Official Report 209KB pdf
Good morning, ladies and gentlemen. This is the eighth meeting of the Economy, Energy and Tourism Committee. We are going to discuss the establishment of the energy technologies institute and the opportunities for Scotland therein.
You can pitch in.
It would be helpful to understand from your perspective the process of how the decision was reached. How comfortable were you that Scotland plc, if I can so describe it, made a strong enough pitch to get the institute, given its clear importance to Scotland and the United Kingdom?
Would you like us to start way, way back, right at the beginning?
That would not be a bad thing to do.
The matter goes back a couple of years to a proposal from the Scottish Science Advisory Committee that we should have an energy institute in Scotland. At that time, the SSAC was chaired by Wilson Sibbett, who set up a whole-day conference and got a fair amount of buy-in from us, Scottish Enterprise and almost all the academics who were involved. It was agreed that we should try to take the matter forward. For a couple of years—I guess that the later witnesses will put me right if I am wrong—the universities were beginning to work together on the matter.
Yes. The Department of Trade and Industry, as it was then, organised an information day. We were conscious that there was a lot of interest in Scotland and a lot of people were going to the information day, so I suggested to the people of whom we were aware that we should meet after the day to exchange information and gain awareness of who was doing what. At that meeting, which the Scottish Executive facilitated, it was proposed that, rather than having a number of separate interests in involvement in the ETI, it would be worth while to work as a consortium and put in an expression of interest.
BERR?
Sorry—I mean the DTI, as it was, which is now the Department for Business, Enterprise and Regulatory Reform.
The group that you established included universities, Scottish Enterprise, civil servants and other interests and stakeholders?
Yes. It included the Scottish Science Advisory Committee, Scottish Enterprise, the Scottish Further and Higher Education Funding Council and the universities. It was open to anybody. Aberdeen City Council came on behalf of the economic forum. Other local authorities did not attend, but expressed interest.
That meeting was clearly a critical point in the process of determining what bids would go forward. Was the meeting that was attended by Aberdeen City Council on behalf of the local economic forum also attended by the University of Aberdeen and the Robert Gordon University?
Yes. I will have to look back at the notes. We held quite a few meetings at which we had videoconference participants. Stephen Logan can correct me if I am wrong, but my clear recollection is that the university and the forum were separately represented and continued to be so for a number of meetings after that.
The expression of interest had the University of Aberdeen's logo on it but not the logo of the Robert Gordon University. I do not know whether that indicated that it was not participating at that point.
That reflected the level of virement. One of the interesting questions that has arisen concerns the way in which, from there, a Scottish bid was put forward that was fronted by the University of Strathclyde. Can you tell us a little about the process of getting from the decision in principle that there ought to be a Scottish expression of interest to the point at which it was agreed or proposed that a bid should go ahead that was fronted by the University of Strathclyde rather than, for example, the University of Aberdeen?
An expression of interest in line with the requirements put in place by the UK was submitted in February, on a consortium basis. There was no requirement at that stage to posit where we were suggesting the director's office should be located. In May, we heard that we had been shortlisted and it was immediately clear that, by the time the final bid was submitted, we were required to identify a single location for the director's office.
Let me understand clearly what you are saying. Before May, and before the shortlisting of the five prospective consortia or hosts of the ETI, no decision had been made that specified a focus on the University of Strathclyde rather than on the University of Aberdeen. That decision was taken in May.
We posited the possibility of three different locations: Glasgow, Edinburgh and Aberdeen. Partly, we did not feel in a position to make a choice at that stage, as it was not clear enough what the ETI was looking for. Also, we saw advantages in all three locations being involved in some way, which remained the case until the final bid. Although the University of Strathclyde was suggested as the key location for the director's office, the final bid suggested that there should still be facilities in Edinburgh and Aberdeen, as you will probably remember from the press coverage at the time.
Absolutely. That brings us to why, when the decision was made in May, you and the other stakeholders around the table decided to focus on Glasgow rather than on Edinburgh or Aberdeen.
That was not determined straight away. There was a process of discussion with the representatives of the ETI. The final criteria against which the ETI would decide where to site its hub were issued at the end of June or the beginning of July. It was after that stage that a decision was taken. It was taken reasonably speedily because it was on that basis that we had then to finalise the bid document. We had the criteria that were established by the ETI and, collectively, as a consortium, we agreed that each potential location should set out how it met those criteria. The criteria were strongly—although not entirely—based around university capacity and facilities.
And the Scottish Science Advisory Committee.
Yes. It was an examination against criteria set by the ETI.
And it was judged by those four organisations, with no input from the universities or the other partners that were round the table?
Yes. That is what they asked us to do.
Are you saying that the criteria changed through the process and that that played a crucial role in the final decision that was taken in the summer?
They were refined slightly. You might want to ask Alison Wall about it later. The criteria did not change in any fundamental way, but they were refined slightly. They related to research capacity, innovation capacity and the physical facilities that could be brought to bear.
Sorry—who refined them?
The ETI.
You said that "university capacity" was one of the criteria. What does that mean?
The criteria would reflect university capacity, which would take into account research that had been undertaken; research ratings; demonstration and deployment facilities, which might be university-based or otherwise; and interaction between universities and industry.
There was a range of criteria. The point is that they changed and were altered through the process.
I think that they were refined. As Alison Wall could tell you, as the process moved on, the ETI became slightly more precise about, for example, what it was looking for in respect of the building.
The final specification that the ETI sent out in late June and early July was the one that the universities made their pitch against. It set out the final criteria. The list was fairly lengthy. We put it into the public domain.
