Am ymlaen i gyfrydd o hyd o'r symud ddau cychwyn gyflymu i'r byd o gaelioanc, i gaelio i chi'n ei gaelio yn cyffredigau'r cyflym. Felly, fodbirdwch y cyflym, ac fodbirdwch, ddau ddau'r cyflym, gwaith ddau ddau ddauio'r cyflym dw i ddau hwn, ddau ddau i'r cyflym, ddau ddauigwch, ddau ddau ddau ddau o'r cyflym, ddau cyflym dw i ddau ddau hwn. is evidence in the AGS report entitled the 2014-15 audit of NHS 24 update on the management of the IT project. I welcome our witnesses this morning, Paul Gray, the director general of health and social care, and Sarah Davidson, the director general of community Scottish government. I understand that Mr Gray would like to make a short opening statement. Thank you for this invitation to give evidence to the Parliament Audit Committee. As the accountable officer for the health budget, I both understand and accept the committee's expressed anger and frustration at the very substantial delays and cost increases associated with the NHS 24 future programme, and I'm very sorry indeed about this. It's not my intention today to seek to deflect criticism nor to seek to tell the committee what it should think about the evidence that it has before it already or the evidence presented today. I do, however, want to provide the committee with as much information as I can in response to the questions that it wishes to raise, and if either Sarah Davidson or I don't have the evidence or information readily to hand, we'll provide it as quickly as possible after the evidence session. I do want to assure the committee that we're taking the lessons learned from this to heart. We've taken a number of steps, working with NHS 24, to ensure that they have access to both the leadership and skills required in order to bring the future programme into operation. The appointment of Angelina Foster as chief executive of NHS 24 has already been announced and we've commissioned the chief nursing officer, Professor Fiona McQueen, working with John Brown, the chair of NHS Greater Glasgow and Clyde, and Jeff Ace, the chief executive of NHS Dumfries and Galloway to form an advice and assurance group in support of the implementation plan for the future programme. I can also assure the committee that the NHS 24 board chair Esther Robertson and the board as a whole are taking this very seriously indeed. NHS 24 have themselves enhanced the governance over the future programme and brought in additional expertise to ensure that it is now implemented as effectively as possible. I don't want to take up more time of the committee with my opening statement, so the convener, Sarah Davidson, I'll be happy to answer questions that the committee may wish to put. Can I ask you first of all, Mr Gray, can you confirm what your arrangement and what the accountability structure is between yourself and NHS 24? I'm the Accountable Officer for the National Health Service in Scotland, a chief executive of it, and I delegate the budgets to the Accountable Officers of the 22 boards, of which NHS 24 is one. Each of those boards has an Accountable Officer, and I delegate the budgetary responsibility for the running of the board to those Accountable Officers, but I am the Accountable Officer for the whole of the health budget. When there's a significant overspend of £41.5 million, as we've seen in the NHS 24 budget, you would take responsibility for that, would you? I would accept that that responsibility falls to me. It falls to the Accountable Officer of NHS 24, but all the budget of the NHS in Scotland, ultimately, I am Accountable for. That's what I meant when I said, I'm not going to try to deflect criticism. I accept that I am the Accountable Officer for the whole. So, in the long run, you've been the Accountable Officer for? I've been the Accountable Officer since December 2013. Okay, so you could say over that period that you've had significant dealings with the NHS 24 period, because that seems to have been when the significant overspend started to develop. So, what kind of action did you take during that time, and it doesn't look like there's been that significant given the overspends continued on there? Well, convener, I have a detailed timeline, and again, I want to be mindful of the committee's time. How much detail would you like me to go into? I'll ask you just if we're more than happy to. I mean, it's a significant overspender of £41.5 million, so I would guess the public out there would want us to ensure that we take the thing. All right. Thank you, convener. Can I start before I took up the role? Is that okay? In July 2010, the NHS Scotland capital investment group considered the programme initial agreement from NHS 24 and recommended that an outline business case should be prepared, noting that that was to be funded from within NHS 24's own resources. The approach of going through the capital investment group, in my view, was not the appropriate approach. I'll just make that point, and it would not happen now. In 16 December 2011, the full business case was considered by the capital investment group and improved on the basis that NHS 24 engaged with other health boards. There was a contractual process undertaken, and in March 2012, NHS 24 signed contracts with CAPGEM and I for software for approximately 20 million and for approximately 55 million for hardware with BT, so there's the 75 million starting point. In June 2013, there was a go live date. It was delayed until September or October 2013, because of issues with the clinical content system, so that was the core clinical system supplied by a subcontractor to CAPGEM and I, and the performance of the system basically did not work with 600 concurrent users. In August 2013, the stage 4 gateway review was commissioned by NHS 24. It got an amber rating, but in October 2013, it was deferred again. In January 2014, I met the chair and the chief executive of NHS 24 and sought to understand the issues. Shortly after that meeting, they then alerted me to the fact that they had discovered that not only was the system not performing, but the contract itself was incomplete. That was January 2014. In February 2014, we implemented our escalation process following their mid-year review, and that was the point at which we jointly commissioned Ernst and Young to give a report on the state of the system at that point. That report appeared and was finalised in March 2014, and in April 2014, the then Cabinet Secretary, Mr Neil, met the chair and chief executive of NHS 24 to discuss the issues and was provided at that point with substantial assurances on the steps being taken. However, I did not consider that they could proceed without an experienced programme director. We identified an experienced programme director and that person was put in place in June 2014. There is a lot of detail between then and September 2015, which I am happy to go through, but the core points of that are that in June 2014, they had neither a functioning system nor a contract. By August 2015, when Ian Craton came in as the chief executive from National Services Scotland, they had worked during that period with Ian and others in NSS who had expertise to the point where they had both a functional contract—one that could be enforced—and a system that provided the functionality that was required. Through that period, we ensured that they had the support that they needed from NSS in order to get to that point. However, on 7 and 8 September 2015, they conducted what they call a system dress rehearsal. Basically, that is a full running of the system. That provided assurance from the staff who were operating it that it was working successfully. They had a successful test of business continuity and they undertook a learning exercise from that. They switched on the scheduled care services on 28 October 2015, and that worked. The scheduled care element of that system worked. There was a failure because of a breakdown in the external telecoms, but that was not to do with the core system. However, what became clear when they moved to the out-of-hours element—there is the in-hours element in the scheduled care—what became clear when they moved to the out-of-hours element was that, although it functioned effectively in testing, it had not invested enough in the training of the staff, so the staff were not sufficiently familiar with the system for it to operate at the speed that was required to give the turnaround to patients who were calling in. I went to NHS 24 to see the system in operation, so I can vouch personally for the fact that it works, but I can equally vouch for the fact that I saw the staff who had an insufficient training struggling to operate the system at the rate at which it should be operated. I am giving this completely honestly. I see no point in trying to hide any of the facts here. At that point, it was a clinically led decision that, although the system was operating effectively, it could not be guaranteed that the turn-round for ill patients would be provided, they would revert to the old system to carry out further testing and training. I can give you a considerable amount of extra detail about what we did in that interim period if the committee finds it helpful, but that is the broad summary of 2 October 2015. Subsequent to that, the committee will have had access to the lessons learned report, and we have heard the evidence from Ian Cracken and John Turner. We have now put Angelina Foster in place as the chief executive. Angelina has considerable experience in running organisations, particularly organisations that have gone through periods of difficulty, which is why she was selected. One of the members of the assurance group, John Brown, has experience up until taking on his role as the chair of NHS Greater Glasgow and Clyde, was in the operation and turn-round of major call centres. Thank you for that. We do not normally give witnesses such an extended period to respond, but I think that, given the concern and the significant sums that are referred to here, it is helpful. What you referred to was that three-year period when you were responsible as the Accountable Officer, but some of the elements of what you referred to, the actions that you took personally, one of them was to encourage them to employ a programme director, is that correct? Is that not something that a chief executive of NHS 24 could not consider themselves? Does it need Paul Gray, the Accountable Officer for the NHS nationally, to refer to that discussion that should take place? Is that the level of detail in terms of your involvement? If I would answer you frankly, not normally, I would expect that a chief executive of a health board would see that through. However, what we were able to help with was finding the right person from somewhere else in the NHS and expediting the process so that it would be done. When was the programme director appointed? That was during 2014. We still incurred significant losses, despite the appointment of the programme director, so it did not have the desired effect that you expected it to have. This year, you referred to the programme director as well, and then you referred to staff training. Where is the connection now? You said that the programme was delivered, but there was an issue about the staff being trained to deliver the programme. Given that the appointment was made in 2014, it did not have the desired effect, the recommendation that you made to the organisation? It had some of the desired effect, it did not have all of it, so it had the desired effect. That, plus all the other assistance that we provided, had the desired effect of getting us to having a viable contract and to having a system that functioned. However, if I may speak about one of the lessons learned from this, it is in two parts, convener. In contract and certainly in IT systems, it is called optimism bias. The initial contract had a degree of optimism bias about it, so in other words it was optimistic in its prediction of how complicated it would be and how much it would cost. It did not include an allowance for inflation and it did not include any contingency. Again, I believe that both of those decisions are to be wrong. That is part 1. Part 2, if you test a system using your most experienced staff with one-to-one support from experts, it will inevitably be better and faster than it will when you use less experienced staff with fewer direct support. For example, when I was in NHS 24 on one of the occasions, the ratio of support to staff was 25 to one, so there was one person supporting 25 staff. Convener, that was a misjudgment by NHS 24 of the amount of training that would be needed, and they took too much confidence from the effective running and testing. The other point that I will make is that the system was tested on one site, and it runs across multiple sites. Systems that run across multiple sites never perform exactly the same on every site. You have confirmed that you are the accountable officer, so ultimately you are responsible for the £41.5 million that is that credit? I am responsible for the £13 billion that the NHS has. However, the decisions to increase funding for the programme were taken within NHS 24. So I did not allocate additional funding from central funds for this. We agreed brokerage, but that is to be repaid. However, I did not go to the finance director for the NHS in Scotland and say, could you please give NHS 24 another £41 million? You are responsible for the oversight of the leverage. You have been before the committee on other issues concerning the leverage, but this is an organisation that has received £41.5 million worth of, we have seen, an overspend of £41.5 million. This is an organisation that costs the public purse significant sums of money, not in the delivery of services out there in the front line that people see, but in the delivery of an overspend that the public actually do not see. The cuts that have been made locally, and I can see it in my own health board, I represent, are £69 million. That is £41.5 million of overspend that could have been prevented. In all, I am asking you, you are the accountable officer who is responsible for that. Do you not feel as if you have let down the Scottish Government in terms of the information that you have provided to them to allow that overspend to take place over the past years? I have been the accountable officer for two years and two months, but that does not alter the fact that ultimately I am responsible for the total sum. The decisions that were taken in relation to what got us here were taken before I was the accountable officer, but nevertheless I am the accountable officer now, and I am accepting the responsibility. I am far beat from me to correct the convener in our second last meeting, but I just ask Mr Gray. I note in Audit Scotland that they are now saying that the final cost is likely to be £125 million, so given that we started off at 75.8 million, we have now gone up from £41 million to £49.2 million overspend, is that correct? That is potentially the overspend depending on what the ultimate implementation date is. I do not like to exaggerate, but I like to always present my case. Can I just say the point that the convener made about cuts? I looked at my emails this morning and there are women sitting up a Highland Glen that