Audit Committee, 19 Dec 2006

Meeting date: Tuesday, December 19, 2006

Official Report 316KB pdf

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“Relocation of Scottish Executive departments, agencies and NDPBs”

Under item 5, we will take evidence for our inquiry into the relocation of Scottish Executive departments, agencies and non-departmental public bodies. I welcome Sir John Elvidge, the permanent secretary to the Scottish Executive; Richard Wakeford, the head of the Scottish Executive Environment and Rural Affairs Department; and Neil Rennick, the head of the public bodies and relocation division of the Scottish Executive Finance and Central Services Department.

I thank Sir John for his patience. I hope that he enjoyed hearing the briefings from the Auditor General for Scotland.

Today, we will ask questions about the Auditor General's report "Relocation of Scottish Executive departments, agencies and NDPBs" and explore some of the key issues that have emerged. In doing so, we will focus on a number of important areas, which I will explain for the benefit of everyone who is attending the meeting or listening in. They are: the extent to which clear measures for success have been set for both individual relocations and relocation as a whole; the assessment and reporting of the costs and benefits of relocation; the question whether the relocations that have taken place represent value for money; the impact of those relocations; the quality, consistency and transparency of the decision-making process; and the Executive's role in determining the relocation of Scottish Natural Heritage's headquarters, including ministerial written authority under section 15(8) of the Public Finance and Accountability (Scotland) Act 2000.

Before Susan Deacon asks the first question, I invite Sir John to make an opening statement.

I will be brief, because I know that the committee's time is constrained.

In my written submission of 13 November, I set out the statutory requirements under which an accountable officer can request from ministers a written instruction to progress a particular action. Those requirements are set out in the memorandum that I issue, as principal accountable officer, to accountable officers, and which my predecessors issued in comparable terms.

In my submission of 16 November, I answered the committee's specific questions on the Scottish ministers' relocation policy. I understand that committee members have also received the written evidence that was submitted to the Finance Committee, including the Executive's response to the specific recommendations in the Auditor General's report, and a draft evaluation report that was prepared by our dedicated relocation policy team.

The evaluation confirms that the methodology for assessing relocation options, which has evolved over time, reflected ministers' objectives for the policy at the time, and that, with the exception of SNH, ministers' final decisions followed from the outcome of the methodology. Again with the exception of SNH, where a decision was taken to locate an organisation outside Edinburgh the lowest cost option or the one with a marginal cost differential was selected.

The Auditor General's report and his evidence to the committee confirmed that, once decisions were taken, the process of relocation in all the cases that were considered was well managed. Staff who moved and those who chose not to move were supported and there was no evidence of organisations' performance being adversely affected by the relocation process.

I am happy to take questions.

If I may speak on behalf of the committee, I thank you for your opening remarks and for the other documentation that you mentioned. I suggest, however, that the range of documentation and, indeed, debate on the matter might be clouding any shared understanding of the policy and its objectives. We have collected all the documents from the Finance Committee's deliberations on the matter as well as our own, and there is no shortage of words on the subject from ministers and officials. Will you summarise what the relocation policy aims to achieve and tell us whether it has been achieved?

The policy's primary objective is to achieve two benefits from relocation: to have a positive impact on the local economy of the area to which relocation takes place and to bring services closer to the public that they serve, balanced with which is the aim to achieve efficiencies in the delivery of those public services where possible.

I am grateful for that summary and will explore each of those points in turn. You identified the first aim as being to have a positive impact on the area to which the agency or organisation is relocated. How does the Executive assess that impact in general and with reference to the relocations that have taken place?

The independent advice that we have is that authoritative evaluation of the impact of such changes on local economies cannot be made in the short term and that one requires a minimum of five years to assess them, so we are not yet able to provide evidence of those benefits in the individual cases. There is background work that provides a robust economic analysis of the proposition that, in general, such benefits are likely to arise, but we have not yet been able to test that general proposition in the specific circumstances of any of the relocations. We are currently finalising the evaluation framework that will enable us to do that.

You said that the second aim was to bring services closer to the public that they serve. How successful has the policy been in achieving that objective? Will you clarify who those communities are? A number of agencies serve a diverse range of communities, so how will the Executive measure success against the second objective?

I am not sure that measurement is likely to be at the heart of our approach in that area. You are right to say that, in practice, many of the bodies that have been relocated serve a broad range of communities, so perhaps it is possible in only a minority of cases to find a clear-cut case of an agency coming closer to communities. It could be argued that SNH is a prime example of that. Although it is, of course, a national body and it provides its functions throughout Scotland, there was a feeling that those functions had particular relevance to the Highlands and Islands, where the most closely protected parts of Scotland's natural heritage are concentrated.

I will resist the temptation to pursue that last point. I have heard a robust counter-argument that it sends the wrong message about SNH's role, but that may be a point for other members to take up.

Given the difficulties that you identified in measuring success against your stated objectives, which we in the Audit Committee understand, how successful do you think the policy has been and on what do you base that judgment?

Without evaluation evidence, it is difficult for me to assess that. However, at the moment, there are no contra-indications to the general analysis that economic benefits are likely to flow from relocation. We see no diminution in how effectively the bodies perform their functions—or, at least, there is an absence of evidence of any such diminution. Identifiable gains—such as the increased flow of money into and the increased employment opportunities in local economies that have suffered relative difficulties—seem to support the argument that positive outcomes can be expected when the detailed evaluations are carried out.

The Executive has said clearly that it has not set any targets. In the most recent update report submitted to the Finance Committee and circulated to this committee, the Scottish Executive says that it

"has not set targets or a wider strategic scope of relocation policy."

That admission might be a cause for concern, given that we are now seven years into the policy's implementation. In the absence of targets, how can we or the Executive know where the policy is leading?

I will have to state the conventional reservation: the decision on whether to set targets is a ministerial one, and I am always cautious about advancing explanations of decisions that ministers have not taken, as opposed to decisions that they have taken. However, I can offer a view. Ministers might be making a judgment on whether the momentum of the policy is in line with their aspirations and expectations. They might be influenced by the fact that, in the majority of cases that have been considered, a decision in favour of relocation has been taken. They might, therefore, feel that no added impetus to the policy is required at this stage. I suggest that aggregate targets would be meaningful only if they changed the pace at which one moved towards them. If ministers are content with the pace of progress, it is perhaps not evident what would be added by having targets at this stage.

Ministers might also feel that it would be better to have more evaluation evidence before trying to reach a decision on the right aggregate level of activity, rather than reaching a set of decisions on how decision making in individual cases could be progressively improved.

We understand the difficulties of trying to assess what may or may not be in ministers' minds.

