Our first item is the Scottish Parliamentary Corporate Body's budget submission for 2003-04. I welcome the witnesses who are here to assist us with our consideration of agenda items 1 and 2. We have before us Paul Grice, the clerk of the Parliament; Robert Brown MSP, who is a member of the SPCB and has been dealing with the financial issues; Derek Croll, the head of corporate affairs at the Parliament, and Sarah Davidson, who is the director of the Holyrood project.
Thank you. It is nice to be back before the Finance Committee. I do not want to say much about the budget submission in broad terms—the committee has identified the key issues. The budget will remain somewhat skewed, particularly on the capital front, until the Holyrood project is completed and because of the necessities of that project.
The report puts this year's forecast outturn at £197.5 million, against the authorisation in the Budget (Scotland) Act 2002 of £144.4 million. There is an acknowledged end-year flexibility of £15 million from 2000-01, but can you sketch out for us where the remaining £38 million will come from?
The EYF comes through in two portions, which are capital and revenue. We have tried to identify each separately. The £197 million that is identified in the operating budget table is the total budget for the year and assumes the EYF from last year's capital and revenue underspends.
Therefore, the EYF for 2001-02 is the source of that money.
Yes.
You say in your report that the EYF will be used to cover increased revenue expenditure requirements. What is your projection for this year's EYF? How confident are you that that sum will be sufficient to cover the increased requirements?
On the revenue side, the EYF is £5.2 million from 2001-02, which is forecast to roll forward into the current year and from the current year into next year. We expect to spend £1.4 million this year and the rest in 2003-04.
Why is the rates bill estimate for Holyrood higher than the bill for our present accommodation? What are the current arrangements for rates? Why is the actual figure not known? How accurate are your estimates?
At this stage, the rates bill is an estimate because we will not know the actual figure until a valuation is conducted of the building after completion. We will not be entirely sure about the start point until the building is finished and occupied. Indeed, there may be an issue about precisely when rates will be due and when we will become liable to pay them.
You also suggest that some of the figures are estimates because you are offsetting the current cost of renting accommodation. What will be the savings once you have stopped renting accommodation? I note that you intend next year to continue to rent until December. I presume that that is in case there is further slippage in the Holyrood project.
That is not primarily down to slippage. We always intended to have a joint-running period. Obviously, the business of the Parliament has to go on until everything has been moved into Holyrood. The Holyrood project team will also have to do some work on tying up the ends of contracts and so on when the building is finished. Therefore, there is a need for continuing staff costs—in a double way, if you like—for a reasonably significant period. On rents and suchlike, it is obvious that the costs are for the buildings that we occupy on George IV Bridge and over the road. To an extent, those costs cover the expenses incurred through using the church's building. Once we are able to give up the interim buildings, the costs of rent and rates for them will cease. We occupy one or two other bits of buildings, and I think that rent and rates for them will substantially cease. However, as I said, there will be a need for extra staff until the Holyrood project is finished, so there will be continuing costs.
Are you able to tell us today that, from December 2003, we will no longer require any additional rented space and that there will be significant savings in the following financial year because we will not rent any buildings?
I ask Derek Croll to give you a detailed reply, but that is in effect correct.
We have assumed that we will relinquish the vast majority of the rented buildings at the end of December 2003. We have some accommodation at the Tun, where the Holyrood project team is located. We anticipate that there will be continuing occupation of that accommodation into the next year while the Holyrood project winds down and post-completion issues are sorted out. However, the committee chambers, the Parliament headquarters building and our accommodation at St Andrew Square should all be relinquished by the end of December 2003.
At annexe A of your quarterly report, you talk about
Should we deal with that matter under this agenda item?
The question might be more appropriate under agenda item 2, which is on the SPCB report on the Scottish Parliament building project. Perhaps Sarah Davidson will store up that question and answer it in due course.
Ordinary staff costs, rather than those for staff of members of the Scottish Parliament, are projected to go up and then down. Is that a result of the cost of the Holyrood project team or is there another reason?
There will be a period of double running of buildings during which we will have extra staff. That requirement will cease when the old buildings are given up.
The reason is a little bit more complex than that. We have had to take on a significant number of additional short-term staff to manage the change. Apart from the building, an enormous number of new contracts are to be let for services such as information technology and catering and we have taken on staff to help with procurement. There are also extra IT and facilities management staff. In addition to the Holyrood project team, there is a bulk of temporary staff, but none of those posts will be needed when we move to Holyrood. There should be a significant tail-off in that respect.
Is it fair to say that there is still a question mark over staff costs for 2005-06 because you have not worked out in detail how many staff will be required to service the new accommodation? Although the new building might be more economical because the staff will be in one complex, the size of the complex might generate more costs.
