh:

I knew that, but my point—which is not unduly critical, as I acknowledge that this is the first go at the budget process—is that anyone reading the document will find neither that reference nor the figures. Although we discussed the SPT payments at one of our previous meetings, members of the public who read the budget document might not have access to that material; there is a need to provide more customer-friendly information. A glossary of some of the terms and acronyms might also be helpful. For example, I did not know what appropriation-in-aid or EYF were. Those aspects of the document might defeat the interested reader.

Features such as glossaries are precisely what we will have to address for future years. Furthermore, people should have an idea of the documents in which financial issues are addressed.

Mr Kenny MacAskill (Lothians) (SNP):

My first question refers to table 7.9 on page 100 of the document, which shows that between 1997-98 and 1999-2000 passenger numbers are down; air movements are down; the cost for arriving passengers is up; the revenue for arriving passengers is neutral; and the capital grant and the revenue grant are substantially up. Where is the £1 million payment to the Ministry of Defence for Stornoway airport? What is going wrong?

My next question relates to table 7.2 on page 94 of the document. In 2000-01, payments for the M6 will be £26 million; in 2001-02, they will be £24 million. New construction improvements for the same years will be £29 million and £49 million, while routine cyclical and winter maintenance will be £55 million and £57 million. Is not it the case that the M6 payments are a proverbial ball and chain in terms of the opportunity for highway maintenance and the expansion of the highway network? For how many years have these payments been made? I know that the matter has been addressed by another committee.

That takes me to page 95 of "Investing in You" and table 7.3, which lists the estimated capital cost for the M77 as £60 million. It has been suggested that that project might use a private finance initiative. Will £60 million be the total cost for the M77, or will we face annual costs like those for the M6, which go on and on? If so, can we have a realistic figure for the cost of the M77?

Finally, on fuel duty rebate, there seems to be an agency scheme with the Department of the Environment, Transport and the Regions. Is an agency fee charged by DETR, and what is the position regarding the VAT that is paid? Is there an opportunity for it to be rebated back to Scotland?

I will ask Bob to comment on Highlands and Islands Airport Ltd. More generally, the decision on Stornoway was taken recently. Do you wish to answer the HIAL questions first, Bob?

Bob Tait:

Yes, minister. Table 7.10 shows the capital and current expenditure. The payment in respect of Stornoway airport would be from the line for the year 1999-2000. It was paid in the last financial year, and so would be out of the sum of £2.9 million.

Sarah Boyack:

The M6 payments were inherited, and we are continuing to pay them. On the M77, the scheme is costed at £60 million. On several occasions in the chamber I have said that we are looking at a public-private partnership scheme; until we have explored that fully, it is not possible to answer Mr MacAskill's question. On the fuel duty rebate scheme, we have an agency agreement with DETR. Bob, can you talk briefly about that?

Bob Tait:

This will be very brief. My understanding is that there is no charge for DETR making the payments on the Executive's behalf. That is part of the transitional arrangements. We will be taking that over in due course. I was not clear whether the question on VAT related to bus fuel duty rebate or to VAT generally.

Fuel duty rebate.

Bob Tait:

I do not have that information. I would need to provide it to Mr MacAskill later.

We make a commitment to provide that information in writing to Mr MacAskill.

Do you have a supplementary, Kenny?

Mr MacAskill:

Yes. I wish to clarify two points. First, on HIAL, am I right to say that, if the £1 million is coming out of the 1999-2000 budget, one third of the capital grant is being used to acquire Stornoway airport from the Ministry of Defence? Secondly, on the PPP for the M77, is it the case that the £60 million expenditure could in fact be substantially more, as is the case with the cost of the M6?

Sarah Boyack:

On HIAL, it was considered vital to secure the long-term future of Stornoway airport. The airport needed to be brought under HIAL's control. That is why it was seen as such an important purchase, which was indeed welcomed in the communities that are served by the airport. It gives a long-term future to the airport and it means that there is now no question of the integrity of the airport over the long run. On the second question, do you wish to answer, Bob?

Bob Tait:

Yes, minister. Perhaps I could add a little to the answer to the question on HIAL and draw the committee's attention to the fact that the capital expenditure for 1999-2000 is £2.9 million. It was only £0.7 million in the previous year and £1.8 million the year before that. There is a substantial increase in provision, but it is arithmetically correct to say that a third of the capital expenditure is being devoted to Stornoway.