I will take you back into your comfort zone of facts and numbers, which might be our comfort zone as well. How many agencies or organisations—although I presume that we are happy to use the generic term "agencies"—have been identified for relocation review since the policy was adopted in 1999? How many posts are covered by those agencies? For how many agencies and posts has a relocation decision been taken?

I am sure that I can answer those questions, although doing so may require a certain amount of scrabbling around among my bits of paper.

We have reviewed 38 organisations, which had, at the time of the review process, 3,855 posts. As a result of the process so far, 2,432 posts in reviewed organisations have been rebased outside Edinburgh and a further 260 are in the process of phased moves. Decisions have been taken on a further 1,001 posts that are to be relocated outside Edinburgh in the future, and 162 posts have remained in Edinburgh as a result of the review processes. I very much hope that those four numbers add up to the total with which I started.

I am not quick enough at arithmetic to confirm that calculation, nor to convert it into percentages. Perhaps you can give me percentage figures. Nevertheless, would it be true to say that the vast majority of the organisations and the posts within them that have been reviewed for relocation have been relocated?

Yes. There is no doubt about that.

Can you convert that into percentages?

I can have a go. Around 4 per cent of posts have remained in Edinburgh, therefore around 96 per cent of posts have either relocated or been identified for relocation.

What proportion of that 96 per cent have been relocated to Glasgow?

Fifty-four per cent.

Does it not concern you that a policy that is supposed to deliver economic and wider benefits to all parts of Scotland—successive ministers have consistently stated that that is its aim—appears not to be sharing those benefits around the country? More than half the posts concerned have simply gone from one end of the M8 to the other. Is that not a cause of concern?

I am not sure that it is my place to be concerned about the distribution of the posts. The locating of posts in a conurbation that contains a number of areas with problems of high unemployment is not obviously inconsistent with the objectives of the policy. It is, therefore, clear to me that in no individual case has the decision been inconsistent with the objectives of the policy. The judgment about distribution in aggregate is really a question for ministers rather than for me.

I appreciate that. However, in the interests of good policy development and implementation, ought there not to be a wider strategic overview of the policy to determine whether it is fulfilling the wider dispersal functions that it is intended to fulfil?

The conclusion of the draft evaluation report—that there is scope for relating the policy better to the range of other policies with similar objectives in relation to supporting local economies—is correct. It is difficult to make a judgment about the policy in isolation, as it is one tool in a range of tools for achieving similar benefits for particular parts of Scotland.

I want to return to a few of the numbers that you mentioned earlier. I shall round up for ease of reference for the purposes of the discussion but, if I captured what you said correctly, about 40 agencies and 4,000 posts have been part of the review process. At what point will, may or should the Executive decide that sufficient relocation has been carried out?

That is a difficult question. The Scottish ministers were at the forefront of an emerging trend in the UK and internationally in favouring the policy. The UK Government and the Government of the Republic of Ireland have both adopted broadly similar policies since the Scottish ministers adopted the policy here. Given that trend in international thinking, it is difficult to regard the policy as having a natural end point. Ministers have on occasion talked about seeing the policy as a form of safety valve for pressures in the Edinburgh and Lothians local economy. None of us can know whether the present high rate of growth in the Edinburgh and Lothians economy will increase or diminish in the future. That trend might be one factor that impacts on views about whether we are in sight of an end point for the policy.

In essence, you say that there is no current end point, but that consideration may be given to one in the future. I guess that we cannot speculate on the matter. However, over time, surely the context surrounding each relocation decision will change. We started from a zero base in which no agencies or functions had been relocated, but a sizeable number of agencies have now been relocated, as we have heard. How does that changing context feed into individual review decisions? Does it affect the balance in decisions on individual cases?

There are two angles of approach to that question. One is to say that there will clearly come a point in time when every organisation that naturally falls within the scope of the policy will have been reviewed. There is a natural cycle. The decision on whether we start the cycle again will clearly be an important one, but it will take us several more years to reach that point. Beyond that point, we will be into a different set of arguments about whether ministers should shift the boundary between what is and what is not considered for relocation. So far, ministers have taken the view that a range of central Government functions should not necessarily be considered as part of the policy.

The second approach to the issue is to consider whether there is a natural limiting point for the broader objectives. I suspect that there is not. The Auditor General's report makes the important point that we are talking about a small slice of the labour market. If one relocated outside Edinburgh every public sector job that was capable of being relocated, in overall labour market terms one would still not have such an effect on the functioning of the Scottish economy that one would obviously push up against some limiting factor. In that second sense, the cumulative impact probably would not act as a limiting factor at the Scottish level.

I am conscious that I must cover several other areas, so I will resist the temptation to probe that issue further. Other colleagues might wish to pursue it.

Will you say briefly—a yes or a no—whether any particular considerations ought to be factored into the implementation of the policy with regard to the role of Edinburgh as the capital city? Is there a need to co-locate a critical mass of Government functions or other specific functions with the seat of Government and the Scottish Parliament?

There is no need for me to have a view on that, because ministers already do. Their view is that yes, some functions should not be distanced from the seat of Government.

Thank you for that.

I will round up some of the issues and ask about them together. We are keen to continue to explore the objectives governing the relocation policy, which we have talked about in general terms. However, with reference to specific relocations, to what extent have the objectives been consistently stated and consistently applied over the seven years for which the policy has been carried out?

They have been stated and applied with progressive consistency. I do not think that anyone would claim that full consistency was evident at the beginning, but a number of steps have been taken to improve the consistency of the policy's application.

How have you sought to ensure consistency, given the timelines of individual relocation decisions which, as has been identified in a number of discussions and reports, sometimes meant that the objectives evolved or developed—or, to put it more pejoratively, the goalposts shifted—over the course of the review process? How has that been managed?

In general, we have tried not to change the basis of evaluation during the consideration of individual relocations. What has evolved—as a result of the accumulation of best practice and the identification of variations from general practice that have proved unhelpful—is the overall framework. It has been a process of learning as we go.

I have a few final questions. The agencies and organisations concerned, their management and, in some cases—when we are talking about arm's-length bodies and NDPBs—their boards have views and insights and are required to have some input into the process. Will you give us an overview of how the organisations that have been subject to relocation have had an opportunity to shape the objectives of their relocation reviews?

It is implicit in our approach that the management of each organisation has a full opportunity to discuss the relationship between its needs and the overall objectives. Consideration of individual relocations is essentially a bottom-up process that involves achieving a broad set of aggregate objectives. I do not think that the management or the boards of individual organisations would claim that their voices were not heard in the process. That is different from saying that they were always happy with the outcome.

Finally, are you working or liaising with colleagues in other parts of the UK or elsewhere on the development of the policy and its implementation? Have you considered the point that was made in Audit Scotland's report, that elsewhere agencies have a greater say over the final decision on location? Will such a direction of travel be considered in Scotland?