That is a fair point. We have begun that work and we will have a detailed discussion with the corporate body early next year to try to understand the matter and to firm up the figures. To some extent, that will not happen until we are in the building. There will be an election between now and then and there are many issues that the next corporate body will have to think through. By February or March next year we plan to have carried out a more in-depth analysis of the issue and we might be able to give more detail about how it will pan out.
Are pensions and employer contributions included in the pay figures in the tables that we have been given?
Yes.
The figures for parliamentary staff are included.
Are you happy that the MSP pension fund, which I presume was started from scratch, will have enough money? We have already had an indication that certain MSPs will not stand again for election. Have you made provision for extra unexpected pensions?
There are two pension issues. Staff are members of the principal civil service pension scheme, which is not a worry because it is not a funded scheme, as is the scheme for MSPs. The corporate body established—under inherited legislation—a scheme for MSPs that is broadly analogous to the one for members of Parliament at Westminster. The scheme is funded and we receive regular reports from the fund managers. The most recent report that we have had—which was well into the period in which the stock market was not performing particularly well—was still reasonably confident.
I welcome Margo MacDonald, who has joined the committee for today's meeting.
The convener will forgive me if I do not completely understand the set of accounts that are before us.
Those costs fall under the property and running costs—maintenance costs are part of property costs.
What sort of percentage of the costs do they account for? How did you calculate the maintenance costs for such a unique building?
We calculated the maintenance costs with great difficulty. We made estimates based on the professional advice that we received. At the moment, we are still going out to contract for a number of the areas concerned, and we will not be certain about the figures until the contracts are in place. Until we get on site and start running the building, we will not be entirely sure about some costs. We have made the best estimate that we can make at this stage. Maintenance costs at Holyrood are certainly estimated to be higher than those that we incur at present.
I would have assumed that that was the case. At this stage of allocating the last bits of the contract, does recognition of the higher maintenance costs that will be incurred in the new building incline you towards choosing one style of contract or finish over another?
Are you referring to the choice of contractors?
Yes—I refer to the choice of contractors and the choice of finish or quality of the building.
The finish and quality are issues for the Holyrood project team.
There has been an attempt to consider whole-life costs, for example with regard to floor finishings. The corporate body took on a cleaning adviser a while ago, and I know that he has been advising about the implications of certain kinds of finishes for on-going maintenance. Such questions have been addressed in relation to some other matters of detail, such as junctions between floor areas.
It was the matter of the ceiling that I had in mind, but we can come to that later.
There seems to have been an increase in the amount that has been set aside for contingencies. I wish to discuss in particular the costs of migration to the new building. Out of a total of £6 million for the next two years, £1.8 million is for contingencies, which is a high proportion.
Decisions about entering figures as contingencies related largely to the fact that we did not have exact figures to enter; it is not as if we have contracts in place for those pieces of work. We have entered our estimate of the costs we think will be incurred. The work on what we call mode 4—to reconvert the assembly hall to the Church of Scotland's specification—will be different from what has been put in place over the past couple of years. The end specification is different from simply converting the hall for the purposes of the May general assembly, as has been done previously, and that is why it has been entered as a contingency.
Are you suggesting that the Church of Scotland has changed its specification in some way?
No, not at all.
Why, in that case, do we not have a firm figure for the restoration of the assembly hall?
The point is that the work will be different. We have previously converted the hall to what is called mode 3, which is the state in which the church requires the hall to be once a year for a week. When the assembly hall is permanently converted—in other words, when we hand it back for good—the work will be different and the contract will be one that we have never let before. Brian Adam is of course right to suggest that some of the work will be similar to what has been done before. The point is that the cost does appear in our budget. We simply took an accounting decision to the effect that it was sensible to enter the cost as a contingency.
Am I right in thinking that the decision on the opening ceremony is a matter for the corporate body, that the corporate body has decided in principle that there will be such a ceremony and that it has delegated to a working party—
There is no delegation. A working party has been appointed to make recommendations to the SPCB. No decisions of any kind—about either the date or the content—about the opening ceremony have yet been made.
Who is working on the ceremony? To whom is a report being made?
The Presiding Officer chairs the working group. It contains an MSP from each of the main parties and representatives of the police, of the City of Edinburgh Council and of the Palace of Holyroodhouse. The group has been invited to produce recommendations, which it will do over the next few months. Once it has reported to the corporate body, the corporate body will take a decision. At that point, we will be able to give a firmer budget. Our feeling is that the figure of £400,000 is quite generous. None the less, it seemed prudent to include it in the budget at this point.
So you are including a contingency for the opening ceremony while recognising that the decisions on it have not yet been made. The contingency will therefore arise only once those decisions are made. It would be useful to get an outline of how the decisions might be made and of how that contingency will be realised.
