Forth Road Bridge Bill: Stage 1
Under agenda item 1 we will take evidence on the Forth Road Bridge Bill at stage 1 from Keith Brown, Minister for Transport and Veterans, and his officials: Susan Conroy, principal legal officer; Raymond Convill, bill team officer, Transport Scotland; and Graeme Porteous, head of special projects, Transport Scotland. I welcome you all and invite the minister to make some opening remarks.
I am grateful to the committee for the opportunity to discuss the Forth Road Bridge Bill, which paves the way for new arrangements on one of the most prestigious routes in the Scottish trunk road network.
We believe that the bill is an important piece in the jigsaw that is emerging at the Forth, which includes the new Forth crossing, the Fife integrated transport system, the dedicated public transport corridor on the existing road bridge and of course the twin-bridge strategy. It reflects a new set of realities: the presence of a wholly new road bridge; the ageing condition of the existing road bridge; new road layouts on either side of the bridges; and new traffic management arrangements.
In looking at what we propose, it is worth considering what the alternatives were. One option would have been to have two separate bridge operators. Our view is that in all likelihood that would have meant redundancy or at least uncertainty for Forth Estuary Transport Authority staff. It was also judged to be uneconomic—potential operating savings of £6 million on a five-year contract cannot readily be ignored.
The new arrangements require the associated procurement of an operating contract providing an efficient, cost-effective twin-bridge strategy for the Forth corridor.
We have new road orders and traffic management to replace existing arrangements. They will be developed with FETA, which will have an essential role as the existing operator. It has experienced staff who are highly regarded and who will have a major role in the future success of the arrangements. We also have the involvement of the traffic sections of the new police service of Scotland, the Forth crossing bridge constructors and Transport Scotland.
My stated requirement is for the new operating contract to meet, if not surpass, existing levels of service. The contractual commitments currently being developed will provide for that. We fully accept that the Forth road crossing and the Forth road bridge will be unique and demanding structures within the strategic road network. However, the operational challenges that are posed will be no less than those on our existing major network structures such as the Erskine and Kingston bridges and the busiest pressure points that we have on the network such as the Raith interchange and the Edinburgh city bypass, where, as things stand, operating companies already operate successfully.
I suspect that, by virtue of the operating company’s role in respect of such high-profile structures, the reputational risk involved will generate high standards. However, there will be advice and support—for instance, from Traffic Scotland’s new control centre, which will be right on the doorstep to help with the arrangements.
We note that the bill will impact on existing Forth Estuary Transport Authority staff and the local communities, and we appreciate that a well-respected employer will be dissolved under the proposals. Although councillors will not be involved in the management—which is the same anywhere else in the trunk road network—the public can still make representations to them, and the public and councillors can make representations to ministers.
Conversely, we welcome the securing of the pensions arrangement, which has been important to staff and to FETA in general. We are grateful to the Lothian Pension Fund for advice and on-going support in securing that commitment. We recognise that the Transfer of Undertakings (Protection of Employment) Regulations are not perfect, but they provide security for terms and conditions. Taken together, pensions and terms and conditions have been extremely important for staff.
Furthermore, safeguards for the staff and the communities will be stipulated in the contract through community benefit clauses and other requirements, most notably in the form of apprenticeships and training opportunities, ethical sourcing practices and regular community engagement. It is important that those arrangements are monitored through Transport Scotland’s performance audit group.
The project team has continued to meet the FETA management fortnightly and has put itself at the disposal of FETA staff who may wish to ask questions or raise concerns. Further meetings with local community council representatives north and south of the river are still taking place and updates on the bill, the operating company procurement and the Forth bridges forum are being provided.
The forum, which I initiated, provides for the interests of local communities, as it is at the core of the management and maintenance of the bridges. It can act as a valuable check if local community groups remain dissatisfied after engagement with any individual forum member on relevant matters.
I have to use the term “Forth replacement crossing” as we do not yet have a name for the bridge, but work on that is in progress. Incidentally, we have had around 8,000 suggested names, the most interesting of which is Kevin. The Forth replacement crossing contact and education centre was officially opened last month; it is an impressive facility and provides a unique focal point for education and on-going community engagement by the FRC project.
That is a quick overview, which I hope is helpful to the committee in outlining the context and beneficial impacts of the bill. I look forward to trying to answer any questions that you might have.