Did you always feel that the refinements—I will use that word rather than "changes"—of the criteria were fair, transparent and logical, or was something else going on?
You may also want to ask the universities about the issue. I think that we felt that they were transparent. We felt that, at the final stage, the criteria began to place a little more emphasis on physical facilities than they had done previously.
You said that the role of Government officials was to facilitate a joint Scottish bid. Can you spell out in more detail the exact role that Government officials played? What role, if any, did ministers play? Can you explain the distinction between the facilitation that was taking place and the decision-making role to which Government officials contributed when it came to deciding where in Scotland the lead location for the consortium would be? You said that the Scottish Science Advisory Committee, the Scottish Further and Higher Education Funding Council, Scottish Enterprise and Scottish Government officials were involved in the decision about which location in Scotland would be the lead one. It seems that there may have been a move from facilitation to decision making. Can you give us more background on that?
In respect of facilitation, as you can imagine there was a long series of meetings between October and the following July in relation to what you are interested in—meetings continued to be held after that to deal with the submission of the bid. I chaired the meetings; I was asked to do so by those present.
Can you make it clear who was present? Did the universities ask you to chair the meetings, or did the other players also ask? How were the people beyond the universities involved?
My understanding is that the universities asked me to chair the meeting. Those that had representatives present were the University of Edinburgh, Heriot-Watt University, the University of Aberdeen and the University of Strathclyde. Also present were representatives of the Scottish funding council and of Scottish Enterprise. Until the expression of interest was made, at least, Aberdeen city and shire economic forum was represented. The request was made differently at different times, but it was endorsed by university people, the funding council and Scottish Enterprise.
In that case, whose initiative was the bid? Was it universities' or the Government's? It is still not 100 per cent clear to me why all the players were involved and what the genesis of the bid was.
It goes back to what Graeme Dickson said earlier.
This is not the first time that we have been involved in facilitating something that universities have done jointly. It happens once or twice a year—Mr Macdonald may recall it happening during his time as a minister. Universities are independent institutions whose independence is preserved in law. We often get them together, try to encourage them and facilitate projects, but in the end it is for them to decide what they want to do. This is an example of how the process works.
Does the fact that the universities required someone to facilitate a way forward—I do not say to hold the jackets—suggest that there was not unanimity about the direction in which they should move? When did the role of facilitation change into one of decision making?
It was open to any university or partnership to bid for the ETI hub at any time. The University of Aberdeen by itself or with Aberdeen City Council could have bid; the University of Strathclyde and the University of Edinburgh could have done the same. The partnership consisted of willing partners, because at all times they had the opportunity to do something different.
When did your role change from one of facilitation to being an active participant in the decision-making process? You told us that four organisations decided where the proposed hub would be, and that one of those was your office.
A colleague of mine chaired the final meeting. As I said, the criteria were issued around the end of June and beginning of July. Ten days later, there was a meeting to examine the documentation that Glasgow, Edinburgh and Aberdeen had submitted. The meeting reached a consensus view. My colleague chaired the meeting, but his main role was to gather in others' views. I will not pretend that we were not party to the decision, but it was based on a consensus.
Do you accept that there is a distinction between facilitation and being an active participant in decision making?
When one chairs, one sometimes has to guide people to a decision and sometimes one allows discussion to take place, as I am sure the convener of your committee has to do. Obviously, as a chair when a sensitive decision was being made, we would have been extremely careful not to drive that decision in any way.
In the guidance that you gave, were you guided by ministerial direction at any stage, before or after May?
No, because ministers were informed of the process that was to be undertaken—
But you were not guided by ministers on how you should guide the group that was making the decision.
It would be difficult for somebody chairing a group of three or four independent bodies—such as the Scottish Further and Higher Education Funding Council, which makes such difficult decisions daily—to try to sway them toward a decision that did not meet objective criteria. The three universities that, in effect, made a pitch did so on the basis that they wanted somebody to help reach a decision. If the three universities were not going to agree to the decision, they would not have gone into the process trying to get impartial and essential advice.
In the early stages, the DTI put a great deal of emphasis on the criteria on research capability. I have a question with the benefit of hindsight. I do not wish to downplay the research that is done in Scotland, but Imperial College London might well have been the best in terms of research and the University of Cambridge is significant in that regard. Given that both of them were eliminated at an early stage, is it fair to say that, in the final decision, the criteria on research did not play a major part in the DTI's decision-making process? In the assessment that the four decision-makers carried out of the three bids in Scotland, what effect did the weighting that was given to research capability have?
We were told clearly that the criteria that were set out would be given equal weighting and the bids were judged on that basis.
Is it not fair to say that, using objective criteria on research, Imperial College London and the University of Cambridge could well have been in pole position? However, they were both eliminated at the first stage.
You would have to ask the ETI shadow board members about that. We obviously never saw expressions of interest from other participants. Even at the early stage, it was important to refer not only to research, but to issues such as facilities and interaction with industry. We have not seen the proposals from Imperial College London, the University of Manchester or the University of Cambridge.
In your answer to Brian Adam about ministerial involvement, were you seriously suggesting that ministers, either before or after the election, did not have a view on the matter?
Ministers may have had a view.
And they never expressed that to you, before or after the election?
There is a difference between expressing a view and the process that was—
That is not what I am asking. I am asking you, on the record, whether ministers expressed a view on the matter, before or after the election.
Are you asking whether they expressed a view on which site should be chosen as the proposed hub?
Yes.
I think that they expressed a view, from their perspective and without sight of the criteria, about which they thought would make a good hub.
The crunch meeting in the process was when the four bodies got together to consider the various criteria that you would use to decide which place in Scotland would be chosen. Given that you had chaired all the meetings up to that point, why did you not chair that one?