We are examining closely the developing experience elsewhere to determine whether there are useful things that we can learn. I do not have any basis for suggesting that a diminution of the ministerial role in final decision making is being considered by ministers.

Before we move on to the next section, I wonder whether you can clarify something for me. You talked about evaluation and the five years that it may take to measure the policy's impact. There are areas of deprivation in Edinburgh, just as there are areas of wealth in some of the places to which posts are being relocated. Is any evaluation being undertaken with regard to the departure of organisations or agencies from Edinburgh?

We are monitoring the overall impact of relocations on the Edinburgh economy. As the draft evaluation report says, there is no evidence of negative impacts, but we are not looking at the connection between the economies of specific, small areas in Edinburgh and the operation of the policy.

I invite Margaret Smith to ask questions about the cost and benefits of the policy.

Before I do that, I want to ask about efficient government and best value. The Audit Scotland report concluded that there has been a lack of monitoring of the impacts of the relocation policy. How do you believe that the policy is fitting in with the efficient government agenda given that, as far as the Audit Scotland report is concerned, relocation was triggered by efficiencies in the organisation in only two of the 38 cases?

I think that there is a difference between identifiable, immediate efficiencies in the organisation and the wider efficient government agenda. There is no obvious reason why relocation should, of itself, inhibit the choices that organisations face in the wider efficient government agenda. One thread of the efficient government agenda is about the creation of opportunities, either at the national level in Scotland or at some level below that level, to buy into shared systems and shared solutions of some kind. Those opportunities should, in principle, be relocation neutral. For example, where an organisation is based makes no difference to its ability to take advantage of e-procurement Scotland.

Another thrust of the efficient government agenda is the emergence of some geographically based ways of exploring shared services and shared delivery. In principle, an organisation simply steps from the ability to be part of one geographical cluster to the ability to be part of another. An organisation may relocate to an area where that kind of thinking is either more or less advanced than it is in the Edinburgh area, but there is not in principle any reason why relocation should diminish future ability to engage with the efficient government agenda.

If an organisation in the private sector were deciding whether to relocate, some part of that process would involve a calculation of the cost of the relocation. However, the Audit Scotland report makes it clear that very little of that has been done in this case. Paragraph 39 of the report states:

"The Executive has not set up any mechanism for routinely gathering data. Consequently it has not undertaken any central review of the costs and benefits resulting from individual relocations. Although attempts have been made to gather some cost information, organisations which had undertaken relocation reviews were not able to provide complete information on projected and actual costs."

The costs of the policy must be set against the backdrop of a Government that is telling people in the public sector to be efficient. However, only two relocations have been triggered in any way by the efficiency savings that they will bring to the organisations concerned. I do not require an answer—you have given me the answer that you thought was reasonable. I do not think that it was, but each of us has a right to our view.

There is some territory that I would like to cover, but I may do so in response to a different question.

I want to ask some basic questions about the evaluation that you are now undertaking. When did the review begin and what was the trigger for it? Some figures in the evaluation report were not made available to Audit Scotland; in response to questions from me, the Auditor General said that some information about the costs of certain relocations had not been made available. In response to a question from my colleague Susan Deacon, you said that 54 per cent of relocations had gone from Edinburgh to Glasgow. That means that in its report Audit Scotland was unable to examine any of the costs of the majority of relocations that have taken place. What are the timelines for the Audit Scotland report and for your evaluation, which is starting to look at such issues? Why did you decide to conduct the evaluation in-house, instead of seeking an external review?

I will have to pass your more detailed questions to Neil Rennick, but I will deal with some of the broader issues.

A fundamental point in this discussion is the distinction between organisations' costs and the attribution of costs directly to relocation. We have monitored organisations' actual costs, to ensure that those costs are scrutinised closely. We have not tried systematically to disentangle from their costs the precise variation that is attributable to relocation. We have taken that approach partly because, as Audit Scotland has found, seeking to identify the costs that arise from relocation leads one to make a number of tricky judgments about what is and is not attributable to one change, when an organisation may be going through several changes.

There is a judgment to be made about whether one should pay the same attention to the second-level analysis in all cases and as a matter of routine. If one had any reason to suppose that the costs triggered by relocation might be so high that they called into question the value for money of the relocation, one would look closely at them. If general cost monitoring does not give rise to that degree of concern, one must ask what carrying out a second-level analysis would contribute to the decision-making process. In the majority of cases, we decided that there was not sufficient reason to trigger a second-level analysis.

I do not know the precise details of the history of our evaluation work. I ask Neil Rennick to deal with the questions relating to that.

Much of this ground has largely been covered by the permanent secretary's answer.

The process of monitoring costs has been on-going from the point at which each organisation was identified for relocation review. The costs were monitored through the normal budget monitoring processes. Following the publication of the relocation guide last year, ministers indicated that we would undertake an evaluation of the policy to consider the impact on organisations and on areas. That evaluation has been on-going over the past year.

The work that was undertaken by Audit Scotland provided us with a particular model for setting out the costs. After discussing the issue with Audit Scotland, we used the cost information that we had received from the organisations and tried to populate the Audit Scotland model with that information. That cost information is set out in the evaluation report. Thus, it was not that the information was not held, just that it was not held in the format that Audit Scotland set out in its report.

From where I am coming from, and in the view of most members of the Parliament, the most basic principle of the relocation policy is the relocation of jobs across the whole of the country. However, the policy has eventually evolved into one in which the majority of jobs have been relocated from one central-belt city to another central-belt city. Furthermore, when we try to look at the costs involved, the very place on which we cannot get information is the place to which the majority of jobs have been relocated. That seems a little strange.

It should be pointed out that, of the jobs that it has been decided will transfer to Glasgow, around half have not yet been moved so cost information is not yet available. It is also worth noting that more than 600 jobs that are identified as being relocated to Glasgow were in practice already located there. The review decision was that those jobs should be retained in Glasgow and that other jobs should also be moved to Glasgow.

I will not go into the figures as we do not have time, but the point remains that substantial numbers of jobs have been relocated from one city to the other.

On the costs of relocation, a layperson would consider that redundancy payments would be a considerable cost involved in relocation. However, I understand that redundancy payments were not included because of Treasury rules. Can you explain why they were not included?

I will do my best.

The first thing to be clear about is that redundancy costs were not included in Audit Scotland's analysis. It is right that they were not included because Audit Scotland was following the best-practice methodology, which says that redundancy payments have no economic effect at the national economic level because they are simply a transfer payment within the economy. Redundancy payments neither create national economic benefit nor diminish national economic benefit and, for that reason, are excluded. That explanation takes us pretty much to the boundaries of my knowledge of economic theory.

