Meeting of the Parliament

Meeting date: Tuesday, January 8, 2019

Official Report 1175KB pdf

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Topical Question Time

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ScotRail (Delays and Cancellations)

To ask the Scottish Government what action it has taken in response to recent delays and cancellations on the ScotRail network. (S5T-01427)

I have been absolutely clear that the recent performance on our railways has been unacceptable. Consequently, before Christmas, I instructed Transport Scotland to serve a contractual notice on ScotRail that it must prepare and submit a remedial plan to reduce cancellations and improve reliability to contract requirements.

I expect ScotRail to set out in the remedial plan how it plans to address the performance issues, to ensure that they can be realised and that the full benefits of the Scottish Government’s record investment in our rail network is then received by service users.

Over the festive period, I have been in regular contact with senior officials at the ScotRail Alliance, where I left them in no doubt that appropriate and swift action was required. There has been a marked improvement since then. On Monday 7 January and Tuesday 8 January 2019, ScotRail had appropriately trained train crew available for all services. I will continue to monitor that daily, to ensure that ScotRail meets its training programme to remove train crew cancellations over the coming weeks.

However, more than 50 per cent of delays to ScotRail trains last year were caused by Network Rail, so fixing ScotRail’s train crew problem will not be enough. It is essential that Network Rail in Scotland be fully aligned with the Scottish Government’s priorities and fully accountable to the Parliament. Only then will it be possible for Scotland’s rail system to be managed properly, as one system. Indeed, members will be aware that, in December 2018, the Office of Rail and Road found that Network Rail had weaknesses in its planning and capability to recover services following incidents. The ORR has issued a provisional order against Network Rail, which requires it to take urgent action to address those findings. Therefore, both ScotRail and Network Rail need to address those issues that impact on performance to ensure that the public receive the services that they expect and deserve.

Months ago, in September, ScotRail’s performance plummeted to a level that breached its franchise agreement. Instead of taking decisive action to demand improvements, the cabinet secretary issued it with a waiver, giving it a licence to continue to fail. Not surprisingly, its performance got worse.

Last month, I challenged the cabinet secretary to stop bailing out ScotRail and start standing up for passengers by at least issuing a remedial notice against it and demanding a clear remedial plan. Again, the cabinet secretary refused to take action. He even told the Parliament:

“There are early signs of improvements”—[Official Report, 18 December 2018; c 10.]

when, in truth, ScotRail’s performance was continuing to get worse.

Does the cabinet secretary not accept that he should have taken action long before now? Will he start to take responsibility for his inaction and apologise to Scotland’s hard-pressed rail passengers for the miserable service that they are still receiving?

I very much regret the poor service from ScotRail that customers have experienced over recent months. There is no doubt that further action is required to ensure that the contract that Abellio has for the ScotRail Alliance is one that it is meeting contractually.

Colin Smyth will be aware that issuing a notice for a remedial plan requires there to have been a contractual breach of the franchise agreement. That was identified on 21 December 2018, when I instructed officials to ensure that such a notice was issued to ScotRail. That is exactly what I have done to ensure that it is being called to account for the contract that it has taken on.

On the waiver that has been provided, as the member will be aware, and as I have stated in the chamber on a number of occasions, the full powers and requirements in the franchise agreement remain in place. The waiver takes account of the very factors that were highlighted in the ORR report just before Christmas, which have had an impact on ScotRail’s performance but which it is not able to manage itself—for example, the beast from the east, and the hot weather during the summer—and the impact from Network Rail’s performance. All those factors have an impact on ScotRail’s ability to meet the requirements. In its report in December, the ORR recognised that that has had a significant impact on ScotRail’s overall performance, which is why it was given the 1 per cent waiver.

I can assure Colin Smyth that there is absolutely no lack of determination on my part to ensure that ScotRail keeps to the standards that we expect of it, as set out in the contract. I am determined to ensure that we address that, and the remedial plan will assist us in dealing with it.

However, it is important that we are honest with the travelling public about the fact that we can address issues with ScotRail, but we also need to be able to address issues to do with the other half of our rail network—the infrastructure element of our railway. In some months, up to 70 per cent of delays have been caused by Network Rail. That is unacceptable, which is why action must also be taken to improve its performance so that we can achieve performance improvements across the board on the rail network in Scotland.

The cabinet secretary knows that, if he had not issued the waiver, he could have issued a remedial plan notice far earlier than he did. He eventually issued a remedial plan notice to ScotRail on Christmas eve because of a franchise breach in relation to cancellations and—as everyone knows—because of a fall in punctuality, which means that ScotRail will breach even the new performance level that has been set by the Government.

