Performance Audits (Programme)
Item 4 is Audit Scotland’s forward programme of performance audits. I invite the Auditor General to speak to the paper that has been circulated.
Thank you, convener. I will invite Barbara Hurst to lead on this item, if that is agreeable to you, but I will first give you a brief introduction. We are about two thirds of the way through the current performance audit programme. We have committed ourselves to refreshing it and rolling it forward for the next couple of years. My colleagues at Audit Scotland and I are really committed to consulting widely on this. Ultimately, I have to take a decision as to what goes into the programme, but it is really important that we consult widely. We started that process with the Accounts Commission and stakeholders in local government.
We thought that it would be useful to give you an early indication of some of the themes and topics that are emerging. We would be happy to get your immediate reaction. We will be consulting on it more widely over the summer recess months, including inviting MSPs to offer comments. It is right that the Public Audit Committee, as the gatekeeper and principal committee of the Parliament with which we interact, is aware of the process and the general lines of thinking that are developing.
My only other comment is that we are clearly heading into an extremely serious period for public finances. We would like to keep a fair bit of flexibility in the programme, because none of us is entirely clear how the next few years will play out in Scotland’s public finances. We will need to develop that capacity.
The programme will almost certainly flex and change in some way as we move forward. We will endeavour to the best of our ability to have projects in the programme that help efficient service delivery in Scotland’s public services.
With that, I hand over to Barbara Hurst to take you through where our thinking has got to.
Barbara Hurst (Audit Scotland)
We believe that audit has a vital role to play in supporting the public sector in its difficult task of reducing its budgets. At the same time, we do not want to lose our focus on ensuring that services are effective and of a high quality. If they are not, they will not represent value for money.
We have agreed five themes with the Auditor General and the Accounts Commission, which will underpin the programme. I hope that they demonstrate that we are trying to strike a balance between budget constraints and a necessary focus on the services that matter to people in Scotland. The first of the five themes, which are outlined in the paper that you have received, is—for obvious reasons—managing reductions in budgets. The second is investment in services, which is about looking not just at major areas of spend, important though that is—we have the capital programme in our own programme of audits—but at areas where, for an investment up front, you could get significant savings over the longer term. We are thinking in particular of services for children and families. We have included the theme of partnership working, which I know that the committee is interested in. We have kept the theme of user focus, because we think that it is hugely important in delivering public services, and we have the theme of environmental auditing.
We have developed a long list of topics where we think that audit can add value. In doing that, we have used intelligence from a range of sources, including your own interests. It is fair to say that the challenge is not in identifying the topics but in reducing them to a manageable number and in ensuring that we address high-risk areas, balanced across the whole public sector.
Appendix 1 of our paper for the committee provides a summary of the work that is in our current programme, on which we will report to the committee up to the spring of next year. The second column in the table shows the proposed programme of work that will start in the year that starts next spring. The third column, under the heading “Rolling programme”, contains issues that we think are important and want to keep under review.
It is probably worth pointing out that two of the projects in the table are Accounts Commission for Scotland-only projects: physical recreation services, which is in the current programme; and charging for services, which is work that will start next year. All the other projects are either Auditor General or joint projects that will come to the committee.
To date, we have had a two-year programme. The Auditor General has said that we need to change that, because we need to build in flexibility to respond to emerging issues. I will try to explain the rolling programme idea, because it is new. We want to have an annual programme, to which we are committed, and a longer list of issues that we will bring forward for review against anything that emerges during the interim period. The approach will allow us to evaluate the items in the programme against emerging issues.
In practice, that means that we will have an annual programme that includes an indication of our longer-term thinking, rather than a fixed two-year programme. A few things in our current two-year programme were overtaken by events and we are keen for that not to happen again. The new system will be more challenging to manage, but if we can make it work it will potentially have more value.
As the Auditor General said, we will consult widely in summer, through a web-based survey and by going out and talking to people. We will consult all MSPs, the public sector, equalities groups, user groups and the voluntary sector.
