Enterprise and Culture Committee, 03 Oct 2006

Meeting date: Tuesday, October 3, 2006

Official Report 244KB pdf

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Budget Process 2007-08

As it is now nearly 3 minutes past 2, I welcome everybody to the Enterprise and Culture Committee's 23rd meeting of 2006. I have received three apologies: Michael Matheson and Murdo Fraser are unable to join us; Susan Deacon will be late. I ask everybody to switch off their mobile phones.

Item 1 is stage 2 of the budget process 2007-08. The committee is to consider its approach to the scrutiny of the Scottish Executive's budget for 2007-08. A paper on the matter has been circulated. I do not think that there is any need for a big discussion on it. If committee members have nothing to say, are they happy to agree the proposed actions in paragraphs 6 and 7?

Members indicated agreement.

Item 2 is evidence taking on the budget process. We have two panels of witnesses, the first of which consists of representatives from Historic Scotland. I welcome to the committee—for the first time on the budget, I think—John Graham, who is the chief executive, and Laura Petrie, who is the director of finance. A submission from Historic Scotland has been circulated, but I give the witnesses the opportunity to make some introductory remarks before we ask questions.

I apologise for the glitches in the first version of our figures, which caused us to circulate a revision. I hope that that has not inconvenienced the committee.

Like the other bodies in the Executive, we are at the moment operating within the overall budgets that the Executive set in the 2004 spending review. In the wake of those decisions, we put together a corporate plan for Historic Scotland that covers the three years covered by the spending review—it extends through to the spring of 2008. We continue to operate broadly within that corporate plan: as time has moved on, we have moved resources around to some extent, but the broad policies that are set out in the plan are still the ones that we are pursuing.

We have not yet set our detailed budget for next year—the process inside the agency for determining detailed allocations is just about to start—but the main issue that we face in thinking about next year's budget is that our income last year was below the projections in the corporate plan, the income for this year seems likely to be below the projections in the corporate plan and we have to assume that our income next year will be lower than that envisaged in the corporate plan. We are likely to assume an income about £500,000 lower than that projected in the corporate plan.

What is the projected income for last year, this year and next year?

The corporate plan figures are £22.35 million in 2005-06, £23.26 million in 2006-07 and £24.36 million in 2007-08.

What are the actual figures?

In 2005-06, income was £21.606 million.

What is your estimate for this year's outturn?

We are in the process of forecasting for this year because we have just had the end of the high season. We are looking at between £22.5 million and £23 million.

What is the reason for income being lower than projected in all three years? I must say that the shortfall is fairly modest by the standards of some other agencies with which we have been dealing recently.

We would love to know the full answer to that question, but one factor that was at work last year was the G8 summit. We are dependent on the income from Edinburgh Castle and Stirling Castle, which are our two leading properties. They were both mixed up in the G8 summit and we lost a significant number of visitors in July, which is one of the peak months. However, we were behind budget for the first quarter of 2005-06, so we were behind budget even before the G8 summit. We did rather better in the second half of the year.

We are devoting a fair amount of effort to trying to understand the situation, but it is not easy. Up to 2005-06, we had had a run of quite strong growth in income, partly on the back of raising prices at our monuments on the back of improvements to the facilities. We have seen some evidence that we are beginning to encounter a bit of price resistance at the leading properties, so we have been rather more cautious in increasing admission prices.

There is also a lot of competition and new attractions open. For example, Concorde opened at East Fortune last year and got a huge number of visitors. We have no means of knowing whether those visitors would otherwise have come to one of our properties, but it is a crowded marketplace.

We have research going on at the moment to test out visitors' perceptions of the value for money they get at our properties. We are also considering visitors who arrive at the gate and turn away for whatever reason. We are comfortable about the quality of what we are offering. The feedback that we get from visitors and the mystery visit programme that we run to keep testing our quality continue to give strong results saying that people think that what we offer is high quality.

Is there a problem with the marketing? You say that there might be some resistance to the prices, so have you considered the possibility of doing a Ryanair: dropping your prices dramatically, thereby getting far bigger throughput and much greater income?

We have not considered that at the moment, but it is one of the ideas that we intend to consider in future. A big project is about to start that will completely change the admission and ticketing arrangements at Edinburgh Castle. It will make it easier for people to book online and take the unsightly portakabin off the esplanade and put a state of the art ticketing facility just inside the gatehouse. The project will allow us to vary the admission price—to offer cheaper admission after 4 o'clock or in the winter, for example.