cannot get two hours of home care a day from NHS Highland integrated care. That is about £20 a day. I look at that and I think, oh gee, what can I do? NHS Highland and NHS Council are up against the wall with the cuts. Do you understand Mr Gray and Ms Davidson as well? Do you understand how angry people around this table feel when we have to look constituents in the eye and say, I am sorry, your mother cannot get care to get her out of bed in the morning and back to bed at night, £20 a day? We come along here and we look at the cap reform, £70 million over budget, £50 million over budget here. It just slips off the tongue. The reality is that the cuts out there are horrific. Do you understand just how angry and frustrated the members of this Parliament are about the constant overspend on ICT? I do, Ms Gimlin. I sought to acknowledge that in my opening statement and I meant it. I was not saying it for a feather. I appreciate that. I have always taken you at your word. You are one of the few that I respect, Mr Gray. One of the very few. I would just like to come back to you giving your word here a few years ago. Before I do that, we have been here before, of course. August 2012, managing ICT contracts. The Scottish Government was unable to provide advice. That was registered of Scotland disclosure in the Crown Office prosecution service. The Scottish Government was unable to provide advice. That did not do too well. The Scottish Government also—wait a minute—this is June 2015. Three years later, despite all the recommendations in 2012, the Scottish Government did not perform a skills gap survey across the public sector because we could not get staff for ICT for two years. I was so worried about ICT and staff. The recommendations in 2012 took you two years to do a skills gap survey. I then come on to your own letter, Mr Gray. Your own letter to the committee. This is October. This one is 2012. We are three and a half years ago. As the accountable officer, you tell us that a strategic review of current ICT skills availability within central government was to be carried out. We all sat here naively taking you at your word. You then went on to say that digital future sets out plans for developing the workforce, developing ICT skills. You were working towards an action plan for the central government ICT workforce, and it would be in place by March. We then go on to June 2015, the next Audit Scotland report. I do not know if there is angry and frustrated as I am, but they keep coming up with reports, and we are no further forward. Information Systems Investment Board was to oversee the implementation of the framework, but it did not have sufficient information or capacity to perform the role effectively. It did not receive all the ICT investment and assurance information required from central government. It is your role as accountable officer, but you are getting very little support from what I can see in nearly five years on this committee, with constant—we are not even looking at cap reform, £70 million over budget—but what you were setting out nearly four years ago was to make sure that the problems with the registers of Scotland—which were minimal compared to this—would never happen again. How can we take you at your word today? When I gave evidence to this committee in my previous role, I told you as clearly as I could and I told you honestly what I expected to happen. What actually happened, and Ms Davidson might have further information that she wishes to provide, was that when the skills survey was done, it did not produce the results that were necessary to allow us to make a coherent approach from it. We did something else. It took you two years to do it. I accept that, Ms Scanlon. I am not disputing what you have said. I am simply saying that when we did that, the skills survey did not produce what was going to be effective in allowing us to tackle the problem, so we took a different approach. Would the committee wish to hear from Ms Davidson on what that approach was? Can we just convener? Can I ask what Ms Davidson—I have put all the blame on you, Mr Gray—but what responsibility has Ms Davidson got here for this £50 million overspend? On NHS 24, that responsibility is mine. What is Ms Davidson here for then? What is her role? She is here because the committee asked her to come. What responsibility does she have? I do not want to give you a rest from the questions. What responsibility does she have? I have responsibility for the assurance framework that governs the central Government sector. It is a similar but different assurance framework to that, which governs the NHS. I have responsibility for the digital transformation service that supports the central Government sector. Therefore, the skills survey that you were alluding to a moment ago is my responsibility and the regions that we have put in place to respond to what we learned from the skills gap survey when we did it, which, as I absolutely acknowledged last time I was here, did not happen as early as it should have done on my responsibility as well. Right. What responsibility do you have just so that we can get through this today? What responsibility did you have in terms of the £50 million overspend on NHS 24 ICT? Nothing at all? Nothing at all. No. Right, okay. It is a halfway for record that the committee's request for Ms Davidson to attend was in relation to the skills gap, and there was a discussion in a previous session in response to that. Right, okay, back to Mr Gray. There will be other questions for Ms Davidson. Yes, I am sure there will. I found it hugely concerning that you said that staff needed training. I was saying that the ICT failure was partly due to the lack of staff training, because we understand that the revised framework introduced in April 2015 provided clearer instructions and guidance, and the assurance framework that Ms Davidson was responsible for lacked clarity. What was the bit that you were saying about the staff? Were the staff not fully trained? Did you not give them full training in the ICT system? In the future? I have one final question. Yes, in the future system. There are many systems. I do not know that. The NHS 24 future system, that was the training that I was talking about. All the staff who used the system were trained in using the system. The training was not sufficient, and the support that was provided when they were using it in live operation turned out to be insufficient. That is what happened in that particular case. That is pretty disappointing. That is also what the Auditor General says. I will go over to the actual NHS 24. In April 2012—I have one question here, which bothered me when I read it—it was an NHS 24 member of staff who discovered that some of the negotiated sections were missing from the signed contract. That is pretty poor—a member of staff. It was nearly two years later before the chief exec and the director of finance were aware that what they had negotiated was not in the written contract. Was this member of staff, or members of staff, did they employ the services of Vincent Mason between April 2012 and January 2014 in order to renegotiate the contract and, without the knowledge of yourself, their director of finance and their chief executive? I simply do not know the answer to that, because I do not know the specific member of staff by name. Are you aware that it was a member of staff that identified that what had been negotiated was missing from the written contract, which was signed? Are you also aware that the director of finance and the chief executive of NHS 24 were not aware of the missing terms in the contract, which led to the court of session? It led to having to pull out of the court of session? It led to huge embarrassment for the Government and, indeed, the civil service in Scotland, because, at the end of the day, Capgem and I were right about the contract, and it would appear that they were fulfilling the contract in the terms of what was written. I am aware that the knowledge of the deficiencies in the contract was with staff in NHS 24 sometime before the chief executive and the chair were full. Nearly two years? I cannot say that absolutely, Ms Garland, but I do not dispute it. Well, I am quite happy to accept that. What I am aware of is that the chair and chief executive did not know until January 2014. I met them early in January 2014, and at that point, we were talking about the deficiencies in the performance of the system. I met them again in January 2014, when they had become aware that the contract itself was incomplete. I can confirm absolutely that they did not know until then, and I am quite happy to accept Audit Scotland's evidence that someone in NHS 24 knew in 2012. In terms of project management, you sit here in all honesty as the accountable officer. The way I see it is that not only did you not know that part of the negotiated contract, verbally negotiated, was not in the written contract, they never did a page by page check, so NHS 24 did not even know what was in the written contract that they signed. Are you not concerned that not only did you not know that they were running towards a 50 million overspend, but that the director of finance did not know, that the chief executive did not know, and that a member of staff employed a leading legal company to try to negotiate the contract that you were unaware of and that the officers, the director of finance and the chief executive were unaware of? Does that not cause you a bit of concern? That is my grave concern. Are you sorting that out then, in future? Convener, I could give a substantial answer to that if you wish, or I am happy to be guided us to the time of the committee. If you give a very brief response as you can give with as much detail as possible. An organisation in which a member of staff knows something of that significance and does not escalate it immediately to the board is a dysfunctional organisation, it would be my concern therefore to ensure that no organisation for which I am responsible behaves in such a way that a member of staff feels they cannot escalate an issue of that significance to the board. That is his brief answer. What I find interesting is looking at the material that we have had today from Lee Evans about IT in response to other questions that I have had in which he says that the NSS has considerable experience. NHS organisations already work collaboratively in commissioning procurement and implementation of IT with an established eHealth governance framework. If we have an established governance eHealth framework, what is it doing in relation to this particular contract? One of the problems, I think, has been, and is still with the NHS as a whole, is that we have allowed NHS 24 and indeed all the 22 boards when commissioning IT go off and do it themselves and they do not have the experience to be able to do it. The result is, for example, that the health committee's report in 2010 on clinical portals were still five years on having a major problem with the access of clinical portals between different boards. My questions to the Government which have been answered on that demonstrated quite clearly. We have had for as long as I have been in this Parliament and I include the first period, a pretty dysfunctional system for IT procurement. I am not convinced that we have got any better on this. The other point that I want to make and question on this is why do we have to employ Pinsett Mason to do the legal work for this particular contract when Lee Evans states in his report to us that NHS National Services Scotland has considerable procurement expertise and works on behalf of NHS boards providing, for example, contract management support and legal services. We have spent £0.5 million of Government money on a private firm whose software did not upload the tender document properly, who then advised somebody in the board that this was something that was quite common. I find that alarming, but they said that although this happens all the time, we will just have a memorandum of understanding that it will be okay, and then repeat the mistake a second time. Why are we employing external people on that way? The Government is a pretty big procurer of IT in Scotland, one way or another, with all the different bits, not just NHS, but all the different bits. Why have we not got a core legal service, legal framework, a core expertise in IT that allows every programme of procurement to be directed to an oversight board that actually examines it at every step of the way? That includes call centres, because we have call centres in police, call centres in fire board and call centres in the NHS, so why have we not got that expertise? Can I just ask allies to try and keep the questions as simple as possible and then we'll make sure we get answers? Dr Simpson, what happened should not have happened. There isn't another, there isn't a nicer way of putting it than that. The NHS24 should have used the expertise that is available in the NHS, and we have now instituted with the chairs and the chief executives an approach that we call once for Scotland, which says that if you are going to do certain things, this is the way you do them. You don't go off and just make a personal choice about how it might suit. You are obliged to make use of the skills, the capability and the experience that is available, and if you choose not to, then the accountable officer for the board has to explain why. There may be circumstances in which there is not sufficient resource available centrally, but the other thing that the NHS can do is to procure that resource through its contracts. How do I put this? I sought to persuade NHS24 to use the NHS, and I quickly gave up on that approach and simply told it. That is about as brief an answer as I can give you. That is very helpful, but it is the fact that the boards can go and do things themselves. I know that we have tried to prevent massive expenditure on a centralised record system, for example, because, look what happened in England, they wasted billions. We have avoided that, but we have now got a fragmented system that is totally dysfunctional as between boards. If you are in one board, you are probably okay, but if you have to go from Fife to Tayside, the Tayside clinicians do not have access to basic information such as the Skylab stuff. That is five years on from the telehealth report by the health committee. The fact that you stepped in and did that is very welcome, but should the boards not have to account to you as the accountable officer at every step of the way, if they are not going to go down? For example, the 14th board that is not procuring track care, one board, why is that board being allowed to do that and have a system that is not compatible with everybody else? How are you controlling this? What reporting mechanism is there to the centre at each step of the way that prevents us from having a dysfunctional system? In January of this year, the responsibility for the eHealth programme overall transferred to John Conach and the chief operating officer. That was a deliberate step on my part to take it into a point where it is under the aegis of the chief operating officer, so in other words, it is concerned with the operation of the health services of