I will stop there, because this is the committee’s opportunity to tell us what you think about our ideas and whether there is anything of great value that we should consider putting in the programme.
I add one comment, which is a pretty significant one, on the assumption of the level of resources that we will have to do the work. The programme will roll forward on the assumption that we will be taking efficiencies out of the budget in autumn. There was a recent discussion on that with the Scottish Commission for Public Audit, to which we will present our budget at the back end of the summer. Depending on the outcome of that meeting and the ultimate decision of the Parliament on the budget, it is clear that we will have to cut our coat according to whatever slack there is in the cloth that we are provided with—I wish I had not started that sentence.
I will refrain from commenting on it.
I do not want to go into specifics about the topics that you have suggested. The rolling programme is a sensible approach. Given the resource that is likely, to what extent do you expect Audit Scotland and the Accounts Commission to be fully committed? How much scope and time will there be to consider aspects of the rolling programme in addition to the current and proposed programmes for the next two years?
Our corporate plan commits us to eight to 12 performance audits per year. As you can see, we are up against that limit. We always have the ability to be flexible and push something further back if something important needs to be looked at—we are keen to explore that approach. Currently, we think that it would be valuable to consider all the issues in the rolling programme. We would re-evaluate them against any issues that came up, so there will be a constant process rather than one in which we commit ourselves to doing something in two years’ time.
That was rather a long-winded answer. We are committed to retaining flexibility. Of course we cannot do everything, but we want to be able to respond to issues as they emerge.
Are you saying that you would take on projects in the rolling programme at the expense of projects in the current and proposed programmes? I just want to be clear about that.
We would ensure that we evaluated the projects to ascertain whether they were of greater importance—I can give you an assurance on that.
Okay. Thank you.
10:45
The paper is excellent and everyone concerned should be congratulated on the strategic thinking in it, which is encouraging. I hope that I will be forgiven if I move on to one or two pet issues.
I would like work to be done on investment, and particularly on early intervention, on which not enough has been done. It is a bit of a nettle to grasp as far as public policy is concerned. It is difficult for people to accept that families—however important they are—might create some of the problems that we face in child care, and that early intervention might not only save money, but be better for the children in the long term. I hope that something can be done on that.
The audit of the gathering will presumably include the year of homecoming, which seems to have been a spectacular failure and a waste of money. I hope that that can be examined in more detail.
I welcome the proposed performance audit of the Edinburgh trams. We have an astonishing situation in which a local authority in total disarray is implementing the scheme, and MSPs of the same political persuasion as at least some of those who are running the local authority are sniping away in the background. There are apparently fights between the contractors and the people involved. It really is a mess, and yet it is potentially one of the most exciting projects that we are undertaking in terms of the environment and public transport.
I have suggested to the City of Edinburgh Council that it considers other sources of funding, such as European money and a range of other sources. It appears that those things have not been considered because the council has been so preoccupied with the day-to-day troubles. I hope that the audit will take account of that.
The programme does not include higher education, yet expenditure in that area seems to be out of control. I recently got some freedom of information data on the cost of the vice-chancellors, the principals and the heads. We are spending £2.5 million on paying huge inflated salaries—which are in most cases greater than the Prime Minister’s salary—to the heads of 13 institutions. We seem to be unable to bring that under control. What can we do to put pressure on the Scottish Further and Higher Education Funding Council, or whoever is responsible? How do we bring that area under the responsibility of the Auditor General and the Public Audit Committee so that we can challenge some of those things? The situation is outrageous.
At the University of Aberdeen, for instance, the former principal has been brought in as a consultant and is, I understand, being paid his old salary while the new principal is in post. I have been refused information about that, and I have had to go through the appeals process. It is astonishing that the top people in those institutions are being paid so much money, and that we have so little control over it.
I have made a few points there.
I will step up to the crease.
In relation to the year of homecoming and the gathering, the piece of work that I have asked Audit Scotland to do should be reported to the committee before the summer recess. It is on the gathering event, because there was a fair degree of concern in the Parliament, and more widely among the public, about some of the reported problems with that. It is a specific one-off audit that will examine how the programme was managed and what the results were.