Let me respond to that as a layperson. Such considerations may be absolutely fine at a strategic economic national level—I do not want to get into discussions like that with you because you will bamboozle me—but different issues arise at the level where an organisation is deciding whether it should stay where it is, opt for the status quo and not lose any staff to redundancy, or relocate elsewhere. In fact, the Audit Scotland report confirms that most current staff did not transfer and that only a quarter of staff relocated. Therefore, some relocations have obviously involved significant redundancy payments. However, because of the Treasury rules on redundancy that you mentioned, we are not able to compare like with like. The real cost of relocating people is inclusive of the redundancy payments because they are a direct consequence of the decision to relocate the jobs. You will never get to the bottom of what provides best value for money if you decide not to take into account the biggest cost factor, which is staff costs.

I should probably make a distinction between what Audit Scotland has rightly and properly done and what ministers can take into account. Audit Scotland was not saying that, in reaching their decisions, ministers are not entitled to take redundancy costs into account. Redundancy payments are real expenditure and it is perfectly possible for ministers to weigh up that factor as one of their decision-making criteria. We are caught on the division between what an economic analysis of value for money tells us and the range of considerations that ministers might take into account. I do not think that we are saying that ministers ignore the existence of expenditure on redundancy where that occurs.

It has been said both by you and by ministers, and it is stated in the evaluation report, that it will take a period of time to be able to evaluate the impact of relocation on an area to which jobs have been relocated. The length of time involved goes from about five to 15 years. It is quite difficult to argue against that point, but you seem to be quite happy to make a fairly snap decision that there is no evidence of the loss of staff through relocation having adverse effects on the services provided, although we have had only a short period of time in which to evaluate that. Equally, we have an evaluation report that says:

"There is no evidence to suggest that retaining the relocated jobs in Edinburgh would have had any beneficial impacts on the city".

How come it will take us five years to be able to evaluate the impact for places to which jobs have been relocated but we can tell immediately that there is no evidence of any detrimental impact from those jobs leaving somewhere or of a diminution in the service provided by an organisation that might have lost three quarters of its experienced staff? How can you tell that?

Some of those issues are pieces of the jigsaw and one can make judgments about them. For example, one can monitor the standard of service in the short term. It is also about putting all the pieces of the jigsaw together to reach conclusions. I do not think that we are saying any more on any front at the moment than that there is no evidence of negative impacts. None of those statements claims to be a statement of overall impact.

You acknowledged that the Executive needs to monitor—I think that that comes from the criticisms in the Audit Scotland report as well—and you just talked about monitoring in the short term. Earlier, I asked why the evaluation report was done internally when it could have offered an opportunity to begin external monitoring in the short term and could have involved asking the users of the relocated organisations' services whether they had experienced any diminution in service. Why did you decide not to go with an external audit?

I ask Neil Rennick to start to help us with that and, if I can add something to what he says, I will.

There are two factors. First, we were covering new ground. We did not have an established methodology for the measurement of relocation policies, so we had no basis on which to construct a requirement for an external consultant to undertake an analysis. It seemed sensible for us to go through the process the first time round, to work out what information was available and to identify how we might proceed, drawing on the information from external analyses from the private sector, for example.

Secondly, in undertaking the work, we drew largely on evidence from the organisations that had been through the relocation process. We spoke directly to them and examined the various documents that were prepared throughout the relocation process, including information on the delivery of services and the ways in which organisations had monitored the impact of their relocation. Those factors were taken into account in the evaluation report even though it was an internal analysis.

From what you have said, it is clear that you had no methodology. In looking at the organisations that have been relocated, I presume that you asked questions about the impact on staff. It is clear that the extended timescale of decision making had an impact on staff. My perception is that you questioned the staff who stayed with organisations and made the move—that is, roughly a quarter of them—but not those who did not. I presume that you agree that you can do more work to examine the timescales and the impact on staff. You should not consider only the impact on the staff who stay with the organisation.

In the evaluation report we acknowledge that there is a separate strand of work on the timescales and internal management of the process. That work is progressing and is drawing on some of the helpful advice from the Audit Scotland report.

On your point about staff, part of our consideration is to think about what the information tells us about the process. We need to consider how much information we would get from speaking to people who have clearly indicated their view by not moving with the organisation.

You believe that the policy benefits those areas to which jobs are relocated. I agree, because I believe that there is a detrimental impact on the places that lose the jobs. However, do you agree that the Executive needs to do more work to target the types of jobs that are moved to particular locations and more work on the value of the relocated jobs? In some cases, people's jobs have been shifted, but they have not moved to the new area. If people move with their jobs, there is a certain value in that. If they choose not to move but the job is taken up by somebody in the new location, there is a different value in that. What plans do you have to evaluate what those different values represent to the new communities to which organisations relocate? Will you consider moving jobs in a more targeted way? For example, if you move an organisation to an area of deprivation, what targeting and evaluation work can you do to confirm that some of the jobs will be available to people who already live in that area, rather than the relocation simply involving putting in another office block?

Those are legitimate questions. One of the conclusions of the evaluation report is that there is scope for further sophistication in matching relocations to the needs of particular areas, which must be right. Currently, discussions take place with people who speak for particular areas, such as representatives from the local enterprise company and local authority, so those people have an opportunity to make their arguments. However, we would not claim that there is a fine-grained methodology for achieving the best-possible match between the relocated body and its new home, so there is scope to take the policy further in that direction.

In the interests of synergy—and constituency interest—I bring us back to the point that the convener made at the start of our discussion. There are different levels of need even in Edinburgh. Although Edinburgh appears to be doing incredibly well economically, some members of the committee represent parts of the city in which people live in deprivation and poverty. Therefore, there is probably a need for a second level of consideration, which takes account of the impact of keeping jobs in Edinburgh—not just in city-centre locations but in other parts of the city—as well as the impact of relocating to another part of Scotland.

Our next area of concern is the quality, consistency and transparency of the decision-making process. We are short of time, so members should ask brief questions.

I will do my best to be brief. According to the Audit Scotland report, there is

"a risk that the lease break trigger will not be applied consistently across all potential candidates."

Audit Scotland also found that there has been variation in the criteria that are used to review potential locations and noted that certain locations have regularly featured on shortlists, whereas other locations have not done. Finally, Audit Scotland found variation between the locations that had been ranked highly in reviews and the locations that ministers ultimately chose.

I will try to roll my questions for Sir John Elvidge into one. How does the system ensure that the lease-break trigger is applied and how does the trigger relate to the policy objectives of benefit to the local economy and efficiency, which you mentioned in your opening remarks? Will you also comment on the differences between the triggers in Scotland and those used in the rest of the UK?

On how we ensure that the lease-break trigger is applied, our basic approach is to seek to be aware of all lease breaks. We have not had perfect information on that, but we have had information about most of the organisations—or bits of organisations—that might be considered for relocation and we are remedying deficiencies in the quality of our information about some of the less obvious buildings that might have lease breaks. We make sure that we know when the trigger might be fired, and it is then for ministers to judge whether they want the process to be triggered. The basic approach is simple.