Because I was on holiday.
Right. Had the person who chaired the meeting been present at all the other previous meetings?
Yes.
Okay.
It all went according to an English timetable and the expectation that everyone would go on holiday in August, whereas, of course, in Scotland, quite a lot of people go on holiday in July.
You said that Glasgow, Edinburgh and Aberdeen were all bidding to be the hub. Did each city have to present to the final meeting a separate reason why it should be the place for the Scottish hub?
Yes; they presented written documentation.
How did the group judge those against one another?
The group read the material against the criteria, but they also had discussions with each of the three separately.
Given that a crucial decision was being made, how much of that material was fed up the way to get a political viewpoint from a ministerial office?
The material was not fed to ministers prior to the decision being made.
So the group took the decision and said, "Here is the decision that we have made, minister. That's it."
The decision was taken on behalf of the three universities.
So there was no ministerial input: the group took the decision and the minister was presented with the fait accompli that the decision was for Glasgow.
Mr Swinney's letters to Abigail Tierney and Nicol Stephen make that clear.
My locus in this is that I wrote the history of North Sea oil—"Fool's Gold: The Story of North Sea Oil"—which was a massive energy initiative undertaken almost completely by the private sector and entrepreneurs without much academic or research input until quite a late stage. I find it odd that we are discussing what seems to be a dialogue between academic institutions. I would like to know something of the input from commercial energy firms, bearing in mind the fact that the Siadar wave energy project in the Western Isles is completely German in financing, technology and organisation. In Germany, that would lead to collaborations between the universities and the big entrepreneurs. Is that happening or foreseen?
There is considerable collaboration between universities and the energy sector here. This particular activity was a UK Government proposal to get companies involved in funding jointly with Government research. It is a particular initiative involving Shell, BP, Caterpillar, E.ON and Rolls-Royce. Bilateral agreements and negotiations are going on between the companies and universities.
With respect, there are also several non-ongoing collaborations, such as the BP carbon capture project at Peterhead, which seemed to be a candidate for the project but the company simply withdrew. The nature of British engineering since the North Sea oil boom means that very few companies that participated in it are left. The further fate of the people who pioneered, say, positioning in the North Sea—Ferranti, Thorn Electronics or Racal—shows that we are going to have to collaborate with continental companies. Energy is a very important diplomatic area because those companies already have extremely good relationships with their research universities.
The bid document referred extensively to collaboration with and work for industry. It was more difficult to say that companies A, B, C and D explicitly supported our bid because they would probably have worked with whoever was the winner. The five key funders, who are providing substantial funding, were party to the decision, so they could not align themselves behind one bid or another. However, in bidding for the ETI work in future, those collaborations will undoubtedly be extremely important.
If all that collaboration was so good, why did we lose the bid?
You should probably ask the ETI, but we are convinced that we must have made as good a case on research, on demonstration and deployment and on collaboration with industry. We think that we had a good proposition on the building. There was to be a high-quality interim building and then a building would be constructed. We felt that that option had been de-risked via Scottish Enterprise but, as we understand it, the Loughborough proposition had an existing building, which I guess was de-risked to a greater extent. You would have to ask the ETI decision makers about that, but we certainly felt that we had put in a good proposition, on the building as well as on other aspects.
I have two points to make following on from colleagues' questions. Christopher Harvie asked a pertinent question. What am I to understand from the response about the decision that Shell and BP, for example, were not to be part of the Scottish stakeholders decision-making process? Was that decision taken by Shell and BP, by the universities or by the Scottish Government?
As I recall, we approached early on a number of industrial partners who expressed general interest. That is represented in the bid. We did not seek, as I recall—it was Scottish Enterprise that handled the main interaction with industry—explicit endorsement from those companies that were the key funders of the ETI, because we did not think that appropriate. I think that Alison Wall would agree that they could not have given that endorsement; it would have prejudiced their position in being party to the final decision.
I understand entirely that point, which you made in reply to Christopher Harvie. However, my question is about whose judgment was exercised in coming to that conclusion. In other words, were the companies invited to consider the proposition, did they express any interest in being involved in the Scottish stakeholders group, or was the decision not to involve them taken prior to the establishment of the group?
We discussed it collectively and concluded that it was not appropriate to involve the companies, but we certainly communicated with industry generally and sought trade association support for the bid.
My other point arising from earlier evidence relates to what you said about a ministerial meeting that took place after the completion of the bid but before its submission. What was the date of the decision on the location of the hub in Scotland's bid, what was the date of the ministerial meeting, and which minister was it with?
The date of the meeting was either 12 or 13 July. I can check, but I think that it was on a Thursday that the group met. Jim Mather met Jim McDonald, who led the bid, later on. I confess that I cannot remember exactly when that was, but it would have been late August.
But it was after that meeting.
It was just before the submission of the final bid document. The team was offered a dry run with Jim Mather, so it was much later in the process.
I have a question about the meeting at which the final decision was taken. The four organisations that you mentioned sat down in a room and reached consensus on the decision, so in effect there were four votes for Glasgow and none for Edinburgh or Aberdeen. For there to be such a consensus, there must have been some pretty clear objective, tangible reasons for taking that decision. What were those obvious and clear reasons?
As I say, there is a set of criteria. Individual locations were marked against each of those criteria and then ranked. As Mr Swinney's letter to Abigail Tierney made clear, we have not released the precise marking sheet. We did not think that to do so would be appropriate or in the interest of Scotland's full bid or subsequent bids for the substantial research programmes that the ETI will run. We can pass the criteria to you.
They run to three or four pages of fairly detailed criteria.