all. I asked John Conach to provide me by the end of March with an analysis of all the major programmes that are going on and the risks associated with them, particularly with reference to the points that I made to the convener earlier, those in which we think that there may be some degree of optimism bias. In other words, we hope that it will work, but we are not absolutely sure, or we hope that it will cost this much, but experience tells you that it probably won't. When I was a member of the infrastructure investment board in the Scottish Government, one of the starkest pieces of advice that we got via SFT, Scottish Futures Trust, was that in some capital buildings programmes there is an optimism bias of 40 per cent. In other words, the underestimate of the outturn cost by about 40 per cent. In IT programmes, I was the chief information officer for the Scottish Government. In IT programmes, it was my analysis of the optimism bias that ran in the range of 20 per cent to 25 per cent. We routinely had to allow about 20 per cent to 25 per cent contingency, so we built it in. We didn't just say, well, that's a pity and we'll wait and see what happens. There is some evidence here of what is likely to be the case. My last question is about the gateway report. When I asked the question in the chamber, I am told that this is not a Government report. Can somebody explain to me what gateway reports are about? The particular gateway report said that this is an example of good practice or best practice. I know that there was an amber alert, but the amber alert was related to possible delays. It was contained in that report that this was an example of best practice. What are those gateway reports? Were they not the mechanism by which the Government's central body actually took a look at what was going on with a project that was run by an individual board or, indeed, other organisations out there and said that this is on time, that the optimism bias is acceptable, that the programme is being developed appropriately, that training is being put in place that is correct? What was the extent of the gateway report? The gateway report at that stage, as I understand it, looked at the governance and the contractual arrangements that were in place on the face of it that appeared sufficient. Can we not answer that question cautiously? There have been a number of gateway reports that have been excellent and insightful. I do not want to undermine the gateway process in the eyes of the committee, because I think that it is a valuable process. However, for a programme of this complexity that is being done once every 15 years, my analysis is—and I have conveyed this—that you would need a review or a report done by individuals who had experience in similar systems of similar complexity. I do not think that that was the case in this particular review report. If a gateway report is to make sense, it has to be carried out by people of sufficient experience, seniority and capability. It is also a process that runs over about two days. Again, there is a question in my mind over whether, on something of this scale and complexity, that is going to do any more than give you a top-level set of assurances. I think that the points that you are making about deeper assurance are quite germane in this context. I ask for information to come back later. Could we have a note from either Sarah Davidson or Paul Gray on all the costs of external consultants such as Pricewaterhouse, Cooper and Ernst and Young? I know that the Ernst and Young one was not given to us in the latest review report, but we spent £3.25 million on external consultants on that one project. Could we get a list of the costs of external consultants of that sort that have had to be brought in on any IT projects? I know that they are not all NHS projects, but could you relay that back to the appropriate information officer and ask for that information? We can do that, Dr Simpson. If it helps the committee, the cost of the Ernst and Young report was £58,700, so I am happy to provide that information now. I would also ask that should the committee want information on every single IT project in the public sector in Scotland, that will be a fairly massive piece of work. Is there any context that the committee would wish to put around that? We will do it if that is what the committee wants, but I just want to alert them to the fact that that would be very substantial. We will come back to you with that and discuss it. Okay, thank you. I will come back to you for details on that. Looking at the issues around NHS 24's IT problems, I personally do not think that we could look at that in isolation. It is part of a broader issue about ICT procurement within the Government, and I am sure that our successor committee will be pursuing that. There are all sorts of problems here about industry shortage of skills and how the whole thing is managed, but looking forward, we are looking back at all the problems, but we have still got a service to deliver to the public. Can you give us some assurances as to the delivery of this service, what the milestones will be and what reassurance we have that it will be adhered to? That is a very fair question, Mr Beattie. I would like to allow the incoming chief executive, Angelina Foster, to review the lessons learned and to come to a view with the support structures that we have put in place of the likely implementation programme for this. There is nothing that I have heard so far that would take me away from the proposition that this system should be implemented by this summer, but I would like to give the chief executive the opportunity to review what has been done so far and to assure herself, given that we have put some expertise in to allow her to get that assurance, before giving absolutely fixed points in time by which certain things will happen. I hope that the committee would understand that that is a reasonable stance to take. With hindsight, is this the right system? Did we choose the right system for NHS 24? Is it over complex? Well, those are perhaps two separate questions. Let me give you a brief description of what the system will do as a way of saying that I think that it is a suitable choice. It will allow more emphasis to be placed on triage rather than consultation, so in other words, patients will be fully assessed and sent to the most appropriate service or for information as quickly as possible, so it will speed that up. It will reduce the need for repeat questioning and duplication, which does annoy folk if they answer a whole set of questions and then go back and virtually have to answer them all again, so we will reduce that. There will be a single sign-on for all staff to all the systems that they require or reduce the time needed for a call and make it safer. The knowledge management system, which they use to signpost the services, will give real-time information on what services are available at the actual time of the call. In other words, it will not signpost a patient to something that is not available at that point in the day, so that will be an improvement. There will be a single patient record for all services, so NHS 24 staff will immediately know if a patient has made an earlier call to the service but in a different place, so that will be drawn together. There will be improvements to the patient journey, and it also provides a modern IT platform on which new digital health and care services can be provided, such as video-supported services, which just could not be done under the existing platform. Yes, it is an appropriate system for NHS 24. Is it a system that has been built from the ground up? In other words, have we invented it ourselves or did we take advantage of other systems that are comfortable, perhaps, that might be available elsewhere? The Arezzo core of the system is a clinical triage system, and that was not built from the ground up, but it had to be adapted to fit within all the other telephony and scheduled care services. It has been built not quite from scratch, it has been built using components that already existed, but it is unique to NHS 24. Given that there is presumably a comparable system south of the border, was it looked at as a possibility to simply transfer that here? I cannot answer that, Mr Beattie, but I am happy to get that information for the committee if they find it helpful. You came in as a accountable officer towards the end of 2013. At what point did you become aware of a problem with NHS 24? January 2014. It was five weeks or so after I took the post. When were the Scottish ministers advised that there was an issue? Let me just go through my timeline. They were certainly advised by me as soon as I knew, so I can give you that assurance, what they had been told before that. There was, for example, the stage 4 gateway review, which gave an amber alert. That was August 2013, and that would certainly have been drawn to the attention of ministers. I am not about to try to invent points at which ministers were told. I can simply tell you that I told them in January 2014, but I cannot imagine that senior colleagues would not have told ministers before. Indeed, they would have known about the gateway report. That could not have been known. There is a great deal being talked about the increase in cost of this, and it is substantial. You said that there was an optimism within IT contracts. Was it 25 per cent? That was roughly when I was doing it, yes. You said that there was no contingency built into this at all? No. What is the 25 per cent optimism that is built and constructed from? Where does it come from? That analysis, when I was chief information officer, was based on reviewing a large number of systems from small to great and comparing the out-turn expenditure with the planned expenditure. Some of that, of course, is because the specification changes after the contract is let, so that clearly increases the cost. However, that was an average that we worked to. If a programme came forward with no contingency, we would send that back and say, if you have not thought about contingencies here, you have not done a proper business case. Given the overrun costs, and presumably that overrun is being met by brokerage, what are the implications for future service delivery funding? Can that be coped with? It can, Mr Beattie, but the convener and the vice convener have made important points about the fact that this is £50 million that is not being spent on something else, and I am accepting that point. However, it is not going to bring the NHS in Scotland to its knees, but it is £50 million that, had it not been spent on this, could it have been spent on something else? Thank you, convener. Just on your very final point there, Mr Gray, and thank you for your frankness this morning. You say that it will not bring the NHS to its knees, but I was told last night that NHS Shetland is facing cuts to primary care and others to GP practice of £300,000, so that is going to be pretty damaging. That is £50 million that could have helped Hyland's convener's constituency, all of our constituencies. There are some things that will be brought to the knees because of this failure, won't there? It is £50 million that could have been spent on something else, Mr Scott. I am not going to try to argue my way around that. It is not that we took money from the primary care budget or took money from another board, but it is effectively £50 million that NHS 24 itself could have spent on other things. It has not actually removed money from other places. On the £50 million itself, could you just clarify whether the sober spend is on capital expenditure, is it on BT and Capgemini, or is it on training? I was a bit puzzled when you made your initial remarks. You highlighted rightly the failures of training, so is the £50 million, or whatever figure it currently is, split between those budgets, or how would you like to break that down? It is largely contractual payments. The training element of this is not a significant element. Again, if the committee would like a detailed breakdown, I am more than happy to provide that to you. I am sure that that would be helpful. The other thing that I just wanted to clarify is that you have mentioned the new chief executive who you have appointed. Is that a permanent appointment or is she coming in for a temporary period of time so that, as you pointed out, she takes care of the troubles that are currently in this organisation? The appointment of Angelina Foster is to the end of this calendar year. That was deliberate rather than just a happenstance. Once the body NHS 24 is through the current set of issues that it has and has a successfully implemented system, it seems to us and to the chair of NHS 24. That is the time to seek a permanent chief executive once you have a stable organisation. What we have done at the moment is to bring in a chief executive who is experienced in taking organisations through a period of difficulty, but you will need a particular skillset for a steady-state organisation, which will be somewhat different. Is it your expectation that the new system will be operational in June, as we were told earlier? I have said this summer, so I am being slightly less... A civil servant's summer is a long, many months. I seem to remember using that term in the past. My wedding anniversary is on 3 September, so it is always summer then. I am not trying to give the committee a hint. I am simply saying that I expect that the system will go live in the summer. It is important that it does, Mr Scott, because we will come to the winter and busy period and all the pressures at that place, and we do not want to be an implementer. If the chief executive is leaving and recruiting in the autumn for a new appointment at Christmas, that, as you rightly just said, is the busiest time for the whole NHS service. Is that the right time to be doing it because of that pressure? I do not think that we will create a further burden on NHS 24. If a new chief executive is appointed and cannot start until January, we are certainly not going to take the current one away. I would like to take this upper level to ask some of the questions that are caring to me.  