First Minister's Question Time
SCOTTISH EXECUTIVE
Cabinet (Meetings)
To ask the First Minister what issues were discussed at the most recent meeting of the Scottish Executive's Cabinet. (S1F-239)
Mr Salmond should not be surprised to learn that we discussed several matters of significance to the Executive and the people of Scotland. Lest he be disappointed, I should mention that his name cropped up once, in passing.
Only the once?
What should have been discussed at that meeting is the increased cost of the Holyrood project. Will the First Minister explain paragraph 4.3.4 of John Spencely's report, which has been made available to members today? That paragraph highlights the fact that, on four separate occasions last year, up to £27 million of additional costs had been identified but were not reported to the Parliament. Will the First Minister tell us whether, at any stage, the project team that he appointed made him or any member of his Administration aware of those possible additional costs? Does he accept that, for whatever reason, when the Parliament decided last June to go ahead with Holyrood, the chamber was seriously misled about the true costs?
No, I do not accept that Parliament was misled, and I give Mr Salmond a categorical assurance that I would not be party to misleading Parliament and have no intention of doing so.
The figures supplied to me were £62 million for construction costs and a total of £109 million. I reported that in good faith and believe it to be correct. That total included £6 million for construction contingency costs. The figure of £89 million is of course important, and I understand that it is built on the inclusion of a number of elements including £16 million for design risks. Those figures were not firm costs and as such were not supplied to me, or to the Scottish Parliamentary Corporate Body. I gave an honest estimate based on expert advice. My officials have advised me that they deliberately excluded those figures because they saw it as part of the task of the design and project teams to manage the risks out. In their view, it would have been contrary to good practice to add them in, as it would have effectively removed the pressure on the design team to prevent the costs from rising.
My officials further point out that the process of setting and working within the overall budget must be seen as a whole. Although some extra risks might materialise, further savings can often be made. For example, the value engineering exercise that they planned turned out to offer savings of around £20 million. The design risk figures that were not included must be considered in that context.
I should add that I would expect the Auditor General's forthcoming study to examine my officials' judgment on this matter, and I imagine that many members will be interested in the results of that inquiry. Mr Salmond will notice that paragraph 4.3.4 of the Spencely report says that the additional £27 million
"were not identified in cost terms in the report to the Client"—
the client being the SPCB. However, the same holds for me as well.
Given that the project team is not noted for managing costs out but for managing them up, might it not have been a good idea for the client to have been told about the £27 million that had been identified on four separate occasions in four separate cost assessments?
Is not it the case that the Parliament was entitled to have that information when it made its vital decision last year? Furthermore, given that we did not have that information, does the First Minister agree with the statement that the £109 million figure that he reported to this Parliament was wrong and not the whole story?
No, I would not agree with that, for the reasons that I have given at some length. I do not believe that Parliament was misled and I gave an account of the situation based upon my knowledge and the information available to me. Furthermore, the SPCB made its decision on that information and those figures. Mr Salmond will remember that paragraph 11 of its report, which was published this morning, says:
"It may well have been possible for the project as it then stood to have been completed for a figure in the region of £109m. At the time we accepted the £62m construction component of this as a challenging budget. But clearly it assumed very limited design changes and no delays."
For reasons that the SPCB goes on to explain very fairly in its report, the pressures for increased accommodation from the parliamentary family and the spread of interests in the Parliament meant that there were very substantial increases in space demands that had to be built into the design. That greatly affected the cost profile. At the time, the figures that I gave were accepted by the SPCB as challenging but possible. It was certainly on that basis that they were put forward.
When I said that the figures were wrong and not the whole story, I was quoting John Spencely directly. Given that information, will the First Minister now say that his officials were wrong not to tell him about the £27 million costs? Will he retract the statement he made, quite incredibly, at a press conference this morning, that it was perfectly proper for him not to be told about the figures? If he was not told about the figures, how on earth was the Parliament expected to reach a rational decision? Given that the officials concerned were appointed by the First Minister when he was Secretary of State for Scotland, will he now accept his personal responsibility for the contribution he has made to the unacceptable and escalating costs of the Holyrood project?
