Official Report 706KB pdf
Agenda item 2 is our inquiry into the A9 dualling project. This evidence-taking session follows on from the evidence that we took at our previous meeting from the Civil Engineering and Contractors Association and current and former senior leaders at Transport Scotland, one of whom, I see, has a season ticket to our business and has hastened back to tell us something different this time, I hope, not the same thing again.
That said, I am delighted to welcome this morning the Cabinet Secretary for Transport, Net Zero and Just Transition, Màiri McAllan MSP, and from Transport Scotland: Lawrence Shackman, director of major projects; Jo Blewett, head of sustainable transport projects and former A9 programme manager for the development of the statutory processes; and Rob Galbraith, head of project delivery.
I should also say that we have received apologies from Edward Mountain MSP. He has been joining us as a reporter from his own committee but, this morning, he has other committee business and is unable to be with us.
Before I invite the cabinet secretary to say a few words, I should say that I have been looking at the way in which the inquiry has been going, and I think that it would be helpful if there were two phases to our questions, the first on how we got here, and the second on where we are going. I think that Mr Galbraith will remember that, at our previous meeting, we seemed to dot between the two a bit. Given that our focus is very much on where we are going, I want the earlier phase of questioning to be quite brief and to the point; I just want to clarify things that we have heard and see whether we can tie down in our minds where we had got to before.
Members will be invited to come in randomly as they see fit. I am not one of these people who allocate everything in advance—I await being inspired by colleagues and the questions that they ask.
Cabinet secretary, you have given us a very comprehensive submission in advance of this morning, and I am very confident that you will not repeat it in full just in your opening remarks, which I invite you to make.
Thank you very much for inviting me along to the inquiry.
As you have noted, the committee has already received a written submission. Members will also have heard my statement to Parliament, which I delivered just prior to the Christmas recess and which was very much about what you have just been talking about, convener—a forward look at completion of the A9. The committee has also taken a considerable amount of written evidence from ministers and from current and former chief executives of Transport Scotland, along with a range of stakeholders.
Given the extent of the first-hand evidence that has been collected on historic events, convener, I expect that, today, I can add most value by doing just as you have suggested and looking forward. That said, I absolutely want to be able to assist the committee with its retrospective look, too, to the extent that I am able. As I noted in my submission, I have considered all the previous written statements and have taken advice from my officials on the period leading up to my appointment last year. I hope that you will appreciate that my reflections will be just that—reflections, not first-hand experience.
That said, I am very pleased to have published the refreshed delivery plan for the A9, which was, as I have said, delivered in December not only to foreground certainty of delivery but to balance delivery very carefully against the need to minimise disruption, to take account of market capacity and, indeed, to work within the financial constraints that we face.
My final comment is about the criticality of safety and how important that issue has been for me. I put on record my heartfelt sympathies to everybody who has lost a loved one on the A9 or who has been injured in an accident, which is something that has been pointed out to me as being of great importance. Dualling, as far as I am concerned, is the key safety mechanism, but as we cannot wait for it to happen, interim safety measures are being pursued, too.
I will conclude there, convener. I very much welcome this opportunity to restate the Government’s commitment to the A9 and to look back, in so far as I am able to from my own experience. I very much understand the committee’s interest in this—and of course, given its nature as the committee with responsibility for public petitions, the public’s interest, too.
I look forward to members’ questions.
Thank you very much, cabinet secretary.
I do not want to lose sight of the fact that we are advancing the interests of a petitioner and a petition, the ambition of which is to have the A9 completed and to ensure that consideration is given to a national memorial. As a result of your statement to Parliament, a programme has now been identified that will ultimately deliver on the petition’s aims, which is why we now want to talk about how that will be achieved and whether there are risks associated with that in the current marketplace.
Looking back, I would just say that the committee was grateful—probably less grateful than we expected, though, given that it all arrived just before Christmas—for the voluminous response that we received to our requests for information. The pile was about a foot thick at the end of the day. Are you aware of all the stuff that we have received, cabinet secretary? Have you been briefed on past experience instead of having read through all of it yourself?
If I remember correctly, convener, I think that upwards of 80 papers were sent to the committee. I have read a selection of them, and I have read summaries of a selection of them. I have also read the written statements from previous ministers.
I want to start with a question that I put to Mr Galbraith last week, and he will, no doubt, want to reassure me in the same soporific tones with which he sought to reassure me last time.
First of all, this is not an issue that I have been directly involved with; indeed, as the member for Eastwood, I have to say that it is not the first thing that is of concern to my constituents, and it is not, as it is for some, my particular field of expertise. However, I read through the narrative, and here I come to the point that I tried to explain to Mr Galbraith. What I saw in that narrative was that, even though there was an acceptance of the challenges associated with all of this, there was still a consistency of commitment and policy objective with regard to delivering the A9 by 2025, both privately and publicly, from the moment the project was announced until somewhere around 2018 when—as I found on reading the papers—a vagueness started to come in.
I have never been able to quite understand the genesis of that. It is not clear to me whether it was those involved in the delivery of the project who thought that something was not going to happen and that they needed to start thinking about different funding streams and operational approaches—none of this was shared with the public, by the way; it was all happening internally—or whether ministers themselves were leading all of this.
