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Chamber and committees

Meeting date: Tuesday, March 26, 2019

Meeting of the Parliament 26 March 2019

Agenda: Time for Reflection, Topical Question Time, South of Scotland Enterprise Bill: Stage 1, South of Scotland Enterprise Bill: Financial Resolution, Business Motion, Decision Time, Financial Scam Prevention


Contents


Topical Question Time


ScotRail (Remedial Plan)

1. Mike Rumbles (North East Scotland) (LD)

To ask the Scottish Government when passengers will see improvements as a result of ScotRail’s recent remedial plan. (S5T-01584)

The Cabinet Secretary for Transport, Infrastructure and Connectivity (Michael Matheson)

ScotRail is investing £18 million to deliver a remedial plan containing a range of commitments that are designed to deliver improvements over the next year. The key commitments include: completion of the current driver and conductor training programme in the east of Scotland by the end of May 2019, which will allow more class 385 trains and high-speed trains to be operated; recruitment of an additional 30 conductors, available to operate services by July 2019; and recruitment of an additional 55 drivers, available to operate services by May 2020.

I expect ScotRail to bring about sustained improvements through delivery of those contracted commitments. That needs to happen now for ScotRail to ensure that customers see improved reliability, fewer cancellations and more seats on the most badly affected routes.

Mike Rumbles

Since the start of the ScotRail franchise, we have had three improvement or remedial plans. Three years ago, the Scottish Government published an improvement plan containing 249 action points. Last year, we had another improvement plan, with 20 measures for improving performance, and today we have a remedial plan with another nine initiatives. We have had three plans, in three years, under two cabinet secretaries.

Meanwhile, there have been more cancelled trains in the north-east and trains that start their journeys from Haymarket when they should start from Waverley. Passengers are sick and tired of putting up with late trains, trains where they cannot get a seat and the substandard service provided. Will the transport secretary explain why long-suffering passengers should have any faith in this third plan?

Michael Matheson

The member is correct to say that there have been previous improvement plans. Those are somewhat different from the remedial plan that we are discussing, the purpose of which is specifically to address areas where ScotRail is in breach of the franchise agreement and to take measures to address those areas in order to get the company out of breach. That is what the actions set out in the remedial plan are intended to do.

The member will recognise that one of the things that came from the improvement plan was the Donovan review, which set out a range of actions that ScotRail had to take forward in order to improve services and reliability across the network.

The member will also recall that the Office of Rail and Road published an updated report on progress that ScotRail was making in taking those recommendations forward. The ORR highlighted that ScotRail was making good progress on those recommendations, although there were still areas where further work had to be undertaken.

The Donovan review set out wider improvement across the whole rail network, and in some areas work has been completed. We have seen improvements, particularly in the Strathclyde electric area. However, that does not address the concerns of people who are experiencing disruption in the east of the country as a result of cancellations that are largely due to a lack of trained crew. As a result of the level of cancellations, ScotRail is now in breach of its contract.

I expect the remedial plan to address the issues in the east of Scotland. However, the wider Donovan review work, which is about improving the network overall, is making good progress, as was highlighted by the report from the ORR late last year.

Mike Rumbles

I represent people in the north-east and their service has deteriorated. The plans have not worked, and the remedial plan says that the company’s performance is unlikely to reach acceptable levels until May 2020. That is one month after the Government can take action to terminate the contract. Will the Government take action by April next year to terminate the contract if performance levels continue to be breached?

Michael Matheson

There is a 2020 timeframe because it takes around a year for the figures to work their way out of the system. That is in the very nature of how these franchises operate—franchises that I no longer believe are fit for purpose or serve the travelling public well. In addition, it takes more than a year to train train drivers.

If ScotRail fails to deliver on its contractual commitments, as set out in the remedial plan, which is now part of the contract and is different from an improvement plan, it will default on the franchise. If ScotRail defaults on the franchise at the end of the remedial plan, we will be in a position to terminate the contract. That power exists. That does not mean that we could not terminate the contract if ScotRail defaulted on other parts of it. The remedial plan creates a contractual obligation on ScotRail to deliver the improvements. Should it fail to do so, it would default on the franchise and be in breach of the contract. At that point, the Government could make a decision on whether to terminate the contract.