The wider expenditure on the year of homecoming will be audited through the Scottish Government’s internal audit process in the normal way. Audit Scotland, as the external auditor, will not examine that area; we are simply not resourced to do so.
It is important to distinguish considering whether expenditure was properly incurred, what the benefits were and whether they were properly reported from considering how that fits in the overall policy context. I would not see us requiring to do a piece of work on the homecoming, unless concern—backed by evidence—was expressed to us that there was something improper in how the budget was managed. We have no evidence whatever of that and we have no role in the policy matters.
As the committee can imagine, we have received representations from time to time about the reported problems with the Edinburgh trams. The City of Edinburgh Council’s auditor is monitoring the situation as it goes along, but the project is live and involves significant contractual disputes, so intervening is not really appropriate for the audit process—we simply cannot go into that. That is why trams are listed in the right-hand column—under the “Rolling programme” heading—of our audit programme. Audit Scotland will judge when it might be appropriate to report on the trams.
It is right to say that the Auditor General has no locus or remit to audit HE institutions, which are in charge of their own activities and their own governance arrangements through their courts, so I cannot consider issues such as principals’ salaries. The Scottish Parliament put in place legislation whereby I might undertake value-for-money studies in higher education, but the understanding was that that would be an exception.
About three years ago, we did a major piece of work on the higher education estate, which will—to be frank—be an issue again in the future. Maintaining the estate of older universities and some of the estate that was created in the 1960s will be a challenge with tight public finances. I acknowledge that concern might be felt about matters such as governance in relation to principals’ salaries—on which I have no views, because I have no information. I venture to suggest that some issues might be even more significant in the medium term, such as the funding of HE and the estate that Scotland carries in the range of HE institutions. We have put nothing like that in the programme yet, but we need to keep the subject under review.
I appreciate those helpful answers. Perhaps we need to keep such issues under review. I know that the convener has some concern about higher and further education expenditure—perhaps we need to consider that separately.
As a member of the Scottish commission—the SCPA—what is it called again?
The Scottish Commission for Public Audit.
The Scottish Commission for Public Audit—I am a member of it but I forgot its name. As an SCPA member, I noted the Auditor General’s plea about his budget.
Higher and further education is relevant, but the Auditor General is right to say that some of the issues that have been raised go beyond his remit. Fundamental accountability questions are involved. Such institutions can spend substantial amounts of public money on a handful of people and not be held to account, other than by an internal court. All politicians and all political parties should examine that issue closely, but it is not immediately for the committee.
I echo what everyone else said—as always, the way in which Audit Scotland moves forward and develops issues is impressive. I am particularly interested in the user focus theme, which is extremely important.
I want to help my colleague George Foulkes with information on homecoming Scotland. He might not have seen the recently published figures that show that homecoming Scotland generated a £53.7 million increase in tourism revenue, which exceeded the £44 million target by 22 per cent, and an additional 95,000 visitors. Now that he has that information, perhaps he will stop calling it a disaster. It was announced yesterday that there will be another homecoming Scotland in 2014 and I am sure that we all want that to be as much of a success as the previous one was.
I do not think that there is any evidence of a link between the two things. We might well say that the level of the euro was a bigger factor in people holidaying in the United Kingdom. The visitors were mostly from England anyway.
An independent report was done on the matter. At some point, there probably needs to be an examination of both the quality and the content of that report to see whether it withstands scrutiny. That is not a job for the Public Audit Committee, but it might well be that other committees in the Parliament will want to look at that in more depth. I am sure that George Foulkes and others will talk to members of the appropriate committees.
Like everyone, I want to say how impressed I am by the programme that is outlined in the briefing. There is no hiding place for anybody in any area of public life in Scotland because it is such a wide-ranging programme. It is not as if it is all concentrated in one particular area.