Last week, Grahame Barn said that he thought that the target became unachievable
“because the political will to provide the funding required to do the job just was not there when required.”—[Official Report, Citizen Participation and Public Petitions Committee, 24 January 2024; c 4.]
I want to try to understand this. Given that the Parliament and the public only became aware much later that we were not achieving the target, I would like to know what happened. How did it become apparent to ministers that the challenges that had been identified might mean that there would be a delay, and who then tried to drive things forward by looking at whether there were different ways of doing it? Did it come from the top down or the bottom up?
I think that that is a very fair observation. I will seek to answer all your questions, but please do come back to me if I miss any of them.
I would just start by saying that there was always an understanding that the A9 was a complex project. Indeed, I said as much in my statement to Parliament. It is actually 11 complex projects, and it is evident right from the early papers that Alex Neil received that it is complex in the statutory processes that have to be gone through, in its design, in the procurement approach, and then, of course, in the way that it is funded.
Convener, you mentioned 2017-18 as being the point at which, in your view, it was accepted that the target date of 2025 was not doable. For the record, I would refute that; I would say that it was not until late 2022 that ministers were finally advised that there was no practical route to completion by 2025. I accept that, as time goes on, there is a diminishing likelihood of completion by 2025. That is plain, as that would require ever more capital up front and ever more disruption on the route.
The advice from 2017 that you are thinking about and referring to is the advice that ministers received on moving to a new private finance model and the advice that developing such a model in and of itself would take so much time that we would be pushing beyond 2025. There was always an understanding that an entirely capital-funded approach, with increasing levels of disruption, remained possible, although I accept with a diminishing likelihood.
On that point—and this is what I do not quite understand—was it officials who thought, “This is financially not going to happen. We need to float the idea of a different funding model, which might lead to delays” and then that was communicated upward, or did ministers ask officials whether there was the funding for the project and, if not, whether a different funding model needed to be looked at? It is not clear to me from the papers which way round the discussion began.
Well, it is a combination. Ministers rely on advice from officials on the appropriateness of a certain path forward and the available options, and it is then for Cabinet to agree that funding be brought forward for whatever that might be.
If I could identify one key issue that pertains very closely to what you are asking about, it would be the reclassification in 2014 of the non-profit-distributing model—that is, the private finance model. As a result of that decision by the Office for National Statistics in 2014, the financing model that we had previously thought would form part of the funding package was no longer available to us. It was not until 2019, when the Scottish Futures Trust advised that the mutual investment model was a suitable replacement, that that private finance option became open to us.
Officials would advise us on that sort of thing. They did a huge amount of work to prepare for a MIM, but the fact is that when the original private finance approach fell out of the realm of possibility in 2014, it had an impact on the timetable. I would sit that alongside a slight delay in the statutory processes as the two reasons that I believe the project has been delayed.
Good morning, cabinet secretary and witnesses. In his evidence, Alex Neil said that he believed that there was more than sufficient capital to deliver the project. He also set out a detailed statement about when each of the sections of the A9 was to be dualled. Why was that not adhered to? It was breached right from the start.
Again, I am straying slightly into the territory of interpreting what Alex Neil thought. We have to remember that his comments, quite understandably, were made within the four corners of the time that he was involved with the project. That was very early in its development. The advice that he received was, “Yes, minister, this is how we are taking it forward; this is how we propose to do it.” However, that was heavily caveated by saying, “There a great many things to be worked out here.”
Some of the other ministers’ comments on this, including Nicola Sturgeon’s, are, I hope, helpful to the committee. Ms Sturgeon pointed out that Mr Neil was correct to say that, for his purposes at that time, funding had been identified, and her view was that that funding was for a one-to-two-year period during a long project. That is not uncommon for major projects; at the very beginning of such a complex project you will seldom have certainty over delivery and funding right through to the end. That was Mr Neil’s impression of that one-to-two-year period, rather than the whole thing.
09:45
I hear what you say, but I am just not convinced. There was a complete failure to adhere to the very clear schedule of works and programming. It set out in which year every section would be done, and that was completely abandoned.
I do not deny that there are delays. The principal reason for that is the two things that I pointed out to the convener: first, the ONS reclassification of the non-profit-distributing model in 2014 and a one to two-year delay on statutory processes.
I was interested in the emphasis that you have given to the ONS decision. I do not recall there being any ministerial statement about that at the time. Why not?
I could not say for certain what the parliamentary choreography was around that, I am afraid. I was not there. Nor, frankly, am I in a position to say why that was or was not done.
I appreciate that you were not responsible. I was part of the Government for a while, so I had a collective responsibility and I have never sought to shrug away from that. However, I never had a portfolio responsibility.
Why did it take five years from the critical watershed decision of the ONS, on which no statement was made to Parliament about how significant that was, even though you now say that that was the absolute critical moment? Why did it then take until 2019 for there to be a private finance plan? That was five years during which most of the work, or a very substantial proportion of it, according to Alex Neil’s plan, was supposed to have been done.