Will you remind me of the second part of your question?

It was about the extent to which the trigger is related to policy.

It is not; it is arbitrary. I do not think that anyone denies that there is no logical link between when an organisation happens to reach a lease break and the potential benefits of relocation. It is simply a pragmatic way of minimising one element of the cost equation of relocation. Buying out leases is typically an expensive thing to do and, prima facie, one would expect the cost of it to be a significant consideration in relocation decisions. However, I do not think that anyone suggests that there is a connection between that and that half of the underlying purpose that is to do with conferring local economic benefits elsewhere.

My next question is on the consistency of the reviews. There have been variations in the criteria and weightings used in the reviews, and changes to criteria and weightings have been made late in the review process. Will measures be taken to address that problem? Clearly, that is confusing.

The history of the policy is of measures being taken to address those variations and bring more standardisation. It is a basic value judgment whether one should start with one framework that applies to everybody or with letting individual organisations work through the logic of relocation for themselves. So far, ministers have been persuaded that allowing the initiative to rest with individual organisations and allowing them to reflect those organisations' own circumstances is the right way in which to go. Where we have seen variations in practice that have appeared not to have a rational justification, we have tried to eliminate them. We have tried to eliminate outliers rather than reach absolute consistency for everybody.

I have one final question, which I ask out of curiosity. Has any Government department offered itself for relocation?

That depends on what you mean by "Government department". The small units initiative has consisted of departments offering those parts of themselves that have been relocated. In that sense, the answer is yes.

Can you tell us why certain locations continually appear on shortlists, and the extent to which that might be altered through your review? I ask that not from an Edinburgh-centric point of view, like that of my colleagues, but from a west of Scotland point of view.

We are monitoring closely the distribution of relocation decisions; for example, we are interested in why particular areas are candidates for several relocations but are never successful. We are interested in whether there is a common underlying obstacle to their success and, if there is, whether there is a blind spot in the policy that should be addressed or whether that common factor is, in some way, producing rational, expected outcomes.

Is there a possibility that certain areas will continue to be ahead of other areas because account is not taken of relocation decisions for a considerable time? For instance, of four relocations, three could go to one area while a second area never gets near that because the process takes too long for the relocations that have been allocated to be fed into the system.

I do not think that there is any danger of ministers not being able to see a pattern or to weigh it up in their consideration. However, there are in individual cases factors that will consistently drive some areas towards being likely to do better than others. The balance between the socioeconomic local-benefit objectives and the efficiency objectives of the policy means that some locations will generally find it easier to score on the efficiency side.

Locations that offer access to a larger labour market will consistently have an in-built advantage in larger relocations. For example, it is interesting that Glasgow has taken 54 per cent of the jobs but only about 30 per cent of the relocations. That tells us that Glasgow is doing better on the bigger organisations, which one would expect given that the ability to recruit a wide range of staff to large organisations will always be a factor in relocation.

We will continue to see some things that point initially in the direction of particular areas, but that is not the same as saying that ministers will never choose to override the weight of those factors.

Given that ministers would have the option to override, would such a decision be as transparent as the current system? I am not saying that the current system is all that it should be, but at least there is a tracking mechanism and a rationale behind it. It is not so transparent to have decisions just being taken by ministers. How do we overcome that?

Ministers have indicated their willingness in principle to move towards giving fuller accounts of the reasons for their decisions. When those reasons flow largely from financial analyses—as you accept they have—there is probably no great need for further explanation. If we were to move away from that to a situation in which ministers were to apply other judgments, transparency could come only from ministers' willingness to explain the factors that they took into account over and above the basic financial analysis.

In terms of the current review, will other factors be included—for example, Executive priorities such as regeneration inside and outside town centres—that could allay some fears of the organisations that relocate from Edinburgh about whether it will make a huge impact on the community to which they relocate?

I am certain that we shall gain experience of providing best-practice advice to organisations about how to address anxieties that their staff might have about relocation. That problem is faced by all relocating organisations; people tend to be less enthusiastic about unknown areas than they are about areas with which they have developed ties. We have begun to develop experience to address those concerns and to give people better information. That is the main area in which the factors that you identify are likely to come into play. However, I am less certain that there is likely to be substantial elaboration of the way in which we are able to compare people's needs in particular locations; at least, I am less clear that I can see a definite path forward there.

In certain instances, you are specific on the relocation of organisations. Forgive me if I focus on local matters. The decision has been taken to locate Her Majesty's Inspectorate of Education regional offices in Livingston, Clydebank and Ayrshire. Why, two years down the line, are we no further forward?

I will have to write to you on that—I do not know why it is taking us so long to pin down the precise location of HMIE's relocation to East Ayrshire.

Margaret Jamieson's final question leads neatly to my wider question, which is about the timescales of decisions. What is the average time from the announcement of a review to the announcement of a decision on relocation? Audit Scotland's report states that, for the bodies that it considered, the average time is 17 months, or 21 months for existing organisations. Do you have an update on those figures?

I do not. Unless Neil Rennick has it, we will have to write to the committee with that information. I would be surprised if the figures had shifted significantly.

As well as giving that average, the Audit Scotland report states that, in several cases, the relocation process has gone on for four years, five years or more. I am sure you agree that, whatever the outcome of the decision-making process, it is undesirable for organisations to have a question over their futures and for individuals to have questions about the location of their workplaces. I am sure that such uncertainty has all sorts of impacts on the ability of organisations and the individuals in them to plan for the future.

What impact has the protracted decision-making process had on organisations and individuals? Do you have any plans to expedite the process in the future?

I agree that protracted delay must be undesirable. No one wishes to lead an organisation during a protracted period of uncertainty. Many of the things that we have been doing are designed to shorten the decision-making period to avoid that problem. In general, delays are among the problems that arise when decisions are being taken for the first time. One can normally do much better when one has learned from such instances.

I cannot say that I have definitive evidence on the impact of delays on organisations. I am not aware of any evidence that the risk has materialised of a significant proportion of staff leaving an organisation during the period of uncertainty—that is to say, evidence of more staff leaving the organisation during that period than one would expect in a given timescale. The main disadvantage is what I think of as the distraction factor; one wants people to think about the job that they do and not about the uncertainty that surrounds them.

You addressed retention but not recruitment. Do you accept that, for individuals who are considering going to work for an organisation, the question of where it will be in the future is material? Do you accept that it is impossible to assess how many people have changed their decisions or how many people's decisions have been influenced because of that uncertainty? Do you accept that every ounce of common sense that we have tells us that that must have had an impact?