Last winter, we ran an offer with City of Edinburgh Council: the council's CityCard contained a voucher that gave families free admission to the castle during the winter. It was modestly successful, although it could probably have been promoted more vigorously by us and by the council. We put our toe in the water—we want to develop that kind of thing.

The other side of the accounts is the cost structure. Given your lower income, have you taken measures to reduce your costs accordingly? The Scottish Parliament information centre briefing states:

"The total management and administration costs of Historic Scotland are estimated to increase in 2007-08 by £565,000 or 8.0% on the year before."

Given the pressure from the Scottish Executive to increase efficiency, can you explain why you are boosting your management costs by 8 per cent?

I will let Laura Petrie comment on the details of the figures first.

Some of this is about the presentation of the figures. In 2005-06, the figures are actual, so the costs are spread across all the objectives. For 2006-07 and in 2007-08, I hold pay costs centrally, which is the reason for the increase between 2005-06 and 2006-07 and between 2006-07 and 2007-08. I am just starting pay negotiations, so I have not attempted to split the costs across the objectives because I do not know yet how they will fall. It is not a case of our increasing substantially our administration costs. At the moment, I am holding those costs centrally.

So, if you were comparing apples with apples, instead of apples with oranges, what would be the percentage increase?

Very small. I cannot strip it out straight away, but I would say that the figures would be reasonably level across all three years.

So the figure would be 0 to 1 per cent?

I would be guessing. Can I come back and advise you on that?

Yes. I would appreciate that.

Are there opportunities for efficiency savings through co-ordinated working with other agencies? I am thinking of your relationship with the National Trust for Scotland and—John Graham will not be surprised to hear me say this—Historic Houses Association? Might closer co-operation lead to efficiency savings and benefits all round?

We do a lot of work with the National Trust for Scotland and have started to work more closely with the Historic Houses Association, which represents most of the leading operators of private historical environment attractions in Scotland. We have set up a new group, called the historic properties group, that meets once a quarter. It comprises senior teams from the National Trust for Scotland, Historic Scotland and the HHA. So far, the focus of the discussions has been on sharing understanding, marketing information and expertise. We are interested in the scope for collaboration that will reduce costs.

Our relationship with the NTS goes further back and, so far, has been mainly about sharing opportunities to increase income, rather than to reduce costs. We have a joint ticketing arrangement with the NTS for Culloden and Fort George—two properties that are closely linked geographically and historically—and we are considering the possibility of making other such arrangements. We make joint training arrangements and share technical expertise, because the NTS has some technical expertise that we do not have and vice versa.

Let us be honest: all that is quite small scale. I do not see scope for drastic cost savings by collaborating with the NTS as long as we remain separate organisations with a completely separate basis and as long as we want to maintain our own identity and do our own marketing. We both collaborate with VisitScotland on the wider marketing of Scotland overseas, but the National Trust for Scotland has a distinctive brand and set of properties that, by and large, do not overlap with ours. We are in the same position. The point is that trying to open up any real possibility of big savings would require significant organisational upheaval.

I seek more clarification on administration costs. You said that the percentage increase looks high only because the costs are held centrally, but regardless of whether they are held centrally or apportioned out, they remain the same.

Laura Petrie's point is about the way in which the figures are presented. She effectively holds the provision for pay increases across the agency in the budget for this year and next. As the outturn of the past year affects pay increases across the agency, the numbers are out in the agency's various units. In the figures for this year and next, however, the costs are still held in the central provision in her budget, so one is not comparing like with like.

But they are still administration costs, regardless of whether they are out in the units.

No. This is the pay for all agency staff, including craftsmen, stewards on the sites and so on. The figure is an artificial inflation of the central administration costs.

I am sorry; I am a bit slow on the uptake.

You propose to increase funding for objective 2, which relates to the management of

"historic buildings, conservation areas, voluntary organisations to achieve the agency's aims",

by just over £1 million. What leverage will that generate? Am I wrong to assume that that will assist other organisations?

No, you are right. Many projects that we support through that budget have numerous funders. For example, some of them we fund in partnership with the Heritage Lottery Fund while others we fund in partnership with councils. There is a lot of leverage in that budget. Indeed, I believe that there used to be a target with regard to leverage.

That is correct.

What percentage of leverage do you look for?

In 2005-06, the leverage rate was 4.3.