There are two sides to that question, and I will try to take them both. I might briefly pass to officials to explain some of the work that was done on developing an alternative private financing model.
You are right, five years is a long time. As I said, Scottish Futures Trust was involved. MIM was developed by the Welsh Government and has been adapted for use in Scotland. I do not just identify the ONS reclassification as the key issue; I also see that there were delays in statutory processes. I am happy to come on to why I think that that may have saved us some time in the end, by meaning that we had only one public inquiry, albeit I would prefer that those processes been quicker.
The new point that I want to make is that there was not a vacuum of work during that time. Work was progressing. The statutory processes work has been progressing to the point where we now have 92 per cent ministerial decisions in hand for those. We brought forward work on the Kincraig to Dalraddy route, which was completed in 2017. The additional section of Luncarty to the Pass of Birnam began in 2019 and was completed in 2021. Of course, work was on-going in the background to develop a new private finance model.
I do not know whether any of the team want to say something about that five-year period and why such work takes so long.
I can maybe add a little bit to the detail of the work that was going on in that period. I am afraid that that work was taken forward with Scottish Futures Trust rather than Transport Scotland, because it is looking at a replacement for the non-profit-distributing model as a private finance-style of contract suitable for use across sectors—it is not sector specific to roads or accommodation or anything. That is why SFT was tasked with that piece of work and was responsible for taking it forward. It was only in 2019, when ministers endorsed SFT’s recommendations, that a new replacement for the non-profit-distributing model was available for Transport Scotland to begin considering as a potential vehicle for its contracting approach.
Was SFT given a deadline when it was commissioned, and did it adhere to that deadline? When did it put forward the recommendations?
You would have to direct those questions to SFT, I am afraid. It is not something that I can comment on.
I think that we need to get at this because there was five years where—
Just one comment—
—all this work was supposed to have gone on and we have only seen two of the sections. Those are welcome, of course, but there is a complete absence of an explanation, cabinet secretary, about what went wrong. Can I just ask one final question?
To be fair to Mr Galbraith, he was halfway through his response, Mr Ewing, so I will allow him to finish.
Was he? I am sorry. I did not realise that.
One point that I am keen to finish is that the bulk of the work, in actual fact, was planned to take place between 2019 and 2025 under the original plan. It would not have been in progress by 2019; most of it would only just have been starting.
It did not go ahead then either, did it? Has there been any review of the failure to adhere to the plan? Has there been any internal review by the Scottish Government—or anybody else, for that matter—as to why the timetable slipped and why there has been a failure to implement the very clear pledges that the Scottish National Party made repeatedly to the electorate at every election?
A formal review has not been done within Government. I am very clear—and I hope that I have set it out clearly today—what my view, which is shared by my officials, is of the two principal causes of delay. The inquiry will add to that work as well.
Since becoming the cabinet secretary in 2023, my focus has been on getting the optimum delivery plan sorted, moving to that NEC4 contract as amended, and progressing interim safety measures in the meantime. Has there been a formal review inside Government? No. We have quite a well-established view of what the two principal causes of delay are.
Has there been any review? Has Transport Scotland not done a review of any sort? Has there been none whatsoever, despite the fact that this was the flagship pledge, and it has completely slipped? No review at all, is that right, Mr Shackman?
There is review all the time.
Yes. The fundamental thing, when we are looking at the procurement options and considering MIM against design and build, is to make sure that we get value for money right across the public purse and that there are opportunities for different contractors across the industry. Using capital money or revenue financing is a fine balancing act and it was not a particularly quick thing to resolve. I was not there and I was not part of the process at that time, but I can assume that, for a number of years, a lot of thought was given to whether we could use revenue financing or whether we should be using capital financing, what the budgets were like at that particular time and what the best balance was for the public purse, bearing in mind the considerable cost of the dualling programme.
I understand all that, but with respect, that was not what I asked. I asked whether there was any review of any sort into the failure to deliver on our pledges in Government. Was there any review or not?
With all respect, I think that I have answered that question. I said that there has not been a formal internal review, but we review on an on-going basis what we think the reasons for delay are, as they emerge, and I have identified the two key ones that we attribute the delay to.
I will park it there, but I do not think—
I take it, Mr Ewing, that you might not be happy with the answer, but we have an answer.
I will come to Mr Golden, but something arose there that left me slightly confused. Prior to the change of rules in 2014, was the Government relying on a private finance contribution to the project? I understood that it was a fully capital-funded project at that point.
Again, I might bring my officials in to ensure that I am accurate on this. It would be fair to say that there was always an expectation that there would be a combination of capital and private financing for the project. Indeed, the Scottish public finance manual requires the Government to consider private financing for projects. Of course, the non-profit-distributing model had been used in a number of major projects that the Government had taken forward. The reclassification in 2014 was quite a turning point, I would say.
I am happy to leave it at that. I turn to Maurice Golden.
I will follow up on Mr Ewing’s line of questioning. Transport Scotland officials have told the committee that it became clear only in late 2022 that the 2025 completion date would be missed, but the committee has heard that it was common knowledge among experts that the date would be missed several years before that. Cabinet secretary, are you concerned about the apparent discrepancy between the views of officials and those of external engineering experts?
