Finance Committee, 07 Mar 2000

Meeting date: Tuesday, March 7, 2000

Official Report 184KB pdf

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Scottish Parliament Building

We move to agenda item 4, which members will recall was raised by David Davidson last week. I will ask David to set out his position, but first I will refer to the correspondence from Sir David Steel, dated 1 March, in which he said:

"we have commissioned an assessment of the current position of the project which will be undertaken in conjunction with independent experts. We expect this to be completed in the next 3-4 weeks."

That letter was written a week ago. We should also note that the Audit Committee is considering this matter. It has written to the Auditor General for Scotland, asking him to look at the management of the project and cost overruns, and asking him to report back to that committee before the summer recess.

I take those points on board. The SPCB has a duty to get its own information together. The Audit Committee has a role, because it is investigating what has happened. The Finance Committee has a distinct role, because any overrun of the SPCB Holyrood project will impact on the Scottish Executive budget, as approved by the Scottish Parliament, and we have a duty to consider any such impact. A sub-group or reporters could be used to gather intelligence on our behalf, from the point of view of budget impact as opposed to project management. The group could report its preliminary findings to us and recommend whether we need to hold a full inquiry. We could also consider the options that might be available to fund the project if an overspend arises, and what effect such options might have on the Executive's budget; that is the primary function of the Finance Committee.

Those measures would be protective of the budget, which was approved by the Parliament, and would be supportive of the SPCB, which is doing its own thing. However, the Finance Committee and the SPCB have to take account of the Executive's budget and its spending plans, because all funding comes out of the same pot. We have a duty to perform, within our remit, and we cannot simply drop in to a reactive mode when something major has the potential to affect the Executive's budget.

We decided to hold an inquiry into the effects of European funding on the budget. Rather than have another full-scale inquiry by the committee, I suggest that we set up a sub-group, or appoint some reporters, to look in the short term at how and where our influence should be directed.

I will leave it to others to comment further, but those concerns were behind my comments when I raised the matter last week and asked that it be put on the agenda. The committee has a responsibility, not just to the Parliament, but to the Scottish people, to ensure that public spending is within the budget that was approved by the Parliament.

I want to make two points. First, we would require the approval of the Parliamentary Bureau to set up a sub-committee. That procedure seems excessively bureaucratic.

I suggested that we could have reporters, if that would get round the difficulty.

Secondly, the cost impact could occur in later years if the project is delayed. There might not be an overspend in 2000-01 or the following year, and the impact would not be felt until 2002-03.

What David Davidson said is correct in many ways. Clearly, the issue is being examined more widely. If the convener of the Audit Committee has asked the Auditor General for Scotland to take a dig at the subject, we must ensure that any work that we do is additional. Perhaps we could allay some of David's concerns under the heading of the item that we just discussed—the SPCB budget. The convener said that we would not return to the SPCB budget until August, but many things will happen between now and August, so I suggest that we keep an eye on the project under that heading. That would not require a formal inquiry. We need merely to keep a watching brief over the plans.

As I understand David's point, if next year's budget is affected, that is a matter for the Finance Committee, which looks forward, whereas the Audit Committee acts retrospectively.

The new Scottish Parliament building is a major capital project, so why is the cost being met out of revenue funding? That strikes me as very odd, as the cost should be met out of traditional borrowing under the golden rule of borrowing to pay for investment. Parliament should discuss those questions, but it has not done so yet. Perhaps that is the route to take.

The independent expert, John Spencely, will examine the project over the next three to four weeks. I presume that he will then publish a report and a statement will be made by the corporate body. I also presume that some figures will be produced at that stage and that, depending on those figures, there may have to be an Executive statement.

And a debate in Parliament.

There will be a debate; the whole issue and the question of where the money will come from will be thrashed out. Perhaps it would be more appropriate to consider the matter again at that stage and to meet the Minister for Finance to ask that question. He may answer the question in his statement and during the debate, but if any uncertainty remains, we should reconsider the matter then. We cannot do much until then.

First, thank you for allowing me to attend.