A large part of the contingency for 2003-04 is to do with the cost of the migration to the new building. The amount will obviously be higher in that financial year because that is when the move will take place. We have provided some details of the migration costs in a separate briefing paper, which sets out where the costs associated with migration arise.
My point was about the increase in the figure. You are saying that the migration will be more expensive than you thought it would be the last time we were given information about it.
I am sorry. Are you comparing the figure with—
I am comparing the amount with the figures that we got this time last year.
I think that that is because we are more certain about what we will actually experience.
Surely the increase reflects greater uncertainty. Of the total migration costs, £1.8 million comes under contingencies, with only twice that amount showing as identified costs over the two years concerned.
It must be recognised that what we are doing is complex and has never been done in the lifetime of the Parliament; I do not suppose that such a move has been made often in the lifetimes of other Parliaments.
I have a point about the flit itself. I confess to having been mystified when I saw that it is to take place during the height of summer—during the tourist season, when Edinburgh's streets get jammed up, blocked off and all the rest of it. Will you perhaps have to pay more to carry out the move in the hours of darkness, before the tourists are up and about and wanting their money's worth? I do not know why you are moving during the summer; it is bound to cost more.
First, moving at that time ties in with completion of the building. Secondly, the flit will take place over the summer recess. It is less of a physical move. There will of course be equipment to shift, but it is more about moving people and giving those people the opportunity to get to know the new building and to understand how it works, so that the final people to flit, the MSPs—
Don't know anything.
My objective for the flit is to have a building that functions when the MSPs walk in. For that, we need staff who have familiarised themselves with the systems and have done some debugging. The summer recess presents an ideal opportunity.
Perhaps I am being dense again, but do not people go on their summer holidays during the summer—even people who are going to make the place ready for MSPs?
We have been planning for that for about a year. We realise that it is difficult. You are right: staff usually have to take most of their holidays in the summer. That is an issue for us. Staff are enormously stressed with the move at the moment.
I heard what you had to say about the working group that is drawing up plans on how we should celebrate the opening of the new Parliament building. Have you allocated some sort of public relations contract for someone to organise the fireworks, for example?
No, but we will bring in an events organiser. For example, something of the order of bringing school children from all over Scotland will require a good deal of expertise. The police, who are particularly interested in the health and safety of crowds, recommended strongly that, if we were to do something like that, we would need an events organiser to help. That is the sort of person who will be brought in. That person will also be there to advise the working group on any other ideas that it might have to mark the opening.
Are we allowed to ask how much they will receive?
I cannot give you that figure off the top of my head, but I am happy to let you have it.
I thought that I might apply. I will be doing nothing during the summer.
I would be delighted. Drop me a note.
I have a couple of questions on items that are slightly tangential to the Parliament—the Scottish public services ombudsman and the Scottish information commissioner. I notice that the costs of those are static over the next three or four years. What is the explanation for totally static costs? Very few organisations have static costs in practice. Is there any other proposed legislation—already introduced or even a gleam in someone's eye—that would create further costs of that nature?
Those are two important points. The first has a simple explanation. The budgets for the ombudsman and the commissioner are transfers from the Executive. That is why they are static. As you know, the ombudsman is just about up and running, but it is early days. I am sure that, when she has been in post a while, a more sophisticated bid will be needed. That bid may go up. The budget at the moment reflects a roll-forward of the agreed transfer from the Executive. You are right to spot that it is static. It might go up, but I honestly do not know. The ombudsman will have to look at it long and hard; she will have to come to the corporate body and then on to the committee if she wants to make a case for an increase.
We were also concerned about the mechanism for enhancing the independence of such posts. We were concerned that the postholders would need to determine their own requirements and that the corporate body should be as neutral and independent a mechanism for administering them as possible. That is also a slight tension.
There is clearly an advantage in such posts being separate from the Government, as that preserves their independence. However, the number of such posts is mounting up; they are viewed in the round as part of the costs of running the Parliament, which, in a sense, they are not.
You are right. We may need to think about how to keep them separately identified. I am happy to give some further thought to that. When the corporate body submits its report, the individual commissioners or ombudsmen may make a separate submission to the committee to explain what their costs are for. As Robert Brown said, the corporate body is in a supporting role—not really a challenging role—on resources. The challenging role seems to me more properly a matter for the Finance Committee.
There is one further issue on that: the Government's broad commitment to decentralisation of its staffing arrangements. I would be concerned if all such posts and bodies ended up being in Edinburgh by default. That is an issue that the corporate body might want to take on board.
This may be a relatively minor point, but the Parliament's income is projected to fall by £50,000 from £250,000 to £200,000 a year. Does that reflect the significant reduction in the number of seats available in the new building's public gallery compared to the current arrangements? Is it an anticipation that fewer people will be interested? Is it due to the location?