Is it possible to see them and the scoring? Could you share that information with the committee?
Well, the minister said in his letter to Abigail Tierney that he was not releasing the marking sheet for the reasons that I have just mentioned. Obviously, you can request it if you wish to, but we have not released it because we felt that it would prejudice the initial bid and could prejudice our future bids for the research programmes. Obviously, we want to present Scotland as strongly as possible and it is not in anybody's interest to show that they have marked themselves lower than perfect on anything.
The information was made available to the university members but went no further.
I ask for clarification on one thing. The final meeting about where would be chosen for Scotland's bid was held—while you were on holiday—after the election, when a Scottish National Party Government and Minister for Enterprise, Energy and Tourism were in place. Are you telling me that the minister did not say to you or give an indication to his officials before that meeting that he thought that the ETI should be in Aberdeen?
The minister did not do that personally.
That is not really an answer to the question. He might not have spoken to you personally, but the way that such things work is that the minister makes his views known through officials. Did he make known his opinion that you should go for Aberdeen?
Even if the minister had said that, I am not sure what officials could have done to bring about an outcome contrary to an objective process. We have done a number of collaborations with universities where—
Are you telling me that officials will fly in the face of a political decision? Surely not.
No. We set out the process that we intended to pursue—that is, the process that the consortium had asked us to pursue.
But advisers advise and politicians make decisions. Are you saying definitely that Mr Mather did not express an opinion that Aberdeen should be the chosen venue for the ETI bid?
He did not tell us not to pursue the objective process that we have described.
Crikey!
Were the officials aware of the speech that Mr Mather made in Aberdeen at the all-energy conference within a few days of taking up office in which he explicitly said that he supported Aberdeen for the hub location of any ETI bid? Are you telling us that you are not aware of the content of that speech?
I am very aware of the content of that speech.
So it was absolutely clear to officials who were taking part in the process what the Government minister who was responsible for the matter felt about where it should go.
I do not think that the speech said that.
I thank Graeme Dickson and Jane Morgan for that fascinating evidence.
I thank the committee for giving us the opportunity to come here and answer questions.
Questions have been asked about the first set of criteria at the expression of interest stage and about how the criteria changed in the final document that we issued for the bids. I will fill in some details.
You mentioned a host selection sub-group. It strikes me that that group was an important component in the process. Who was in it?
Allan Jones from E.ON initially chaired it. It included representatives from the six ETI companies, three public sector representatives and an independent member from the Office of Gas and Electricity Markets.
Which organisations did the three public sector representatives represent?
The Department of Trade and Industry—
The organisation that we used to call the Department of Trade and Industry.
Yes. The other two organisations were the EPSRC and the Technology Strategy Board.
I am interested in two things. First, I suppose that Rolls-Royce is now the largest of the independent suppliers of high technology that are owned and controlled in Britain. Is that right?
It depends on how you measure things. You could put BAE Systems in the engineering sector higher. In the non-engineering sectors, some of the pharmaceutical companies would be put higher.
But Rolls-Royce would be regarded as the world leader.
It would certainly be in the top bracket.
Secondly, I am interested in the organisation and history of energy. As a result of what I have done in the area, it strikes me that we do not have the manufacturing capacity that we had in the 1970s, say, which was used to extract North Sea oil. Many companies that were involved in extracting North Sea oil have simply disappeared. Therefore, international capability is important, as you have stressed.
The list of technical areas that the ETI will seek to address is driven by the partners from industry and the public sector in what will become a limited liability partnership, which we intend to establish by Christmas. Those partners—including those from the public sector—have their own reasons for their involvement, but we have established a joint set of the outcomes that we hope to achieve from the ETI over a period. Those outcomes are the pull-through of new technologies in the low-carbon energy sector, the enhancement of security of supply and a reduction in energy poverty.
We will decommission many production platforms in the North Sea over time, many of which have elaborate generator equipment for the pipelines from the fields. Will you be concerned with the possible reuse of that equipment as combined cycle generators and for local block generating capacity on land with appropriate implantation into local heating schemes, for example? Otherwise, a lot of high technology might go to waste.
It is clear that those systems have applicability in the ways that you described, but I cannot say now whether the ETI will support that. Our plan for the next six to 12 months is to undertake a detailed analysis of areas in which the ETI could invest to provide additionality to the incentives that are already available. The technical issue of building efficiency and the use of waste heat in combined heat and power systems, for instance, is on our list and we will examine that fairly urgently but, as we have not done that work yet, I cannot sensibly comment on the question. I agree that most of that plant is high efficiency, so it could offer potential.
Dr Clarke mentioned four work streams that are in play and are relevant to Scotland. That raises the obvious question: why did Scotland not win the institute?
That goes back to what I said at the start. We put out a request to host a headquarters, which will basically be an investment office. The immediate work streams will run for a number of years, but we also have a starting list of 15 other topics that we will work through gradually. Will that be the total list? I doubt it—it will probably be a longer list. Looking at the entire spectrum, I think that it is clear that Scotland plays very strongly in certain areas, but I could argue that not just other areas of the UK but other areas around the world play strongly in some sectors. For instance, if I wanted photovoltaic solar technology, I might think that, as Japan is one of the world leaders, I should be talking to the Japanese.
We have very good flights to Japan—without going through Heathrow.
Like the convener, I am excited to hear about the work streams. Clearly, there is a lot of potential for Scotland in the future. Many of the marine activities—whether they are wind, wave or tide—will use the technologies and expertise that have developed with the offshore oil and gas industry in the UK, particularly in the north-east of Scotland. When you visited the five shortlisted bidders, where did you visit in Scotland? Did you visit the three partner universities and cities?