Thank you very much. Margaret McCulloch will start the questioning.
I will ask you a few questions about the liabilities for the M9 spur extension and the A90 upgrading contract. The City of Edinburgh Council initially raised concerns that it may remain liable for some compensation costs associated with the project following the dissolution of FETA. Councillor Lesley Hinds indicated in her evidence on 20 February that discussions between the CEC and Transport Scotland on that issue were on-going and that the council hoped for an amicable outcome.
Can you assure the City of Edinburgh Council that it will not be liable for any compensation costs relating to the M9 spur and A90 upgrade project following the dissolution of FETA?
I am aware of that discussion, which took place after I attended the committee last week. I made the situation plain in the committee meeting and to the City of Edinburgh Council. FETA currently has an obligation to the road that was previously constructed, and we are taking on all FETA’s obligations, so I do not see what the council’s continuing concern is.
However, we must ensure that proper procedures are followed. For example, if there is a claim and someone thinks, “Well, the Government stands behind this so we can be quite ambitious in our claim”, we will have to ensure that the proper procedures are followed, whether that involves district valuers taking valuations, or lands tribunal processes if necessary. However, we have said from the start that we would take on those obligations.
Discussions are on-going between us and FETA and between FETA and City of Edinburgh Council, but the council should take comfort from what I have said, as we have made plain before.
Can you expand a wee bit on how you intend to formalise the position?
The bill itself provides for us to take on all FETA’s obligations. FETA has a legal agreement with City of Edinburgh Council whereby it pays for any compensation claims, and some of the claims—the second half—are not due in until September this year. I do not know what else is required to formalise the position. We have said that we will take on the obligations and we have made that plain to the council.
A potential £4.4 million liability made its way into the public domain, but the City of Edinburgh Council does not expect it to be that much. Its estimate is about £93,000. Many claims come in, and everyone knows that they are always much higher than the amounts that are eventually settled. The City of Edinburgh Council and FETA previously agreed the provision and I do not see how there can be any continuing confusion. The claims are still to come in, but FETA will stand behind them and the Government stands behind FETA. Under the bill, FETA will be dissolved and we will take on all its obligations.
The City of Edinburgh Council has all the comfort that it needs. When Lesley Hinds was here last week, she mentioned that discussions are on-going between Transport Scotland and FETA, so they have that comfort.
09:45
You mentioned in your opening remarks that the TUPE regulations will apply. For the record, can you give an assurance that the terms and conditions of FETA staff, including their pension entitlements, will receive the fullest legal protection when they transfer to any new bridge operating company?
Yes. There will be the fullest legal protections under the TUPE provisions. That is a fairly standard procedure. For example, we ensured that it happened in relation to the ferry contracts. The pension arrangements are a bit different, and we have gone much further than the legal protection obliges us to go, by taking on the work that we have done with the Lothian Pension Fund. Staff terms and conditions are protected by TUPE, and the pensions are not enhanced but continuing along the lines that they were on previously. My understanding is that the outcome whereby we reached an agreement with the Lothian Pension Fund—the local government pension fund—is what the staff were seeking. We have been mindful of the uncertainty that has existed for staff, and we have provided the fullest protection that we can.
When your officials were here, they said that FETA could not bid to manage the Forth bridges due to procurement and state aid considerations, but in the 1990s local authorities did win road maintenance contracts. What legislation has been put in place since then that prevents a body such as FETA from making such a bid?
There are a number of points to be made on that. It is not so much legislation that prevents that but the stance of and the possibility of action by the European Commission if it believes that proper process has not been followed. FETA does not have the ability to demonstrate value for money in what it does. I think that Barry Colford said that when he was before the committee. There would have been substantial risk in awarding the contract to an organisation that is unable to demonstrate value for money and has not market tested its services. It is a question of the risk that would be attached to making an award of that nature.
It is important to recognise that FETA has no Scottish Government representation on its board and the Scottish Government has no direct influence on how it is run. In that regard, it would probably be regarded as a separate economic entity, but the European Commission has the final competence in what is and is not classified as state aid and in what state aid is permissible. Different considerations will apply.
It is a question of considering the likelihood of a challenge from the European Commission. As you will know, convener, not least in relation to ferries, we never know until it happens whether the European Commission will decide that it will take action, whether or not it is provoked into taking action by somebody making representations or a complaint. The risks of awarding a contract to an organisation that, for reasons to do with its formation, has not been able to demonstrate value for money in the way in which we need it to would simply have been too much for us.
