Public Audit Committee

Meeting date: Wednesday, September 12, 2012

Official Report 463KB pdf

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Public Audit Committee Report

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“Major Capital Projects”

Agenda item 4 is the regular update from the Scottish Government on the committee’s report, “Major Capital Projects”. I have one point to raise, but I will open up the discussion for comments first.

I raised this issue before, so for the sake of consistency I should raise it again.

I very much welcome the update, which I think we get twice yearly and which I find very helpful. However, as in a previous meeting, I raise the issue of Inverness prison. There was an announcement four years ago about the building of a new prison in Inverness at a cost of £80 million. I welcome everything on the capital projects list, but I want to know about projects that have been announced previously but are not on the list. I know that it is a capital projects update, but I wonder about projects that were announced and have fallen by the wayside. Does that make sense?

Okay. We can ask about that and use Inverness prison as an example.

I am pleased to see in annex A that for the Aberdeen western peripheral route project there will be community benefit clauses for local people in the procurement process and recruitment and training clauses in contracts. I and other members have raised those issues previously, so I very much welcome that we are going down that road, if you will pardon the pun.

That takes me to the point that I want to make. Ms White will not know this, but the column in annex A on the contribution towards local economic development is a new aspect of the capital projects report that the committee requested. It is fair to say that the Scottish Government has done a pretty good job of providing that additional information, which is extremely helpful, so we should be grateful for that.

I noted a worrying aspect that I suggest that we ask for further information on. The two biggest capital projects are the Forth replacement crossing and the NHS Greater Glasgow and Clyde new south Glasgow hospitals. The report indicates that the FRC project has produced 45 vocational training positions and that the hospitals project has produced 47 apprentice places.

It seems to me that, given that those are the two biggest capital projects and that one of them is the biggest capital project that Scotland has ever seen, that is quite a small number of training places. I suggest that the committee raises that point with the accountable officer and asks why there has been such limited benefit from the projects in terms of training places, given that the projects are a big part of the capital programme. Is that agreed?

Where are we in the process and how do we know that that is a small number at this stage in the game? I do not know enough about that.

I think that we can legitimately give the Scottish Government the chance to answer that question. The Forth replacement crossing is a £1.6 billion project and the report states that it will deliver every year 45 vocational training places. That does not seem to be a great performance in delivering benefit, but there may well be an explanation for that. I think that it is entirely fair to ask about that.

Why do we not just ask for a note of that issue across the board as the projects develop, rather than say, “Why is this so little at this stage?” We cannot make a judgment on whether the numbers are so little. I would not mind regularly seeing information across the board about the numbers in that column. That would be very helpful. I would rather have that than jump to say “That’s not enough” at this stage. I do not know whether it is.

There are also differences in the timescales. The contract for the new south Glasgow hospitals and the laboratory project was signed in 2010, whereas the work on the Forth replacement crossing started in 2011 and will be completed in 2016. That could be one of the reasons for the numbers that you indicated, convener, but I do not have a problem with asking about that.

I think that we should also look at the NHS Greater Glasgow and Clyde project, which has created 185 new entrant jobs, 87 per cent of which have gone to local residents. That is a good-news story and is excellent.

That point is entirely fair, but it prompts the question why the two biggest projects cannot perform as well as some of the other projects, which are providing employment and training opportunities for a much smaller capital investment. I think that it is fair to say that.

I understand that and I take your point, but I think that we should look at the positive as well as at what you may deem to be questionable. We should ask questions, but we must consider the timescales and procurement process, too. I just point that out.

By all means. We can make comparisons with some of the more positive stories.

11:15

Ms White makes an excellent point—that particular project highlights a very positive story. However, as the convener said, although we are highlighting those positive results and praising the Government for them, we have to ask why they are not replicated across all other projects. The Government may well have a valid answer, but it is up to us to ask for it.

The front page of the update says that recommendations have been made about the A9. The contract completion date remains the same, but the Government has brought forward the starting date by two years. Given that the distance between Inverness and Perth is a total of 110 miles, can we ask for some information on when the project is due to start?

I am sure that that can be done.

To return to the previous discussion, I do not think that it is right for us to pick out a number and ask why it is not higher or lower when we do not really know what stage the projects are at. It would be of best value for us, as a committee, to ask the Scottish Government to keep us updated on the numbers and figures in the column in annex A as they develop and progress. We could then pick up on them the next time we see the figures. Would it be better to say, for example, that the number of training places should be 90 instead of 45? Maybe 90 would still be terrible, or maybe it would be brilliant. I do not know. There is no value in the numbers at this stage.

The update says that the project will deliver 45 places every year. It is not 45 one year, 90 the next and 200 the year after that. I think that the question is legitimate.

I do not think that it is legitimate at all.

I disagree.

It seems to me that if we, as the performance audit committee, get an update on major capital projects we are entitled to ask questions about the performance demonstrated—whether in terms of delivery, cost and budget overrun or, indeed, local economic benefits.

I take the point that it is not legitimate to jump to the conclusion that something is wrong, but—in view of Sandra White’s point, which I think is correct—some of the projects are delivering greater numbers of employment and training opportunities for a smaller capital investment. If there is a disparity in performance, it is surely reasonable to ask for an explanation, albeit without jumping to the conclusion that something is wrong—I take Mr Coffey’s point on that.