No. I do not accept that charge. I certainly accept that I am responsible for the project in the same way as a minister is responsible for anything that occurs within his bailiwick or area of responsibility. I sometimes think that I take that more seriously than others have in the past.
I take some consolation from a large number of John Spencely's findings. It is important to recognise, for example, that he endorsed the construction methods, which were much criticised. I note the evidence in his and the SPCB's report that many of the cost features were very competitive when compared with Portcullis House, the new Parliament building in London. I know for a fact, despite many of the rumours that have been put about, that the demands made by the Executive for additional space were less than 5 per cent of the total increase that occurred. I certainly believe that the decision to go to the Holyrood site, which was made as a result of investigation and advice from men of skill and experience, was the right one. I hold to that decision and will continue to defend it.
Joint Ministerial Committees
To ask the First Minister whether there are any plans to set up further joint ministerial committees. (S1F-241)
My apologies, Sir David. I am looking for my papers, as I really must get this reply word perfect. The answer is that a joint ministerial committee on health will meet shortly. Beyond that, I have nothing to say.
We look forward to the establishment of that committee and to its deliberations.
May I suggest that we might have another such committee on the construction and financing of major public buildings? I listened with interest to the First Minister's answers to Mr Salmond's questions. In retrospect, rather than charging ahead with the Holyrood project on his personal recommendation last year, does the First Minister accept that it would have been far better if the Parliament had accepted the amendment lodged by Mrs MacDonald and Donald Gorrie to halt and take a look at all the options, before taking a final decision? In the light of the bitter and costly experience of the past months, is the First Minister prepared even at this late stage to back our call for a halt to consider the options so that when a decision is taken by the Parliament it is an informed one that takes all the factors into account?
Mr McLetchie makes his point rather more reasonably than he sometimes does. I am grateful for that.
The difficulty with his suggestion is that delay undoubtedly means additional cost. Delay eats money. If Mr McLetchie has looked with care, as I am sure he has, at the SPCB's report, he will have seen that one of the difficulties with, for example, the redesign of the chamber and various other factors—although I understand why they happened—is that they have led to delays. Mr McLetchie will also have looked at the Spencely report, which makes it clear that we are talking about penalties of tens of millions of pounds if we simply write off the Holyrood site. There is no comfort there for anyone who argues that there is some easy, cost-effective solution to be found by moving to another site.
I remind Mr McLetchie, in a spirit of co-operation, that the early indicative costs—from the same chartered surveyors—for, for example, the St Andrew's House-Calton Hill site were considerably higher than those for the Holyrood site.
Of course I want everyone to look rationally and sensibly at the facts of the situation. I also urge that we take into account the very considerable inconvenience, increased cost and difficulties of starting at a new site, with a new design, with costs that may well end up being higher, and with leaving this Parliament operating on a hand-to-mouth basis under the very unsatisfactory circumstances in which we find ourselves at the moment.
I accept that delay has a cost attached to it. Sometimes, however, a pause for reflection and consideration of options can achieve substantial cost savings. If there had been a proper examination during the summer, as recommended by Mr Gorrie and Mrs MacDonald, some of the cost factors that have come to light now would have been revealed then. We would be substantially better off and not in the mess that we are in now.
I will ask the First Minister about the financing of the project—which is a very serious matter. He will recall that, when he responded to my question on this subject on 2 March, he said that he was not looking for additional funding from Gordon Brown to assist with the financing of the escalating costs of the Parliament, and that funding had to be found from within the Scottish budget.
The First Minister will be aware of the report in The Herald today that suggests that the Chancellor of the Exchequer is indeed to gallop to the rescue. Can the First Minister clarify whether that is the case? If not, are other funding options, such as a parliamentary bond or some private finance initiative, to be considered for the overall funding of the project?
If the First Minister is unable to give a clear answer to that today—he may not be—will he make such information available to the Parliament in time for next week's debate, so that we can take all factors into account when we debate the report of the Scottish Parliamentary Corporate Body?
I will try, of course, to make available any information that seems relevant and which will help that rational discussion and debate. I am all in favour of rationality in such matters.