On the M77, the £60 million in the table is the figure for the estimated cost of the capital works on a conventional procurement. That was the figure that was used in the strategic roads review.

If we choose the PFI route, the convention is to include the future maintenance costs of the road over 30 years in the risk transfer to the private sector. That would add to the costs that were to be recovered in the contract. There would be a service payment to the contractor for the duration of the contract. The M74 contract and the Skye bridge contracts are for a maximum of about 27 years.

There will be a service charge, which would relate to the overall costs, but we have not reached that stage in the M77 procurement.

Cathy Jamieson (Carrick, Cumnock and Doon Valley) (Lab):

I want clarification on the answer to Kenny MacAskill's question about the M6. Page 95 of "Investing in You" mentions the contractual obligation to pay the service charge for the next 27 years. Can you clarify what that amount is for the next 27 years and whether it is related to the figures—£24.7 million, £26.1 million and £24.2 million—that are given in table 7.2?

Bob Tait:

Yes, it is related to those figures.

The future level of payments will depend on future usage of the road. Part of the contract with the concessionaire sets out a payment mechanism. The figures for the early years are shown in table 7.2. The later years' figures will depend on road use and will be worked out in accordance with the formula in the contract.

Is that likely to be the ballpark figure for the next 27 years?

Bob Tait:

Use of the road and the fact that the figures for 1999-2000, 2000-01 and 2001-02 are in the same ballpark suggest that future payments would be no lower than that. They would probably be slightly higher.

Robin Harper (Lothians) (Green):

My question is on the Scottish renewables obligation. I have asked—and had answered—my first question in Parliament previously, although I did not agree with the answer. My view—and that of Friends of the Earth who recently lobbied you on this—is that a renewable is an energy source that does not contribute CO2 to the atmosphere. Is the Executive's position still that waste-to-energy projects will qualify for support under the Scottish renewables obligation? I expect you to confirm that.

More importantly, does the Executive intend to strike a balance in the competition between wave power, wind power and solar power? Will you consider ring-fencing funds for those important developments, or will the applications that arrive first be the ones that are most likely to get support?

Sarah Boyack:

On the future of the SRO and how it operates, to examine the whole picture we are currently in discussion with the Department of the Environment, Transport and the Regions and the Department of Trade and Industry. The issue does not affect only Scotland, but the whole UK. I am aware that a number of views have been submitted to the Executive—those views are being considered.

Cathy Jamieson:

On the freight facilities grant, I am pleased that an amount has been set for the next three years. However, on the basis of the interest that has already been shown in the grant, do you anticipate that it will be difficult to meet the requirements of all the projects that people would like grants for? A number of people know about the grant and I doubt whether the amount of money that has been allocated would be enough to see all their projects through to fruition. How will priorities be decided?

Sarah Boyack:

You are right to say that the increased level of awareness about the freight facilities grant has generated interest in the industry.

I will make two points. First, the fact that we have established new freight facilities means that those facilities can, potentially, be used by other operators. In a sense, the heavy capital costs for construction can be of benefit to future users. One of the conditions for winning a freight facilities grant is that the facilities must be potentially open to other users, so that they do not have similar high costs. I hope that such new facilities will be more available to other users.

On Cathy Jamieson's second point, the fact that we want to continue the freight facilities grant scheme illustrates our recognition that there is further to go. We had a conference this week with the Rail Freight Group. One of the issues that we examined was the extent to which the Executive and the industry can work together to make the most of the freight facilities grant and encourage more partnerships between companies. There is a lot of work that we need to continue. The stability of the freight facilities grant is a signal to the freight industry that the Executive regards it as important. In order to meet our environmental objectives, it is crucial that we give the scheme long-term stability.

Des McNulty:

I will follow Murray Tosh's practice of asking three or four questions at the same time so that I do not have to come in again.

First, much of the information that we receive in relation to environmental expenditure is big figures that are linked to European targets. Is it possible for future documents to be more explicit about how quickly spending will enable us to meet targets? Clearly, as a minister, you have choices to make about how much to invest and how quickly particular targets should be achieved. It would be helpful to know what choice has been made and what effect that that will have on the speed with which European obligations are met.