No, we came to Edinburgh.
So you did not have a direct look at the facilities or potential in the other two cities.
No. We were not evaluating the facilities at that stage, so we would not have expected to do that. We wanted a chance to engage with the bidding teams. We offered to look at any other sites that they wanted us to look at during the process, but we did not provide any detailed feedback, on the buildings for example. That would not have added to the process.
I think that I understand your point. You described a process in which you measured things such as reputation, culture and commitment, and you found that all five bidders scored highly. You went on to focus on location and buildings, but at the point at which you visited the bidders, you were not looking at that.
That is right. They were not assessment visits; they were very much information-sharing visits.
Just to touch base and meet the bidders.
To answer questions and share visions and ideas.
I should add that all the specific sites were visited before ETI took a final decision.
When you say "the specific sites", do you mean the University of Strathclyde or all three cities in Scotland?
For each of the final three bids, each of the bidders showed us the specific sites that they were offering.
So, in the context of the Scottish bid, you visited Edinburgh before Scotland had identified its hub and Glasgow after Scotland had identified its hub. However, you did not visit Aberdeen, which clearly has a relevance to the work streams that are at the top of your list, because of how the process was designed. Is that right?
Correct.
If there had been a separate bid led by the University of Aberdeen or the Aberdeen city and shire economic forum that showed comparable levels of commitment, reputation and culture to the five shortlisted ones, would there have been a fair chance that it would have been shortlisted separately? Is it fair to comment on that, or is it impossible to make that judgment?
It is impossible for us to make that judgment. There were many very strong bids at the expression of interest stage. It was competitive even then.
But if an Aberdeen bid had been of such quality as to justify shortlisting, you would have visited it first to share information and then, potentially, to look at the other aspects.
If there had been a separate bid, we would have treated it in exactly the same way as the other bids.
When you came back to Scotland and visited the University of Strathclyde to consider the location and building resources that it was offering, clearly you could not compare that with other potential sites that Scotland might have nominated. You simply looked at the one that was nominated.
Yes. We were offered a specific site, and we reviewed it. Clearly, we could not judge any other site because it was not offered.
Absolutely.
And that was reasonable.
I completely understand that point. Therefore, when it came to the final, deciding question of location and buildings, your judgment on the Scottish bid was based entirely on whether Strathclyde competed effectively with Loughborough.
The final assessment examined all the different aspects. We considered research and development, reputation, the site, the transport links, the commitment to ETI and the financial information. It did not all hang on the building. My earlier comments referred to the fact that the detailed specification contained much more information about the building than there was in the original request for expressions of interest.
The whole package of reputation and culture that the bid from Scotland offered was very competitive.
So Scotland did not lose on that.
Absolutely not. More than half the 15 work streams listed are covered by that package of reputation and culture.
So the criteria on which the bid was unsuccessful essentially concerned the building and the location. Scotland competed very effectively on the reputation and culture side, so it follows that it was on the building or location side that Scotland lost.
As Alison Wall said, we considered four areas of criteria. Bear in mind that all the bids were viable as an HQ for ETI. We had to select which was the optimum option for ETI. The Scottish bid contained a proposal involving an interim building—which was acceptable—and a longer-term option using an as yet unbuilt building. Compared with some of the other bids, the Scottish proposal was a higher-risk option.
Could you define "higher-risk" for me, please?
ETI is a brand new organisation. It is working to a brand new funding model, which has not been tried before, involving 50 per cent public sector funding and 50 per cent private sector funding in a single pot, managed by a separate entity, ETI. We are looking to invest in an area of technology development—the demonstration of low-carbon energy technologies—that has largely not been addressed in a highly integrated way before or in such a way as to facilitate the very rapid pull-through of capability into commercial application. Given that context, the last thing I want, quite bluntly, is to have building risk, organisational risk or management problems around me. I do not want those issues.
Are you saying that the Scotland bid contained building risk, managerial risk or organisational risk?
No, I am saying that those are issues that I do not want to have around me in the organisation. One of the issues, and the key one in Scotland, was risk to do with having a building to meet our requirements in the future. If, at some point in the future, the new building came into being, we would have to transfer staff and so on. I appreciate that the move would be over a very short distance, but it all introduces management issues.
Would the bidders have been aware that, among the criteria that were given, that risk factor could weigh against them? Would our team know that?
I believe so.
They could clearly see our requirements. We were working through August, and we fed back some detailed questions after our assessment meeting in the middle of that month. Those gave a flavour of any areas of concern.
That is a crucial point, if you do not mind me pushing it, convener. Many members have been involved in submitting bids in the past. Would the Scottish bid team have been aware of that factor when it was choosing its location? You are saying that it was a big deterrent against Scotland being chosen.
I believe so, judging from the criteria, the visit and the discussions that we had.
I have a couple of questions in this area. You have explained that, on the general criteria, there was not much between the five bidders, and then the three. I presume that that relates to what we were told about research capability being one of the key criteria and there not being much in it in that respect. I presume, therefore, that whether the University of Aberdeen, the University of Strathclyde or the University of Glasgow led the consortium would have been of no consequence whatever in terms of the location of the hub, as they were all part of the same bid. Is that a fair assessment?
That is not quite right. If you look at the criteria document—you are welcome to have a copy of it if you do not have one yet—you will see that we were looking at the immediate surroundings of the host location, what would be on site, alongside the hub, and the wider reputation and culture. There were two slightly different aspects.
Okay. You say that the main criterion on which the Scottish bid failed was the building, around which there was uncertainty. What weight did the folk who made the decision on behalf of Scotland give to the criterion of the building? I understand that an outstanding building was available in Aberdeen and that it was known that there were risks associated with the temporary building in Strathclyde and uncertainty about the long-term future. What weight was given to that part of our bid?