Do you have any plans to increase that figure? Indeed, is that possible?

We last measured the target in that way in 2005-06. Of course, with the establishment of city heritage trusts, the method of measurement will change, and we will have to see how that will develop over 2006-07. Because we have changed the grant scheme, the various leverage rates will change.

I hope that the committee will forgive me, but I should have declared a relevant interest as a trustee of Fife Historic Buildings Trust. I am particularly interested in finding out what you hope to get out of that investment with regard to the preservation of the historic built environment. Moreover, does the Executive have any input into the overall aims and objectives in your corporate plan?

The agency's aims and purposes are set out in the basic framework document, which is a kind of contract between me, the minister and the head of the Education Department. The document has been around in some form or other since the agency was established 15 years ago and, when it was revised in the autumn of 2004, we, the then minister and the head of the Education Department discussed precisely how the aims should be framed.

So the establishment of those aims was the product of a dialogue between you and the Executive?

Yes.

You said earlier that, in some cases, income has not come up to expectations, despite all the work that you have done. You also mentioned a number of smaller initiatives. Have you put any resources into a programme of initiatives to boost income?

We are strengthening our visitor service and business development team to strengthen its ability to do market research and plan business activity at our various sites. A fact that I did not mention when I was talking earlier about income is that sales in the shops have been consistently behind our targets. The spend per visitor in our shops is tending to drift down. There are many problems elsewhere in the retail sector, but we are in the midst of a big review of our retailing operation, with the aim of sharpening its performance. We are considering issues such as whether we carry too many lines in the shops, whether we have too many small shops and whether the overheads of some cover the income that we get.

My final question is related somewhat to our next panel of witnesses. I note from the National Library of Scotland's budget that the NLS has increased sales in its shop, although that might be from a relatively low base. Many of Historic Scotland's properties have manuscript and library collections. What discussions, if any, are you having with, for example, the National Library of Scotland or the National Museums of Scotland to consider what relationship there is between Historic Scotland's activities and theirs?

We do not have many properties with collections that are of interest to the National Library. We have more properties with collections that are of interest to the National Museums of Scotland. We have an important collaboration with the National Galleries of Scotland up at Duff House, which it runs as an outstation, while we look after the building. In day-to-day operational work, we have strong links, first, with the National Museums of Scotland, secondly, with the National Galleries of Scotland and, lastly, with the National Library of Scotland. We have a big relationship with the National Museums on the archaeological side on what happens to archaeological finds. That is probably our main, day-to-day business with the National Museums.

I was interested to hear you say that you are finding a wee bit of customer resistance to the raising of prices. Generating income is extremely valuable and it increases efficiency. Is there a mechanism whereby you have volunteer community groups involved in supporting or helping to maintain some buildings? The National Trust for Scotland has such a mechanism, but I am not aware of one in Historic Scotland.

We do not rely on volunteers to anything like the extent to which the National Trust does. That is essentially because most National Trust houses have collections and furniture in them, so staff are needed to keep an eye on the houses when they are open to the public. Most of our properties are open to the sky and do not have anything that anybody can steal, within reason, so we do not have the same operational need for a large number of staff. Many of our staffed sites have only one person there at any one time.

However, we do work with volunteers at a number of our properties. Dundonald Castle in Ayrshire is, in effect, managed for us by a group of local volunteers who run the admissions and the shop and guide people round the monument. We have a partnership at Callanish in the Western Isles, where the visitor centre is run by a local trust, although we look after the actual monument. We have that kind of relationship with a local group of volunteers at one or two other properties.

I was thinking more in terms of the craftsman side of things, where there is more of a physical, hands-on approach to looking after properties. I was interested to see the work that you have been doing with the skills sector in developing skills. That seems vital work to me, because we are losing those kinds of skills. I just wondered how that work is developing and how much emphasis you are putting on it.

We are putting a lot of emphasis on it. Most of the opportunities we offer for people to get practical experience come through our grants programme. Offering practical experience is now one of the criteria in our grants programme, which is a competitive process.

One criterion is how the project for which the applicant wants money from Historic Scotland will help training and development of skills. Many of the projects that we have funded recently have included the aim of giving people the opportunity to work on a historic building and acquire skills. We also run our own small training school, in Elgin, for stonemasons. We set it up five or so years ago because we were having such difficulty recruiting for our needs, although it now supplies a wider need in the Highlands as well.

