Meeting of the Parliament

Meeting date: Tuesday, June 25, 2013

Official Report 849KB pdf

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Topical Question Time

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“Scotland’s key transport infrastructure projects”

1. To ask the Scottish Government what its position is on the affordability and public reporting concerns raised in Audit Scotland’s report, “Scotland’s key transport infrastructure projects”.(S4T-00416)

We welcome the report, as we continuously look at ways of improving our processes.

On affordability, ministers have introduced a limit on how much of future budgets—that is, the total departmental expenditure limit—should be committed to capital investment now. The 5 per cent limit is an important part of the sustainable financial framework that we have put in place. Audit Scotland shows in paragraph 95 of its report that the five transport projects are affordable within that limit.

On public reporting, we have always been clear that non-profit-distributing and rail investments will be financed over the long term from future revenue. It should be noted that Audit Scotland acknowledges in exhibit 1 of the report that four out of five of the projects are still in procurement, so much of the information is commercially sensitive and cannot be disclosed on a project-by-project basis at this stage.

In its recommendations to the Scottish Government, Audit Scotland notes that the long-term revenue commitments for projects should be reported to Parliament once contracts have been signed. We will do that.

As in many such reports, there is a mixed picture in the Audit Scotland report. There are things that the Government can take comfort from, but there are also significant criticisms. It has been suggested that, when Audit Scotland says that Transport Scotland is not fully demonstrating the reliability of its analysis of what projects will cost—as with the Aberdeen western peripheral route, for example—that is just longhand for the word “guessing”. The Aberdeen western peripheral route business case was signed off when everybody knew that the ultimate cost would be dramatically higher than was stated. Does the Government accept that the report contains serious criticisms and that Opposition members have felt for a long time—as did Scottish National Party members when they were in opposition—that there has been a lack of proper scrutiny of some of the most major spending decisions that Executives or Governments have taken, and that that needs to be addressed for the long term?

I agree with Patrick Harvie that there is much in Audit Scotland’s report that commends the work that the Government has done, particularly on the project management of the Forth road crossing, which is the biggest infrastructure project that the Parliament has undertaken. The report is very complimentary about the processes that have been gone through and the fact that, to date, that project is on target in respect of time and budget—in fact, elements have come in under budget already.

As I mentioned in my substantive answer, the other four projects are currently in the procurement phase. Some of them are not even contracted out yet. It is therefore not possible to be as explicit as we would like to be on aspects that are commercially sensitive. It is also not possible to be as specific as we would like on the ultimate cost, because we will not know that until bids have been received.

Patrick Harvie highlights some of the recommendations in the report that we will want to consider, not least on public reporting, which I think he touched on. To that end, I have asked that we have a debate that goes through these projects, so that any remaining questions can be asked. We have been making sure that the scrutiny required to ensure that the projects are on time and on budget has been put in place, through the infrastructure investment board and processes in the Government.

The proof is in the pudding. The M74 and the M90 are projects that we have successfully completed on time and sometimes under budget. That is a record that we will try to continue.

I do not want to get drawn into a debate about whether particular transport projects are supported or not in policy terms. The minister seems a little bit reluctant to acknowledge that there are long-standing criticisms of Transport Scotland as an agency that need to be addressed. Does he intend to, as recommended,

“review and update by December 2013 its current business case development and assurance processes”?

Will those reviewed and updated processes include a much broader analysis of the factors that should be taken into account in deciding whether a business case should be proceeded with, such as environmental and social impacts, which currently are not given the place that they should when these major infrastructure projects are debated?

Audit Scotland’s recommendations and comments on the business case for these projects were, in essence, around process and not necessarily around scope, as Patrick Harvie has drawn it.

We want to listen to what Audit Scotland has to say, as it has a great deal of expertise in this area. With the projects that we have undertaken and completed up until now, we have shown that we have business case processes that are robust. Of course we want to listen to any further comments. Patrick Harvie says that there are “long-standing” concerns, and he has the opportunity to write to the Government on those concerns. I am happy to commit that we will provide him with a full response.

There will also be the opportunity—whether through the Public Audit Committee or the chamber, in the debate that I mentioned—for members to ask questions on this area and get detailed answers.

Does the minister agree that there would be a lot less concern about the affordability of transport infrastructure projects if the Chancellor of the Exchequer heeded the call from the Scottish Government and a range of other bodies and economists to use this week’s spending review to change course and invest in capital spend?

Jamie Hepburn makes a very good point. Our capital budget has been cut by 25.1 per cent in real terms between 2010-11 and 2014-15. In response to that, and because we have not wanted to delay investment, we have had to look to alternative ways to finance our transport investments. We hope that the chancellor will see sense tomorrow and announce a significant increase to our capital DEL budget in 2015-16.

It is worth pointing out that we have had decades of underinvestment. Even with one hand tied behind our back, due to the cuts that I mentioned, we have taken the tough decisions to start to bring Scotland’s transport infrastructure into the 21st century, even if many of these projects should have been undertaken and completed in the 20th century.

Jamie Hepburn’s point about the budget cut has some resonance today, now that we have seen the note that Liam Burns left for the incoming coalition Government, in which he said, “there is no money.” That is the context in which we are taking forward this huge transport infrastructure pipeline of projects.

Will the Scottish Government complete a new project execution plan for the Aberdeen western peripheral route by September, as Audit Scotland recommends? Will it provide reassurance that the project will proceed on time, even though Audit Scotland described the NPD funding programme intended for the route as “risky”?