Absolutely. Our experience in the Executive tells us that it becomes almost impossible to recruit people for certain posts while there is material doubt about a change in location. There is, of course, a relationship between retention and recruitment difficulties. The recruitment difficulties might not be huge, unless experienced staff are being lost, but there is no doubt that protracted delay has a negative impact on recruitment.

On timescales, there can be many reasons why relocation decisions become protracted. I understand that one is that further information might be requested or further studies might be commissioned. Registers of Scotland is a case in point—there has been uncertainty there for almost six years, I think, although I am pleased that some element of certainty has been introduced for the forthcoming period. In that case, ministers explicitly said that one of the reasons why things had taken so long was that further studies had been commissioned. I have looked at the studies, which are substantial, but I wonder how much value they have added to the decision-making process relative to the time that they have taken and the costs that must have been involved in commissioning them, given that such studies are often commissioned from external consultants. Could you comment on that?

In every case, we must have thought that the potential value of the study was worth the time and cost of the work. Registers of Scotland is a good example, because the nature of its business is changing significantly as technology revolutionises how it delivers its business. It has been genuinely difficult to gain an adequate understanding of where the business will be in order to make the business impact judgment. Of course, I cannot put my hand on my heart and say that, in every case, the impact on such decisions of having done the studies is as large as people thought it might be but, in every case, there was a reasonable basis for thinking that the impact might be large enough to make it worth doing the work.

The Registers of Scotland example is interesting in many ways. It has to be open to question whether it should take five and a half years to reach the rather sensible conclusion that location decisions should be embraced as part of the organisational change programme that the organisation is already developing. You may or may not wish to comment further on that.

We have finished on that area of questioning—I do not see any volunteers. That allows me to move on to the next section of questioning, which is consideration of the relocation of the headquarters of Scottish Natural Heritage, with particular regard to ministerial written authority.

I should make it clear for the benefit of those who are not aware of it that Sir John was not the principal accountable officer at the time of the decision. We want to see what happens and to understand the processes better, so we appreciate your being here to help us with that, Sir John.

Paragraph 3.3 of the memorandum to accountable officers from the principal accountable officer states that if a minister overrides an accountable officer's advice, the principal accountable officer should be informed so that he may give advice to the minister or office-holder. Was the principal accountable officer informed in relation to SNH and did he give advice to the minister or the accountable officer in that case?

I am very sorry to say that I do not know the answer to that question. I feel that I should, so I apologise.

Is that something on which you could come back to us in due course?

Indeed, yes.

That would be helpful.

Are you able to tell us what the process would be if the principal accountable officer were to disagree with the accountable officer's view that an action was incompatible with the proper performance of that accountable officer's duties? In other words, would the accountable officer still seek written authority, and would the principal accountable officer's views be made known to the Auditor General for Scotland, for example?

Gosh! That is a fascinating question of theology. That has never happened in Scotland or anywhere else, so I will need to address the point hypothetically. Such a view's being taken by the principal accountable officer would negate the accountable officer's request for direction. In practice, there would no longer be a direction, and all that would happen before the Auditor General was notified. It would therefore be as if it had never happened.

That was useful clarification.

I turn now to the purpose of seeking written authority. The policy memorandum for the Public Finance and Accountability (Scotland) Act 2000 does not confirm the policy intention behind the provision requiring accountable officers to seek written authority. The purpose could be to provide protection for accountable officers, and an incentive to ministers to ensure that decisions to commit expenditure are proper and provide value for money. As the principal accountable officer, what are your views on the purpose of section 15(8) of that act?

My view is that the fundamental purpose of section 15(8) is to place decision making about the conduct of Government ultimately in the hands of ministers and not in the hands of accountable officers. I think I am certain that that is its primary purpose, but it is carried out in a way that creates a form of accountability that is being substituted for the form of accountability that the accountable-officer system provides. The reason for the high profile of the process is to create an opportunity for Parliament to direct the processes of accountability towards the minister, whereas they would normally be directed towards the accountable officer.

Your letter of 13 November states:

"Ministers are responsible for defending the specific action."

Does any guidance exist for ministers, setting out what is expected of them in defending the action? For example, is there guidance on how much information ministers should be able to provide about the basis on which they make decisions?

I can be confident in saying that there is no such guidance. Events such as the convener describes are so rare that it would be difficult to generalise for ministers about how they should conduct themselves in assisting Parliament in the exercise of accountability.

Such rare and highly unusual events would attract a degree of interest.

In his submission, Mr Wakeford says that the Cabinet had

"agreed to incorporate revised guidance on public sector appraisals … into the Scottish Executive's own procedures"

and he mentions the impact that that had on the DTZ report. As principal accountable officer, can you tell me whether any other relocation appraisals were revisited as a result of the revised guidance?

I do not think so. I am not aware of any such revisits.

Again, I am happy for you to come back to me in writing if you want to check that. That would be helpful.

Are reviews of the processes in relation to ministerial authorities undertaken?

Could you elaborate a little further? I am not quite sure what those processes would be.

Once a written authority has been issued, is any internal review carried out, either by you or by the department, to find out whether, procedurally, everybody was happy that it happened because it had to happen, and whether everybody was informed, so that ministers knew what their responsibilities were in issuing that authority?

Relocation is a process of such significance that it receives a high degree of scrutiny at all stages. Ministers reviewed the overall process relatively early in the life of the Scottish Parliament, once we gained some experience of the use of the mechanism, and they introduced changes to ensure—to put it loosely—that the view that was being expressed was the collective ministerial view, rather than risk its being otherwise.

By "collective", do you mean "Cabinet"?

Yes—although it is a process that involves the First Minister and Deputy First Minister on behalf of the Cabinet, rather than the Cabinet itself.

Would that way of sharing the decision have been in place at the time of the SNH decision?

I believe that it would.

That covers the areas that I wanted to pick up. John Swinney now has questions for Richard Wakeford.

In the material that the committee has seen so far, there is information on the financial considerations that were brought to the attention of ministers about the SNH relocation. What is not clear from that information is whether there was any other information that might have provided a counterbalance to the financial information that was provided. Can you shed some light on what information led the accountable officer to conclude that relocation to Inverness did not represent value for money in terms of the policy and the overall argument?

As you said, there was a financial analysis that examined net present value, taking into account property, travel, staff transfer costs and so on, over a 30-year period. That was subsequently adjusted because the guidance changed halfway through the process, which led to the figures that I put in the annex to my letter to the committee. That set of figures shows a range of hypothetical net present values for different locations, not for specific sites. The risks and benefits were also taken into account and are outlined in that annex. In putting the advice together, my predecessor—who was responsible for seeking the written ministerial authority—took all those factors into account.

In arriving at the judgment on Inverness, was consideration given to other project proposals that would have performed better financially than Inverness?