I will probe a little more on income and expenditure. For some reason, we do not have your income figures. Perhaps you could send us those figures for the three-year period as well.

Yes.

I have two questions about income. What is your income? What is the breakdown between income raised through grant in aid from the Executive and that raised through your charging policy?

It also strikes me that although there is an outturn or a projection of declining income for three years, you project a 6.3 per cent increase in spend next year. Are you living within your means?

Can I pick you up on the last point? I did not say that income was going down; I said that it was falling short of the projections in the corporate plan. So far this year, it is up 6 per cent on last year, but it is below the possibly ambitious targets that we set for ourselves.

So costs are rising by roughly the same percentage as income.

That is not an easy question to answer. There are two important chunks of our budget that need to be mentioned. One is the grants budget. We cannot talk meaningfully about costs rising within that budget.

Within what budget?

Within the grants budget.

The other chunk is the projects that we undertake on our own estate. One reason why we have been able to live with the income shortfall during the past two years is that planning for our two big projects has taken longer than we thought. At the time of the corporate plan, we thought that we would have started the Edinburgh Castle project by now, but the project has grown as we have worked on it—we have convinced ourselves that it needs to be a bigger project, to do more than just provide a physical facility, and to address the ticketing operation.

The other project—the refurbishing and re-presentation of the palace block at Stirling Castle, which is a much bigger and more ambitious project—was held up for several months because asbestos left behind by the Army was discovered under the floor during preparatory work. The planning of that project has also taken longer than expected.

What is the split between the money that you get from the Executive and the money that you raise yourselves?

Our finance from the Executive in the current year comes to £44.4 million, while the projected income for this year is £23 million.

Basically, two thirds to one third are the rough and ready proportions that I would quote.

Do you think that you could increase the proportion of revenue that you raise and save the taxpayer a wee bit of money?

Clearly that is one of our objectives, and we have a conversation each year with the minister about what income targets should be set in the forthcoming year. We will have that discussion with the minister and the process of setting targets for next year.

Has the one third changed at all in the past few years? Has it gone up or down?

Compared with a decade ago, we are covering more of our costs from our income. Over the past two or three years, the level has, I believe, remained flat. Is that right, Laura?

Yes, that is correct.

Do you think that you might need to be a bit sharper and more commercial and aggressive in your marketing? Are you a sleepy organisation?

I do not think that Historic Scotland is a sleepy organisation. We are finding it quite tough in the marketplace, but we are not alone in that. One measure that we use to benchmark our performance is the performance of a basket of around 30 historic attractions in Scotland. That basket includes 10 of our attractions, 10 of the National Trust for Scotland's attractions and 10 attractions that are run by private operators. Last year, our market share was the same as it had been the year before. It might have been a slightly disappointing year for us, but we were not alone in that.

We are constantly looking for new ways to generate income. For example, we have a much more active events programme for our properties now than we used to have because laying on an event at a property is the most successful way we have yet found of getting local people to visit it. Around two thirds of visitors to our estate are from overseas. Most Scots will have been to properties in their local area once—they may have visited a property on a school visit 25 years ago—and something interesting must be found to get them to go back more often. In recent years, the events programme has grown quite a lot to meet that objective.

My memory has been jogged. I should remind the committee of my entry in the register of interests: I am a trustee of the Tain Guildry Trust and the Tain Museum Trust.

Mr Graham, I want to explore your thoughts on the recent review of the historic environment, which has just been published. What implications might that review have for Historic Scotland's budget? What potential exists for expanding your activities or carrying out your activities in different ways? I know that you are aware of comments that have been made about Historic Scotland. Will you say something about them? It has been said that Historic Scotland can be a barrier to the sensible development of historic buildings.

That is a broad question. The Historic Environment Advisory Council for Scotland recently offered four reports to the minister, which we are studying on the minister's behalf with a view to offering advice on the way forward. At this juncture, I cannot say a great deal about what our advice is likely to be, but I will say that HEACS has made the point that the job of looking after the historic environment is not exclusively the job of Historic Scotland. Many bodies have a part to play in looking after it. Local authorities are extremely important in that context, and the HEACS report raises a number of questions about the organisation and resourcing of local authorities as well as the organisation and resourcing of Historic Scotland.

You asked how our activities might develop. It is clear that we could tackle certain opportunities with a larger budget, but we have found ourselves reasonably fully occupied with looking after our current range of properties. As I have explained, we are wrestling with the problem of raising income. We hope that we will improve our income figures in the future, but we ultimately depend on the number of overseas visitors who come here. In that respect, we are no different from English Heritage.