Jamie Greene (West Scotland) (Con)

Like many—although not all—members, I want the franchise to succeed. However, we all have constituents who are bearing the brunt of the daily cancellations, delays, unreliability and severe overcrowding on carriages right across Scotland. That situation is—it must be—unacceptable to each and every one of us.

The plan will take some time to implement—including the time that it will take to recruit and train drivers, which is one of the key points in the plan—but the reality is that commuters do not have 12 months to wait; they want improvements now. What is there in the plan that fills the cabinet secretary, and should fill us, with confidence that passengers will start to see tangible improvements now, not in 12 months’ time?

Michael Matheson

As I said, ScotRail has to start delivering now in order to get out of being in breach of the contract. As ScotRail completes its training of drivers and conductors, particularly in the east of Scotland, it will be provided with the cohort of staff that is required to meet the demand for services. The recruitment of additional staff will assist in removing ScotRail’s need to be dependent on rest-day working, which has been an issue of contention in the past. That will provide greater resilience in the network.

As more of the Hitachi 385s are delivered—they are late in being delivered; Hitachi might not deliver all those trains until the summer—there will be increased capacity, in terms of seats, on the network overall. That increase in capacity is feeding into the network, and that will continue as more of the Hitachi 385s are delivered.

Alongside that, we should ensure that the crew of the new trains are able to operate them on their designated routes. That will allow some of the diesel units, which are being replaced by the Hitachi 385s but are being used on other routes at present, to be cascaded to routes in Fife and the east and the Borders route, for example, to provide additional capacity.

Once more of the high-speed trains are introduced, there will be increased capacity on the network. Their introduction has been delayed because of Wabtec’s failure to deliver.

These are not excuses—this is the reality of where we are. Once the additional rolling stock is in place, there will be a substantial increase in the number of seats that are available at peak times on the busiest routes. That is why it is important that we continue to do everything that we can to ensure that ScotRail, Network Rail, Wabtec and Hitachi are all focused on delivering on their commitments, so that passengers get the services that they deserve. I am determined to ensure that they remain focused on that task, and that we see improvements sooner rather than later.

Bruce Crawford (Stirling) (SNP)

I thank the cabinet secretary for his useful answers to the questions.

On behalf of my Stirling constituents, let me be the first to say that the performance of Network Rail has simply not been good enough. I have written to the cabinet secretary about that. What can he do about Network Rail, whose signal failures in the Stirling area last week caused huge inconvenience to my constituents? Is it not time that Network Rail is devolved to the Scottish Parliament, so that customers can be absolutely clear about where accountability and responsibility lie across the network?

Michael Matheson

The member raises an important point. I have said previously in the chamber that we must ensure that both parts of our rail network—ScotRail, which provides rolling stock and services for passengers, and Network Rail, which provides services that support infrastructure—are operating effectively. Just last week, the failure of a piece of infrastructure at Haymarket caused massive inconvenience to travellers across the east of Scotland, which rippled into the west of Scotland. The same piece of infrastructure had already failed earlier in the week. That demonstrates the need to make sure that the rolling stock and service providers and the infrastructure providers are aligned.

Mr Crawford might recall from previous questions in the chamber that the Office of Rail and Road has issued notice to Network Rail because of its failure to deliver recovery properly where there have been system failures on the infrastructure side. We have had quarters in which the level of cancellations and delays that have been caused by infrastructure has been greater than the level of cancellations and delays that have been caused by ScotRail.

At the end of the day, passengers want the services that they deserve, and they want to be able to access train services as and when they require to do so. Both parts of the system must play their part in bringing that about. I have stated time and again that Network Rail needs to be devolved to the Scottish Parliament so that we can ensure that the way in which the organisation is managed and aligned reflects the Scottish route. That will allow us to make sure that both parts of the system operate effectively, instead of Network Rail’s operations here in Scotland being decided on in Luton. In that way, Network Rail will be more accountable to us and to communities, businesses and the public in Scotland for the services that it delivers. Both parts of the system have an important role to play in addressing the issue.