Given ScotRail’s appalling failure, does the cabinet secretary honestly believe, as he said, that the performance targets that are set out in the franchise will be met—yes or no? If the answer is yes, when will that happen? If the answer is no, when will he finally bring an end to this failing franchise?

That is exactly what is set out in the franchise—the franchise sets out the commitments that we expect the franchisee to meet, and we will continue to press ScotRail to do that. It is clear that ScotRail has not been meeting those commitments in recent times, and it must take action to ensure that it is going in the right direction. We will continue to remain focused on that.

I am committed to making sure that ScotRail is held to account for its response in meeting the standards that are set in the franchise contract. I am also determined to make sure that we do everything that we can to improve the management of the infrastructure of the rail network in Scotland. If Colin Smyth is really committed to making sure that we deliver the best possible railway system for the travelling public in Scotland, I hope that he will support the devolution of Network Rail to the Scottish Parliament so that we can have an integrated network that enables us to deliver the services that passengers deserve.

Four members would like to ask supplementaries, so it would be good if we could make progress.

I wish the chamber a happy new year.

I pay tribute to the ScotRail staff who worked over the festive period to keep Scotland moving, but it is clear that ScotRail’s performance is still unacceptable. Helpfully, the cabinet secretary referred to the remedial plan that he has required ScotRail to put in place. If the plan does not result in long-term improvements, what sanctions—financial or otherwise—are available to the cabinet secretary under the existing franchise arrangements that mean that his threats to ScotRail have teeth and consequences?

The member has asked a helpful question. A key part of the franchise approach to the rail network in the United Kingdom is to make sure that the contract is utilised in a way that holds the contractor to account. That is why I issued the order for a remedial plan notice. ScotRail must now bring forward a remedial plan that sets out how it intends to get services back in line with what is set out in the contract. ScotRail will have eight weeks to set out that detail—it will have to submit its plan by around 18 February. If it fails to do that, it will be in breach of the contract. Any organisation that is in breach of its contract could be fined, costs could be increased for certain services that it provides to the taxpayer or the contract could be removed.

The requirement to produce a remedial plan has serious implications for the contract holder. It is not something that would be issued on a whim because of individual problems on a limited number of occasions. There has been a series of problems over a period of time, which I do not believe is acceptable.

I know from the discussions that I have had with ScotRail that it is clear about how serious the situation is for it, but it has assured me that it is determined to do everything that it can to make sure that it gets services back on line, in line with what is expected under the contract.

The cabinet secretary mentioned some of the improvements that ScotRail made over the festive period, but could he give us a bit more detail about the impact that those improvements have had and, more importantly, what more ScotRail is doing to help those passengers who have been inconvenienced?

One of the main challenges that we have had in recent times has been to do with the ability of ScotRail to train its staff for the new Hitachi trains and the new routes that were introduced as part of the timetable change on 9 December. The late arrival of the refurbished high-speed trains is just one of the factors that have had an impact on ScotRail’s ability to train staff.

Just under 900 members of staff needed to be trained, and ScotRail is now at a point where 20 per cent or so of those staff are still to be trained. It has given me an assurance that, as we go forward, the number of cancellations that come about as a result of a shortage of train crew will continue to decline, and it will continue to try to work that number down in the coming weeks. It will continue to be focused on training its staff in order to ensure that they have the level of competence that will allow it to minimise the number of cancellations that occur as a result of a lack of available crew.

I say to the cabinet secretary that we seem to be here repeatedly and we are hearing all the same stuff. I have lost count of the number of plans and improvement plans, and now we have a remedial plan. Plans are of no interest to constituents on the far north line who finish a hard day’s work only to find that the train that they hoped would take them home has been cancelled. What level of mismanagement is required from Abellio before the cabinet secretary will take control of the situation?

The way in which the provisions are set out in the franchise agreement gives us the power to direct ScotRail to bring forward plans to address issues where it has failed to deliver proper services, and we are holding it to account for the contract. Requiring the remedial plan is one of the most serious actions that we can take, and we are requiring the company to ensure that it starts to address the issues effectively and systematically. It is very clear about how serious this is for it as the franchise holder.

We now need to see the detail of its plan, which we will receive in February, and to consider that. There will then be a period of time to allow the company to take it forward and ensure that it is delivering the agreed improvements that it has set out in the remedial plan. Once that has been taken forward, we as the Government will be in a position to assess the company’s performance and whether it is actually delivering on the remedial plan that it has submitted to us. As I said to Jamie Greene, should it fail to do that and to meet those necessary standards, that could result in the company losing the franchise. It is aware of the potential implications for it if it fails to deliver on what is set out in the remedial plan.