I should mention that I have been promoting amendments to the Planning etc (Scotland) Bill to do with the protecting the historic environment and the duty of care for archaeological sites in particular. I have taken an interest in such matters.

Could some of Historic Scotland's assets be freed up if local authorities did more? If assets were freed up, what might Historic Scotland do that it cannot do at the moment?

We work closely with local authorities on the consent side of protecting the historic environment. Our experience shows that the process will go more smoothly if the council and the developer involve us early in their plans and we are given opportunities to set the context within which a project is taking place or explain what is important about a building that is at the centre of an application. We will not always agree with the developer, but there will be shared understanding of the significance of what is there.

Many of the most difficult cases in which we become involved are cases in which we see the proposal only after all the work has been done and the design is finished. Understandably, by that stage the promoter is raring to go. Our objection comes as a bit of shock and causes a great deal of unhappiness.

Do we still need an agency called Historic Scotland? Could not properties such as Edinburgh Castle and Stirling Castle be looked after just as well by the National Trust for Scotland? Could not your grant-giving powers be delegated to local authorities? Do we need a separate agency, with all the overheads that that entails?

We do not look after only Edinburgh Castle; we look after 345 properties across Scotland and run them as an entity. We would make a surplus on some of them as individual business units, but we would make a loss on the vast majority of them. We would certainly make a loss on the properties where we do not charge for entry. Would the National Trust for Scotland take on the whole network, which as a business loses between £12 million and £14 million a year? What kind of endowment would the organisation seek from the Executive before agreeing to do that? That is the core question.

I think that we can guess your answer to the question.

Finally, I take it that you had no role in lodging objections to flying the saltire above Bute House.

No.

Thank you for your evidence.

I am not sure that the last question was relevant to the budget.

Bute House is an historic building. Does it not fall under Historic Scotland's remit?

I welcome to the committee Jamie McGrigor, who is here as the member in charge of the Scottish Register of Tartans Bill.

I have been informed that the issue is unlikely to be discussed before 4 o'clock.

That is correct.

I will withdraw until nearer the time, if that is acceptable.

No problem, although you are welcome to stay—you could learn a lot. However, if you give us a contact number, we will let you know when we are due to discuss the bill. The clerks will let you know when we are within 10 minutes of the item.

That would be great.

We will now take evidence from the National Library of Scotland. I welcome Martyn Wade, the national librarian, and David Hunter, the strategic policy manager at the National Library. Papers have been distributed to committee members. We will move to questions after the witnesses have made some introductory remarks.

I still have the remnants of a cold, so I am a bit croaky. Unfortunately, our director of corporate services is on leave and our finance manager has recently been unwell, so I apologise in advance for the lack of specific financial expertise on the panel.

I thank the committee for giving us an opportunity to talk about the National Library's activities and work. We are planning an open event for MSPs in the near future, and I hope that you will be able to join us for that. We have just completed a briefing for MSPs on our corporate plan for this year. It is hot off the press today and we will send it to all MSPs to help to inform members about the work of the National Library.

Over the past three years, since the publication in 2003 of our new strategy "Breaking through the walls", we have gone through a major strategic change that has emphasised what the library is trying to do. For many years, it focused on its collections and on visitors to the reading room. For that reason, it had a low profile compared with the other national collections.

The strategic change was intended to emphasise that we were not just about the excellence of our collections but needed to focus on widening access to ensure that everybody in Scotland could access our collections. We also needed to develop a range of activities to enable people who were unable to visit the library to use the collections and to improve greatly the range of services that were available at the library. That change has had a significant impact on the way in which we have used the budget over the past three years and on the development of new resources in the library, focusing on education; interpretive services; the development of a digital National Library of Scotland for external access; marketing; the development of fundraising; and a range of activities that have enabled people to use the library.

We have provided some figures for you. The figures from the corporate plan, which give a departmental breakdown, are based on the corporate plan of April 2006. We took the opportunity to reconfigure those figures into the strategic priorities, as requested by the committee. Those are the figures from August. However, things have moved on since then, which is why there is a difference in the totals.

Last year and this year have perhaps been exceptional years because of the purchase of the John Murray archive. That involved a major grant of £17.7 million from the heritage lottery fund, much of which has gone through our books, as well as significant contributions from the Executive. We excluded those sums because they would have distorted the figures. Likewise, we have not included in the figures in front of you the notional capital charges that feature in our accounts: because they are notional, they do not feature in the budget figures.

