Infrastructure and Capital Investment Committee

Meeting date: Wednesday, January 16, 2013

Official Report 432KB pdf

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Forth Road Bridge Bill: Stage 1

The third item of business is our first evidence session on the Forth Road Bridge Bill. We are going to hear from the Scottish Government’s bill team. The aim is for the committee to seek clarification on the bill’s provisions and associated documents. I welcome the bill team, who are David Thomson, bill officer; Raymond Convill, bill team leader; Graham Porteous, head of special projects; and Susan Conroy, principal legal officer. I invite one of you to make some opening remarks.

Thank you for inviting us. I am head of special projects at Transport Scotland. Raymond Convill is the bill team leader, David Thomson is a supporting officer and Susan Conroy is a principal legal officer with the Scottish Government.

The Forth Road Bridge Bill was introduced on 11 December 2012, and supporting information was also published on that date, notably the policy memorandum, the explanatory notes, the financial memorandum and the delegated powers memorandum. A business and regulatory impact assessment and an equalities impact assessment have also been published. A full strategic environmental assessment was undertaken for the Forth crossing. As the bill will have a negligible impact on the local environment, we have not done an environmental assessment for that part of the bill. Transport Scotland will, however, specify in the contract documents the minimum requirements on the bridge operating company in relation to environmental responsibilities.

The bill is relatively short, and is in some ways technical, dealing as it does with trunking, maintenance, the organisational status of the Forth Estuary Transport Authority and the Transfer of Undertakings (Protection of Employment) Regulations. I can assure the committee, though, that ministers, the Scottish Government and Transport Scotland fully appreciate the impact that the changes will have on the lives of the FETA staff, who are drawn from the local communities and who work on the Forth road bridge, particularly as many of them have long years of service there. Any changes in respect of an employer, career progression and pension rights are very real and should not be underestimated.

The principal aim of the bill is to enable the most cost-effective and co-ordinated approach to the management and maintenance of the Forth replacement crossing and the Forth road bridge. The Scottish ministers believe that having a single contractor carrying out the management and maintenance of the two bridges and the adjacent connecting trunk roads will achieve cost efficiencies, and that holding a procurement competition is the only way to truly test the market to prove value for money.

The bill’s provisions will trunk the road over the Forth road bridge, transfer FETA’s assets and liabilities to the Scottish Government and dissolve FETA and transfer its employees to the new bridge operating company. In line with ministerial objectives from the outset, the bill paves the way for the procurement process to take place. It will protect all the FETA staff and retain their skills, knowledge and professionalism, as they are all greatly valued by the Scottish Government. As with the wider Scottish Government approach, there will be no redundancies. Subject to parliamentary approval, the bill’s commencement provides for the simultaneous dissolution of FETA and transfer of its employees.

To allow the management and maintenance arrangements to bed in and so that the new bridge operating company can become familiar with the Forth replacement crossing, commencement of the new bridge operating contract will be in advance of the opening of the new Forth replacement crossing.

I hope that those opening remarks are helpful. If the committee needs any other information, we will try to provide it.

Mr Porteous, you touched on some of the bill’s provisions, but can you outline what the key provisions are and why they are necessary?

The first key provision is to trunk the road over the Forth road bridge so that responsibility for it becomes the Scottish ministers’ as roads authority. The second provision is to ensure that all the assets that FETA currently owns, such as land, buildings and vehicles, transfer from FETA to Transport Scotland. That results in the bill’s third provision, which is dissolving FETA. There are also delegated powers that are transferred to us on bylaws and the transfer of the FETA employees.

I presume that the provisions are necessary because we need to co-ordinate between the new crossing and the Forth road bridge.

Yes. A maintenance company has to be in place to maintain the Forth replacement crossing. There will be a new bit of road and new sections of motorway at either side. In order to pave the way to get a procurement competition, we must trunk the road to take responsibility for it.

Perhaps there will be questions about that a wee bit later.

What consultation has Transport Scotland carried out on the proposals? Why has there been no formal public consultation exercise?