Income comes from two sources: the shop and broadcasting. Broadcasting is the larger of the two, I think. I expect shop income to be significantly higher in the new Parliament building. Aside from the main gallery, the capacity for visitors in the new building far exceeds anything that we currently have. If the visitor numbers are anything approaching the projected 700,000, the corporate body will have to consider in more detail the major issue of how we provide retail facilities for them. We are not in the new building yet; we have not looked at that.
Do you project that the broadcasting contract will bring in less income, given that you are anticipating higher income from the shop?
The short answer is yes.
I am sorry for being late.
The catering revenues are effectively netted off against the catering costs within the running costs of the Parliament. Overall, we anticipate a slight increase in catering costs, largely because there will be more facilities in the new building. However, it is fair to say that we do not know at this stage what the likely income from the public cafeteria will be. The cafeteria may generate a stream of revenue on its own, which we should disclose separately.
Have you made no predictions whatever about likely income flows, even though you are dedicating so many square feet to a public facility?
We have made predictions in relation to the catering contract for which we have gone out to tender. However, until we see what the visitor flow is, it will difficult to take a firm view on what the income will be.
Have you not had any advice on what your turnover per square foot is likely to be for the facilities that you are offering, in comparison with what happens elsewhere?
The situation will not be totally comparable with what happens elsewhere. We are dealing with a facility that is in a sense ancillary to the Parliament. In the new building, there will be major opportunities for supplementary activities to take place in the various spaces that will exist. Although the new building will offer such potential, at this stage—before we have entered the building and have been able to assess how it works—it would be irresponsible to put down major markers to guide the corporate body and the Finance Committee. At present, the issue is simply too open.
I want to follow up on Alasdair Morgan's question to Paul Grice about whether certain budget responsibilities represent a corporate expense for the Parliament, whether they are an Executive expense or whether they are something else again. It would be helpful to have an indication of whether the corporate body has discussed with the Executive how to divide up the budgeting responsibilities for different activities taking place in Scotland. There is an issue about the commissioners. If they are independent, who funds them? Is the funding being top-sliced from the block grant that comes to the Executive or is it coming through the Parliament? Have you discussed guidelines with the Executive, which you would be able to offer us?
There have been discussions, the fruit of which members can see. We have established the precedent that the commissioners must be independent from the Executive, as Alasdair Morgan mentioned. The new commissioners who come on stream will be funded in the same way and will be identified separately. I am happy to give further thought about how the machinery of that might work most efficiently, so that the Finance Committee, through the corporate body's accounts, will be able to identify how much the various commissioners cost.
I was not referring specifically to the commissioners. I was asking about the general principle of how one divides things up. For example, it appears that the roadworks that are associated with the new project are off your balance sheet and have probably moved on to the City of Edinburgh Council's balance sheet. Who funds those roadworks? Are they part of the project?
The funding for that work has come out of the block, as everything does. That issue aside, the lines are clear. We are responsible for everything to do with the running of the Parliament. I will be honest—the roadworks probably fall into a grey area. They are not part of the site, we do not own them and we probably would not have undertaken them had they not been in that area. However, it is clear that the work was commissioned by the Executive and was paid for by the Executive through the City of Edinburgh Council, although we were involved in managing the project.
Before we move on to item 2, I have some questions on the capital budget. The total of £135 million in this year's capital budget includes £125 million that relates to Holyrood. Do you have a picture of the variants on that projected spend and do you have a view on what is likely to be carried forward to the next financial year?
The projections are that we will spend up to that level. That said, progress through the project involves a continuously moving process of reforecasting. We do not expect to spend more than that figure; it represents the worst-case position.
Will you explain why the capital costs in the post-Holyrood completion period are £18 million, which is greater than the figure of £15.4 million for 2003-04?
As part of the resource accounting arrangements, the cost of capital reflects the depreciation on buildings. Depreciation does not affect the building until it is operational. The difference in capital costs reflects the fact that the completed building will incur a depreciation charge.
On the landscaping part of the project, we would like a better indication of what has been purchased for the significant sum of £14.2 million. The Finance Committee has not been provided with a detailed brief on that area.
We can do that.
I can do that now, if members would like. The construction cost is between £7 million and £8 million; fees amount to just under £2 million; the cost of land purchase is £0.3 million; and contingency and inflation costs come to £1.8 million. We also had to do some work in relation to the parks police muster rooms, which amounted to £0.5 million. Those figures, together with VAT of £2 million, produce a total of £14.2 million. The figure that was transferred from the Scottish Executive's budget to the SPCB's budget was £8.1 million. I can provide those details in writing.
It would be useful to receive a paper on that, as background information.
In view of my membership of the Holyrood progress group, I will withdraw from the meeting at this stage, before the committee considers the quarterly report on the Scottish Parliament building project. I will sit in the public gallery.