I remind the committee of my entry in the register of members' interests as chair of the Scottish Library and Information Council, of which the National Library of Scotland is a member. Martyn Wade sits on the council with me and on the management committee.

I am pleased to welcome the National Library of Scotland, which I think is appearing before MSPs for the first time. I am not sure that many MSPs appreciate what is held in the national collection, what the National Library has historically done with it and what it now proposes to do with it. That is what I would like to explore, in terms of what the National Library is doing with the budget and how it has reconfigured that to meet the new objectives. The figures that we have for the spending for 2006-07 and 2007-08 do not look much different, although the way in which expenditure was profiled changed before then. Perhaps Martyn Wade would like to tell us a bit about what the National Library is doing differently.

Absolutely. I should have said that the 2007 figures are, essentially, unchanged because we have not yet started our budgetary process for that period. That planning process is just about to start; therefore, in essence, those are continuing figures.

Over the past couple of years, there has been a major shift in balance from the backroom and facilities management areas, and we have reconfigured our management resources to give a new balance, as I suggested earlier. Previously, as you would expect, we put great emphasis on our collections, which are obtained in three ways. First, they can be obtained through the privilege of legal deposit, which is absolutely crucial to a national library. That enables us to claim a copy of every item that is published in the United Kingdom and Ireland free of charge, although there is a cost to us in cataloguing them and adding them to our stock. Secondly, we receive a purchase grant of £1.3 million from the Executive, which ensures that we can be a world-class research library. We collect publications not just from the United Kingdom, but from English-speaking countries around the world as well as from major European countries where other languages are spoken. Thirdly, we can obtain collections through donation deposit, whereby people donate items to us. We also acquire historical material for our heritage collections of manuscripts and rare books, as well as contemporary publications. We aim to develop a comprehensive world-class collection for researchers, whatever the level of their research.

Our reading room is relatively small—it can take only about 200 people and at times it is full. Our previous focus was solely on providing access to the reading room, although we had a small touring exhibition programme. In essence, the library was a physical building that people had to come to.

The new strategy is entitled "Breaking through the walls". Technology—the internet in particular—allows us, if not to break through completely, certainly to render the walls permeable. Where possible, we want people to be able to use our collections digitally. We are currently developing a digital National Library of Scotland, which will include a whole range of material from our collections that we can digitise within copyright constraints. We have a long-term expansion programme for that, using our resources and grant funding from joint applications with other organisations. We also can also be contacted via e-mail for inquiries.

We want people to use as many of our resources as possible wherever they are, rather than just in the library. However, we acknowledge that some people are not comfortable with that, so we are also developing partnerships with libraries across Scotland—with public libraries in particular. In effect, we will be adding our collections to the collections of every public library in Scotland. We have pilots with Moray Council and Aberdeen City Council, whereby people can use terminals in the libraries to access our collections. The staff are trained in the nature of the collections and also feed into planning the development of the collections. There is therefore a good exchange of skills and expertise with the libraries. For people going into those libraries, the link into our building will be as short as possible. Together with the Scottish Library and Information Council, we hope to establish a network whereby a core of resources will be available through every public library in Scotland. That will be a stepping stone into the collections of the National Library.

A related and significant change is the extension of legal deposit to digital publications. That will be a huge challenge. We have the right, and the responsibility, to collect those publications on behalf of the people of Scotland. I am talking about journals, documents and books that are published electronically, but perhaps most importantly I am talking about websites. As I say, that is a huge challenge, and is where the focus of the digital National Library is being placed. For copyright reasons, some of those items will be available only within the National Library, but we are seeking voluntary agreements with publishers so that publications will be available in libraries in other locations.

Constraints on our collections mean that some items are available only to people who visit Edinburgh, but through digital means we aim to ensure that everyone in Scotland can access as much of the collections as possible—either directly from their home or place of work, or from their local library with the support of trained staff.

The budget has not increased a great deal, so I presume that you have reconfigured it.

Yes.

Did you want to tell the committee a bit about whether that just means training staff to do things differently, or whether it also means changing the funding of various departments?

We have been successful in gaining increased funding from the Executive. We are grateful for that because it has been helpful in facilitating changes and in enabling other activities.