The bill’s provisions are tightly defined and technical rather than broad and conceptual but, as I mentioned, they affect individuals, which is important. Transport Scotland takes the view that continuous consultation with targeted stakeholders throughout the project—from policy development through the legislative process to the implementation of the policy during the dissolution of FETA—is more appropriate and inclusive than a one-off written exercise.

As the bill affects specific groups, the method and frequency of stakeholder engagement have been tailored to meet the specific needs of individual stakeholders. That was the purpose of our communication with the groups. For example, we have worked with FETA to identify the options for future maintenance and management, we have met FETA staff to discuss their concerns, and we have met community groups on the north and south sides of the river.

What were the main issues that were raised with you during that consultation? How did you respond to the concerns that were raised?

The main issues from the staff related to their pension provision. They totally accept that they are going to a new operating company. Their terms and conditions are protected, but their pension provision is not protected under the legislation. Under TUPE, a new company would have to provide a broadly similar pension arrangement, which obviously caused a bit of concern. We took that on board, discussed the matter with the Lothian Pension Fund and decided that the best option for the staff was to have their pensions stay where they are. That is why we will write it into the contract that the successful bridge contractor will apply for admitted body status. Essentially, that means that the staff’s pensions will remain unaffected and that they will stay with the same terms and length of service. Therefore, their pensions are, in effect, untouched.

I understand that the Scottish ministers are acting as a guarantor for that admittance to the Lothian Pension Fund. That is an additional commitment that was made to address the staff’s concerns.

When we met the community councils, they understood what we were trying to do. They were particularly excited about having clear lines of communication and how we would deal with that. Obviously, we were able to explain that the Forth bridges forum is part of that process.

The community councils were excited about the potential for an improved visitor centre. As things stand, there is very little for visitors to do at the bridge, and there is a huge opportunity for something to happen there.

There was very little from bridge users. The bill will not affect them as such.

Another feature was the timing. It was important to try to establish the arrangements quite early on so that people would know where they would be in years to come.

You have touched on staff issues. You said that staff will be transferred under TUPE and that pensions have been safeguarded. How many staff are affected by that?

Seventy-two.

I understand that there are safeguards for the short term when the transfer takes place, but are there any safeguards for people’s pay and terms and conditions in the longer term?

11:15

Yes and no. Nobody is guaranteed a job for life these days—that is an accepted fact. However, the company that takes over the responsibility for the bridge has a duty to employ the staff who are there at that time. That contract will have a set life, which will be a specific period with a series of add-ons envisaged at the end. For example, our typical maintenance contract will have a five-year duration with a series of add-ons at the end—perhaps two plus two plus one, which takes it to somewhere around 10 years.

At the end of that period, staff who are employed on that contract would be entitled to transfer to the next company under the Transfer of Undertakings (Protection of Employment) Regulations, which will safeguard their jobs. At that point, we will ensure that something happens with the pension of anyone who is a member of the FETA staff now and who is still employed by the bridge operating company. The idea is that, in however many years’ time, we will write a provision into the subsequent contract that will protect the pensions of the people who are currently FETA employees.

Over time, there will obviously be a churn of employees as people retire or move into other employment. Will new staff be employed with the same terms and conditions as existing FETA staff, or will those terms and conditions be up to the new operating company?

They will be up to the new company. Nobody else will be admitted to the Lothian Pension Fund, other than the existing FETA staff.

As we have explained to the staff, there is a possibility that the company that takes over could offer to buy out their terms and conditions, which is a standard practice. They could be offered a cash enhancement to transfer from FETA into the new company’s pension fund.

That is really what I was getting at when I asked my first question.

Graham Porteous mentioned a figure of 72 staff. That is for the current staff, but there are also existing pensioners—I have a figure of 60 for current active members. There are those 60 people, then there are the 72 who have been mentioned and then other people who are previous employees. I think that I am right in saying that, if the contract is re-tendered in the future, the condition that means that those people will continue to be part of the Lothian Pension Fund will continue as well.