My recollection is that a virtually identical risk was associated with Aberdeen and Glasgow. They were both in the same position in that temporary facilities that required a little refurbishment were readily available at both universities when they were chosen. Both, however, proposed new buildings for the permanent location of the hub.
Is it not true that Aberdeen City Council had already given a commitment to a building dealing with the same general area and that, as an add-on, the ETI would have been a good fit? The building is going to be built anyway, so there was no uncertainty about the availability of the land, the building or the commitment in Aberdeen, whereas there were uncertainties around the building at the University of Strathclyde.
No. Exactly the same commitment existed in Glasgow. The land was identified—
So, is the building at the University of Strathclyde going to be built now anyway, or is it not going to be built now that we have not got the ETI?
If I can just finish what I was saying, the issue was about the certainty of delivery within a specific timescale. Obviously, buildings can be delayed. Scottish Enterprise felt that it had done everything that it could in the presentation of the package to reduce that risk to the absolute minimum, and it felt that the building could be constructed within 18 months to two years. It would have done the same for the building in Aberdeen, so there was no real difference at all.
Well, the big difference is that such a building is going to be built in Aberdeen anyway for this type of research facility, allowing incubator-type companies to work around it. Aberdeen City Council has given a commitment to that in any case, but I am unaware of any such commitment having been given in Strathclyde beyond what Scottish Enterprise might have done.
I think that there was—
There is no evidence that Scottish Enterprise is going to do that now that the bid has failed.
There is a commitment to an incubator building. There was a proposal for another building. I am sure that Paul Lewis, from Scottish Enterprise, can answer your questions on that.
I would be pleased to hear that.
Okay. The building is crucial, and David Clarke and Alison Wall have been very clear about the criterion of the building. It strikes me as extraordinary that we did not win the bid simply because of a building and the risk associated with constructing a building. Is that the case?
It is up to the ETI to decide how much risk it wants to take on. Obviously, an existing building has less risk associated with it than one that is yet to be built. We felt that we had put in a good bid and we were extremely disappointed. It is fair to say that many people thought that we would win.
Was the final decision taken on the basis of where Dr Clarke would have a nice office to sit in?
I am sure that you would agree that, from the point of view of the chief executive officer's office, the building that we are in is probably the least comfortable of the three longer-term options.
I am sure that that is a great shame.
It does not worry me in the slightest.
From what you have said, you will use up a lot of air miles flying up to Aberdeen and back. Much of the work that you are talking about will involve travelling to Aberdeen to look at wave and wind energy projects. Like the convener, I am astonished that the final decision came down to a building. I do not know how much time you spent in Glasgow, but I spend quite a bit of my time there. There is a lot of very nice office space, even down by the riverfront, which is not that far from the University of Strathclyde.
As I said, the ETI will fund programmes wherever it is appropriate to fund them and with whichever partners it is appropriate to fund them with. We will fund programmes that can deliver capability that we can quickly pull through a demonstration phase. It is very unlikely—but not impossible—that all the work from the ETI will end up being centred in Scotland. In the context of travel, the issue of where we put the hub is almost irrelevant, frankly, because I am quite sure that we will be involved in projects all over the UK, which might involve partners from other parts of the world. From the point of view of travel, the location of the building is irrelevant.
You might think that it is irrelevant, but we might choose to take a different point of view.
I am slightly concerned about the lack of visits to Scotland and, in particular, to the north and Aberdeen. I do not believe everything that I read in the newspapers, but yesterday an article was brought to my attention that appeared in the Newcastle paper The Journal. It said:
Can you clarify who those people are?
The judge who is referred to is Bob Taylor. Is the claim true?
Bob Taylor was not part of the selection committee, so no, it is not true.
The article goes on to say:
That is incorrect reporting. At no point was Bob Taylor part of the panel and at no point did he have any involvement with the panel.
The same paper states:
It is partially true. Rolls-Royce does not have a research centre at Loughborough, but it supports research activity at Loughborough through technical programmes. There is a centre that would probably be seen as a Rolls-Royce research centre, but it is owned by Loughborough University and is not funded or operated by Rolls-Royce.
Lewis Macdonald will ask the final question.
To return to what you said earlier, was the decision of the host selection sub-group on the final location and the successful bid a unanimous decision?
We took a vote.
Was it close?
The outcome was very clear indeed. In the end, everyone was very comfortable with the decision.
I thank David Clarke and Dr Alison Wall—please stay with us. I hope that you appreciate that the robustness of the questioning was because we care a great deal about the issue.
We have heard that Scottish Government officials played a facilitating role in relation to the bid. Would the universities and other bodies that helped care to comment on why that was necessary in putting together a Scottish consortium?
As was explained earlier, there was a pre-existing set of academic partnerships that pre-dated the ETI concept. Jane Morgan explained that, last October, the DTI organised a meeting to bring together the entire UK energy community. There was a healthy Scottish representation at that meeting. Thereafter, a number of the academic groups, including the University of Aberdeen, the University of Strathclyde and the University of Edinburgh, discussed how we might best present a Scottish bid. There was also representation from the Scottish Executive energy group. It was suggested that if we were going to call a meeting soon after the DTI meeting, it would be good to have administrative support and independent chairing to ensure that we were able to take a broad view of where the opportunities were and that Jane Morgan's office would be best placed to facilitate the gathering of the various players in Scotland.
At what point did you want the facilitation role to change to a decision-making role, which is what happened, according to what we have heard today? At what point did that become appropriate?