There have been two main changes. First, we have developed the capacity of our staff to do different things and to do more. Curators who were used only to working with manuscripts are now also used to converting them digitally. We have changed the balance of skills in the National Library. We have changed the management structure quite radically, to provide professional expertise in the areas that we did not previously work in.

Secondly, we are considering raising much more significant funding ourselves. We have a major fundraising campaign specifically to complete the purchase of the John Murray archive, but a large proportion of our fundraising is for educational and access activities. At the same time, we are raising smaller amounts that will facilitate those activities. We have changed the use of the budget. We have additional funding and we are considering maximising our income from elsewhere.

You mentioned maximising income. In your submission, I noticed comments on the role of curators. In my home area of the Highlands, looking after old and valuable books, which can involve rebinding, dealing with marled paper and getting rid of foxing, is a problem. Is there an opportunity to market such services to private collections? Even in Edinburgh, it is difficult to get a nice old valuable book rebound and sorted. It strikes me that that could provide a big income stream.

Our priority in the past, which will be reflected in the proposed culture bill, was to be a centre of advice and expertise. In many cases, the National Library has the greatest capacity and skills in those areas. Our focus has been on providing advice and support for publicly available libraries to ensure that their collections are preserved and conserved as far as possible. For example, twice a year, we bring together the librarians who are responsible for rare book collections throughout Scotland to share expertise. That work has occupied the staff fully. It is unclear how far we should move into providing services that are available commercially. There is good provision of modern, historic and rare book binding among commercial binders. Our focus is therefore on providing advice and expertise.

Until now, we have worked mainly in the public sector but, where writings are in private hands, it is important that they are preserved because, generally, such collections are available to scholars and researchers on request when needed. Our focus is on ensuring that items are preserved for the future in Scotland, rather than on establishing a commercial process. In many areas, a strong commercial sector is already in place.

It is laudable that you are co-ordinating with local authorities. However, my second question, which is a bit like the convener's devil's-advocate question to the previous panel, is one that is always in the public mind. What do you do that could not be done by a big library service, such as those of the City of Edinburgh Council or Glasgow City Council? I accept that a smaller library service could not do that work.

To be realistic, the National Library and other libraries have a great deal in common. However, the unique aspect of the National Library is its national dimension. We collect on behalf of the nation, rather than focus on the needs of individuals in specific communities. Our work should complement, rather than compete with, that of public libraries, and we work increasingly closely with public libraries to ensure that that is the case. We are clear that entitlement, as applied in public libraries, is delivered locally. In our collections, we have single copies that we have acquired by legal deposit or purchase. We frequently have the role of ensuring that those are preserved and conserved. As we often have the last remaining copy, we provide a backstop and ensure that items are available to people in Scotland.

Local authorities sometimes feel unable to look after certain items. In the past few years, there has been a decline in specialist skills in local authority libraries, particularly in relation to historic collections. That has placed a greater role and responsibility on the National Library of Scotland. Our collections are kept almost entirely to the appropriate British standards to support their preservation and conservation, so we are increasingly providing a home for items that people feel unable to keep locally. In such cases, we can often provide a digital alternative for use in the local area.

Our work complements the work of local libraries, which is geared towards meeting the immediate needs of local citizens. The National Library of Scotland provides the complementary national dimension and meets needs that go beyond the role of public libraries—and, indeed, a lot of higher education libraries—by providing a national level of provision of largely unique material.

Our collections go back to the origin of the Faculty of Advocates in 1689. Those items were new when we acquired them, but they are now historic and rare. Our principal role in relation to the items that we collect and keep now is to make sure that they are preserved so that they are available in 300 years' time. That work complements the work of local authorities, which is much more about immediate demand and use.

I am particularly interested in the information in your corporate plan on energy costs and the huge impact that they are already having on the National Library of Scotland, given that you have to maintain the correct atmosphere to preserve documents. It is clear that energy costs are already a serious challenge for you. You have done quite a lot of work to improve energy efficiency, but will you comment on your strategy and say a bit more about what you are doing? Could you appeal to your energy provider—whichever company that is—and ask it to be philanthropic in its approach to your energy costs, bearing in mind that you are preserving the nation's historical documents?

As you would expect, our work on energy efficiency includes a range of small activities as well as major activities. We engage strongly with our staff in all sorts of sustainability activities. We have a group of staff from all levels in the organisation who are keen on that area. We formalised their enthusiasm, brought them together and empowered them to make suggestions at all levels about, for example, recycling and waste minimisation as well as energy use.