The bill transfers ownership of FETA’s assets to the Scottish ministers. Is it feasible that some of those assets might be further transferred to, say, a private sector bridge operator?

No. The intention is that we will retain ownership of the land. There is no point in our holding on to disposable plant such as lorries that are getting to the end of their lives, but the fixed assets—land and property—will stay with us.

FETA has responsibilities other than the management of the bridge. In 2002, the Scottish Executive said that it could fund public transport alternatives, road works, traffic management measures and other schemes. How will those issues be dealt with following the dissolution of FETA?

The responsibility for that sort of thing would fall to Transport Scotland.

Last week, someone raised with me the sad issue of people committing suicide from the Forth bridge. What sort of safety precautions will be implemented—on the old bridge and the new bridge—to prevent suicides?

There is no pedestrian access to the new bridge, because it is a motorway, so there will not be the same sort of problems with people going for a walk and jumping off the bridge.

The set-up on the existing bridge will not change as a result of the bridge operating company taking over. The intention is that the control room staff who monitor the bridge for things such as potential suicides will still do the same job, albeit for a new employer.

How does Transport Scotland intend to develop, let and manage the contract for the management of the Forth road bridge and the Forth replacement crossing?

The contract will be based on the existing fourth generation contract, which is for the current maintenance and operation of the trunk road network. We have been through several iterations of that and are now on version 4. The contract has recently been let for the west coast, and we will use that for our base document, while taking on board any lessons that have been learned and any observations.

Transport Scotland is fairly experienced at tendering contracts. I will be responsible for the tendering of the contract. As I say, we are basing the contract document on the 4G contract. Although that will take care of the roads on either side of the crossing, and although we maintain other bridges, such as the Erskine, Kessock and Kingston bridges, we will base the Forth replacement crossing part of the document on information that is provided by the Forth Crossing Bridge Constructors and the Forth road bridge section will be based on information that is supplied by FETA staff.

We have employed Halcrow as our development engineer to develop the document; it has done 4G contracts before, and it is working closely with FETA staff to gather together an operating and maintenance manual so that it can all be put into the contract.

So you are at a fairly advanced stage in the preliminaries of putting the contract together.

We are getting there. I have a deadline, as I have to be ready to go to tender by June.

But there is nothing particularly novel in what you are doing.

No. It is all fairly straightforward.

Thank you.

Paragraph 22 of the policy memorandum highlights FETA’s view that

“it is important that some local accountability is retained in light of the impact of bridge works on the local communities.”

How are relations between any new bridge operator and the local community likely to be managed?

We will write it into the contract that the contractor will have a duty to consult local people and hold regular meetings. Engaging with local communities is important, so we have to do that with all our contracts. In this case, there is a local community adjacent to the project, but we do that with all our contracts.

We are working hand in hand with FETA to see what it does at this point in time. Whatever that is, similar provision will be written into the contract. For example, if FETA meets with a particular community council every month, we will replicate that in the contract so that the new contractor has to continue to do that.

To ensure that the contractor liaises with the community, the contract will include other provisions on issues such as community initiatives. For example, the current 4G contracts contain a provision that the contractor has to undertake a minimum number of community initiatives in any year. The contractor must also engage with the community through projects with schools and colleges—it will have to do something like four such projects a year—and a development opportunity has to be provided.

We will have the Forth bridges forum, which is a separate entity that has already been set up. It will engage with local communities to make sure that the contractor does what it has to do. There is also an audit function. The PAG—performance audit group—will audit the bridge operating company, which it does for all our contracts. For example, if there are supposed to be four community engagements, we and the PAG will check that they are being done. We will not wait until the end of the year to ask whether there have been four engagements or whether the operator has met the community councils; checks are done monthly. At the end of month 3, if there should have been a meeting with the community council and it has not happened, we will make sure that that is rectified.

There are formal terms of reference for the forum, which we can pass to the committee if you require it.