Colin Smyth (South Scotland) (Lab)

The remedial plan estimates that ScotRail will not stop breaching on punctuality until 2020, but no timescale is provided for ScotRail hitting the overall punctuality target that it is paid hundreds of millions of pounds of taxpayers’ money to meet.

Does the cabinet secretary honestly believe that the current holder of the ScotRail franchise will ever meet the 92.5 per cent punctuality target? A simple yes or no will do. If the answer is yes, when will it do so?

Michael Matheson

The remedial plan is not intended to enable ScotRail to achieve that target—that is the role of the wider Donovan review. ScotRail’s forecast for achieving the 92.5 per cent target is that it will do so by the end of reporting period 13, in 2020-21, and it believes that it is on track to achieve that.

Stewart Stevenson (Banffshire and Buchan Coast) (SNP)

I draw members’ attention to my entry in the register of members’ interests.

Can the cabinet secretary give an indication of for how long the Scottish Government will accept applications to the local rail development fund, so that the benefits of our improved railway system can reach even more communities, such as Ellon in the north-east of Scotland?

Michael Matheson

I am aware of the interest in a line to Ellon. The local rail development fund was a £2 million fund that was established in February 2018 to provide funding to allow communities to appraise potential options and develop proposals that aimed to tackle local rail connectivity issues. Ten organisations were successful in securing £0.7 million from the fund.

Given the significance of the interest that was reflected in the application process, we provided communities with an opportunity to bid for the remaining £1.3 million on 28 February this year. I encourage all members in whose constituency or region there is interest in applying to the fund to go to Transport Scotland’s website, where information is available. Applications should be completed and returned by 28 June this year.


Natural Retreats and Cairngorm Mountain (Scotland) Ltd

2. Rhoda Grant (Highlands and Islands) (Lab)

To ask the Scottish Government, in light of the recent BBC investigation, what action it is taking regarding its dealings with Natural Retreats and Cairngorm Mountain (Scotland) Ltd. (S5T-01570)

The Cabinet Secretary for the Rural Economy (Fergus Ewing)

The situation is extremely disappointing, and it is important that we understand what has happened with regard to public funds. I have asked Highlands and Islands Enterprise, which is the accountable agency for Cairngorm Mountain, for a full account of the situation, and I will meet HIE to establish what more, if anything, can be done.

Snow sports are an important part of our rural economy. Through our enterprise agencies, we have committed £6 million to infrastructure projects since 2014. It is important now that we all work together to secure the future of Cairngorm to benefit the local community.

Rhoda Grant

Cairngorm Mountain is crucial to the economy of Badenoch and Strathspey and, for some time, the community there has been expressing concerns about management of the mountain by Natural Retreats, and about the flow of money into and out of Cairngorm.

There is a complicated web that includes a public body and its interaction with private companies, so can the cabinet secretary tell me what financial checks were made of both Natural Retreats and Natural Assets Investments Ltd before they gained the management contract and while it was running.

Fergus Ewing

Rhoda Grant is correct in saying that the success of Cairngorm Mountain is extremely important to the local economy in Badenoch and Strathspey, and to the wider Scottish snow-sports community. She is also correct to say that there have, for some time, been concerns among the local community. I am well aware of some of them.

In answer to the question, I confirm that Highlands and Islands Enterprise carried out due diligence financial checks for Natural Retreats. It reported that NR’s turnover for the year ending March 2013, prior to the procurement process, was £2.8 million. HIE was also assured by two forms of security—an intercompany guarantee and a personal guarantee from the main shareholder in the NR family of companies.

Rhoda Grant’s second question related to the process in relation to other changes that followed the financial checks. I confirm that appropriate checks were carried out at every stage and that, where appropriate, professional advice was sought. However, I want to reassure Rhoda Grant and all other members that—as I mentioned in my original answer—those matters are of concern to the public and are of considerable public interest. I am seeking a full accounting from HIE on them, and full answers to the questions that have been raised by the media, local community members and others.