"Investing in You" says:

"The operational and capital investment costs"—

of water authorities—

"are met by a combination of charge income from customers, and grants and loans from the Scottish Ministers."

Could the balance between those sources be set out for each of the three water authorities? That would, perhaps, allow us to understand the pattern over three, four or five years.

My third point is on expenditure on environmental improvements in urban fringe areas. There is, perhaps, a parallel between such areas and river valleys in more urbanised areas, such as the west of Scotland, on which a lot of work was done by Strathclyde Regional Council. It is difficult to identify how the budget proposals would develop that programme because the money for environmental improvements is being handled by several agencies.

In particular, will you consider the Executive's appropriations from the Erskine bridge tolls in the context of the immediate urban environment that surrounds the bridge, one side of which is in my constituency? I receive constant complaints about the scale of plant growth, litter and so on, but I have never found out why—given that the tolls produce financial benefits—those problems cannot be dealt with.

Finally, is there any information on progress toward the reduction of landfill and the Executive's targets on that? I could not identify anything in the budget document about the progress that is being made or about investment in alternative methods of disposal.

Sarah Boyack:

I will address the four key points that you raised. We will want to examine your first point in future. I have said that we are trying to be more explicit about how the programme for government is addressed through the budget. A key target of the programme for government is that we meet European requirements and obligations. We have tried to be more explicit about water expenditure in the quality and standards paper, but you make a fair point that we should try to be more rigorous in all areas.

We can provide the information that you request about grants and loans from the Scottish Executive for the three water authorities, so that the priorities can be seen.

On your comments on environmental improvement—especially in urban fringes in the central belt—the best place to find information about that is in the Central Scotland Countryside Trust allocation, which can be found in the Scottish Natural Heritage programme. That programme is a dedicated stream of expenditure.

In response to your point about the Erskine bridge, I hope that a biodiversity action plan for trunk roads and motorways will be produced. We have made a commitment that we will also consider the impact on the surrounding area when we consider where to spend money on roads infrastructure. Foliage is an issue for drivers, and we will log it for future reference.

I have discussed landfill with the Convention of Scottish Local Authorities in the past couple of months, when I addressed conferences and meetings of local authority chief executives and leaders. We discussed the £2.5 million that has gone into their budgets for preparatory work on the national waste strategy, which is in its first stage. We know that we have an enormous task ahead of us and we will consider landfill during this summer's comprehensive spending review, when we will consider priorities for future investment.

There is no instant solution to the problem—it requires major expenditure over the next few years. We have worked on identifying the future costs to local authorities for meeting the landfill directive's requirements and we will make that work available to local authorities. Work is in progress on the issue, which will be considered in future years through the budget process.

John Graham:

On the water question, the broad picture is that just less than half of the investment programme is being funded by the Executive from grants and borrowing consents. The balance will come from charging.

Nora Radcliffe (Gordon) (LD):

I want to pick up on a couple of points from the question and answer paper, which I found helpful.

On page 5, you mentioned the agreement between the Executive and COSLA for funding

"flood prevention and coast protection schemes"—

which will allow for

"a proportion of non-housing capital expenditure to be top sliced for support of major FP/CP schemes".

We have recognised global warming by imposing taxes. Are we at the stage where we should make more provision for flood prevention schemes and so on? Is the Executive thinking along such lines?

Sarah Boyack:

We address that issue in the climate change consultation paper, which considers the possible costs of climate change and the extent to which we can mitigate its potential impact. We are almost coming at the issue from both angles: we are considering the impact of climate change and trying to shape the level of change that might take place in future. We are aware of the issues.

Nora Radcliffe:

So, that work is coming down the track.

On page 12, the question is asked:

"Why is spending on local authority grants falling and what is the expected impact, particularly in relation to SPT?"

The question was answered in relation to SPT, but the part that dealt with the expected impact of the fall in spending on local authority grants was not. Could you elaborate on that?

David Reid:

The answer is that local authority grants are almost entirely taken up by Strathclyde Passenger Transport Executive. The figures are in table 7.11 on page 101 of the report. The principal reduction concerns the SPTE and there is a small reduction in capital grants to local authorities, which is because that is made up of specific projects. To the extent that one can identify what is coming, one can anticipate the need. Other than for SPTE, the change is negligible. The figure of £5.2 million for 1999-2000 is high, but that amount relates to particular projects. The line then carries forward at £4.7 million for this year and next year.