I want to go back to the procurement process. In the procurement requirements, will you take community value into account? Will there be a requirement to employ people who have been unemployed and who have the necessary skills to do the work that you are procuring? Will there be a requirement to take on apprentices?

I appreciate the reason for the question. There will be a specific stage in the procurement process at which we ask the contractor what he is going to do, but we will have already written into the contract a minimum requirement that he will have to meet. Transport Scotland has a fairly good record—in fact, I think it is an excellent record—of ensuring that local people and apprentices get jobs. For example, in the recently completed M74 project—although it was a construction contract rather than a maintenance one—900 people were employed at the height of construction, over 70 per cent of whom were from the Glasgow postcode. Also, 15 apprentices were employed as a result of the project. All the contracts that Transport Scotland issues have similar provisions. The contract for the Forth replacement crossing has them—I do not know the facts and figures on that, but they are reported on monthly.

We will write it into the Forth road bridge contract that any vacancies that arise will have to be advertised in local job centres. The 4G contract has a provision that 10 per cent of all new recruits must get an apprenticeship or training. For example, we will specify a certain minimum that must be achieved for an annual spend of £10 million. Obviously, it is impossible to say that new people have to be employed year on year because, if the existing people do not leave, there will be no vacancies. However, we will say that either two new recruits or two existing staff members—these numbers are examples—will be trained up to Scottish vocational qualification level 2, and one new member of staff or an existing member of staff will receive professional training. Also, we will say that three work experience places must be provided per annum per £10 million-worth of spend. We will look to see whether any of the tendering companies can better that, but we will put that in as a minimum requirement.

That is excellent. Thank you.

What assessment has been made of the potential impact of the bill on users of the Forth road bridge? I am thinking particularly of cyclists, pedestrians and those who use public transport, given the bridge’s future and continuing use as a public and active travel corridor.

There should be no change for users of the bridge. As a result of the bill, they will see nothing new, because things will stay exactly as they are until the new Forth replacement crossing opens. All that will happen is that there will be a different management contractor, which should do exactly the same as happens at present.

When the Forth replacement crossing opens, the traffic on the existing Forth road bridge will reduce—it will be buses, taxis, cyclists and pedestrians. The biggest concern that has been raised is about how we will continue to ensure that cyclists and pedestrians get across in windy or foul weather. There will be no change to that. As things are, in winds above a certain speed—it is either 40 or 50 miles an hour—people are not allowed to walk or cycle over the bridge, so FETA gathers cyclists and pedestrians at one side and organises a vehicle to take them over. It is not a regular service, but if there are three or four people, FETA takes them over. We will replicate that as a condition in the contract. That will be in the bridge operation and maintenance manual, which will be part of the conditions under which the new company will have to operate.

That reassurance is most welcome.

I understand that Transport Scotland and FETA considered three possible options for the future management of the two bridges. Option 1 was:

“FETA continues to manage and maintain the Forth Road Bridge while the Scottish Government appoints a separate company to manage and maintain the Forth Replacement Crossing”.

Option 2 was:

“A single company is appointed to manage and maintain the Forth Replacement Crossing and the Forth Road Bridge”.

The third option was:

“Responsibility for managing and maintaining the new Forth Replacement Crossing is delegated by the Scottish Government to FETA, in addition to their responsibility for the Forth Road Bridge.”

Why did ministers choose the option that is presented in the bill—that is, option 2?

11:30

That option was considered the most cost-effective way of being able to ensure that both bridges were maintained and to prove value for money. The various other options that were examined were discounted because they could not happen.

It would be more expensive to have two separate companies operating the contract because there would be operation and maintenance costs for two companies when one could do it. It is obviously more efficient to have one company doing both.

If we left a new company covering the new bridge and FETA covering the existing bridge, FETA would not need as many staff as it currently has, because there would be far less work for it to do. For example, many of its staff are involved in nightly traffic management. Every night, there are cones out on the Forth road bridge because there is work to be done on it. After the new bridge opens, that will not happen, because there will be much less traffic, so the traffic management staff will not be needed. If we went for two separate companies, there would be redundancies at FETA.