Thank you for the question. I do not want to point to the experts that you are referring to, so I will answer the question in the generality. Ministers welcome the advice that we rely on from our officials, and I have always been very satisfied with the advice and support I have had from Transport Scotland. That is always better when it is complemented by views from people from industry or those who work on these matters on the ground. From my perspective, we take advice and information in the round.
I mentioned before that there was always an understanding that an all-capital, increasingly disruptive approach could be taken until late 2022, when that was no longer a possibility. All the while, we were doing work to consider a better combination of actions. I think that some people in the industry would accept that there was an opportunity to do it very quickly and very disruptively. Grahame Barn, when he was in front of the committee, mentioned how quickly he thought that it could be done. He talked about how Inverness could potentially be cut off, which nobody would want, but physically it still could be done. That is what I mean by a diminishing likelihood.
There are different views. Ministers take them all on board, but I would not want to diminish the quality of advice that we get from Transport Scotland, which I very much value.
Okay.
Do you consider the road order processes used to authorise major road projects to be fit for purpose?
Sorry, Mr Golden, can you elaborate on that slightly? Is this the statutory—
We will stick to what has happened before. I know that Mr Torrance was keen to raise that particular question.
Okay.
Mr Choudhury, do you have a final question in relation to how we got here, before we switch to where we go from here?
Yes. Good morning, cabinet secretary. Following on from the question that my colleague Maurice Golden asked, at what point were Scottish ministers first aware that the completion date could potentially be missed?
I will try to clarify this. Late 2022 was the point at which a submission came to ministers advising that there was now no possible route through to completion by 2025. That would have been received by Ms Gilruth and Mr Matheson, and Ms Gilruth updated Parliament after the Christmas recess in respect of the timetable and the Tomatin to Moy procurement problems that we had faced. Late 2022 was the point at which the advice arrived that said that 2025 was no longer doable. However, I recognise that there was a diminishing likelihood of it in the months leading up to that, and I think that that would have been reflected in advice as well.
I have just one more question.
Is it on how we got here?
Yes.
At the previous session, Transport Scotland advised the committee that it was 92 per cent through the statutory process back in 2011. When the original timetable for the project was set out, the estimated time required to complete the statutory process was six years. We are now at double that time. What engagement have ministers had with Transport Scotland during that time?
That identifies a really key point, as far as I am concerned. As I said at the beginning, the statutory process taking a little longer than had initially been anticipated when planning is certainly, in my view, one of the reasons for the delay.
I would caveat that by saying, again, that this is a project of great complexity. When Roy Brannen was in front of you, he discussed the number of sites of special scientific interest, the national park—all the things that make it a complex project. Although the statutory processes took too long, in my view they are a very important part of democratising infrastructure development and engagement with the public. I was going to say that we have been lucky in the sense that we have had only one public inquiry, but I would not put it down to luck. I would put it down to the quite robust and deep engagement that was had with communities. That may have meant that it took a bit longer, but we may also have saved time as it meant that we fewer public inquiries. I do not know. All I am saying is that I think that deep engagement is the right approach.
Thank you. Let us switch to where we go from here and how we manage things going forward.
Good morning to the cabinet secretary and our other witnesses. Cabinet secretary, can you outline the current governance structure for the A9 dualling programme? What is your role in that?
Yes—absolutely. I will speak about my role and my view of officials. If they have anything to add to what I say, they can do so.
It is probably worth pointing out that a slightly different approach has been taken since Ms Hyslop and I took over the running of the transport brief. Previously, the transport minister took direct responsibility for the bulk of the portfolio responsibility as it stood, and the cabinet secretary had an oversight role. I now have explicit responsibility for parts of that, and there is an ever-so-slightly slimmer junior ministerial role. I think that that is working well. It provides a better connection between the minister and the Cabinet, and it helps to relieve a little bit of the pressure on the junior minister, which is a significant role.
10:00Ms Hyslop and I work together on that. On the explicit responsibilities, I have responsibility for major projects investment, and she has responsibility for major projects delivery. Those two things together mean that we both work on the A9. We have done so to date, and we will do going forward.
On governance structures, we regularly meet the director of major projects and his team to receive updates on our priorities in respect of the A9 and on a range of other major projects, such as the Rest and Be Thankful project. I also meet Transport Scotland directors twice weekly for operational updates.
A regular rhythm of advice is received. Ms Hyslop and I very much share responsibility and, of course, I report to the Cabinet. The Deputy First Minister has a role in all of that, as well, owing to her finance responsibilities.
Would you be interested to know about internal officials governance?
Yes, please.
We have a programme board for the A9, which typically meets every six weeks or so. There are four directors on that board, including the chief executive officer of Transport Scotland. We discuss the whole programme. As members might expect, there are project meetings for individual projects. There will be monthly meetings on the Tomatin to Moy stretch as it progresses, as there will be for all the other projects. The idea is that each of the projects should come together and report regularly to the programme board.
We will continue to review the frequency of the meetings, attendance at the board, how it reports back to the cabinet secretary and the Minister for Transport, how it addresses engagement across the corridor with stakeholders and members of the public, the risk profiles, and all the things that members would expect a programme board to review in a project of such a scale.