So, does that money relate to projects, rather than a general grant for roads and road maintenance?

David Reid:

Yes. It will be for particular projects that local authorities are undertaking on roads or piers and harbours.

Does it cover the Executive's general allocation to roads and road maintenance?

David Reid:

No.

The last wee bit of Nora's question covered what I was going to ask.

A number of members want a second attempt at asking questions; I am happy to allow that as long as members are fairly brief and to the point.

Helen Eadie:

I want to go back to the issue of freight facilities grant in table 7.4. The minister and her colleagues deserve to be congratulated on the work that they have done. However, I am concerned about the amount of future moneys and would have hoped that the forecast figures would increase. The minister might not be able to respond to that point now, but it is an area of work that is warmly welcomed by the community.

In written answers to our questions, the minister said that support is available nationally under the infrastructure investment fund. What is happening about the capacity issues surrounding the development of freight and how will that be financed in future? It is a tremendous piece of work.

Sarah Boyack:

There are two answers to that question. First, there will be discussion, through the comprehensive spending review this summer, of the Executive's future priorities. Secondly, we want to ensure that the rail industry also invests in infrastructure. There are discussions with the strategic rail authority and Railtrack to discuss priorities throughout the network. There are constraints and there are issues about how to achieve the improvements in the infrastructure that will enable the projected increases in freight and passenger transport.

Mr Tosh:

I have a few questions about the environment section of the statement. Is there a case for picking out what might be called new policy initiatives in future reports? For example, on page 104, reference is made to the pending access legislation and the related increase in allocation to Scottish Natural Heritage. However, no amount is quoted that might be available to local authorities or SNH to carry out detailed work. Councils, in particular, might welcome such money—they are about to be charged with additional responsibilities in that area.

I do not know what the implications will be, but on the following page we might have expected to see some reference to contaminated land, on which there will be major developments later this year. SEPA will have additional obligations and, although I do not know how onerous they will be, it might have been reasonable to flag them up.

On page 106, I did not understand the footnote at the bottom of table 7.17, which seems to imply that the allocations will be found from all the other headings. Also, table 7.17 is a leveI III table, but I could not read back from those figures to any of the level II tables. The presentation sometimes makes it difficult to track expenditure from one level to another. For example, I found great difficulty in reconciling tables 7.12 and 7.13. I thought that £10 million for water was missing and that perhaps the minister had left it to the committee to allocate it.

No such luck.

Mr Tosh:

With the help of the clerks, I worked out what EYF is—it is obviously all in the rounding of the figures. Nevertheless, a health warning to say that the figures do not add up absolutely would have been of assistance to the ordinary reader.

Finally, may I say that Bob Tait made everyone's day at this end of the table when he said, "Yes, minister."

Sarah Boyack:

I was not going to comment on that, but I did note it.

Murray Tosh's point about presentation and being able to track how all the bits of money add up is a fair one. This is the first time that the budget has been subject to this level of scrutiny and we are in a learning process. Terms such as EYF would be included in a glossary, so that people would know that different types of money are available in the system. I will ask John Graham to comment on the point about contaminated land.

John Graham:

Mr Tosh is quite right that contaminated land is one of several pressures on SEPA, which accounts for the rising gross provision for SEPA in the plans. Like SNH, SEPA produces a corporate plan each year, which will come out within the next month or two. It sets out the full background to its funding. As Mr Tosh points out, the contaminated land will also have implications for local authorities. That will need to be taken into account by the Scottish Executive in the spending review discussions with COSLA about the single capital allocation.

Mr Tosh:

That might raise questions about whether the document should contain links to other reports or the websites of various agencies. It might also include information on the time scale of the availability of further information. That would mean that people would recognise the limitations of the document, but would know where to go to get more detailed information. I take it that the same point applies to the access issue—one would go to the SNH report for that information.

Sarah Boyack:

I acknowledged that earlier when I accepted your points about a glossary. We need to consider where people should go to find information about different elements of our expenditure. It will not necessarily all be covered in the document, although that will provide a clear structure.