I am interested in the rolling programme item on women in custody, which links strongly to the following item on young people leaving care. I am also on the Equal Opportunities Committee, which compiled a report on women offenders in Scotland and custody, so I am aware of the range of issues that are involved. To my mind, and I think that the Equal Opportunities Committee would agree, prisons are still being used a little as a dumping ground—although I know that the report does not actually state that—for people with mental health problems and suchlike. We also heard about the damage that is done to families when people are put in prison without due respect for the impact that that will have on children. That item is therefore particularly important.
The Edinburgh trams item will be interesting. Of course, some of us were not in favour of the project in the first place, but it is going ahead. It is the only project of its type that is running—it is running away with money, in spite of the fact that there is a tram on Princes Street that has not moved yet.
The range of issues that are covered points to the fact that the Auditor General and his team are on the ball in ensuring that areas in which public money is spent are audited correctly.
On the Edinburgh trams project, I return to your point, Mr Black, about looking at major projects and trying to ensure that, as they develop, there is value for money. The Forth crossing is clearly a controversial project. There are some who are in favour in principle, some who are against in principle, and others who support the principle but worry about the project’s ability to stay within budget. If it goes ahead, will you start to look at it at an early stage? What assurances can the Parliament have, through you, that there will be better financial controls on that project than there were with the Edinburgh trams project, the Scottish Parliament project, and indeed—reflecting on the work that you did previously—the Edinburgh airport rail link?
If the Forth crossing were to go ahead, it would clearly be such a significant project for the Scottish budget that my colleagues and I would need to think about what role we would play in monitoring it as it proceeded. Until we have more information about it, it is difficult for me to give a more precise answer, but it is certainly something that we will have to keep under review.
11:00
I am concerned that it is the type of project that can push a range of projects off the page. It is not just a big project—it has major implications for other aspects of Scottish infrastructure. If its management goes wrong, the whole country will pay not just financially but in the development of other services. It would be helpful if the project could be monitored.
My question touches on themes that the convener and others have mentioned. Do members recall the concerns that we expressed about various projects and project management approaches? We were keeping an eye on various methodologies for managing projects and keeping them under control. Will that be an on-going piece of work in the programme—as part of the work on major capital projects, for example?
The planned piece of work on the management of capital projects will look at all those issues. Our first report, in which the committee was interested, commented on and suggested improvements in project management. We will undertake an evaluation of the current state of play in the area.
It is encouraging to hear that. Inevitably, perhaps, contract disputes arise from time to time. Is it Audit Scotland’s business to look at such processes? We could mention the Edinburgh trams project in that context. Are there ways of resolving disputes that would save the public money? As we all know, ending up in court to resolve disputes is very expensive. Could other mechanisms, such as mediation, be deployed at an earlier stage to resolve disputes as they arise?
I will give a two-part answer. First, if a contract is going into dispute, the external auditor has no part to play in the process while it is live. That is the simple truth of the matter. Secondly, to minimise the risk of contract disputes arising, it is important to specify the project well and to have good project control in place at the outset. It is perfectly appropriate for audit to come in after the event to assess the quality of project specification and management throughout the course of the project. We did that for the Holyrood Parliament building project, which gave rise to disputes.
That is a really important message. Perhaps when project plans and so on are defined in future, there should be some kind of agreement to have mediation before the legal stage is reached, to reduce the ultimate expense to the public purse that inevitably arises from court proceedings. That is wise advice.
A few members have picked up Barbara Hurst’s point about user focus. I am always seeking to establish whether the public perceives that a public service has improved. Although your resources are quite tight, in much of your work it is crucial for you to have some engagement with the public. One of my favourite issues is police call management and whether the public thinks that the service is improving. I would expect a future report that you produced on the issue to include a statement on the extent to which the public in various police board areas thought that the service had improved.
I agree. We try to build in user focus as much as we can, as any service that people provide is being provided to someone. We have in house many skills relating to survey design and running focus groups. We will continue to take that approach, when we can.
I thank the Auditor General for his briefing.
11:04
Meeting continued in private until 11:05.