The cost of allowing FETA to maintain both bridges has never been calculated because it was not presumed to have been an option. How can we be sure that we are getting best value for money if we do not know what the comparative figures are?
We can be sure of that by going through the tendering process, which, after all, is an effective way of getting value for money. Are you asking why we did not compare the cost of simply going with FETA with the outcome of a tendering process?
No one has ever calculated the cost of running the two bridges together under FETA. Is the fact that we do not know that comparative figure not a weakness in the overall process?
I think that it is but, as I pointed out, FETA could not produce that information for the existing bridge. As a result, it would be pretty hard for us to come up with a worked-out and credible figure for running the two bridges. Given that, in any case, the second bridge is something of an unknown quantity in that respect, we need to take it to the market and see what its experts think, while using—and giving a guarantee that we will use—FETA’s expertise. Everyone in the authority will continue to work and bring their expertise to bear, not just on the existing bridge but on the new one.
That approach gives us the best of both worlds: we use existing expertise and, at the same time, go to the market for the best possible and most efficient price.
It was indicated in previous oral evidence that FETA could not take responsibility for the new bridge without legislative change. What sort of change would have been required—primary legislation or simply some tinkering with regulation?
The option of delegating responsibility for the new bridge to FETA was identified and considered as one of three options, another of which I mentioned in my opening statement and all of which are set out in the policy memorandum. Legislation would be needed to expand FETA’s functions because it was set up exclusively to maintain the existing bridge. Although some consideration was given to the form that such legislation might take, we did not reach a concluded view on the matter and, in any case, the option was ruled out for other reasons, primarily the value for money factor that I mentioned earlier. We considered the option and, although we did not follow it through to the nth degree, we understood that FETA was set up for reasons particular to that bridge and that we would have had to change its constitution, which relates only to that bridge. We did not go into any more detail about the legislative changes that would have been required.
So you do not know whether primary legislation would have been required.
Legal experts will be able to answer that question better than I can, but I would imagine that, as FETA was established under primary legislation, primary legislation would be needed to change it. Perhaps we can get a legal view on the matter.
Susan Conroy (Scottish Government)
The 2002 order setting out FETA’s functions does not allow for it to manage and maintain a second bridge, but that could have been amended through primary legislation extending the order. Consideration was given to whether that could be achieved by other means but, as the minister has pointed out, no concluded view was reached on whether primary or secondary legislation would be sufficient.
Thank you.
Transport Scotland officials have indicated that the bridge maintenance contract is likely to be let for an initial five-year period, with possible extensions. However, FETA has expressed concern about the length of the contract and has recommended a minimum contract length of 10 years. Given Transport Scotland’s experience of maintaining other bridges, what is your view on the right length of such a contract?
Although we have said that the contract will run for five years, we have also made it clear that there could be extensions. Apart from anything else, a large number of companies in Scotland are interested in trunk roads maintenance contracts and having longer-term or very long-term contracts can exclude others who might have developed new processes or efficiencies that we might want to tap into. As a result, that length of contract is not necessarily a bad thing.
I think that I am right in saying that, by and large, the companies that bid for the contract will not have to make a large-scale investment, such as a ferry company would by investing in vessels. They would have to invest in plant and so on, but such companies would tend to have that in place anyway. The normal reason for having a longer contract is to allow bidders to invest over a longer period and get a return on their investment, but that does not apply to the same extent in this case.
Five years seems to be a good length for the contract, but we reserve the option to extend it, which could occur for a number of reasons. We have done that with the trunk roads contracts that we have already let. The best outcome is for the contract to run for five years and for us to give ourselves the option of extending it if we want to.
Are the contracts for the Kessock bridge and the Kingston bridge the normal length for which such a contract would run?
The Forth crossing situation is unique. There is no separate transport authority for the bridges that you mention; they are all part of Transport Scotland and the trunk road network.
That would be the usual length for a contract, although—as I said—we have extended the trunk roads contracts. We are about to move into the fourth generation of those contracts, and we are looking at similar lengths for them.
FETA was also concerned about the membership of international bridge associations. Do you intend that the new operator will maintain membership of those groups?