The financial analysis that was based on the work that the external consultant, DTZ, did showed a range of NPVs. Inverness was among the most expensive of those. There were other factors to take into account; the conclusions that my predecessor reached about which of the options could be proceeded with and which represented value for money took account of them.

The test that he then applied was whether, if you had called him to the committee to defend a decision to relocate to Inverness, he would be comfortable that he was able to do so on the grounds of economy, efficiency and effectiveness. Because we have the evidence that he sought ministerial written authority, it is clear that he decided that he could not come and defend such a decision on those grounds.

In that assessment, did your predecessor also have recourse to the relocation policy's three key objectives, which are to

"ensure that government in Scotland is more efficient and decentralised"—

I think that we can all agree that SNH might have ticked that box by going to Inverness—

"provide cost-effective delivery solutions and assist areas with particular social and economic needs"?

Were those factors implicit in the judgment at which your predecessor arrived?

Yes. I should not speculate, because he is my predecessor and he reached the decision, but it was for him to put weights on the different factors in order to come to the conclusions that he did and I conclude that ministers put a different weight on some of those factors in reaching the decision that they reached at the time.

Essentially, your predecessor followed the available processes for assessment under the Executive's relocation policy, tested the case against the objectives, either undertook or arranged for a financial assessment and came to the conclusion that, on the basis of that evidence, there was no case for relocating to Inverness.

The financial appraisal, which was done by DTZ, was about the major elements of the likely costs and impacts. However, on top of that, a range of other factors that would be much more difficult to quantify were taken into account. If you are asking me whether lots of other figures were added to the assessment to come arithmetically to a decision that relocation to Inverness would not be compatible with economy, efficiency and effectiveness, I cannot claim that that was so because, as in many judgments that one makes, there are elements on which it is not possible to put a precise value. The things on which it is normally possible to put a precise value went into the assessment and then there were a number of other factors about which we could be far from certain at the time.

To put it in slightly more colloquial terms, on the hard numbers, the case was against relocation to Inverness but, when you applied some of the other factors, such as socioeconomic benefit and the impact of decentralisation—if you were ever able to put a number on those things—a judgment was made. That is obviously what ministers made a judgment about.

Yes.

The Auditor General's report refers to the fact that SNH

"was not given the opportunity to comment on the cost figures upon which ministers based their final decision and disputes the rationale behind some of the assumptions."

The permanent secretary said earlier—in response to a question from Robin Harper, I think—that organisations were generally left in the driving seat of the relocation assessment. Why was SNH plucked out? The permanent secretary said that organisations are generally left to decide about the mechanics of relocation, but the Auditor General says that SNH was not involved in assessing the cost estimates and disputes some of the figures on which ministers made their judgment. Why was the general position that the permanent secretary outlined not applied to SNH?

I was not involved at the time, but there is a good deal of evidence on file of a close working relationship between my predecessor and SNH. I wonder whether the clue is in the letter that my minister sent to the chairman of SNH on 9 July, in which he highlighted elements that were relevant in ministers reaching a decision. It mentions the Scottish Executive's relocation policy, as would be expected, the intention to share public sector jobs and their economic benefits throughout Scotland, and significant efficiency gains. It also says that potential synergies could be explored, because SNH already had a significant presence in Inverness and a large part of its work is there, although I note the view that was expressed earlier in the committee that perhaps much of SNH's work needs to be done in other areas, too. However, that was certainly a factor that was mentioned.

The letter also says:

"In addition, because of the profile and nature of its work, SNH is a better candidate than other organisations for location in the Highland area."

That may give some clue as to why the minister reached a different conclusion from that which SNH might have reached in its own analysis. I return to the point that I made at the beginning of my answer. There is plenty of evidence on file that a lot of work was going on in partnership between SNH and the department to analyse the various options.

We heard from the permanent secretary again that there has been no identifiable deterioration in the performance of organisations that have relocated. Is that the case with SNH?

I believe that the organisation's performance has not suffered unduly, although dips might have occurred in some areas, as in any organisation when key staff leave and a vacancy is suffered. That happens to us in the Executive in Edinburgh as much as it happens to SNH.

During the review, SNH has been increasingly willing to review its overall structure and management systems. The move to Inverness may have changed the organisation's culture in a way that has made it more effective. It is probably anecdotal evidence, but the relationship between SNH and the Deer Commission for Scotland is much closer as part of an overall policy of bringing together the organisations that my department sponsors to work more closely. That has happened as a direct result of SNH's arrival in Inverness when the Deer Commission was reviewing its location requirements. The two bodies now share the SNH building in Inverness.

In effect, relocation has acted as a trigger for a wider reassessment of business processes by SNH.

It has. As far as I can see, that factor was not taken into account in the analysis of the options on where to move to.

This point does not relate to SNH. Do you have further proposals for the relocation of any elements of the organisations that are part of your department? Are you considering any relocations?

There is a short answer and a long answer. Most NDPBs and executive agencies that my department sponsors have been relocated away from Edinburgh, so I have no candidates in play for the policy of relocating from Edinburgh. However, the department is pursuing a policy of much closer working between several executive agencies, NDPBs, the Forestry Commission Scotland and Forest Enterprise Scotland, which are part of what we call the Environment and Rural Affairs Department family. As opportunities arise, we encourage those organisations to come together and co-locate around Scotland to deliver a better service to the customer and to deliver efficiency gains. That is also relevant in the process of developing rural development policy. In a consultation paper last year, the minister outlined a process that will see some regionalisation in the consideration of applications for grant aid. That will mean that more work will be done regionally around Scotland rather than in headquarters.

In terms of the crude moving of jobs from Edinburgh to elsewhere, we have no current plans. However, two significant initiatives are under way to translate our thinking into the more effective delivery of policy to the people of Scotland: on the ground and the new rural development regulation.

Finally, your department has a presence in various parts of the country—as a department and through the NDPBs and executive agencies. Do you accept that you have to take the greatest care not to damage that by relocating agencies that are located outside of Edinburgh to other parts of the country?

Some committee members may know my background. I came to the Executive from an organisation down south where that sort of damage was suffered. I bring personal experience of how it can inadvertently be made more difficult for an organisation to deliver for the people whom it serves and how important it is to take those elements into account in making judgments.

That is one of the reasons for our on the ground policy approach in which we are bringing together more closely the bodies within the ERAD family. We are trying to help officers in those agencies, who serve the people of Scotland, to come together more closely. If each officer sees the impact of their organisation's decision-making processes, we will deliver a better service to the customer. However, if we force that to happen too quickly, we could undermine the capability of each organisation to deliver the services that they are required to deliver. The process is tricky. It is therefore being led for us in a steady way, which allows us to involve the organisations fully in the process with the deputy minister chairing the steering group. The project is under way and we have the full involvement of the chief executives and chairmen of those organisations in taking it forward.

Thank you.