There was an evolution of the specification and the perceived requirements from that ETI as we went through the 12 months from October. In May, when we got the good news that the Scottish bid had made it into the final five, there was greater clarification of the details of what was required in relation to the building. We were always comfortable about the research capability and culture. At that time, there was the healthy signal that there was a great desire from the northern group—I tend to think of the research groupings in terms of the pooling entities, on which the funding council can elaborate—the Edinburgh-based group and the Glasgow group to have the opportunity to host the hub. In those circumstances, we agreed completely that it would be rather unseemly for any individual university group to have led an independent, metrics-based assessment of each of the three geographical locations that we were offering. It seemed natural that the four non-university groups should take a position as to how they would measure and compare what the three city offerings were bringing to the party.
There might well have been an expectation of political involvement in this. Was there at any point any request from the group to have direct political involvement, such as ministerial engagement?
We were aware of discussions with senior politicians and the chair of the ETP—the energy and technology partnership—at the time, but at no time did we put forward a motion that the academic groups would drive engagement with the politicians.
Was there an expectation among the group that the final decision would be made by ministers, as opposed to the four non-bidders who were part of the consortium?
Speaking for myself—others can speak their own minds—and as someone who led the Glasgow bid for the ETP, I expected the four groups independent of the academic team to carry out appropriate consultation and discussions to ensure that all the views had been taken. The decision whether to engage with politicians was taken outside the academics group; although we were part of the panel and discussed the matter, we routinely heard through executive members of the ETP references back to the political side of things.
In that case, would you have expected the decision to involve ministers at any point?
As I understood it, there had been dialogue with politicians. Their views would have been processed and understood by others in the group aside from the senior academics.
Do you accept that what you have said is at odds with other comments that have been made this morning?
I do not think that it is.
I do not know how you can square that. We heard a fairly clear statement that ministers were not involved and a clear indication that they expressed their views publicly about where the institute should go. What you are saying is slightly different. As I understand it—and of course I do not want to misrepresent you—you have said that you are aware from others engaged in the process that ministers received information and, presumably, expressed a view on it.
We understood that there had been conversations with politicians.
You said that there had in any case been a series of collaborations in Scotland in this area, prior to the proposal for the ETI. Having failed to win the hub, are you and your group taking steps to ensure that we win a significant share of those collaborations?
The committee should understand that the strength of collaboration in Scotland is real. The ETP was not a construct; the northern partnership, the eastern partnership and the Glasgow partnership had established some very good relationships. As I am sure you are aware, Mr Adam, investment has been pooled in Scotland, with major public funds being used to build capacity in a range of disciplines, including—most recently—engineering. The outturn from the unfortunate decision not to establish the ETI in Scotland is that we are now embedding the research component of the energy and technology partnership—the way it has been structured in the past year—in the Scottish research pooling in engineering. I will chair a research directorate that will include senior representatives from the Aberdeen and Edinburgh consortiums, and we are now working on its organisational and management structures to ensure that we engage properly with industry, the public sector and other external investors.
Given the different views about where the hub might be situated, there was potential for a less than harmonious relationship. Are you able to assure us that there is no longer the potential for any such disharmony and that we can go forward together to win as much work as possible from the ETI as well as the other work that you have mentioned?
I am sure that the University of Aberdeen will want to comment on that.
I will just finish off this point, and then Stephen Logan will respond.
I am pleased to hear that. When I was in the United States in October, I was approached by universities in Oregon seeking exactly that kind of collaboration. I am delighted to hear that such collaboration is going ahead.
That is wonderful.
To re-emphasise Jim McDonald's point, there was no disharmony among the academics. The relationships were preformed; they existed before the ETI came along. From a competitive point of view, we all wanted the hub in our own location, but we agreed to a set of principles whereby we would accept the end point of a process.
We asked Dr Clarke about a risk assessment on a building. Quite frankly, I find that extraordinary. Were you made aware at any stage—and we would be interested in the stage at which you were made aware—that one of the showstoppers was the assessment, at Strathclyde and Aberdeen, of a building?
I will respond first, and the others may take up the issue.
You are clear that the building was the issue. Are you satisfied that the strength of Scotland's bid satisfied the other criteria?
With no inside knowledge of the process, I believe that the weak part of our bid was not the location but the building risk issues.
Thank you for clarifying that.
I will pick up on what Jim McDonald said, and on David Clarke's comments on the visit programme. Once Scotland had been shortlisted, the ETI bid team visited Scotland. As Jim McDonald said, the proposed interim accommodation, in the royal college at the University of Strathclyde, was deemed less than sufficient for the ETI.
Thank you for that clarity.
That is extremely helpful. I have a question for Scottish Enterprise and the Scottish funding council. When you made a judgment between the potential hubs or research groups within the Scottish bid, were you aware of the weight that was attached to the building issues, or was it too early for that to be clear? You were involved in making that judgment, along with the Executive and the Scottish Science Advisory Committee.
A couple of criteria required an holistic view. Some 42 different criteria were considered. We needed to consider them in absolute terms, and we needed to be aware of where the best place to meet the criteria would be. I speak as a representative of a national organisation that does not have an issue of location provided that it is north of Hadrian's wall.
I am sorry, but I did not quite understand the last point.
The issue is where we would put a brand new building that might be able to accommodate the things that we want to do. Another option is to refurbish existing space. That leads on to a risk analysis of how long it would take to clear out existing users and refurbish the space for occupation. Such issues needed to be addressed at the Glasgow site and the Aberdeen site. Paul Lewis has described the solution that was arrived at after it had been decided on other criteria associated with research prominence, depth, critical mass and subject coverage for interdisciplinary work that Glasgow was the preferable city for the location of the energy technologies institute hub.