My view is that we immediately jumped to the conclusion that something is wrong, which is why I am a bit uncomfortable.

The difficulty is that in some instances we are not comparing apples with apples. A bridge project is completely different from a hospital project: they involve different building schemes and engineering skills. Some projects also involve working in limited space.

I do not see anything wrong with what we have but, if the committee is minded to ask a few more questions, that is fine. We can say that a project with a smaller capital outlay is creating more jobs than another—that is fantastic—but engineering-wise they may be completely different. I suspect that we are looking at a situation where there are differences in strategy, and we cannot really say that one project will employ the same amount of people as another on a basis of proportionality.

That seems entirely fair, and it may be part of the explanation that is given. I think members were suggesting that we ask for clarification or a bit more detail.

It could be worded in such a way that we ask for more detail without saying, “This project is giving this, so why is that one not?”—I do not think that that would be a good way to word it. It could be worded in such a way that it might be acceptable.

That is true. We could ask the Government how it determines the figures that appear in the column, which gets us slightly back to Mr Coffey’s suggestion. Can you live with that kind of formulation?

Yes, as long as we do not start saying, “This is a paltry figure. Please explain.” We could couch it as Sandra White suggested and ask the Government to keep us updated on progress with the numbers for all the projects in that column. This is the first time that we have seen the figures and it is our first opportunity to get a handle on the issue. It is far too early to look at a number and go, “That’s not enough.” It is not appropriate for us to do that at this stage.

We are the Public Audit Committee and we are here to audit what the Government does—not just how it spends money and whether it spends it wisely but whether it provides the community benefit that Sandra White rightly welcomed. We should not be scared to ask the Government questions. We are sitting here saying, “Oh, we’d better write it in a way that’s acceptable.” We are elected members of Parliament: we are allowed to ask questions. If we are not allowed to do so in the Public Audit Committee, we can stand up in Parliament and ask them. We would not be doing our job properly if we did not ask for some clarity.

We are not saying, “Hey Government, you’ve got this wrong—can you put it right?” We are simply asking a reasonable question about clarity. Modern apprentices and youth unemployment are among the critical issues that Scotland has to deal with, and yet we are scared to ask why only 45 jobs are being provided in a £2 billion project. It is becoming a bit embarrassing, for goodness’ sake. Can we not just say, “Dear Alex, can you please clarify this?” I did not come on to any committee or get elected at my time of life to be scared to ask a question, or to sit and waste 10 minutes deciding whether a question was acceptable to the Government. I am sorry—that was a bit of an outburst. Can we just ask a simple question and do the job that we are elected to do?

If I had wanted a quick press release, I might have put on a rant like Mary Scanlon’s. However, I do not want to get into the politics of it. I said earlier, when I came on to the committee, that it is our job to scrutinise what the Government spends and how it spends it. I am absolutely clear about that—that is how I come at the issue.

This is about wording. Colin Keir and Iain Gray are right. There are differences in the contracts. As I pointed out, the Southern general hospital has been on stream since 2010, whereas this project is only just going on stream, so there is an obvious difference there. I am not saying this because it is Alex Salmond or anyone else in my Government—I would say the same to anyone.

There are various ways of skinning a cat, and we have to put the question properly. We cannot say, “This has only created 45 jobs”. That is not a question—it is an attack. We can word it as the convener suggested. It is great to have the figures here. It is the first time that I have seen them because I was not on the committee previously. We just need to ask about projections. We can word the question in such a way that we get further information without attacking people.

I think that we can word the question in that way—we are obliged to do so to meet the concerns of the committee. It is the only way that I can see to balance the concerns of those who would like to ask the question pointedly and those who would like perhaps to be more open-minded about the explanations for the figures.

It seems to me that there is little purpose in our getting a major capital projects update from the Scottish Government if we are not prepared to ask questions about what we see in it, whether that is a time delay, a budget overspend or a variation in performance when it comes to local benefits.

Unless the committee objects, I suggest that I take cognisance of everyone’s comments and write to the Government in a way that is not designed to be an attack. It will be a letter to the accountable officer—to an official, in any case, and not to a minister. I will ask the question in a way that I will try to make acceptable. The committee will see the letter afterwards and can take me to task. I will also ask about projects such as Inverness prison and the deputy convener’s question about the timing of the A9. Unless members feel strongly enough to stop me, I suggest that that is how we proceed.

I would want to see the letter before it is sent.

We can do that.

Mary Scanlon made a comment about whether the committee is critical of the Government. Over the years the committee has shown impartiality in that regard and has been very critical of the Government on a number of occasions. I know that Mary is new to the committee, but the point I would make to her is that we need to be in a position to be critical. We do not just look at a figure and immediately criticise it without knowing any information or background to it. Such information may lead to our being critical at some stage, but we are in no position to adopt that stance at the moment. The convener has quite correctly said that we should ask for more information to be drilled into that column. Rather than adopt a critical stance at the outset when we do not know anything about the situation, we will make our own determinations when the time is right.

I think that we have agreed that what we are doing is asking for more information. In response to Sandra White, I have also agreed that committee members will see the letter before it goes to the Government so that, if any member feels that it does not reflect the discussion in a balanced and appropriate way, they will have the chance to say so.

We will now move into private session.

11:26 Meeting continued in private until 12:28.