I would like to know in what way Michael Matheson’s remedial plan of January 2019 differs from Humza Yousaf’s performance improvement plan of January 2017.

The ultimate sanction if the company fails to deliver on the remedial plan and meet the requirements that it sets out is that it could lose the franchise.

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Healthcare Environmental Services

To ask the Scottish Government what action it will take regarding the cessation of trading in managing medical waste contracts by Healthcare Environmental Services Ltd, including supporting the 150 workers who have been made redundant. (S5T-01416)

The Scottish Government is concerned about the situation at Healthcare Environmental Services Ltd and is taking a number of steps to respond. The company advised the national health service boards in Scotland on 7 December that it was unable to continue to provide clinical waste collection services. NHS Scotland then implemented interim contingency arrangements to ensure that clinical waste is appropriately collected, stored and disposed of in line with industry regulations. There has been no impact on patient services.

The Scottish Environment Protection Agency is monitoring the situation on a daily basis and is continuing to seek regulatory compliance. We will work with SEPA to ensure that the sites are cleared safely and all waste is disposed of appropriately, should that become necessary. There is at present no significant environmental risk and no risk to the wellbeing of local communities.

There is obvious and clear concern for the workforce given the impact on them. The company took up the offer of partnership action for continuing employment support on 27 December 2018, when it made its employees redundant. PACE partners attended a support event that was held in Shotts on 3 and 4 January and provided support to 125 individuals who were in attendance. We have also been in contact with representatives of the redundancy payments service. We are awaiting information from the company regarding employee details in order to progress redundancy payments.

We are monitoring the situation and will provide further support and take any further action as may be required.

I thank the minister for his reply and for the PACE assistance that he and his department provided over the festive period.

As well as finding the HES workers jobs, the other top priority is for them to be paid their wages and receive the other payments that they are due. The company’s bank, HSBC, has refused to release any funds since 5 December, which is why the workers did not get paid. Will the minister urgently contact the bank and demand that the necessary funds be released urgently to pay the workers all the wages that they are due? Will he look at whether the Scottish Government can in the meantime provide urgent cash help to the workers who are owed their wages?

Finally, will the minister urgently contact the Insolvency Service again, as this morning it advised workers that they are not entitled to redundancy payments because the business has not currently been declared insolvent?

On the member’s first point, I am aware that the company has set out the difficulties that it has had in accessing finance from its bank through the usual banking services, and I undertake to contact the bank, in co-ordination with the company, to see whether we can move the matter along. My expectation is that that would result in payments to the workforce; that is the basis on which I would seek to intervene.

On the contact from the Insolvency Service, I think that I need to get more detail of that. When a company is not in the process of administration and has not declared itself insolvent, there are certainly difficulties with workers being able to secure redundancy payments through that process. The information that we have had is that another process is under way; if the HES workers have been advised otherwise, I will need to look at that—if I can get that information from Mr Neil, I of course commit to doing so.

I will supply the minister with the necessary information this afternoon; I myself received it only within the past half hour.

I want to ask the minister about the causes of the company going down. Princess Anne opened the new facility in April, and in September the United Kingdom Cabinet Office intervened, initially in relation to the management of waste south of the border. There are allegations that the UK Cabinet Office and, in particular, a senior official called Coleen Kaiser Andrews have, since September, been involved in an exercise to deliberately and systematically destroy the company. Will the minister urgently raise the matter with David Lidington, Minister of State in the Cabinet Office, in London, because these are serious allegations, and I have seen some indication that there is a degree of justification at least for making the allegation?

Before the minister replies, let me say that I hope that Mr Neil would think seriously before naming in this Parliament an official who cannot answer back and taking advantage of parliamentary privilege in such a way.

I would be cautious about commenting on allegations whose full detail I have not seen. I say again that, if I am provided with information, I will have a look at it and that, if it is necessary to contact the Cabinet Office in light of that information, I commit to doing so.

What assurances can the minister give to communities in and around Shotts that the waste that is currently stockpiled on the site in Shotts is being properly stored according to the highest health and safety and public health regulatory standards?

I can give that assurance because, through NHS National Services Scotland, we have put in place interim arrangements with a range of companies: three licensed waste carriers are covering the whole of Scotland for priority sites—that is, large hospitals—and other contracts are in place with specialist companies to provide community collections from smaller sites. The arrangements will deal with waste on an on-going basis.