Rhoda Grant

Was Cairngorm Mountain (Scotland) Ltd in breach of contract when it went into receivership? If so, could HIE have cancelled the contract rather than having to pay the receiver to take it back into ownership? Given the community’s desire to own the asset, will the Scottish Government now look at transferring it to the community while ensuring that all monies that are owed to HIE and the Scottish Government are recouped from Natural Retreats?

Fergus Ewing

That is a legal question, and it would be imprudent of me to give off-the-cuff legal advice. I have already said that I am seeking a full response on all issues. I will say only that HIE was faced with the decision to ensure that it took action to enable skiing to continue—snow conditions permitting—and that it took that obligation extremely seriously. It became aware that CML was in serious difficulty in October 2018, when a working capital loan of £1.8 million was sought, but the company was unable to provide security. HIE staff then sought to progress a managed exit. The aim was not to end up in the courts, which could have prevented any operation at all on the hill. Rather, the aim was to enable skiing and snow-sports activity to continue on the hill, if possible. The vast majority of local residents were happy to receive that news.

I am not saying that Rhoda Grant’s question was not appropriate; it was perfectly reasonable. I will ensure that it, and any others that it would be imprudent for me to answer off the cuff now, will be answered in due course, because we take those matters extremely seriously.

Edward Mountain (Highlands and Islands) (Con)

Given that it will probably take two years to get the funicular railway operational, and with the new snow factory probably being in the wrong place, there is little to attract families to Cairn Gorm. Will the cabinet secretary confirm what actual cash funds are committed from today to support the mountain over the next two years?

Fergus Ewing

I was grateful that Rhoda Grant expressed her support for skiing on the hill, and I hope that Edward Mountain has a similar view. However, I am afraid that I do not accept as correct the sweeping judgments that he has made.

To be quite honest, it is simply impossible to answer a question about how much money is required until we know the facts. The way to carry out government is first to assess the facts and therefrom to decide what conclusions are relevant. That is important.

As Edward Mountain knows, we are due to receive shortly the peer-reviewed assessment by COWI, the firm of structural engineers that has been examining, as its professional expertise enables it to do, the structural state of the Cairn Gorm funicular and the steps that are required to deal with it. Until we have established what the recommendations are and the assessment is peer reviewed, it is by definition not possible to assess what action will be required to remedy the defects in the funicular, far less to make a budget. That is the task that we are engaging in.

I am pleased that HIE has established a local body—the funicular response group—that is chaired by a local councillor and has a substantial membership. It is liaising and working practically with the grain in order to find a solution to all those matters. My concern is to find a solution through working with all relevant parties. That is what we will continue to do.

John Finnie (Highlands and Islands) (Green)

The cabinet secretary can be reassured that all members wish to see a successful tourist industry in the area. When we discussed the issue previously, the cabinet secretary took grave exception to my description of the situation as “a shambles”. In the interim, has he had time to reflect on that judgment, and has he undertaken an assessment of the reputational damage that has been caused to Highlands and Islands Enterprise and of the—sadly—possible wider implications for Badenoch and Strathspey?

Fergus Ewing

I fully accept that the situation is disappointing. However, I point to the fact that HIE intervened successfully to resume responsibility for running the operations on the hill. If it had not done so, there would be no chance of any operations on the hill. HIE should be given credit for that. It has set up a local response group that works sensibly and is looking at the facts and dealing with the realities.

I think that Mr Finnie expressed his support for the hill, but he did not mention the fact that HIE also contributed to the procurement of snow-making equipment. The people who operate the five outdoor snow-sports resorts in Scotland recognise that snow-making equipment has the potential to be game changing, because it could extend the season and enable snow sports to continue when snow is relatively thin on the hill, as it has been this year, sadly. HIE’s action last October in procuring that equipment, which it had been working on for a considerable time, is also welcomed locally.

The priority now is not to seek a post mortem; it is to make a prognosis and find the way ahead. That is where I shall focus my efforts, while ensuring that answers to perfectly legitimate questions, such as those that have been asked by Mr Finnie, Ms Grant and others, will be answered by HIE. Arrangements are in place for me to meet relevant HIE officials in the coming weeks to deal with all those matters.