Cabinet secretary, a colleague touched on this issue earlier. Do you consider the road order process that is used to authorise major road projects to be fit for purpose? If not, do you have any plans to update that process?
I apologise to the committee. I want to clarify that, when Mr Golden asked that question before, he meant the statutory processes. I know that Mr Barn spoke about his view that that had slowed down the process. I understand that view. Mr Barn’s objective is to get projects moving and moving well, and I appreciate his perspective.
I go back to the point that statutory processes are laborious—there is no doubt about that—but, as we all know from representing our constituents’ interests when major infrastructure projects are happening on their doorstep, they are really important in ensuring that the right processes are gone through, that thorough consultation happens, and that people are really engaged in the development. That pertains to roads just as it does to a whole suite of other infrastructure projects, not least energy projects. The issue is being grappled with just now, and it will increasingly be grappled with as we seek to upgrade the grid.
I have been clear that I think that the statutory processes took a little longer in the case of the A9 than we expected. They are a very important part of democratising infrastructure development, and I would not like to suggest that there should be any shortcuts around them. I say again that, to date, we have had only one public inquiry in a major and complex project. In some ways, that is a success of the deep engagement that there has been. I do not know whether there are any technical reviews.
I know that a review of the statutory process is just starting. A representative from our major projects directorate is taking part in that review. It is in its early stages, but there are moves to look at the process and see how it can be refined or improved.
Cabinet secretary, why has a hybrid approach to A9 dualling been adopted? How does the total cost compare with the cost of a capital-funded approach?
I will definitely go to Rob Galbraith on some of the close details on costs, because it is very easy for me to use the wrong figures when I do not have them in front of me.
On why a hybrid approach was adopted, I mentioned earlier that it was always expected that a combination of funding techniques—if I may use that horribly untechnical term—would be adopted because that allows the Government to best use the resources that it has to achieve its objectives. It recognises that capital can be in short supply—that has been the case increasingly. All members who have had cabinet secretaries in front of them to discuss the budget will have heard us talking ad nauseam about the restraints and constraints on capital budgets that are increasingly being felt.
The hybrid approach allowed us to spread the financial burden between the Government’s capital budget and revenue budget. The size and scale of the A9 also lends itself to a combination of funding techniques. For example, we can make progress in the plan that we have set out on a capital basis with the first three southern sections, and the northern and remaining sections well suit being bundled into MIM baskets.
I will hand over to Rob Galbraith for some of the cost details. However, I will be absolutely up front that capital is, in the long run, the less expensive way of completing major projects, but capital is not as readily available as a combination of capital and revenue.
I will pick up on costs in a bit more detail.
When we are comparing procurement options, we look at costs in two ways. We look at the cash that will be spent over time. That is what we call an outturn cost. Within that, we look at what the effects of future inflation are expected to be. That is useful to look at, but, in my view, it is not and it should not be an ultimate decision maker because we also have to think about what the value is in the present-day cost of the decision that we are making when we discount the effects of inflation. That is a decision in relation to the current value of money. When we talk about a current value of money comparison, we see that the difference between a fully MIM option that we were looking at and a capital-based design-and-build option was around 14 per cent. For the hybrid option, the difference was about 10 per cent. The hybrid option was 10 per cent more costly in equivalent present value of money terms.
When we compare outturn cash figures, we see that the figures are quite different because of the effects of inflation. That is driven by the timing of when money is spent. When money is spent on a private finance contract, it is spent for a long period of time into the future, so it attracts more inflation. However, that inflation attaches to lower sums of money compared with having to spend the money on capital money outlay in the next few years. That comparison is critical to understand, and it drives the difference in the cost comparator.
I will briefly add to that for the committee’s awareness, although it may already be aware of this. I hope that the committee will be comforted to know that MIM has managed out some of the worst excesses of private sector profiteering that were apparent in historical private finance initiative deals. The way that it works has been designed to not allow for that.
How confident are you that the programme for dualling the A9 will come within the £3.7 billion budget? Is there any robustness in the figures that could back that up?
The advice that I have is that we are looking at a total scheme cost estimate, which is a defined way of measuring, of £3.7 billion. I am just checking my notes. When that is adjusted for inflation, that is the equivalent of £2.45 billion, which is well within the original estimate of £3 billion at 2008 prices. That relates to what Rob Galbraith explained about the way that we compare spend. The advice that I have is that, comparing apples with apples in respect of the 2008 estimate, the £3.7 billion in spend nowadays should be within the original budget.
That gives me some comfort. I do not want to misquote Mr Barn, but I think that he was asked about how realistic the funding proposals are and he said that they are not unrealistic, which I will take to mean realistic. I will check that—I have the transcript of what he said here.
A couple of questions arise from what I have heard. On the £3.7 billion, there is a funding trail in the pile of documents that we have received. At one point, figures as high as £6.25 billion were identified in relation to the project. Can you explain why you are confident about the figure of £3.7 billion? Is that a comprehensive figure, or did the allusion to £6.25 billion in papers that we received include other considerations? Have those disappeared, or do they continue to sit alongside the £3.7 billion?