I, as a factory engineer 30 years ago, would not have dreamt of putting forward a proposal that did not have the relevant contingencies. It only would not have contingencies if it was something that was actually viable off a shelf and I could take off a price list. Why are we in a position where people are putting forward projects without contingencies? I do not suppose that it would be sufficient for me to say that I would not because I was not a factory engineer but I was an IT professional and I would never put forward a project without some level of contingency that I had assessed properly. Why does it happen? It happens for three reasons. First, I think that people feel that it is very important to get all their estimates right first time when we all know that that does not happen. The second reason is because I think that we are somewhat guilty of making people produce business cases that are not really the business case. What do I mean by that? The business case for this new system—I have described some of the benefits that it provides—but the business case for this system is also because the old system is going to run out of support pretty soon. Frankly, if you are trying to construct a discounted cash flow that says that it will produce this much saving over this much time, you are always being pushed to make the cost as lean as possible so that the saving can be seen to emerge as quickly as possible. I think that we need to get more sensible about business cases and say that the business case for this is that your building is going to fall down if you do not do something, so you need to do something. It is not because you will save £20 million over a period of time, so that is the second reason. The third reason is because we place undue weight on very precise numbers. You really need to look at a system in the round and look at the evidence that you have about what has happened in the past when people have tried to implement systems like this. You have to look at the cohort of people whom you are serving and the cohort of people who you are going to have to train and think very hard about what they know and what it is going to take to get them into the new system. One of the things that the training did not cover was what the system did not do. That might sound a very odd thing to say, but if you are used to a system that does one thing when you press button B and all of a sudden when you press button B that does not happen, that is a bit of a shock. All of that requires you to think in a very contextual way about what it is that you are trying to implement. Once you have done that, you come away from what will the software cost and what will the hardware cost to what will the total cost of implementing this system be, and then you get a much better estimate of what the real cost is. Mr Greer, can I say thank you for that exposition? I am wondering whether the somebody listening who could just tidy that up, write it on one side of a piece of paper because it will get that and send it to every single civil servant because you have just expanded actually how you get some intelligence into it. That is how we should do these things. Why do your colleagues not understand that? What is the point of having a cash flow analysis if you have not built in the contingencies? That is obvious to those of us who do these things. Why does the civil service not understand that is a question that you cannot answer, but maybe Alison Stafford is listening. I guess that my next one, convener, is actually, sorry, Alison. Forgive me, Sarah. I apologize, wrong name. I think that Mr Davidson does not understand. I will leap to her and defend myself. Well, okay. I am sorry. I picked the wrong name of my answer. I do apologize. Can I come back to the general issue of governance? I do not want to get remotely personal about this, but we have been through a period, and I have been through a period on this committee, listening to people explaining how a lot of projects have not worked very well. Of course, there have been lots of projects that have worked well, and we have not covered them off, which is part of your point about what things do not do. We have been through a diagram, which I think had nine different boards on it, as I recall, for the governance of these things. I am not the only colleague on this committee who has commented that maybe that cannot be a very good way of operating, but what were the governance organisations doing while this was going wrong? What are the governance organisations learned so that this does not happen again? What were the governance organisations doing? Before I got here, I cannot speak in detail for that, but what I have said, and I repeat, is that the way that this was put through governance was not right, so it was not touching the right bits of the governance organisation. That was part of the problem. However, what the governance did in February 2014 was to act in relation to what we call our ladder of escalation. That is the process that we have for escalating things. That ladder of escalation was what brought about ultimately the appointment of a new programme manager and the restoration of the contractual position and the fact that it got to a system that at least functionally operated. The governance from 2014 did step in and produced some results. It did not produce a system that functioned in November 2015, and I am not trying to glide away from that. However, the governance was there, and when it operated, it produced the result. However, because it started off in the wrong place, it was not touching the right points of the governance as it went along. There was internal governance within NHS 24, and I think that the committee has already explored some of that, and Audit Scotland has reported on it. However, one of the things that I have already mentioned is that I am very anxious to understand whether there are systems being developed locally that have national significance but are not touching the sides of the governance in the way that it should. That is why I have asked John Conachon to do what I have asked him to do. If I could pick that up and make a more general point, albeit that health projects and central Government projects are managed within different frameworks, the thing that they have in common, as Mr Gray has explained, is the responsibility and assurance for projects running through the senior responsible officer to the accountable officer. That is the same in the central Government sector and in the NHS. One of the things that we have increased our focus on in the central Government sector, and I think that we could take from what we have heard this morning the same, is the case in health. In the light of the recent Audit Scotland reports, the need for escalation has been quickly through those systems so that we use the governance frameworks well and, indeed, within central Government use the assurance framework to act immediately if problems are flagged and not to leave those to be dealt with by individual organisations within their own assurance. That is the way in which the broader governance system can support the assurance that is taking place within individual organisations. I am hearing you both are right that you are suggesting that governance is something that exists and that the problem is pushed up to it and that it is the responsibility of those who are aware of an issue to escalate it. Would it not be altogether rather safer if governance was seen as being an activity that went down and periodically dug deep enough to check? Surely that is what governance is about. We do not want to wait until the plane falls out of the sky before we check whether the routine maintenance of the engines is good enough. I would say that within individual organisations, certainly within the central Government sector, I would expect the governance of an individual project to be doing exactly what you describe and that providing things are going well, that type of iterative, virtuous circle governance ought to keep things on track. The strengthening that we have put into the assurance system over the past couple of years has been in order to pick up things where that is not working as virtuously as it should so that it does not just remain hidden within the local governance but is escalated to the senior accountable officer or to ministers if necessary so that action can be taken. Part of what we want to do is to build a culture where organisations and that internal governance that you describe are far more comfortable with flagging up the fact that they have difficulties and need help rather than thinking that they have to resolve things all themselves. That is working against human nature, which is not about to change, I would suggest. In that context, I have a letter here that is unrelated to this, but we will be talking later about a performance board that has been set up by the Government and you will be aware of that. I am looking down that list, nothing personal about any of this at all but mostly its directors and there are two non-executive directors, I have no idea who they are but I suspect that what we would tend to describe as usual suspects. To what extent is there really a non-executive challenge within the organisations that you represent, which are rather important parts of the Scottish Government, in such a way that virtuous circles are allowed to be virtuous circles, but somebody is actually asking how virtuous this is, whether people really are asking the right questions or whether they are just on the golf course together. I do not play golf, which is a mercy for many, I have to say, but I would say that if I take the specific of NHS 24, believe me, the non-executive directors are now exceedingly focused on their task and they have also been significantly refreshed by their new members of the board. I can say from personal experience that they are taking that very seriously indeed. You ask a very fair question, how do we get the necessary level of external challenge so that we are not sitting comfortably assuming that it is all going fine when, in fact, Rome is burning? We go through pretty careful selection processes to appoint non-executive directors. I have certainly been faced with some pretty uncomfortable challenge in terms of what I do and how I go about it, and quite properly so. I do not want to get into the naming names, but I can assure you that, for example, in the health and wellbeing audit and risk committee, I have a number of non-executive colleagues who are completely fearless in asking questions and are not too worried about whether I like them or not. I think that that is absolutely right. In the broader sphere of the performance board, I do not think that the non-executive directors who have been asked to take part in that will do so in a sort of automatic or anodyne way. I was not trying to pick up on that. I guess that my point about that was simply that there are only two of them. I am sorry that you can be the finest available and you are seriously outnumbered. You can quite easily get just overwhelmed. The one thing that I would also add is that, again in the central government sector, but now going to be available to health, the investment that we have been making in digital transformation service provides other individuals who can stand separate from executive responsibility within an individual body but bring quite a deep expertise in the structure and delivery of digital transformation programmes at IT projects and are able to ask the kind of questions or to support non-executives and ask them the kind of questions that can get to the heart of the matter. I think that that is another contribution that we can make to that analysis. Have you reflected at all on the general governance structure on which we have commented before, which seemed to be very complicated? It suggested to me from experience elsewhere that there will be people having meetings because there were just so many people who had to have a meeting in order to decide when the next meeting was going to be. I think that there is an important distinction between the governance of individual projects and programmes and the governance of the Government's overarching digital transformation strategy. The latter is about ensuring alignment. For example, the overall digital transformation sponsor board ensures that all sectors across the public sector are developing public services in a digital way, which aligns with the vision for that. That is a quite different task from the governance of individual projects and programmes. I am satisfied that the former does not contaminate the latter. In other words, the landscape that is required to do the more reflective piece of alignment is not getting in the way of good delivery and management of individual projects. However, I did say when I was before this committee in the autumn, and I think that the permanent secretary has rated at Christmas time that we are going to review the overall operation of the assurance framework and necessary of the governance that goes with it in the spring and summer of this year, and we will absolutely take stock of that and take the views of those involved in it as to whether they feel that it genuinely hinders or helps them to achieve what they are trying to do. My question is to Sarah Davidson. Future public sector ICT contracts, how are we going to ensure that the skill and the expertise are there so that they are not back in the same boat two years now sitting in front of this committee? It was interesting that you said that they are flagged up when they need help. Is it not that we should have the correct procedures and expertise in place at the beginning of these contracts rather than come running to flag up when we need help when we are in trouble? Absolutely. The way in which the assurance framework and the transformation service, which is the skill service work together, is intended to do exactly that. In the central government sector, I am sure that there is a parallel process in health. As soon as anybody or a part of central government decides that it needs a particular project, they require to engage with the chief information officer within government and to have their initial proposition assessed by that office in order to determine whether the budget looks right. I will pick up all the points that we discussed earlier about contingency and others, whether the right skills are in place to deliver a project of the scale and complexity that is envisaged and whether the timescales that are envisaged are realistic. If any of those points are deemed inadequate, the project will get an amber rating, and if more than one of those points is deemed inadequate, it will get a red rating. That triggers the active involvement of the office of the chief information officer working along with the project and programme management centre of expertise and the digital transformation service to remedy or, more correctly, to support the SRO and his or her team and the accountable officer in remedying that. I think that when I was last at the committee, the digital transformation service was only in its first weeks of operation, but already in the quarter since then it has stuffed up considerably, has applied exactly that type of support to projects at inception stage and is currently working with five organisations at early business case stage to identify the skills that they need, and if they need skills, the digital transformation service will help them to get those from the market. That is absolutely what we need to be doing. In envisaging as we are at the moment, the increased responsibility that comes with the devolution of additional powers, some of which will require significant IT and digital capability, we are already thinking now about the particular skills and the types of individuals that we will need to find from the market to ensure that we can deliver those well and to do so. We absolutely learned the lessons of projects that have both gone well and not gone so well in the recent past. Mr Gray, earlier on in your comments, you spoke about the staff training being insufficient. Before I was elected to Parliament, I worked in a private sector organisation and there was a huge change that took place in terms of software implementation. It was