As you suggest, the bulk of our energy consumption is used in the storage of our major collections at George IV Bridge and Causewayside. The staff in our estates division are some of the most experienced staff in the world in fire protection and energy consumption. We have just completed some major capital work at the Causewayside building, which was easy to do because it is a newer building. We replaced what is now obsolete mechanical engineering equipment, which resulted in a 20 to 25 per cent improvement in energy efficiency. Subject to capital, we will apply such activity to other parts of the estate.

We have a mixture of two approaches. We consider major capital investment when that will produce major savings through more effective energy controls, but we also engage with staff on smaller activities so that we make incremental changes as well as larger ones.

Your suggestion about appealing to energy producers is interesting. We take our energy from the Scottish Executive's contract as part of the buy-in to shared services and efficiency, so we believe that we already acquire energy at the lowest possible cost, but I will raise the matter with my colleagues in the other national collections because energy costs affect them as well. All the national collections require specific environmental controls. We can perhaps approach the energy providers about that. I am not confident about the outcome, but if we do not ask we will not find out. I will have a word with my colleagues in the other national collections and we will consider how we can make a joint approach.

I would like to clarify the gap of £6.7 million for 2006-07 and £5.3 million for 2007-08 between the figures from the National Library of Scotland and those presented in the Executive's draft budget. Does the gap represent the capital budget?

It is the capital plus the notional.

Fine. Jamie Stone wants the last word.

I crave the indulgence of both Martyn Wade and the committee, but I wish to ask a tiny last question. Let us say that you are building up your collection over the years and you happen to buy a J K Rowling first edition. Five years later, it is worth a great deal of money. Playing the market is the wrong expression, but if you sold that edition and bought a later one, you would realise that money. Do you think about that? Do you work your collection that way, or is it there for ever?

With such books, we do not buy them but acquire them under legal deposit—we claim a copy free of charge—and we do not sell them for a number of reasons.

The printable legal deposit, which was recently reconfirmed under the Legal Deposit Libraries Act 2003, is an understanding between the legal deposit libraries, of which there are six in the UK and Ireland—five of them are in the UK—and publishers, whereby the publishers are happy with the process on the basis that the items they provide are preserved for scholars. For those who are interested in publishing as a research area, I point out that changes are made to different editions and different publications.

The basis of legal deposit is that we claim books for preservation and for scholars. However, we also have a relationship with authors, who are very supportive of our role. For example, J K Rowling voluntarily donates copies of her books in all languages. Our work in this area is about preserving the integrity of the collection and maintaining good relations with publishers and authors. That will become particularly crucial with electronic legal deposit, about which publishers are extremely cautious. Once an electronic document is released, it can go anywhere and publishers lose the rightful commercial benefit that they can gain from that digital publication.

On the other hand, if we can maximise, on a voluntary basis, the access that we can provide, we can get a real benefit for the people of Scotland, for example by getting voluntary agreements with Scottish publishers that their books may be available digitally in libraries a certain period after they are out of publication but while copyright still exists. We want to ensure that we maintain those good relations so that we can build on them to expand access in future and not rock the boat. There is the integrity of the collections but there is also the relationship with the publishers and authors, which we want to maintain.

You need to remember to donate your memoirs, Jamie.

Don't encourage him.

We receive manuscript collections from a number of MSPs and other politicians—indeed, we also receive the archives of political parties. We are keen to maintain those because, in future, they will be the history of Scotland.

You will be hearing from Solidarity quite soon.

It is fair to say that the National Library of Scotland has probably come further in a shorter time than many others, which has not been easy. I recall that there were some fairly well-publicised difficulties when staffing changes were made.

It has been a challenging three years for the library, but they have been crucial because, with the impact of technology, the internet and digital publications, unless we capture this window of opportunity and get it right, we will lose it for the future. For the library, it is entirely unacceptable that, for example, we collect printed but not digital collections, which are the publications of the future.

If we were inventing a national library in the 21st century of course it would deal with the digital issues as well as the print issues and of course education and access would be at the heart of its work. Over the past three years the National Library has been trying to develop that process, but it also recognises that it is a long-term process on which we must continue to build over the next few years to ensure that we have the national library that Scotland needs.

Okay. That was helpful. Thank you both very much. I am sorry that we did not need to bring in David Hunter.

That is all right.

I am sure that you do not mind.