I have one question for Mr Wakeford. Do you also have a follow-up question, Susan?

Yes.

I will come to you in a second.

As a result of the further assessment work that was undertaken, did Inverness's position improve relative to the other relocations in the option appraisal?

The figures are in the annex to my letter of 13 November. At a glance, I would say that the position did not improve; it got worse as a result of the application of the new guidance, which was based on the Treasury's green book approach.

I just wanted to clarify the point.

In light of the evidence that we have heard, I have a few points of clarification. The first relates to the draft evaluation report, which went to the Finance Committee and of which we have a copy. The table on page 22 shows the various relocations. One column includes comments on the relocations, one of which relates to SNH. It says:

"Inverness selected given existing staff located there and SNH considered the most appropriate body to locate there."

Is it right to say that the status of that comment is different from that of the others? Surely that is an expression of ministers' views? It sounds like a summary of the letter that you read out—the letter in which your predecessor conveyed to the chair of SNH ministers' reasons for the Inverness decision. As I said, I read it as an explanation, which makes it different from the other comments that are made in the table, which give officials' interpretations.

Yes. That is clarified by the previous column, which acknowledges that the decision on SNH was of a different order.

Reference has been made to the number of staff who left the organisation and the cost associated with that. For the record, and so that we are all crystal clear, do you have a precise figure for the number of people who did not relocate from Edinburgh to Inverness? How does the figure compare with the earlier predictions of the number of staff who would not move?

The original forecast was 136. In the event, the number of people who did not relocate was 102.

I do not know whether it will help the committee if I mention a further factor that is relevant to future relocations, although not to the relocation of SNH. There is now an opportunity for staff of specified NDPBs who find themselves without a post to transfer to the Scottish Executive without having to apply in an external competition. In other words, provided that there are opportunities in relevant Scottish Executive offices, we can now offer employment to people who, under the SNH change, had no such opportunity.

I am aware of that point and I agree that it is important.

You confirmed that 102 people chose not to relocate to Inverness. How many people did relocate?

Fifty-five, compared with a forecast of 36.

Can you provide any additional information on those former members of staff? Obviously, I do not seek information from which individuals could be identified, but it would be helpful to know what level of skills and experience the organisation had to replace.

I will provide you with a note about that.

Thank you.

I seek further clarification on costs. The appendix that you mentioned states that the cost associated with the move to Inverness was £20.692 million, and £20.856 million after revision. Have I selected the right numbers? Please correct me if I have not. There are a lot of numbers in the papers.

The figure that was relevant when the decisions were taken is the second one that you mentioned—£20.856 million, which is a revised net present value with a 3.5 per cent discount rate over a 30-year period covering property, travel and staff transfer costs.

You said that that is the figure that was relevant when the decision was taken. Can you give a date for that?

March 2003.

So, in March 2003, at the point at which the accountable officer said that the relocation would not represent value for money, the cost was estimated to be £20.856 million.

That is the net present value that was used in the analysis. I need to be careful here, because the costs are a very different thing.

I understand that.

In response to a question that I asked in the chamber on 5 June 2003, the then Deputy Minister for Environment and Rural Development said:

"Over a 30-year period, the move to Inverness will cost, in net present value terms, somewhere in the region of £22 million."—[Official Report, 5 June 2003; c 488.]

Does that indicate that there was an increase in the estimate over a period of time, or was there just a rounding up of the figures?

You have me at a disadvantage there. I will have to look at the file and see whether I can understand why that figure is different.

I would be grateful for that.

Finally, can you tell us the current figure for the actual cost to date and the projected cost over 30 years? I seek the comparable figures to those that we have just discussed.

No. It is simply not possible to do that. After the decision was taken, SNH was asked to put together a project plan to deliver the decision that the minister had taken, with due attention to economy, efficiency and effectiveness. A project plan came in for us to approve and my predecessor's job was to ensure that the mechanisms in place to deliver the plan could give him assurances that all those things were covered properly.

At not quite the end of the process, I have an analysis that compares the original costs of that project plan with how they turned out. One of the reasons why we cannot give you a complete answer at this stage is that there are still some unknowns. One of the most significant unknowns is the disposal proceeds from the Hope Terrace building, which in the project plan were estimated to be £1.9 million. They will depend on the planning brief that consultants and SNH work up before they dispose of the property.

Can you give us a broad indication of whether the comparator figure will be greater or less than the estimate at the point at which the decision was taken?

The best way that I can preface this is to say that we are dealing with different currency systems. Having read through the file, my judgment is that the relocation has been achieved at less cost than was estimated. A number of factors are involved. One is the fact that fewer people had to be made redundant. Another is that the building was procured advantageously. On the slice of the project that has taken place, SNH has provided me with a project plan that shows that excellent use has been made of the budget available. We are not at the end of the process yet and that is not an evaluation. At the time that the decision was made, no estimate was made of the travel consequences, given that SNH operates around Scotland. The costs of travel and how many people will travel to Inverness—and from where—will settle down over time. There are a number of unknowns about which it would be wrong to make a judgment at the moment.

I appreciate that there are certain unknowns at the moment, but it would be helpful if we could be furnished with further information on that point before our meeting with the minister in the new year. There are a range of different totals in the public domain, including the figure given in the Audit Scotland report. It would be in everybody's interest for us to have as good a handle on the figures as possible.

I am sure that, given the professional background of my minister, he will be happy to present you with the various accounting bases.

I am sure.

In your evidence you said that when the minister came to his decision, he used different weightings to the weightings used by the accountable officer. I presume that there was no previous agreement between the minister and the department on how the weightings would be valued. Is that routine?

As a senior civil servant for many years, I have found that there are certain things that one can put into currency terms, on the basis of assumptions, and certain things that one cannot. One therefore has to make judgments about how material those things are to decisions. In the field of the environment in particular, that is very tricky, as you know. I do not want to sound like Donald Rumsfeld, but there were a lot of things that were known and some other things against which it was more difficult to place figures. As I indicated, there are also some other things that were not expected at the time but which have come out from relocation, including the change in SNH management.

I was not trying to be anywhere near as sophisticated as was mentioned. I was trying to explain that, when accountable officers are operating under the clear instructions that they have, they have to make judgments by putting certain weights on certain factors. They start from the position of the general policy of the Government of the time, but it would be a strange world in which the judgments reached by an accountable officer were always followed through when the minister considered them. I am saying simply that the accountable officer at the time reached one conclusion based on some of the relatively less tangible factors and ministers collectively reached a different conclusion.

That exhausts our questions, and I thank Sir John and his team for coming today. It has been most helpful. As usual, we will want to follow up a number of points, and we will write to you about them once we have seen the Official Report. Thank you for your time.

That ends item 5, and we will move into private session for items 6 and 7.

Meeting continued in private until 13:06.