quite a feat. It was a double in size department when software was supposed to facilitate and make things a bit easier, but the thing that struck me then and also about that was just in terms of the staff access and training, particularly with the numbers of people who work in NHS 24. Not everyone is going to be able to go at the particular lot of time. Were there any particular issues that NHS 24 faced in terms of staff access and training? If somebody or individuals did not fully understand the software, were they able to go back on multiple occasions to get further information and assistance? It is a fair question, Mr McMillan. My understanding of what happened was that it was not so much an issue of being able to access the training itself, but the amount of time that was provided and then what they called floor walkers, the on-floor support. If in training you have three hours to come to terms with a new system, it probably feels okay at that point, but then when it comes to live running, for example, if in testing, and they did do this, you have people as actors describing their symptoms. It is frankly rather different when you have someone in the end of the phone in a live situation describing symptoms that you know are very serious and need urgent attention and you are struggling with this bit of software in front of you. I think that it was more to do with the amount of the training and, as I said earlier, the fact that colleagues needed to know what the system did not do, as well as what it did do, and also the amount of support provided on the floor was underestimated. If you took all those things together, that is what created the effect. It is certainly going forward with the system. I would take it that those issues will be fully addressed, particularly with any new members of staff who do come into the organisation. Will that be fully taken on board in terms of their competence, their IT competence at that point, as well as any additional training that they have come in? That is why I want to give Angelina Foster time to ensure that she is satisfied that there is space allowed for all those issues to be addressed. Perversely, it might be easier for someone coming in afresh who has never used the old system, because they will not have approaches and ways of doing that are aligned to the old system. They will simply become familiar with the new and go ahead with that from scratch. I am very clear that NHS 24 has a strong commitment to ensuring that people who come in to use their systems are properly trained in them. That is, at times, genuinely a matter of life and death that cannot be left to chance. Is that being asked to do the same job as a previous system, but just a bit differently, or is it being asked to do something totally different? It is a bit of both. For example, I spoke about the reduction in repeat questioning and duplication. That is what the old system did, but it is just doing it better. The switch from emphasis from consultation to triage is a new approach and has a strong clinical support. The real-time information and the services that are available at the time of the call are a new feature. The single patient record is also a new feature. It is doing some things better, but it is also doing some things differently. I am a final question. In terms of the paper that was received, and it is under recommendations 6.7 and it is a second bullet point, in terms of the executive management team should secure effective call centre implementation support from both Capgemini and other independent sources to support the future programme. In terms of the other independent sources, who do you envisage they would be? Would it be from other private sector providers, where there is clearly going to be a high volume of calls on a daily basis, or would it be from other areas of the public sector? I can give you two examples of what they have done. They have just recruited someone with expertise in delivering call centre implementations on a contract to work with the programme director so that she has direct personal access to that level of expertise. I also mentioned that John Brown, the chair of NHS Greater Glasgow and Clyde, has direct personal and very recent expertise in that area, which is why he is part of the assurance. He has assurance, if you like, from a public sector expertise angle and also from a private sector expertise angle. That is in place, and that is not something that we would hope will happen. One of the things that you said earlier on, Mr Gray, about the method that the contracts are financed and the likes, has got me a little bit animated in my thinking, if you like, particularly that around optimism bias and the contingencies. It takes me back, David Torrance and Nigel Don have both asked quite a lot of the questions and you have answered them, some of the things that I was thinking along the lines of. It takes me back to the point that of absolute clarity of what is being required and what you said earlier on about an acceptance that there will be spec changes within any particular programme, which, obviously, we think in terms then about taking your contingency and working within that. Of course, if optimism bias is so low, your contingency really means nothing. Who is keeping a hold of what the overall, what you are actually asking a contractor to produce for you in terms of the end product of what will be used? Who is keeping a hold on the decision of what specifications and when are being changed? It would seem to me that, unless somebody is sitting there absolutely aware that there is a change in what is being asked and the specs that are coming in, the difficulties technically, let alone the cost overruns that would necessarily happen. Who is actually keeping a hand on this? It seems to me that every time there is an ICT project that comes up, there is a lack of knowledge surrounding what is being asked for and also how it has changed from beginning to end. Let me try to be brief in my response. It is the responsibility, ultimately, not just in NHS 24 but in any programme of this size and style, is the responsibility of the programme director to ensure that any changes that are asked for are actually required. Why I say that is this, Mr Kerr. Sometimes when you get through the process of a system design and then you see it in operation, you will say, well, wouldn't it be nice if it just did such and such a thing? Well, actually it might well be nice but it wasn't in the original specification and paying more money for something that would be nice is not good use of public funds. However, you might get to a point, and I am using a deliberately invented example here, you might get to a point where you have a clinical system that allows you to record three conditions. In practice, people turn up with more than three conditions, so what happens if they have four or five? That would be a necessary change. If you had asked for something to record a certain number of conditions and it turned out that that was not going to work in practice, that is a required change. Each change ought to be the subject of a change control notice. In other words, it is not simply somebody on a whim saying, I would like it to do this. That change control notice should go through the governance framework so that the programme director ultimately can be assured that the change is both necessary and cost effective. The other thing that is important to do is to bundle up changes, not to do them piecemeal, because that hugely adds to cost if you just do a little change and then another little change. Actually, if you do not do them in a bundle, you can have adverse interactions between the changes which create situations that you just did not want. It is very important that that is properly controlled, both from expenditure of public funds and also from the point of view of not undoing the good that has been done in developing the system. We would just take me to one final question then after that. How confident are we that the people who are in place going through procurement, right away through the management, through the gateways reviews, are the right people to be doing those jobs? I know that you have answered earlier on about the, you know, looked at carefully and all the rest of it, but for these particular problems that were faced in a 41 million overrun, are we really sure that we have the right people in place that can identify what you have described? Well, I have looked at this very carefully, Mr Kear. I actually met the person that they are employing from the private sector myself, because I took this pretty seriously with the chair, and he certainly has excellent credentials and very strong evidence of success in the areas that we need. I interviewed John Brown, the chair of NHS Greater Glasgow and Clyde as part of the appointment process. I have real confidence in him, and I understand the account that he gave of his own personal expertise, and that is why I selected him. We have put around this the strongest team that we have. It is not that I wish I had a stronger one. I do not want to leave that impression with the committee. We have put a very strong team around this. The chair has been incredibly assidious, and I do want to pray tribute to her in the way that she has assembled around her a team of people who can support this implementation. She has worked extremely hard to get the right people in place, so I am as confident as I can be that this will work. We have put the resource in that it needs. Mary Scanlon, finally. A brief question to each of you. Ms Davidson, Paul Gray has, I feel, answered questions very straightforwardly with a degree of common decency, and I thank you for apologising for what went wrong. Given that you have been in your position for nearly two years, Ms Davidson, and you have had oversight of a £50 million overspend on NHS 24, oversight of the cap, overspend of over £70 million, would you like to take this opportunity to apologise for not learning lessons from the past and looking forward that things will be better? I will not be here, but our successor committee may look forward to not having to address on three separate occasions critical overspends in ICT. If you would like to take this opportunity, would you like your colleague to apologise for the failings here? As Mr Gray was explaining earlier, I do not have personal responsibility or accountability either for the NHS 24 or for the cap futures programme, but what I absolutely do have personal responsibility for is ensuring that lessons are learned from all IT and digital projects and programmes across the whole of Government, not just the central Government sector. I can absolutely give assurances that we continue to learn from them and that we are improving all the time the relationships and engagement between people who are responsible for delivering programmes and projects in different places. We will be particularly looking to learn the lessons from the experience of NHS 24 and of ARC futures and others. You are failing to apologise. If I can just move on to Mr Gray. This has been seven years in the making of NHS 24, starting in January 2009. I apologise for giving you a wrong figure earlier. When you previously came to our committee in 2012, it was because the registers of Scotland, the estimated ICT project, was estimated cost £66 million. The final cost was £112 million. At that time, it was a significant overspend, double the price. There are also continuing concerns about the registers of Scotland. Given that you have been very honest today and given that it is Audit Scotland that has brought those millions and millions of overspend to our attention, would you, as accountable officer, not be looking to cabinet secretaries and ministers to take some responsibility in these difficult financial times for our councils and our health service, is it not reasonable to expect our ministers to take some responsibility too? I have heard no apology or no acceptance of responsibility for the huge overspends here. Is that a reasonable request from an about to retire MSP? In a democratic Government, we can live in hope. Let me say three things, Ms Scanlon. First, in fairness to Ms Davidson, she should not be asked to apologise for things for which she is not the accountable officer. I am the accountable officer for this. Ms Davidson had no responsibility for the overspend in NHS 24. I did and I have accepted it and I have apologised. Secondly, as to ministers, ministers are rather dependent on their civil servants. Any colleagues here who have been ministers will know that. I am the accountable officer, I am responsible, I am apologising. Thirdly, what is reasonable to ask of ministers, I think a lot is asked of ministers and again I do not mean ministers of this particular Government. That is not reasonable, but I have never found ministers of any Government slow to apologise for things that they got wrong themselves. I do not think that ministers got this wrong. I think that we did. Would they still have to accept responsibility? Can I just ask finally in terms of you have recognised some of the humility that you have shown, but if this was any other business that you were running that was running at a loss of over £50 million, and we have referred to some of the differences and the figures that have been referred to, when can we hope that those losses will come to an end? What is the five-year plan, the 10-year plan, to ensure that those losses will not continue? There is no business out there that could continue with those losses and the Government should not think of it in any other way. That is a fair point, convener. Can you give me a five-year plan? When can we expect to see a return that says that NHS 24 will not be running at a loss? NHS 24 has a plan to return its brokerage, and when that brokerage is complete, NHS 24 should not be running at a loss. To be fair, that is not the answer to the question. Surely, when you have provided the brokerage to NHS 24, you cannot continue to write blank cheques. That is unacceptable. No organisation can continue to do that. If it was a business, it would be bankrupt and somebody else would be taken over. You have given them a blank cheque because you have said that here is a leverage, but surely the conditions attached to that are that the organisation stops running at a loss to public purse because there are facilities across the whole of Scotland being closed down because of the savings that are overruns and the budget that this organisation is taking. I will forget about humility. You have apologised. We have heard all the apologies, but now is the time to deliver. When will you deliver to ensure that NHS 24 does not keep receiving blank cheques? Nobody else does. NHS Glasgow has been advised to make £69 million worth of savings, along with others. They do not get the blank cheque, so why should NHS 24? NHS 24 has to repay what it has got, so it does not simply get. I understand that, but tell me when. NHS 24 should implement this system in the summer. From that point on, it ought to be financially sustainable. It ought not to require further brokerage. From this summer, I expect NHS 24 to be financially sustainable. Can I predict what might happen