Mr MacAskill:

I want to pick up where Nora Radcliffe and Murray Tosh left off. On page 106, in table 7.17 on flood prevention, the estimate for 1999-2000 is £6.1 million reducing to £6 million for the following two years. In view of the fact that that predates the serious flooding in Aberdeenshire, Moray and the city of Edinburgh, do you anticipate any increased funds being made available, or are local authorities in danger of losing out?

Sarah Boyack:

No. The figures represent projects that the local authorities have already identified as important and have therefore included in the budget process. Clearly, in response to recent experiences, local authorities will make further submissions to the Scottish Executive that we will have to consider and programme into future budgeting.

Will funds be available?

Sarah Boyack:

I refer you to the points that I made earlier about the comprehensive spending review. In the light of pressure on all our budgets, we will have to prioritise. We will get some fairly strong feedback from local authorities about which schemes they want to implement. That is something that the Executive will have to consider.

Robin Harper:

Landfill tax was mentioned and the minister will be aware that there is considerable disquiet about the rules and regulations applying to the disbursement of landfill tax, particularly in relation to the development of small local recycling businesses. Is there any intention, at any level of government, to review those rules and regulations? For the record, could I also add biomass and hydro to the renewables that I listed earlier? I am always getting told off for forgetting them.

There is an on-going review of landfill tax that is examining its current effectiveness and future direction.

Mr Gibson:

I would like to thank the convener for welcoming me to the Transport and the Environment Committee. As I am the reporter from the Local Government Committee, I thought that I should wait until the other members had asked their questions before I asked mine. I am pleased to say that members have already raised many of the issues that I would have raised, such as the landfill directive, water and the M74. The minister's answers have been very helpful, as were the papers from the Executive. I hope to come back in a couple of weeks with a list of questions from my colleagues on the Local Government Committee; however, I have a few points that I would like to raise today.

The bottom of page 19 of the Executive clarification refers to funding allowed for roads and transport. It says:

"The funding level for roads and transport is declining in real terms because these are in part budget influenced services. The level of funding is partly based on councils' previous expenditure."

Could you tell us about those budget-influenced services and why, for example, in table 8.2 on page 109 of "Investing in You" there is no allowance for inflation in the money available under roads and transport? That is of great concern to many members of the Local Government Committee.

David Reid:

I will answer as best I can. I am not involved in the detailed calculation of the distribution of the local government finance settlement. We should possibly provide further information to the committee in consultation with local government finance colleagues. It would probably be most helpful, in fact, if we simply got back to the committee in writing with an answer to that question.

Mr Gibson:

The other matter is in regard to water. I noticed that, on page 103 of "Investing in You", the allocations appear to vary considerably between 1999-2000 and 2000-01, for example. The figures for East of Scotland Water and West of Scotland Water appear to show significant decreases over those two financial years, although the figure for North of Scotland Water shows an increase. I have an idea why that is the case, but I wonder if the minister could respond on that.

John could deal with that.

John Graham:

Essentially, that flows from differing investment needs. In general, those needs are higher in the north, which is why it has been given greater priority in distribution.

Is that to ensure that the increase in water and sewerage charges is not as high as it would otherwise be in the north of Scotland? Is it a matter of trying to level it out?

John Graham:

Given that the investment needs are higher in the north, if the Executive had not made extra funds available to the north, the charges there would have had to rise.

We were very conscious of that when the decision was taken.

I hate to be too persistent, convener—

You do not hate to be persistent at all.

I asked a question about table 7.17 and wanted to be advised on where its figures fed backwards into a level II line. That point was not picked up—because I asked too many questions.

David Reid:

Table 7.17 relates to the local authority single allocation, shown in chapter 8.

Is it covered by specific grants or by the capital expenditure allowance?

David Reid:

It is a combination of both. Flood prevention expenditure is assisted by a 50 per cent capital grant.

The Convener:

I thank the minister and her team: that was a comprehensive and useful session for us, and our preparatory work paid dividends on the level and depth of questions that we were able to follow up. I appreciate the time and effort put into that. As members are aware, the Minister for Transport and the Environment is staying with us for our discussion on the statutory instrument on nitrate vulnerable zones.

While the officials are coming to the table, I would like to establish the committee's view on further evidence on the budget process. Arguably, the session that we have just had was substantial, and I am minded to say that we are relatively satisfied with the evidence that we have gathered so far and with the discussions that we have had. Is that a fair and accurate reflection?

Members indicated agreement.