I read with a certain curiosity the story that appeared in The Herald. I recognise that speculative pieces sometimes appear. I stand by what I have always said: the Scottish budget was transferred to this Parliament; the Scottish budget was intended to bear the weight of our own building and of our own arrangements for our future home, and that remains the situation.
The increase in price is of course a matter of concern and we will examine that with great care. There will of course, or it may well be—I had better be careful—that the phasing will be over a rather longer period than was previously anticipated, and that will be of help: £109 million is in the line at the moment, ending in the year 2002-03. We believe that the cost of £195 million, assuming—as I would hope and believe to be wise—the Parliament decides to proceed with the Holyrood site, could be managed reasonably comfortably, without impacting on other things and perhaps using some end-year flexibility to bring the matter to a successful conclusion.
I am certainly prepared to listen to suggestions about other methods of funding, but I do not think that I would hold out a prospect of an escape hatch opening and allowing us to dive off in another direction without any financial difficulties.
In the light of the present difficulties of the Holyrood project, does the First Minister believe that there is a case for moving to a fixed price for the remainder of the contract?
That is an interesting subject. There was running criticism about the fact that we proceeded by what is called a construction management method. That essentially means that work was put out on a package basis to competitive tender, with the lowest satisfactory bid being accepted in each case.
It is interesting that John Spencely rejects what he calls single-stage lump-sum contracts, which means, as I understand it, a fixed-price contract. One of the reasons for that is that he believes that that would lead to enormous—or rather very significant—delay and additional expense. He believes, as is clear from the terms of his report, that the method chosen was suitable and appropriate to the contract. On the ground of the need to avoid lengthy pauses, I caution against rushing to the conclusion that we should move from our present construction methods.
New Deal
To ask the First Minister what impact the new deal has had in reducing youth unemployment in Glasgow and elsewhere in Scotland. (S1F-246)
The new deal has made a substantial contribution to reducing youth unemployment in Scotland, which has fallen by 55 per cent in the past two years, to its lowest level for a generation. Of the 46,800 young Scots who have joined the new deal programme, 22,100 have secured jobs and 14,350 have taken up full-time education and training or joined work experience placements.
The programme has been particularly effective in Glasgow; youth unemployment there has dropped 57 per cent over the past two years.
Does the First Minister agree that although the 36 per cent drop in unemployment in my constituency is to be welcomed, at 10.2 per cent it is still well above the Scottish average?
Can the First Minister assure me that the success of the new deal will be matched by wider initiatives that will include other age groups and deal with the harsh realities that the long-term unemployed have had to experience as a result of 20 years of John Major and Margaret Thatcher?
I have a great deal of sympathy with Paul Martin. I recognise that Springburn and that part of north Glasgow have had intractable problems. We are extending the new deal to age groups beyond 18 to 24-year-olds, which will help. The lowest unemployment claimant count for 24 years is creating an environment that is helping to put downward pressure on unemployment figures.
We are making particular efforts in Glasgow. The gateway to the new deal is sophisticated and has been well funded. We offer guaranteed interviews with employers who back the new deal, such as Stakis Hotels, British Telecommunications, the Wise Group and Marks and Spencer. I believe that we can make further progress, but I am genuinely proud of the remarkable change that has been brought about and the remarkable progress that has been made.
Is the First Minister aware of the recent research undertaken by Dr Sunley of Edinburgh University and others that demonstrates that up to 75 per cent of the new dealers leave their job after six months and that up to two thirds of those jobs would have been created under other programmes, given the general level of activity in the economy? Is he aware that there is a growing opinion that the new deal is more about massaging figures than about creating real jobs? Will he take steps to improve the effectiveness of the new deal?
I find that a deeply depressing contribution. I know that Alex Neil would expect me to say that, but it is true. The energy and perverse cunning by which people such as Alex Neil seek the downside of any announcement is getting past the tolerance level of most of us.
The new deal has made a considerable impact. The figures support that fact. Of course there will be failures. Without being in any way pejorative, it is clear that the client group has problems: people would not be in that client group if they did not. We are investing time and resources to equip those people with the confidence that is required to allow them to enter the job market.
There have been many successes. If Alex Neil is telling me that Governments should not try to help in this area, but should leave the matter to the market, he is not the Stalinist I remember.