That is a perfectly understandable question, which I have asked myself from time to time when I have been reading all my papers. I will hand over to Rob Galbraith to ensure that I am absolutely correct, but those are different ways of expressing costs. The £3.7 billion is the total scheme cost estimate. As I have said, we compiled that figure so that it could be directly comparable to the 2008 figure, which was also a total scheme cost estimate. The higher numbers—the £4.6 billion and others—are the outturn costs, which take account of inflation and other issues that can bear down on costs.
Before I put anything on the record that is not accurate, I will hand over to Rob Galbraith to try to explain that.
I think that we touched on that the last time I was with the committee. The £3.7 billion is in April 2023 prices—it is essentially a present-day price. It does not include forward inflation from this date or costs for the operation and maintenance of the constructed costs. The £4.6 billion and the £6.25 billion are in papers in which we discussed procurement options for the remaining parts of the programme. One thing to note is that they do not include costs that have already been spent, because that is not part of the decision making on future spend that will be incurred.
What we try to do in those cost estimates is compare taking a capital-funded solution and delivering that versus delivering a MIM private finance solution. There is a 30-year operation and maintenance period for the private finance solution. To get a like-for-like comparison, we have to put 30 years of operation and maintenance into the capital-funded design-and-build solution. That includes operation and maintenance costs that are not part of a total scheme cost estimate and future inflation costs that are not part of an April 2023 pricing cost. The numbers represent outturn, but they represent outturn for a different scope and not even for the full amount of the programme.
Thank you—it is important that that has been stated.
I will bring in Mr Ewing. Quite a large part of our evidence about the future of the programme has been about not so much whether people want to do it or even whether the money might be there to do it but whether, in fact, there will be troops on the ground who can deliver it.
I will come on to that in a moment, convener.
The first area that I want to ask about is the outline plan for completion of the A9 dualling project by the envisaged date of 2035. That is subject to one important caveat, which raises serious questions in my mind about whether the plan will be delivered. That is that the use of mutual investment model contracts is
“subject to ... further decision making in late 2025”,
based on
“an updated assessment of market conditions.”
That means that a decision could be taken not to use MIM.
What criteria will be applied in 2025 as to whether MIM will be used? If MIM is not used, what is the contingency plan?
I will take the last part first. If the market conditions that prevail in 2025 are not suitable and mean that we cannot go forward with a MIM contract, we have contingency that the 2035 date could still be met via capital funding, provided that capital was available. I do not know what will prevail in 2025, but I know that, if I am in post, I will be determinedly pushing for capital to be available should MIM not prevail. However, my preference is that MIM will be available.
It is absolutely right that a Government creates staging posts for consideration of prevailing market conditions at the time. That is how we discharge our duty of prudent public spending. It would not be correct for me to make that decision now. The Bank of England has raised interest rates 14 times in the past two years, and they are at an all-time high. Now would be a particularly bad time to enter into borrowing at the current cost, so we very deliberately created the opportunity in 2025 to allow us to assess the market conditions, which are—fingers crossed—predicted to improve. We are in a particularly sticky spot just now, but I have to robustly defend the Government taking the chance to assess the conditions at the time and then make the decision.
10:15
I am not sure that they are at an all-time high; they are at a relative high.
Thank you, convener—you are quite right.
I am not so young that I cannot remember it being considerably higher than that.
I am probably not old enough to remember.
Just standing back for a moment, the capital budget that is available to the Scottish Government each year is of the order of between £4,000 million to £5,000 million. It is reasonable to assume that that will continue to be the case. By 2035, which is 10 years, my maths suggest that there is a total of £40,000 million to £50,000 million available in the capital budget. The Highlands wants £3,700 million, which is less than 10 per cent of that total.
Why is the Scottish Government not making a clear cast-iron commitment or guarantee that, if MIM proves to be too expensive, for the reasons that the cabinet secretary has set out, a sum equivalent to less than one 10th of the total capital will be available for the Highlands, particularly since—this is just a matter of fact—there has been hardly any spending on roads projects in the Highlands since devolution? All the money has gone elsewhere. We have had a couple of roundabouts and a couple of small sections of dual carriageway.
Surely the Government recognises that it is the Highlands’ turn. If the Government cannot make a commitment that if MIM is too expensive traditional capital spend will be used, does that not suggest that the Highlands do not even merit a 10th of the total capital spend between now and 2035, a proposition that will simply not go down very well at all in my constituency or in the Highlands as a whole?
Mr Ewing’s advocacy on these points is very effective and it is absolutely heard loud and clear. From my perspective, I cannot make decisions based on regional competition; I have to make decisions based on what is right, what presents value for money and what is best for the people of Scotland. I should say that I consider that the dualling of the A9 is one of the most important pursuits in respect of what is right for the people of Scotland, and that is why I have been determinedly trying to work on this optimum delivery plan.
On certainty, Cabinet has agreed to my plan. It has understood the point about 2025 and MIM decision making and our view that 2035 remains possible should capital be made available in the case that MIM is not suitable. The Cabinet has collectively agreed to manage the financial pressures that that will create, and that delivers a degree of certainty that we have not had to date.