in two years' time? I can't, convener, and I won't try to. From this summer, I expect NHS 24 to be financially sustainable. Let's put on the record today. When do you expect—because you are the countable officer, your persons came here today—you have had to apologise, which we accept, but let's forget about that and you confirm to me what any other business would be expected to do the exact same? Organisations across the NHS sector have been asked to make cuts and ensure that they cut their cloth accordingly and that they do not find themselves in a budget overrun. All of them have been required to do that, because NHS Glasgow has been advised that there has to be a 10-year plan, a five-year financial plan, to confirm that they have to make £69 million worth of savings. What is the financial plan for NHS 24 to ensure that they run according to the budget? NHS 24 is required to submit its draft financial plans in March of this year and to have them finalised by May. That is the point at which we will have clarity about that. I am seeking to answer your question, convener. What I am saying is that I do not expect us to have to provide— That is not the question that I am asking you. Will they have a break-even budget? When can they expect to be running that? They should have a break-even budget by May of this year. Sorry if I misunderstood you. By break-even budget, by which that point, the Government will not be providing any more leverage to allow them to exist? That is no additional brokerage. That is the answer that I am going to give. That is the position that we are expecting this financial year. I thank both witnesses for their time. We move into a brief five-minute suspension. Colleagues, I now move to agenda item number three, which is evidence on the AGS report entitled the 2014-15 audit of Coatbridge College, Governance of Sevens arrangements. I welcome our panel of witnesses this morning. Professor Alice Brown, the chair of the Scottish Funding Council, Lawrence Howells, the chief executive, John Kemp, the director of access, skills and outcome agreements at the Scottish Funding Council. I understand that Professor Brown has a short opening statement to make. Thank you for inviting us to this committee again. We very much welcome the opportunity to discuss this very important matter and to provide a brief opening statement. Can I first emphasise, as we did in our written submission, how seriously we take what happened at Coatbridge? We are grateful for the Auditor General's report and your subsequent hearings, which have shone a very bright and necessary spotlight on this issue. At the time, colleges were not public bodies, but since April 2014, they now are, and therefore, the Scottish Public Finance Manual applies. The SPFM considerably strengthens the rules on severance, as you will be aware. Colleges must now obtain the SFCs, the Funding Council's prior approval, before any severance payments can be made. Indeed, it is a condition of grant now. I stated in our written submission that the Funding Council has taken a number of steps to learn crucial lessons from what happened. We do understand the need to be more proactive in ensuring that good governance is across the college sector, and that is something that we are already doing. While today is not the time to go into specifics, just one example of this is the funding council's approach to the issues that arose at Glasgow Clyde College board last year. We will also be implementing the recommendations of the college good governance task group without delay. The group of which Lawrence House, our chief executive as a member, will be reporting next month. Can I also take this opportunity to update the committee on just two matters? First, our revised severance guidance, which we delayed finalising until your report on Coatbridge was completed, has now been issued. Also, together with new college Lanarkshire, we had asked Mr Doyle to respond to our letters seeking return of a proportion of the severance payment that he received in time to be able to share his response with the committee. We understand from our legal advisers that he has not yet given us substantive response, but has indicated that he will do so soon. We will consider next steps with the college when we get his response. Thank you again for this opportunity. We are happy to answer your questions this morning. First, I can ask in behalf of the funding council, will you accept all the content of our report on Coatbridge College? We accept the contents of your report and the recommendations that we raised in our written submission. We saw that one aspect was not fully justified, and that was with respect to support for the colleges going through what was a major regionalisation process. Is that not the fact that you do not accept the recommendations if you feel that part of it is not justified? I mean, that is different from advising. We accept the recommendations. We were just putting additional information into the public domain that, in fact, we did do a lot to support colleges going through this process. As you will recall, there were 10 mergers taking place within a period of 18 months. For anyone who has been involved in the merger process, as I am sure some of you have, it is a very complex thing to undertake, particularly complex when you have to ensure that students continue to be taught well through that process, hugely disruptive for students and for staff. However, you will accept that the disruption to students is that Mr Doyle received £304,000 well above the recommended amount, and as a result of poor governance in the organisation, that affected students. The role of the Scottish Funding Council in assisting the process, we have advised that we think that that could be more proactive, is that not—I mean, we have said that lessons have to be learned from this, so why do you feel not just unjustified in the recommendation? I am not saying that you are unjustified in the recommendation. That is what you are saying. We do not feel that that recommendation is justified. Fully justified, just because of the additional information that I have given you, but we fully accept that we could have been very more proactive, particularly in relation to issuing the severance guidance more timely, just at the point of merger. You will recall that we did issue merger guidance, but the severance guidance was not reissued. One of the ironies, of course, is that particular co-bridge college. It was reissued to them in January 2013. They chose not to take that advice and follow that guidance, and that is a different matter. Can I now come back to the issue relating to the correspondence that we exchanged and the connection with the information relating to business cases? What you advised was that you asked us to amend the official report to reflect the fact that you, Mr Kemp, felt that the information was provided adequately. For all the colleges that are referred to here, was that the full business case that it was provided with? That is a rather separate point from the point that we were making. You are referring to the letter that I sent about the information provided to the committee. When I heard the comments made when you published your report that the Scottish Funding Council hadn't produced information that the committee had asked for, I was rather alarmed that that would be the case. I obviously asked members of the executive why information had not been provided. I was then given the full information about what had been provided and when it was asked for and what had been delivered. That was a point that I was trying to make that I would be alarmed if you did not receive information that you had requested. Therefore, I wanted to know what the circumstances were around those points. I was satisfied that, in fact, information that had been asked for at particular times was provided. There was some confusion around particular issues. A question was asked in a letter for information rather than what was said at a committee hearing. I think that I will apologise for any confusion around that. However, in no way did we attempt to not find the information that we asked for, was all the business cases that could be provided in connection with the severance payments to college principals. According to this table, there was only one business case provided. I will come back to that in a second so that there is an attachment to this document that provides—I think that that is in relation to Langside College—but when I interrogate the document further, it does not look like I have a full copy of the business case. It looks like I have got an extract of a particular annex in the document, so we asked for a full copy of the business case and we have not received a full copy of the business case, so can you understand our frustration? I certainly do if that is the case and I will ask Dr Kent to answer that point. The reason that you have one business case—it is not one business case, it is an extract of one business case. The point that I am making here is that I have a two-page document here. It refers to various annexes in the document, refers to annexes F and other annexes, so it looks like I have two pages of a much larger business case document, so I think that it is a very fair question for the committee to ask a question about that incomplete. That is the first time that we have heard that— Bill, you have provided the document, it is not the full document. No, but it is the first time that we have heard that is your concern. We are happy to follow that up and see whether there are other annexes that you have not been provided to. The actual issue relates to the business case in the second. However, you do accept that the document that we have for Langside College, we asked for the business case and we have provided with that an extract. Is that correct? So we do not have the full document here? I am not aware whether this is the full business case or whether the annex is referred to something else, but we can follow that matter up. On the issue of business cases, and just again for clarity, when Mr Howells, when you met with the committee in your evidence session, asked you the question, Mr Doyle may come before us and advises that other principles received similar deals. What you advise me of is for it to be approved over and above the severance payments that have been referred to, a business case should be provided. That is what you said, is that correct? That guidance required business cases for exceptional payments with the schemes that were generally operating in the other colleges. Apart from Mr Doyle's case, where there was an exceptional case, all the other cases of the principles, the schemes were in line with the general schemes for all staff. When we say that they were in line with the general schemes, would that also be that you would expect those schemes to meet with the guidance circular that was issued in the year 2000? Is that correct? Yes. So let us look at the table that you have provided us with, because when you look at the table, significant sums are referred to in the columns where it is referred to payment and loo of notice. Your guidance refers to the fact that payment and loo of notice should be avoided, except in very exceptional circumstances. That means that I would expect this column to have one or two principles to find themselves in that exceptional position. So why, then, have we got all of those principles receiving significant sums of public money, and it appears that, apart from the ones that have been referred to in Audit Scotland, the alongside college one is the only one that has a business case? Do we not do that? I mean, when people receive sums outwith the guidance scheme that has been set out by the Scottish Funding Council, should it not be accepted, then, that the college should say, if we are going to pay that significant lump sum and there are other pension payments of over £200,000 in one of them, would that have required a business case? The system in operating at that time was that the business cases were made to the board, and our guidance was that they should be made and retained. That was then looked at by auditors later on. The business case did not have to be sent to us at that stage. Do you think that you are paying the checks? You are the accountable officer, so you are responsible for public funds being paid to those principles under guidance, which is most specific than probably people would give you credit for. When you look at the guidance that was set in the year 2000, it is quite specific about what is required, so when you look at that, did you not say to your officials, including Mr Kemp, that we should ensure that those funds that are going out the door, that there is a business case attached to them, to make sure that those products are best used for public money? Or did you just let them go out the door? At the time, the decisions on the arrangements were the matter for the individual boards. Provide the funds to those boards. Was your funds that was allowing those payments to be paid, or was it not? I understand that. Were you the accountable officer? Indeed. That is why we are now in a preferable situation where, since April 2014, those arrangements now have to be approved by SFC. At the time, they were the responsibility of the boards. As we know, we did not run colleges and we do not run colleges. We were relying on that delegated authority to those boards to take forward those arrangements within the context of our guidance. I agree with you that it is regrettable that that did not happen. That is why we are now in a position where, with tightening up of the arrangements and tightening up the rules, we are now in a better situation. I can only apologise on behalf of the boards involved in the sector concerned that that happened. Where we are now is in a much different situation, and the new situation, in effect, accepts that. I will keep the official report as busy. We have heard the apologies before, and, although they are welcomed, I suppose that the issue is getting down to the bottom of that. Here is a table that provides payments that are made over and above the recognised scheme, and someone has received £200,000 as part of the pension scheme. Did nobody ever refer that to you, Mr Hill, and say to you, that payment is one of the payments that we have heard about at the college? Did that not alarm you? Was there ever anything brought to the final council that said that? The cases that were brought were the ones where the auditors in the college and the auditor general identified significant concerns in governance. Those were covered in the auditor general's report of 2015. That highlighted the two cases that we know of North Glasgow and Coverage. Let me just finally look at this. It is £50 million worth of public funds that are going into the merger process. Would there be no secret to anyone that is part of that mergers process? There would have to be significant sums of money put in place to deal with principals who could no longer continue to be part of the colleges where there was a merger taking place. You would have known that the service fund in the council is paying that money to those colleges to pay off those