The building and location were among the criteria that were set out by the ETI bid team, once the initial expression of interest had been made. As Professor Gani said, when we compared the various locations in Scotland that were bidding to host the hub, we found that the issues in Glasgow and Aberdeen were similar. In both cases, there was a need for temporary accommodation prior to providing a permanent facility—a building of the right type, with potential for expansion, low carbon emissions and energy efficiency—that we believed would meet the specification that the bid team was seeking. The real pressure on the building issue came after it had been decided that Glasgow should be the Scottish bid. After the bid team had spent time visiting Glasgow, its response to Scotland's proposition focused on both the temporary and the permanent facility, as Professor McDonald said.
We have heard from Paul Lewis and others about the Scottish bid and the quality of the building that was offered. Paul Lewis identified four areas of risk: infrastructure, planning, funding and procurement. Dr Clarke, was there one area in which you did not accept that the Scottish bid was as strong as the bidders believed it to be?
We did not assess the bid at that level of detail. We simply perceived a degree of risk.
So, before the decision was made, there was no analysis of the detailed work that Paul Lewis described, which was done to ensure that the bid met the four criteria to which I have referred?
No.
My question is directed at Professor Logan and Professor McDonald. How surprised were you—as I am—that it all came down to where the building would be?
We were surprised and disappointed. The original criteria majored on research capabilities and international standing, so it is disappointing that, ultimately, bricks and mortar were an issue. However, I hear what David Clarke is saying and accept that a major organisation needs to concentrate on its core start-up activities. I understand why a building that is ready made, as is the case in Loughborough, might be attractive. I cannot speak from a position of objectivity, but given our hopes for the future of the ETI hub, I would have liked to think that other factors would outweigh the immediate availability of a permanent building. Paul Lewis described our ultimate offering and the temporary accommodation that was offered—a nice set of professional offices in close proximity to a lot of research facilities. However, that is in no way an attack on the ETI group, which made its decision. It perceived risk, whereas we thought that we had taken risk out of the proposition.
I endorse what Professor McDonald has said. We have had a double disappointment: first, that Aberdeen was not selected as the site for the Scottish bid; secondly, that the ETI hub will not be in Scotland. The second disappointment is much bigger. I thought that we made a compelling scientific and academic case and that we offered a strong link to a series of industrial companies in the north-east of Scotland and in the central belt. In our bid we ticked as many of the boxes as we could.
I am well aware of the city science park project; I am not so aware of the Aberdeen project, but I take on board what Brian Adam said about the availability and the space. Given what Professor Logan has just said, I am astonished that the institute is at Loughborough—but maybe I am biased.
The Aberdeen bid was like the Strathclyde bid—it involved refurbishment of space in our engineering school initially, then a longer-term move to a building called the energy futures centre, which the city council, along with Scottish Enterprise, was intending to build at some distance from the university, on the beachfront. It was exactly what it said on the tin—an energy futures centre, and it was designed to meet all those criteria.
On a cross-party basis, we are all biased.
Dr Clarke said that it does not matter where the headquarters are, but it does—it is all to do with status and the things that gather round a headquarters such as that. Paul Lewis said that, after the first visit to Glasgow, the details in relation to the building were beefed up. When the criteria were refined in June or whenever, were some of the building criteria refined, or did they stay the same all the way through?
The building criteria stayed the same. We put a lot more detail in when we did the detailed specification, and we really increased our aspirations in terms of the overall sustainability and performance of the building. For example, we said that we would like to see BRE environmental assessment method standards.
So, in relation to the building, the goalposts were moved right at the last minute?
No, I do not think that they were moved at the last minute. The first expression of interest was very general—just some bullet points to address. In the detailed specification, we were clear about the type of buildings we wanted, and that was for the bidders to respond to. We set out specifications that were minimum requirements, and we set out additional requirements. The target to respond to regarding the building was very clear.
Maybe one of the bidders can say whether that posed any particular problem at that time.
You are right—the goalposts did not move, but there was a lot more detail on the specific requirements of the ETI when we got to that stage. What happened subsequently—the point I was emphasising—was that once our submission had been put in for that single location, the ETI bid team visited and sought to raise questions regarding the bid. It was our job, prior to the final presentation in London, to ensure that we responded to those questions and addressed all the concerns that the ETI bid team might have had about accommodation. That principally concerned the quality of the temporary accommodation—I have spoken about the fix that was put in place for that—and the deliverability of the permanent facility.
It would be helpful if Dr Wall could write to the committee. You kindly offered early on to write to the committee in respect of the criteria and the weightings, so that we can understand that properly.
We can give you the specification document as we sent it out to the bidders, if that would be helpful.
And the weightings of the different criteria?
We said that the weighting would be equal.
And it was.
That is what it said in the document, and it was.
That is very helpful.
There has been a lot of emphasis on office accommodation, but this time last year a major energy project was live in the Aberdeen area: the Miller field to Peterhead power station carbon-capture project. It was arbitrarily hit on the head by BP in April. Would it have made any difference to your decision-making process if that had still been on the go? The carbon-capture technology was being pioneered in the Sleipner oil field in the Norwegian sector of the North Sea. It would seem that the centre would have given a tremendous boost to the north-east. The whole notion of pumping carbon dioxide back into oil fields to enhance the exploitation of oil fields is of major interest. Did BP's killing off the project have any effect on that?
It did not have any effect on our decision-making process.
Okay. I thank you all for coming along today—we appreciate your time and your evidence, and we thank you for your honesty and clarity.
Meeting closed at 12:44.