That is an interesting issue, and it is very important, especially to the bridgemaster, who gets a great deal from those associations. The issue will come to the fore later this year when FETA has a chance to welcome other members of the International Cable Supported Bridge Operators Association—that is a long title—to Edinburgh.
There could well be some added value in maintaining contact with the operators of similar bridges, and one option might be for membership to pass to Transport Scotland rather than to the Forth bridge operating company. I have asked officials to consider that issue further in consultation with FETA and, in particular, with Barry Colford.
Minister, you will be aware of the recent controversies over the insidious practice of blacklisting in the construction industry. We have also heard negative publicity around aggressive tax avoidance schemes that involve using payroll companies. Can you give an assurance that the bridge maintenance contract will not be awarded to a company that has been found to engage in employee blacklisting or that uses aggressive tax avoidance measures?
As you would expect, the Scottish Government deplores such behaviour. The contract that we intend to enter will contain provision for ethical sourcing practices, which is important. That will mean that freedom of association and the right to collective bargaining, which have been the source of some of the blacklisting allegations, will be respected.
The contract will guarantee that workers will have the right to join or form trade unions of their own choosing and to bargain collectively. The employer will be required to adopt an open attitude towards trade unions, and the contract will require that workers’ representatives are not discriminated against. Given that those issues have been the source of the blacklisting allegations, the contract will ensure that such practices do not happen. There are investigations and inquiries into those companies that have been accused of such practices, in which we are taking a keen interest.
And on the tax avoidance practices?
I am not sure of the full extent of the clause on ethical sourcing practices that will be in the contract—my officials might want to say more about tax avoidance.
Graham Porteous (Transport Scotland)
The contract will take the stance that companies that have not fulfilled their tax obligations may be barred from competing, but we will take advice from the Scottish Government legal department and from whichever policies are in place at the time.
Minister, you said in your opening statement that the reason that councillors were not involved in the new body was because there were no councillors involved in any similar bodies. However, the City of Edinburgh Council’s concern is that, although councillors are involved in FETA, the new Forth bridges forum will involve only officials.
Would you be prepared to consider the involvement of transport conveners from the affected local authority areas, or councillors with transport responsibilities, or possibly ward members from the affected community areas in order to enable community concerns to be raised directly?
10:00
I listened to the evidence that was given, but it was unclear to me what was being asked for. Would the council’s transport spokesperson or the local member be involved? Which councils would be represented? That was left very unclear in my mind.
I gave the matter some consideration, especially at the start of the process. Coming from a local authority background, I am always keen to see councillors have as much influence as possible. However, it would be unique if we had elected representatives at that level involved in looking after an operating contract that is wholly the responsibility of the Scottish ministers. That would be not dissimilar to asking for the Scottish ministers to be involved in a local roads management project. I think that that would be wrong, because there is a line of accountability about who is responsible for taking the decisions on the operating contract and who is responsible for the expenditure. That proposal would substantially muddy the waters.
However, we need local representation, because the bridges are in a unique situation. The two different communities on either side will be linked by three different bridges built in three different centuries. That is unique in Scotland, so I understand the point that has been made. For that reason, we have established the forum to deal with not only those issues that might arise after the bridge is completed, but those that might be raised by the community during the process of building the new bridge. It is important that we ensure that local community representatives have their say on the forum, but I do not think that that would be added to by putting in a level of elected member representation.
FETA was a completely different body from the forum that has been established. Transport Scotland and the Government will stand behind the contract, so there will be democratic accountability. We should not complicate that further by putting in elected representatives who would not be responsible for the spending decisions.
Can you say a few words about how local communities will be represented in the operation of the forum?
Sure. As you will know already, community councils and businesses are represented. Transport Scotland and the bridge operating companies go along to speak at the forum and I receive regular updates on issues that are raised there. Perhaps Graham Porteous can say more about that.
We have had several meetings with representatives from the north and south sides of the bridge. The forum provides people with ample opportunity to explain their concerns and how they would like us to take things forward. The contractor is required to meet community groups regularly, and one purpose of the forum is that, if community groups are unhappy with what the contractor is doing, they have the avenue of the forum to make representations on their behalf.
As there are no further questions on the Forth Road Bridge Bill, I thank all the witnesses for their evidence.
That concludes the committee’s evidence gathering at stage 1. We hope to consider a draft report on the bill at our meeting on 13 March.
10:03
Meeting suspended.
10:07
On resuming—