principals. Did you never say that you need to make sure that whatever funds have been paid to those individuals is appropriate? Did you see the fund, for example, the one that referred to £200,000 for pension payments being paid to the various colleges and a number of other payments that were made? Have you never had any sight of those? We did not have sight of those before they were made. In the case of Coverage, we were aware of what was happening and that is why we intervened in that particular case. In Coverage, you intervened only after the auditor general was made aware of that? No. In the case of Coverage, we were made aware before it had been happened and we were active. The auditor general's support came afterwards. Can I ask you this question just finally? It is one of those that I have always wanted to ask you. Did it never occur to you that we became and made aware of the fact that Mr Doyle was seeking those payments well and over above what was being recommended? Did it never occur to you that the Scottish Funding Council should say that we are not paying the money? We took that judgment at that time that we would limit any payment that we made to the standard payment for 13 months. I accept the judgment of the committee that, when I went to the board, I could have been stronger. I should have said that— No, I am not asking you about when you went to the board. Mr Doyle, you have got the checkbook. The only way that Mr Doyle can get paid the money is if you say to him, yes, this money will get paid to you. If it was made clear to him that he was not going to receive the money in the first place and you were not going to sign the check, you would have stopped that process and taken it any further, because you would have advised them that the Scottish Funding Council was not going to make the payment. Is that not fair? At the time, it was the responsibility of the boards to make those payments. You made the decision, yes, but it was not your responsibility to give Mr Doyle the money. It was not your responsibility. We did not write the check to Mr Doyle. In fact, we contacted the college and asked them not to make the payment, but they went ahead and made the payment. I appreciate your question about what we should have done after that. Did you advise Mr Doyle? Was Mr Doyle advised that the payment would not be made? The payment was not going to come from us. We could have chosen not to make a payment for the proportion that we paid to the college. However, that issue would have been relevant after Mr Doyle had had the check paid by the college. Despite us asking the college not to do that. Did the Scottish Funding Council contact Mr Doyle or the college, the chairperson of the college, Mr Gray, and advise him that he can agree to whatever payment you want, Mr Gray, but we are not paying this money. We asked him not to do it. There is a difference between asking him not to do it and saying that we are not going to provide you with the funding. Did you? We accurate what we did, because we said that we will not pay above the 13 months. We did not say that we will not pay you anything in relation to Mr Doyle. That is a fact. You said that we are not going to pay above the 13 months, but you did. The college did. You provided the funds to allow for the 13 months up to. That is a sum that is referred to in the payments here. You said that we will pay the 13 months. If you said that I am not paying the 13 months because you have agreed to well above the scheme that we have agreed to, would that not have been more appropriate? We took the judgment at the time that the danger there was that we, that takes another 100,000 or whatever the number is, out of the services that the new college could give to students. It is happening anyway, because if you are paying the money, that is money that can go to the college sector anyway. Indeed, but if we had taken a further 100,000 back out of the system, so that was the judgment that we took at the time. We accept that the committee has advised that you believe that we should have taken a different judgment, and we are now in a different situation where, when these cases will not happen— Mr Doyle was always arranging for this, and he was looking at, I am going to get this package together, and he was colluding with others to do that. If he was made aware that you were not even going to give him the 13 months, then he could not take it any further. That is the way of position that he would have been in. If he had advised them that we would not even pay the 13 months, he would not have been able to do that. He would have maybe tried to take out the college funds, but that would have been much more of an issue for him, would it not? Indeed, he would have taken it. The college could have paid it out of their general funds. What I could not have done is stop paying the college any money, if you like, because the money for running the college is necessary for running the college. I will be paying the college money every month, of course I would. It is their responsibility to decide what they pay in any particular month. It clearly would have sent a more forceful message to the college to say that instead of offering to pay 13 months for Mr Doyle, I will pay you nothing and accept that we should have been more forceful at that moment, but the college could still have gone ahead and paid that £300,000 out of funds that it had. I am referring to the letter that you have sent to the convener of 17 February, where, if I put it in my own words, you seem to grudgingly accept the recommendations of the committee. I do not want to pick over the calls, because obviously we have spent huge amounts of time on that, but I think that, in terms of future governance that we really need to ensure ourselves in our own minds, that this is not likely to happen again. In terms of being forceful, Mr Howells, at the critical meeting of the board of Coatbridge College that you attended to tell them that you are not paying £304,000 to Mr Doyle, you will stay within the recommended guidelines of the Scottish Funding Council, and we would expect no less of you to do that. Why did you leave after 10 minutes?  To be honest, let me tell you of my experience of that meeting, which was that we entered the meeting and I would not say that there was an entirely welcoming atmosphere. I had ready what I wanted to say to the board and, as you can see from the minutes of that meeting, I effectively made sure that that board heard from me orally the essence of our guidance. I made it clear to the board that I would be interested in debating with them and would be keen to have a dialogue with the board. I reached a point where there was no dialogue happening and there were one or two questions. At that point, we were invited to leave. I could have stayed and repeated the points that I had made and, on reflection, maybe I should have been more forceful. That is one of the things that we learn in subsequent events from that event. However, my main purpose was to make sure that every member of that board was absolutely clear of what I understood our guidance to be and that they would take that on board. We have learnt from this and it is clear that there are occasions where we need to be more forceful in these occasions and some of the events that Professor Brown referred to subsequently show where we have been trying to do that harder. It really does not matter whether you were welcome or not or whether they were not talking to you. You had a very serious job to do on behalf of the Scottish taxpayer and on behalf of the Scottish Government. You would have saved this committee an awful lot of time, an awful lot of reading, a huge amount of work and I give credit to every member of this committee. I think that we have done a third job here and I retired in three weeks. I would have to say to you, Mr Howells, that I was very disappointed—I am talking personally, not on behalf of the committee—that I was very disappointed at the role of the Scottish funding council, because I really just think that John Doyle and John Gray ran circles around you. That is very disappointing and I stand by every single comment and recommendation in our report and appreciate that you say that it was not fully justified. Did the Government put so much pressure on you to make sure that the mergers happened and that you were willing to turn a blind eye to John Doyle and John Gray? Secondly, the Auditor General mentioned collusion. Collusion by John Gray and John Doyle, following the fact that I appreciate that it was Mark Barthow at the time and the fact that the guidelines were set out to them, collusion in order to get the remuneration committee to pay an extra £200,000 to John Doyle, is a very serious matter indeed. In fact, in my dictionary, it is fraud. That will be overlooked. I imagine that today's official report will also go to the police. Do you agree with this committee and do you also agree with the Auditor General that John Gray and John Doyle colluded in order to ensure that the remuneration committee was not fully informed of the SFC guidance and to ensure that John Doyle got significantly additional amounts of taxpayers' money that he was not entitled to? Do you agree with that? I am interested in preventing the senior team from receiving an unjustifiable package, but I do not want to digress. If you want to answer that quickly, I am happy about that. However, the point that concerns me is that you had sanctions and you did not use them. Probably because the college knew perfectly well that you were not going to use them, that allowed them to help themselves and line their own pockets. You referred to paragraph 299 in our report, and you have sanctions not to pay them the money. You decided that you would not bother penalising John Doyle because that would result in penalising students and staff. Now, if you had sanctions that you were not willing to use at any point in any time, did you ever go to the Scottish Government and say, "'This isn't really working. You're giving us sanctions that are worthless. We need greater sanctions in order to ensure that taxpayers' money is not wasted, because you did not use the sanctions that were available to you.'" Can you answer that? Indeed, I accept that position. I guess that's why the new arrangements post 2014 give us a new power in respect of these particular events. I'm talking about, you know, we'll have to go over this. No, I accept that. We're referring to our report. In relation to your report, we didn't—you're correct—we did not recover that or pay nothing for John Doyle's severance that we've been there before for the reasons that we've given. During that process, we didn't say to the Government right then that we need extra sanctions. However, post the event, from April 2014, we now have the authority to decide— You were given sanctions that you refused to use, which made life easy for John Doyle and John Gray. Have you ever used those sanctions? Yes. We used the sanction of withholding grant quite frequently. The reason we didn't use it— In terms of severance payments. In terms of severance payments—I don't think we've ever used it— Right, you've never used it in terms of severance payments. I can't think of an occasion where we've used it. Do you realise the signal that puts out? No. John Gray and John Doyle knew perfectly well that they could do what they want. Yeah. If I can explain why we didn't use it—we did consider this. The reason we didn't use it in the context of the John Doyle and John Gray issue was that, as you said in your earlier question, it was an issue of a patent collusion between two people. There wasn't a patent, according to Lawrence Howells. He said that it was a collusion. No, I'm not disagreeing with that at all. Those two people had exited the college pretty much on the evening that Mr Howells had attended the board meeting. Despite us asking that they not make any payment until we could completely get to the bottom of what their decision was, they made the payment and Mr Doyle had the money in his bank account almost immediately after the board meeting. Our view was that, at that stage, once the money had left the college, were we to use the sanction of not paying the grant or withholding grant for the whole amount, it would only have impacted on the college. We did, as you know from earlier discussions at this committee, consider options about whether we saw legal advice on whether we could recover it from board members who had taken the decision, which was against our guidance, and the advice was that that was unlikely to succeed. We did consider other options, but the option of withholding grant or not applying part of the grant for the merger was one that we did not think would work because the money had already been paid to Mr Doyle and we did not think that there was a prospect that, while we were to withhold it from the college, he would immediately repay it. Do you understand why I am very disappointed at the role of the Scottish Funding Council in its lack of supervision, oversight and scrutiny and management of the Coatbridge severance payments? Do you understand my personal disappointment? I can understand the anger of people at this event and our role in it. In our defence, as we have said in the letter, we did know about the issue in advance and we tried using all the powers that we had at our time then to prevent it. I can understand your anger— A 10-minute meeting where you were unwelcome and nobody was talking to you, that is hardly using all the powers at your disposal.  