FETA could not tender to do both bridges because it is a fully funded Government organisation and, if it used Government funds to tender for the contract, that would constitute state aid and we would be breaching procurement rules.

Therefore, the decision was reached that by far the best option—which FETA supports—is to go for one company looking after both bridges.

The final business and regulatory impact assessment of the bill’s proposals confirms that the cost that is associated with option 3—FETA taking responsibility for both bridges—was not assessed. You have given the reasons why. However, given that, how can the committee be sure that the proposals in the bill represent the best value for money?

The result of the procurement competition will offer that certainty, because the competitor whose bid wins based on quality and price will be awarded the contract. Therefore, we will be able to prove that we are getting the most cost-effective bid.

I will ask a quick question about how we safeguard the standards of maintenance on the bridges. You mentioned the PAG report on the analysis of standards of work. The latest was from 2011-12. On electrical safety, which is covered by the BS7671 certification, it says that BEAR Scotland’s performance in the north-east has “dipped to fair”, with some

“non compliance with BS7671 for M90 Friarton Bridge”

identified. The report also states that BEAR’s performance in the south-east has “dipped to fair”, with

“no BS7671 certification ... available for ... Kincardine Bridge”;

that Scotland TranServ’s performance in the north-west has “dipped to fair”; and that Amey’s performance in the south-west has “dipped to fair”, with

“no BS7671 certification ... available for … Erskine Bridge”.

That certification is important for electrical assets, and all the performance units so far have “dipped to fair”. How do we stop that happening on the Forth bridges?

I am not an expert on the operation of the maintenance contract but, based on previous experience, I think that BEAR will have been taken to task behind the scenes for that. It might be expected that one report could show a dip in performance, but I would certainly not expect the next one to show a dip. If that happens, discussions will take place at a fairly high level. I certainly would not expect to see a second such report.

Will there be penalty clauses in the contract so that, if performance dips, penalties will be imposed on the company?

Personally, I do not like the penalties approach. There will certainly be a mechanism whereby the company does not get money, but it can be dangerous to penalise people by taking money off them. I understand the concept that you are getting at, but what will happen is that the operator will not get paid for something rather than be required to pay back money for not having done something.

Are there any further questions?

On the issue of best value, you have said that option 2 represents best value for the taxpayer. However, if I heard your previous answers correctly, it seems that, because of the state procurement rules that apply, option 3 has not been tested, so we do not know whether option 3 would be more cost effective than option 2. Is that a fair assessment?

Let me just remind myself what option 3 was.

Under option 3, FETA would continue to have responsibility for the Forth road bridge in addition to its existing responsibilities.

No, option 3 is that FETA would take on responsibility for the Forth replacement crossing.

FETA could not take on responsibility for the new bridge without legislative change. At the moment, FETA reports to the FETA board, which is made up of several councillors. We would have an odd situation whereby Transport Scotland was responsible for the road but FETA was responsible, under a different reporting regime, for the existing Forth road bridge with a section of trunk road that was motorway.

Another difficulty is that, although FETA has some great guys who are experienced at what they do with the existing bridge, the new bridge will have a totally different type of structure that they do not have experience of. The new bridge will not be all steel in the way that the existing bridge is, so other skills would need to be brought on board.

There may well be sound reasons why the Government has chosen option 2, which may well be the most cost-effective option. However, what I am seeking to understand from you is whether option 3 has been tested for cost effectiveness or whether it has been excluded because of the state procurement rules that apply.

I will need to come back to you with a written answer on that, as I do not know the answer off the top of my head and I cannot read through all the notes just now. I was not involved in the process. I will come back to you with a written answer on that, if that is acceptable.

That would be helpful. Thank you.

If there are no further questions, I thank our witnesses very much for coming. I will suspend the meeting briefly to allow the witnesses to leave the room.

11:38 Meeting suspended.

11:39 On resuming—