We recognise that there is always risk involved in projects. We try to make adequate provision, for example by following the procedure for adjusting for optimism bias that is recommended by the Treasury.

In the case of the Forth bridge project, it is worth noting that we have taken on the risk of inflation and so far have delivered the project ahead of schedule and ahead of budget. We take risk into account. The 30-year period includes a large number of projects and a large sum of money—£7.5 billion—and of course there is risk in that. Our job is to manage the risks.

We will look at Audit Scotland’s recommendations, as well as what the Public Audit Committee has to say, before taking a view on the recommendations in due course.

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Tenant Farmers (Right to Buy)

2. I intimate my entry in the register of members’ interests.

To ask the Scottish Government what its policy is on tenant farmers’ right to buy in light of the comments by the Cabinet Secretary for Rural Affairs and the Environment at the Royal Highland show on 20 June 2013. (S4T-00407)

The cabinet secretary has confirmed that the forthcoming review of agricultural holdings legislation will provide the opportunity for people to have their say on all aspects of tenant farming, including the right to buy.

While I share the Government’s frustration about the lack of availability of new tenanted farms in Scotland, does the minister accept that the Government’s position means either working through the existing arrangements to achieve an agreed way forward with all agricultural sectors or having a statutory tenant farmers’ right to buy? Does he accept that the Government’s position has created the very uncertainty that it wished to avoid by ensuring that no tenant farms will become available for rent until it decides its policy? When will it clarify the policy?

I do not agree that no opportunities for new tenancies will arise, not least because the Government is purchasing land on the national forest estate to make new opportunities available to tenant farmers. In addition, the cabinet secretary announced last Thursday at the Quality Meat Scotland event at the Royal Highland show a new tenancy opportunity at the bull studs in Knocknagael near Inverness.

The public sector can do much to improve the availability of tenancies. I recognise that there are concerns about the potential implications in terms of people being deterred from bringing forward new tenancies. However, it would be unrealistic to expect a review of agricultural holdings not to consider right-to-buy issues when we know that that is the elephant in the room. That has been the case for at least 10 years. To enable the industry to move forward, it is important that all key stakeholders have their opportunity to enter into full and frank dialogue. The review of agricultural holdings legislation will give stakeholders that opportunity.

I thank the minister for that straight reply in accepting that there is an uncertainty that I suspect we all wish to avoid. Does he recognise that many people at a recent NFU Scotland conference on the tenanted farm sector argued that the best way to increase the availability of farms is to encourage retiring owner-occupier farmers to rent out farms long term? Does he agree that that is what the Government should be trying to achieve? Does he recognise that the Scottish Tenant Farmers Association said last Thursday that the cabinet secretary’s statement could “blow the STFA apart”? None of us believes that that is sensible, so does he accept that the Government must repair those relationships that are essential for constructive reform?

I recognise that the issue is a heated one. To enable the industry to move forward, we need to lay the issue to bed once and for all. I know that some tenant farmers are in favour of that; clearly, some are against. I understand the reasons for that, so we will give everyone the chance to let us know their views. The member’s idea was interesting. That is exactly why we must have the exercise, to see whether there are alternatives that will deliver on the policy objectives. To deny the opportunity to have that debate would be a mistake.

A number of members want to ask a supplementary question, but I am afraid that there will not be enough time for everyone to do so. However, if we have quick questions and answers, I might get in a couple of members.

Tenant farmers and the STFA agree that tenant farmers have suffered increased uncertainty over their rent reviews since the Moonzie and Salvesen judgments. Will the minister comment on that? Those judgments have contributed to the demands for a fresh discussion on the right to buy.

The recent judgments have created uncertainty and the Government wants to take forward proposals, particularly in relation to the Salvesen v Riddell case, which has posed immediate challenges for us. Fortunately, we have a window of opportunity—it was helpful that the judgment allowed us that extra time—in which to deliver a solution. The member rightly highlights that, if the system was working perfectly, we would not be in the position that we are in, with this issue constantly emerging. As I said, it is the elephant in the room and we must address it at some point.

The minister mentioned the need for new ideas. Does he recognise that the tenant farming forum, NFU Scotland, the rent review group, the STFA and a myriad of other stakeholders have been working tirelessly to achieve exactly that and to introduce a vibrant sustainable tenanted sector? We all want to achieve that, but the cabinet secretary’s announcement has made that considerably less achievable. Does he agree that that announcement has undermined the work of those organisations?

I do not think that the announcement undermines that work. The issue that we must address is that the system is not working well, as Rob Gibson and other members said. Despite the desire of Scottish Land & Estates, ministers, NFUS and the STFA, the number of tenancies is not increasing. The review will offer the opportunity to look at potential solutions. It would be a mistake to deny people the opportunity to discuss right to buy. Submissions have already been made to the land reform review group, and that evidence can be taken forward into the forthcoming agricultural holdings legislation review.

The cabinet secretary’s announcement reignited the debate on the right to buy. What steps will the Scottish Government take to secure the rights of existing tenants, including tenants who are on limited partnership leases or who are going through rent reviews, to ensure that they will not be adversely affected while the debate takes place?

I assure the member that the cabinet secretary is keen to take forward preparations for the review as soon as possible. A timetable for the review will be announced during the summer. I hope that that will give people certainty about the timescales that we are dealing with as we address outstanding issues. If the member wants to address her question to the cabinet secretary, I am sure that he will be happy to meet her to discuss forthcoming proposals.