Timing may prove to be important. I back what Andrew Wilson says; this is the appropriate committee to examine whether this is the sensible way in which to fund such a capital project, of which there will not be many. However, the immediate issue is that money is being spent from the revenue account and that, at some point, that will impact on services. I do not think that the public, whose money is being spent, are desperately concerned whether the impact occurs in this financial year or the next. Costs are being run up. If contracts or penalty or other clauses have to be renegotiated, it is advisable that someone examines the matter now.

I do not know whether you have seen John Spencely's remit; I have, and it is not primarily financial. I would prefer the investigation to be headed up by a quantity surveyor than by an architect. Much of the discussion has centred around the architecture and whether the project is feasible from that perspective. Your job is to count the beans, many of which are being spilled right now.

I do not know whether that is helpful, but I wanted to remind you that the meter is ticking. There have been 35 cement workers on the site, all of whom were contracted and had to be paid, but none of whom had anything to do. Many other people on the site have nothing to do.

Thanks, Margo. I know that you have taken a particular interest in this matter, and it is helpful to have your contribution.

There is no question but that it is in our remit to keep an eye on the matter and trace the impact of any delays or Executive or Parliament decisions. It is a question of timing. Keith Raffan asked whether we should act now or wait for the Spencely report. That report will be produced in a month to six weeks, by which time we will have begun our new inquiry. However, if an inquiry into the parliament building were to be undertaken by a sub-group, it would not be as onerous and would not involve the whole committee.

Does anyone want to speak on that point? Keith was the last member to comment on it, and his view is known.

I am not certain, but it might be possible for the Finance Committee to have a look at the contracts that were agreed. If you wait six weeks, you will be into the new financial year. If John Spencely's report drifts—and I think that it will have to—you will have to wait until the new Auditor General takes up his post on 1 April. He will have to get his feet under the table before he can produce a report, and you will then be well into the summer, when the Parliament is in recess.

There is some urgency to look into this matter. Moves must be made in advance to curb current expenditure on the project, before the final decisions have been made on the feasibility and advisability of proceeding at Holyrood rather than going elsewhere. I am not jumping to conclusions; all I know is that it is a gey expensive hiatus if we wait until the other reports are available.

I take that point, but I want to repeat my earlier point. The Audit Committee has asked for its report before the summer recess, and would not allow the matter to drift beyond that period.

I am not sure that I agree with Margo's last point about looking at the contracts. I would have thought that that was within the remit of the Audit Committee. Her first point is important, however. In light of the fact that John Spencely is an architect—and Margo drew a distinction between an architect and a quantity surveyor—it may be appropriate for us to examine his remit. From our perspective, the figures—or the beans, as Margo calls them—are crucial, as is the rate at which the money is being spent. We must ensure that we receive robust financial information at the end of the exercise. I presume that John Spencely will be able to call on quantity surveyors. It might be worth while for us to consider that.

We need to examine the variance from the agreed budget, because it will have an effect on the roll-out of the Executive's budget and spending plans. We have a responsibility to ensure that any variances are examined by the Finance Committee. The variances may be positive—I have an open mind on the subject—but I suspect, from press commentary, that that might not be the case, and the committee needs to get to grips with the matter.

Might it be an idea for us to agree to appoint a reporter? We could ask the clerks to provide us with a remit for that reporter next week, and agree then who the reporter would be. By that time, certain things might be a bit clearer, such as the Spencely remit or the impact on the budget, whether this year or in future years. One of our number could report back to us on that, then we could decide what course to take. It would have to be pretty short and sharp.

I suggest that we place it in the context of the SPCB's budget submission to us, otherwise issues might arise such as our stepping on the toes of the corporate body or other committees. We need to get away from that; the Parliament needs to be seen to be steady on what it is doing with its own structures. From the outside, people will not draw a distinction between committees and bodies. We must be seen to be getting our act together on this matter.

Having brought this matter to the committee—and I am grateful that the convener put it on the agenda—I am happy to take your suggestion on board.

The clerks will come back with a projected remit for a reporter, including the time scale.