I talked about the steps that SEPA is taking. There is no indication that there is any substantial risk to communities just now, but that is why SEPA is involved and is there on a daily basis. We will continue to be informed by SEPA.

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Kaiam Europe

To ask the Scottish Government how it will support the Kaiam Europe Ltd employees who were made redundant without notice and were not paid before Christmas. (S5T-01415)

The Scottish Government and its agencies have been working to support the former Kaiam employees in Livingston. Partnership action for continuing employment support was available from 24 December, two days after the company appointed an administrator. That support will continue. For example, a jobs fair is scheduled to take place in Bathgate on 17 January. Our shared goal is to help the people who have been made redundant to get back into work as quickly as possible.

Earlier today, I spoke with the administrator, KPMG, about how we can support those people to secure the redundancy payments to which they are entitled.

Will the minister condemn outright the people who were responsible for the actions—or inactions—that led to more than 300 workers being informed on Christmas eve that they were being made redundant without notice and without pay? By way of contrast, will he commend the warm and generous response of the wider West Lothian community, in particular community volunteers and council staff, who organised a community hub and collected and distributed donations of toys, food and gift vouchers, in addition to raising more than £22,000 for those affected?

I recognise that any administration or redundancy situation will be particularly upsetting and challenging for the individuals involved and their families and communities. There is no good time of year for administration or redundancies to happen, but before Christmas is a particularly bad time of year for it to happen. I regret that the chief executive of the company did not inform the workforce in person, as has been well reported, and that the company determined to go into administration at that juncture.

That said, we can all commend the response from the local community. It has been very clear that the community has rallied round to raise funds and to help on the ground by volunteering and making donations of toys and food. That shows the strength of community spirit in the area. Those who have been involved deserve the highest commendation from us all.

The minister will be aware that, this morning, the Economy, Energy and Fair Work Committee began to get its teeth into questions that have to be answered about the transparency and due diligence of the Scottish Enterprise investment of £850,000 in Kaiam. Will he instruct Scottish Enterprise to co-operate fully and frankly with that committee, and will he confirm that that does not preclude any further investment to secure highly skilled jobs in West Lothian if a suitable buyer for the business can be found? Can he provide Parliament with an update on the efforts to find a suitable buyer for the business?

I will not rehearse the points that I made earlier to the committee about the expectation of due diligence being followed in each and every circumstance in which public funds are awarded. However, when that process is followed, it does not always result in the company that has been awarded funds being able to sustain itself over the longer term. Sadly, that has not been the case with Kaiam.

I do not need to instruct Scottish Enterprise to respond to any call from the committee. It is my expectation and belief that it will respond to any request from the committee.

As an update on efforts to sell the business, I can say that I discussed the matter with KPMG earlier today, and it has informed me that it has received in excess of 20 expressions of interest from various parties.

On the question of on-going support from our public agency, Scottish Enterprise has already, through the administrator, set out what support it may be able to offer any potential buyer.

Against the background of the bad mistreatment of the workers at Kaiam, what is the Scottish Government doing to ensure that companies in Scotland that are in receipt of regional selective assistance or are Scottish Enterprise account managed companies will not treat their workers similarly in future circumstances?

It is clear that any company is ultimately responsible for the manner in which it conducts itself with its workforce. The Scottish Government’s perspective on fair work is well known. Part of fair work should be proper dialogue with employees about the circumstances that any company finds itself in. That is one of my expectations.

We have set out some of the work that we plan to take forward in respect of conditionality around regional selective assistance and other forms of public support through the fair work first principle, and we will set out more detail on that in due course.

I endorse Angela Constance’s comments on the response of the community, West Lothian Council and other partners in providing advice and support to employees who are affected by redundancy at Kaiam. However, the responsibility for the closure lies with the owner, Bardia Pezeshki.

On five separate occasions prior to 24 December, ministers were warned about major problems that threatened pay and jobs at Kaiam. That situation ended up with 300 workers with no pay and no job. Will the minister answer this question directly: did he at any point in the period between 22 November and 24 December ask the company to inform workers that their jobs and pay were at risk?

There was an on-going process of engagement between Scottish Enterprise and the company. The difficulty that we had with this situation is that the circumstances were never the same at any given time. When we were first notified about the matter, it was not about the company closing but about finding a buyer. Thereafter, it was about actions to secure funding and to pursue a sale proposal. It was only much later on that the possibility of the company going into administration became apparent. We have done everything in the intervening period to try to support the company and, ultimately, to support its workforce, which we continue to do.