Mr Ewing is right to point to the capital budget for the Government. When Roy Brannen was here, he pointed out that we have about 40 per cent of capital spend, the vast majority of which is in transport. I will give you this year’s draft settlement as an example. First, it is being eroded but that does not speak to where we have come from; that is just me speaking about where we are going. I always have to balance objectives. This year, I plan to invest over £1 billion in roads, which is up 26.2 per cent. That includes a year’s worth of progression against the A9 optimum delivery plan; critical work on the A83 Rest and Be Thankful; £47 million to protect the integrity of the M8 Woodside viaduct and other projects. I appreciate that those major projects are not directly applicable to the committee’s inquiry, but they demonstrate that, every year, there are priorities to balance. However, I end by saying that the A9 dualling is a key priority.
I will move on to a different point that Grahame Barn raised in some detail in his evidence. Unlike in the past, over the next 10 years, an enormous amount of civil engineering work is planned to be undertaken in Scotland, and in the Highlands in particular. We are looking at £40 billion on grid upgrades, £1 billion for Scottish Water and £3.5 billion for Network Rail to electrify the rail network. There is substantial civil engineering work involving Aventus Energy in Invergordon in renewables, and then there are the pumped storage contracts that SSE and others plan.
The reason why I raise that is that Grahame Barn pointed out that that means that there will be a big choice of work for civil engineers and, arguably, some of the other works that I have mentioned may be more profitable than roads contracts, where the profit margins typically have at best been 3 per cent, although that has never been achieved in the past several years according to CECA.
What is the Government’s view? Is there a real risk that even if we assume that the money is available, there will not be the companies, the people and the expertise to carry it out, because they will be too busy doing other more profitable work, which we all hope will be able to be done as well?
I noted Mr Barn’s comments on that. I think that we would all welcome what he set out in respect of that very busy pipeline of work in Scotland in the next 10 to 20 years. I absolutely welcome it, and the Government does, too.
That speaks firstly to why the upgrade of the A9 is so important. As well as the safety points that I made at the start, there is also the issue that the A9 is a key economic route connecting Scotland. It is an arterial route—the spine of Scotland—and it will be critical to facilitating the economic opportunities that you have spoken about.
The delivery plan that we have set out now provides a degree of certainty on the direction of travel. I know from my engagement with industry on this issue and other matters that having a clear articulation of the Government’s direction of travel is one of the most useful things in creating certainty in the market. The move to the NEC4 contract as amended will be welcomed by industry. I think that Mr Barn welcomed it, and I hope that its use will do as Mr Ewing says and make matters attractive and hopefully speedy.
Finally, we already have close engagement with industry, and that will continue as the market becomes busier and busier, as Mr Ewing rightly pointed out will be the case.
I have one final question. Inverness is 168 miles from Glasgow, where Transport Scotland’s big office is located. There is no Transport Scotland office in Inverness or the Highlands. Almost all the capital money will be spent on the A9 or the A96 over the next 10 years. Why is there not a Transport Scotland office based in Inverness, and will there be one? Will staff be relocated there? Is the absence of such a presence not a bit of a sign that there is still not an absolute commitment to delivery of the project? Staff have to travel up the road and stay in a hotel or drive up the road and back. I have met some of the staff—
I think that the question has been asked. I am conscious of time.
There are two points. First, Transport Scotland and ministerial presence in Inverness, and anywhere where we have major developments, is important and I always encourage that. We have a suite of engagements planned from the start of the new year as we complete the delivery programme.
I do not currently have any plans to relocate Transport Scotland’s office from Glasgow to Inverness. We will have Transport Scotland officials who live in Inverness and surrounding areas, but I am not planning to relocate offices. However, I believe that the presence of ministers and staff in the areas in which we are working is vital, and I will continue to encourage that.
Transport Scotland would be more than welcome in Dundee, if you are looking at other locations, cabinet secretary. [Laughter.]
I think that we should stick to our inquiry.
Yes—apologies.
Cabinet secretary, you said that the A9 is a key priority, but clearly meeting climate change targets is also a key priority. My assessment is that Scotland is under severe pressure in meeting the 2030 net zero target and that the transport sector will be a key priority in terms of emissions reductions. Is there any conflict between project completion and meeting our climate targets, particularly in the context of the 2030 target?
That is a really good point and one that I considered closely. One of the things about transport and net zero being in the same portfolio is that I have the same budget to try to balance between these issues.
My view with the A9 is that it is a long-standing commitment. It has a safety imperative. It has the opportunity for economic regeneration—actually, it is more than that; it is economic prosperity. With my climate and environment responsibilities, I will always seek to find the finest possible balance between those competing interests. We will need roads in a net zero Scotland. Yes, I hope that they will be driven on by low-emission electric and hydrogen vehicles, but we will need roads. They will need to be safe, and they will help to ensure the economic prosperity of the country.
You mentioned economic regeneration. We have rightly focused on the actual road, but I wonder whether the relevant road infrastructure will be fit for purpose. You mentioned electric charging points. There is the issue of whether service stations might link to third sector and local community groups rather than multinationals. Can you explain the wider vision for the road?