Higher Education Funding
4 Miss Annabel Goldie (West of Scotland) (Con):
I will declare an interest, as I am a member of the court of the University of Strathclyde.
To ask the First Minister whether the Scottish Executive considers that higher education is being adequately funded on the basis of the levels of funding outlined to institutions by the Scottish Higher Education Funding Council in its circular letter of 23 March 2000. (S1F-249)
I recognise Annabel Goldie's efforts in this field.
We have made provision to increase higher education funding by more than £250 million in the current comprehensive spending review period. Miss Goldie has watched this scene over the years, so she will know that the contrast with the legacy of the Conservative Administration—a reduction of almost 40 per cent per student during that party's time in office—is clear. The final funding announcement left higher education facing a cash reduction of £40 million over two years. That was the position when Mr Michael Forsyth went into banking.
I thank the First Minister for the fullness of his reply, with which I do not agree at all. However contemptible he may consider the efforts of the Conservative Administration, we are now considering the efforts of the current new Labour Administration.
Does the First Minister accept that the announcement of an increase in the overall grant funding for our higher education institutions of 2.8 per cent—which in reality translates to a 2 per cent increase—means that some form of top-slicing is being applied to the Scottish Higher Education Funding Council, which is tantamount to a covert agenda? Does he accept that that contrasts uneasily with the situation in England, where grant funding of 3 per cent—which was announced by the Higher Education Funding Council for England—has meant an increase of 3 per cent for institutions there? Does he accept that that means that as institutions in Scotland try to cope with reduced resources, they face the possibility of high-calibre staff being poached by English institutions? Is that not an affront to higher education in Scotland? Is not this Administration reducing it to the pauper's option?
I admire Annabel Goldie's phlegm and general staying power. As she sat on the Strathclyde court during the term of the Conservative Government, she will remember that, in 1998-99 and 1999-2000, there were reductions of £20 million in funding for higher education. The cliff that had been established had to be overcome, and it took a good deal of the £250 million that we ploughed in to undo the damage that had been done by the Conservative Administration.
The present £609 million, as against £591 million last year, represents a 3 per cent cash increase on the previous year. There is some ring-fencing—around, for example, SHEFC's £2.4 million running costs. I understand that those costs have been ring-fenced, as a matter of practice, for some time. The sum of £1 million is being used to sustain the professionalism and commercialisation of the research process to support the knowledge economy, and a further £1 million is being allocated towards the cost of decommissioning the Scottish Universities Research and Reactor Centre. I remember the correspondence in which I was engaged when I was at the Scottish Office. That £1 million was ring-fenced at the request of a number of Scottish universities, and was agreed with the university sector as a whole.
With all due respect, Miss Goldie is talking through a hole in her hat.
I shall have another go at trying to get a simple answer to a simple question.
A 2.8 per cent increase in funding to our higher education institutions has been announced at a time of stringent funding. In reality, that is reduced to a 2 per cent increase, although higher education institutions in England have received a real-terms increase of 3 per cent. What is happening to the difference and how are our higher education institutions meant to compete with those in England?
I have given the figures. I am beginning to worry about my teaching skills. I recognise that every class contains a few people to whom the teacher cannot get through. They may be people of infinitely pleasant personality, but they are not quick on the uptake.
I am advised—I hope that this will help Annabel Goldie—that there will be a further allocation of a £49 million retention within the next month or two.
Now that one independent committee, the Cubie committee, has savaged one part of the Labour party's higher education policy and another independent committee, the Quigley committee, has savaged another part, will the First Minister give us a cast-iron assurance that he will argue with the Westminster Government for the restoration of benefit entitlement for students, which was taken away by the Conservative Government and which the Labour Government has failed to restore?
I must confess that whenever I hear a Scot nat asking for a firm and binding assurance I reach for my gun.
The answer to the question is no. I find it very odd indeed that John Swinney, who has honourably pursued the cause of particularly Scottish solutions for many years, should now complain that we have worked one out—and a good one, in terms of the Cubie inquiry. It is going to plough about £34 million net into the Scottish student support system, and it has been widely welcomed. I am happy to endorse that solution and I hope that he will endorse it also.