It is certainly my intention that there will be ample opportunity for recharging along the route. That sits closely alongside the work that I am doing in another part of the portfolio on the roll-out of electric vehicle chargers and our ambitions to go from around the 2,400 mark—that might not be the right figure—up to 6,000. There is a lot of interest in the availability of service stations and other rest opportunities along the A9 and I understand that. I know myself when I am driving it that I would welcome the opportunity to stop safely. There are also issues for women and other vulnerability issues in being able to do so.
The provision of service stations and so on is not directly Transport Scotland’s responsibility. It is funded to deliver its statutory obligations, and the delivery of service stations is not one of them. However, that issue is raised with Ms Hyslop and me a lot, and it is certainly my intention to do what we can to encourage the development of such facilities along the route, because I acknowledge their importance.
I have a brief follow-up on that. I would like the A9 to showcase Scotland, Perthshire and the Highlands. For me, that would mean not going into a service station that could be located anywhere in Scotland; indeed, anywhere in the world. There are fantastic examples of communities getting involved in community cafes by the roadside in a service station environment. Is there any way that you can make that happen if you share that vision?
I probably cannot do that single-handedly, but I can certainly note that, alongside the considerable points that have been made to Fiona Hyslop and me about the need for rest opportunities. I will do my best to advocate for that.
Thank you.
Finally, cabinet secretary, I note that, in the 2007 to 2011 session of Parliament, I was the convener of a hybrid bill committee that was set up to take forward the Queensferry crossing project. It identified the route and the difficulties that there were going to be in various villages during the process. As was pointed out, that was because of the need for an act of Parliament, which drove the requirement for parliamentary scrutiny, but it seemed that the cross-party nature of a parliamentary committee looking at and agreeing the project that Government ministers were then invited to deliver overcame some particularly difficult issues to progress.
We are where we are in the different processes that are in place. I think that we all recognise from the paperwork that we have read and everything else that, in the Pass of Birnam to Tay crossing section, the issue around Dunkeld is particularly difficult to grapple with. You have talked about there having been only one public inquiry so far. Are you building into the thinking in relation to the project that there could yet be difficult areas that have to be resolved, which could lead to a challenge with timing?
10:30
On your first point, I have been considering the best way to make sure that there is strong parliamentary engagement on the next steps. I looked at the committee that you convened in respect of the Queensferry crossing. As you say, that came from the need for an act of Parliament. I will come back to the committee with views on how we ensure parliamentary engagement. It might not be this committee, although I will let you know. I envisage that it would probably be the Net Zero, Energy and Transport Committee or similar. I will come back when we have more certainty on that, but I definitely want Parliament to be more fully engaged in the next steps.
In respect of the Pass of Birnam to Tay crossing statutory processes, I will ask officials about timing. The problem is that the timing of these matters is out of our hands, as I am sure that you appreciate. If an inquiry is decided on, we cannot control the length of that although, because we have had the co-development process and because the proposed route takes into account a number of suggestions from the community, I hope that that will lessen the likelihood of objections. I cannot eliminate the possibility and nor should I, and nor can I control the timing should an inquiry go ahead.
I will comment on the way that the programme has been structured. The Pass of Birnam to Dunkeld project is the only project that still requires a ministerial decision. Other projects are required to complete other elements of the statutory processes but, based on progress so far, we are confident on those.
We have looked at the sequencing of work, and the programme that we have outlined means that there is considerable float—several years of float—on the timing of when we would construct Pass of Birnam to Dunkeld. If it takes longer to complete statutory processes than we currently anticipate, the section can be built in parallel with other work, because it will be sufficiently removed at that time. Prior projects will have been completed and so that will not present a safety risk. We still have plenty of time to complete it within the 2035 deadline.
Thank you for that, and thank you, minister, for the comments on scrutiny. To hark back to the exchange with Mr Ewing on the capital projects that will potentially be vital for development in the north of Scotland, this is a national infrastructure project that is of importance to the country and to all parties combined.
I have just a small question for the cabinet secretary. Given the time that has been taken and the dates that have been missed, do you have concerns about the project sticking with the current times that have been given?
A lot has changed in recent times. We have an updated business case, we have 92 per cent of ministerial decisions for statutory processes in hand and we have a new NEC4 contract in use, which was developed in concert with industry. We have the option to utilise a new funding model that is available to us, and we now have a plan that has carefully considered the best sequencing and is about rolling construction through to 2035. Therefore, there is reason for confidence.
I have to caveat that by saying that this is a complex project; it is 11 complex projects. Having certainty in an uncertain world is not always easy. However, I can guarantee that if issues arise—they will arise because that is the nature of major projects—we will work as quickly as we possibly can to resolve them against our delivery timetable.
Thank you, cabinet secretary. Before I conclude, is there anything further that you or your colleagues feel that we have not touched on that you had come along expecting to reveal to us today?
I was very open minded, convener, about what we might cover, so I will not add anything. I just thank you all very much.
In which case, thank you for your engagement and the engagement of your colleagues.
10:34 Meeting suspended.Next
Continued Petitions