I stayed there for 10 hours until they got the message but you just walk out the door quietly and meekly. That is not using all the powers at your disposal. I have accepted before that we should be more forceful and we have learned from that and we are doing that in the future. Do you agree that the Scottish Government puts considerable faith in the SFC and its central role in the merger of the colleges? Yes, it did. The SFC also worked in partnership with the Scottish Government officials and the change team in taking forward the merger process. In retrospect, do you believe that you fully met that faith? I think that the Scottish Funding Council must remember that I was not here at the time, so I am reflecting on what happened and I have been looking at all the paperwork as well. I think that the Scottish Funding Council achieved a lot in the 18 months of merger when there were 10 mergers to undertake. In hindsight, and clearly with the evidence that has been produced through the Auditor General and your own inquiries, the funding council could have done better and I think that the funding council totally accepts that. The matter was brought to the attention of our board again in January of this year when all members of the board got a copy of your report and, indeed, a report from the chief executive. We will be looking very carefully at all the steps that will be taken to make sure that that kind of thing does not happen again as far as we can. However, one of the things here is to think about it in the context of a whole governance framework. There are different roles and responsibilities and lines of accountability at play here. You start with clearly the appointment of principals and their terms and conditions, the appointment of chairs of boards and their terms and conditions and so on, and the appointment of board members and the point that you also make in your report about the adequate training of those. That is a point that we will definitely be taking up and we are taking up at present. Within that, you have got the checks and balances of auditors, both internal and external. You have got ourselves. You have got Oscar, who, again, we are in discussion with Oscar. You have also got the Standards Commission and the Ethical Standards Commission. The network and framework of governance that is part of looking at the whole picture. I would say that that framework failed on this occasion and failed to public. Certainly, when you look at the kinds of sums that are involved, I think that you yourself have described them as eye-watering and I certainly find them so. I am finding what you say there, sort of spreading the blame over everybody. No, not at all. We accept responsibility for our part in that. I am saying that, in looking forward and learning lessons from this, we have to think about how that network works effectively to make sure that it does not happen again. It is not one institution, but we fully accept responsibility for our failure in this respect. Perhaps I can ask you one of your questions. I would like to pick up on something that the convener was asking about business cases, because the answer to the convener—I think it might have been Mr Kemp actually that answered that one—was that business cases did not require to come to yourself. They just had to exist and be presented, I think, to the board of the colleges. I think that that was the term that was used. However, in page 3 of your letter of 17 February, the third paragraph down that starts with paragraph 299 of the report, it says here that the guidance did not require the college to share the business case for any exceptional payments. You are specifying exceptional payments. That sort of implies that, in the normal course, the business case would come forward, but in exceptional cases, which presumably is where the college is picking up that part of the cost, it does not come forward. We maybe could have written that sentence better. What it means is that, where there was no exceptional payment, no individual business case would be needed for a payment. If the principal was simply getting exactly the same deal as everyone else, it was non-exceptional and no business case was needed. Where it was exceptional and a business case was needed, that still did not need to be shared with the SFC. You do not need a business case, if it is just within the terms of the— The college, our guidance was that if the principal, for example, was getting exactly the same deal in terms of months for years of service as everyone else, no individual business case was needed, it was just part of the wider scheme. Would you still need a business case to say that it was justified and that it was appropriate and that the payback period for this was appropriate? Would you still have to have a business case for that? It would be implied that the scheme itself covered those issues, because it would cover the length of service that is qualified for a particular payment, and therefore the payback would be included in that. In the context of a merger, you can see your point, if it has not been in a merger, if you are making a severance deal with the principal, you need to consider where we need another principal. However, that is in the context of a merger where there will be fewer principals. Of the lessons that we have learned from this, had the Scottish Public Finance manual not changed this so radically, as we have heard earlier, it would mean that, essentially, our previous guidance is irrelevant. Had that not happened, I think that this is one of the lessons that we would have been very carefully learning, because those things were happening through a system that we were not within our sight at the time, and that is a lesson that we would have had to learn had it not been dealt with otherwise by the SPFN. During the course of this whole process, did you see yourselves in a supervisory role, any sort of watchdog role in relation to this and the payment of monies? We had a variety of roles, and we were encouraging the merger programme, supporting the merger programme, but we were also aware that we had a supervisory role. That is why we intervened to the extent that we did in Coatbridge. There were other cases where we had to express views on the ways in which things were going. Many of those have not come to light because they were resolved, but we did see that we had a supervisory role, as well as the supporting role and other roles that we had in the merger process. Again, looking at the third page of the letter on 17 February, I am looking at the statement here that we were successful in preventing the senior team from receiving an unjustifiable package. If you were successful with the senior team, it still seems strange to me that you were not successful with the principle. What was the difference in approach there? Our approach was exactly the same in both cases. Many of the actions that you have described in earlier meetings about our interaction with Coatbridge were about both cases, because they were both live issues right up until the end when they dropped the additional payment to the senior managers but retained the payment to John Doyle. Our approach was very similar. We saw that all of them were unacceptable. We took the actions that you have heard about in earlier meetings. We had the chair and principal in to express our concerns. By the time that Mr Howells attended the board meeting, we knew that the senior management team had been dropped, so it was down to Mr Doyle. Essentially, the process was the same. Given the same process, why was it successful in preventing the senior team from receiving an unjustifiable package but not Mr Doyle? I was going to say that you would have to ask Mr Gray and Mr Doyle that, but you have. You have reached your conclusion and it is one that we agree with. Coming back to the meeting that Mr Howells attended, he made the statement that he was invited to leave. My understanding is that he was there for 10 minutes. At the end of 10 minutes, when you stated probably in 10 minutes not all that much given that you were talking about questions and so forth, you were then invited to leave. How did that happen? What did you think as you were asked to leave? There weren't many questions to be quite honest. I'll be really honest. What did I think? I thought that I've got my message across that there's nobody in this board that could possibly not have understood what I'm expecting of them. I'm now expecting them to go into debate amongst themselves and challenge the chair and the remuneration committee about the way forward. That's honestly what I thought. I think it's been suggested. Maybe that was a naive of me to think that. I'd got my points across. I was expecting that board now to say actually we now need to follow this guidance. Did you, during the course of that 10 minutes, indicate that the funding council would be still prepared to pay the 13-months severance? The minutes say that if the decision—let me see. The minutes don't record that I said. You don't record very much at all. No. I mean I said you need to follow your guidance. If you're going to go beyond the 13-months for everybody else, you're going to need to go through these processes. Did you indicate that you were prepared to fund that portion of it? I don't think that we talked about our funding at that meeting. You said that you could not have changed the mind of the board—again, the same letter, page 3—that you would not have changed the minds of the board. So presumably you left that meeting after 10 minutes believing that you couldn't change the mind of the board. I'll be really honest. I left that meeting thinking that the board's heard what they have to do. I now expect them to do it. That's honestly what I thought at the time. But then the letter says about not being able to change the minds of the board. I mean that doesn't seem logical. If you left believing that they'd heard the message, you presumably believed that they would take note of it and do something about it. But then you say here that—on what basis did you believe that you couldn't change the mind of the board? At what point? I think that in our letter we're referring to the whole situation and the aftermath of it. I'm honestly saying what I thought when I walked out of that meeting, and if our letter doesn't give that accurately, I apologise for that. I mean, I have to say that I find that all the SFCs in this quite weak. I have two areas that I want to look at. One is that my understanding of how and why the senior management additional payments were not made on the same basis as John Doyle was because the letter that they'd received expired on 31 July. At this committee, I don't think that I've ever seen the letter related to John Doyle. Have you seen that letter? Because if it said that it expired on 31 July, the board is doubly culpable for failing to take cognisance of the guidance that was offered to them. Have you attempted to ascertain that at any point? I think that our view has been that if it was not in accordance with the guidance, it should have been set aside. Yes, but my understanding of the basis for John Doyle receiving the package was that they felt on the advice of the lawyers that they were contractually obliged because of previous correspondence to pay that, whereas they clearly weren't in the case of the senior management because of the termination letter of the original proposals for merger, which had to be submitted to you on 31 July. You didn't seek to clarify that subsequently and haven't ever sought to clarify that. I know that it's bolting the stable door after the horse is well and truly bolted, and it's bolted pretty fast in this case, but it's an important question about the role of the board and what basis the board acted. We haven't clarified that particular point to my knowledge. Again, I think that it is back, as Dr Kemp said. We thought that if it wasn't in line with guidance, it didn't stand anyway. But it is back to what was the role of the whole of that board in looking after the affairs of the college and its responsibility to challenge it. Those matters may be subjudice in due course, but what I'm really interested in and the other thing is that if we go back to Stevenson and Telford College, that's in 2011-12, the severance payments under a regional scheme were 21 months, so there was an existence, this Edinburgh scheme, which was at odds with the scheme that you were promoting as part of the merger process, and yet again in Angus in 2012-13, a whole year later, we have another 21 month under a general scheme. So, we've got two areas in Scotland where we've got general schemes that John Doyle quoted in his proposals to have a regional scheme for Lanarkshire. I have some understanding of where he was coming from. Here are three principles that got away with 21 months pay and some of them, £52,000 and £23,000 in lieu of notice in addition to that. They got away with £249,000 and £202,000. Why shouldn't I have a good go at getting the same scheme? That seems only fair. Why should I be penalised and not have the same scheme that others are getting? What did you comment on those schemes as they went through? Our view was that 21 months were something. We couldn't justify funding from our funding and we didn't fund up to 21 months. Did you comment that it was at odds with the guidance at that stage? I know that you weren't responsible, the boards made the decisions, but as the funding council handling the public money, did you comment at all on the fact that this was basically well in excess, at least eight months in excess of the maximum amount that you were prepared to fund? Collegies were well aware that the maximum amount that we would fund would be roughly a year payback, which sometimes meant a 13-month scheme. The 21 months that were offered by some colleges, and I would stress that the excess above the year payback, not with our money, was in line with voluntary severance schemes right across Government. We did not say to Edinburgh or to Dundee and Angus that we object to your scheme. What we said to them was that we are not prepared to fund all of your scheme. This is public money, and we want to spread it around as much as possible. The reason that we objected, in the case of Coatbridge, to the proposed 21-month payment, or actually ended up being longer than that to John Doyle, but the proposed payment to the senior management team and John Doyle, as we understood it early in 2013, was that that was to be for only the senior management team and not for the whole of the college. Had they come to us and said, we have reserves, we want a 21-month scheme that will apply to everyone in all the emerging colleges, including the principal, we would not have objected. Let's be clear, the 21 months was a relatively standard scheme across the public sector in Scotland. We were prepared to fund a more meager scheme and most of the colleges went for that, but the issue with Coatbridge was the disjunction between the very generous scheme for the senior managers and the 13-month scheme for the other staff. That was what led to our initial objection. Some of how it was reported in the minute of the remuneration committee in January at Coatbridge significantly misrepresented the Edinburgh scheme and said that that was the standard across the sector. It wasn't alone that there were others, but it was quite unusual. It implied that we would fund the whole thing. We wouldn't, and we didn't fund the 21 months at Edinburgh. We funded up to a 12-month payback. As you'll see from the table that we've given you, the SFC contribution in most of these cases is considerably less than the whole of Mac. We're not disputing the SFC's contribution at any point in this proceeding, but you've just said that the 21 months—I think that your words were—was a fairly general scheme across all government. I think that the standard civil service scheme is 21 months. The scheme that was being proposed for Severance as part of this rapid and fairly forced merger process was to say, well, the civil servants can have 21 months, but the colleges can't have 21 months. I'm beginning to feel very confused about this, because if there's a general government view that 21 months was reasonable and that that can apply to civil servants and the government, but cannot apply to college staff, I feel that to be really rather unfair. Our view was that within the limited money we had available— I don't know, but that was a money that the government decided to give you. So the government gave their own civil servants 21 months as a standard severance package. It's applied in Edinburgh as part of the regional scheme because that's what your table says. It's applied in Angus because it's part of the regional scheme, but when it comes to Lanarkshire and Clydebank and the other areas and the Glasgow areas, because they didn't have this scheme in place, they're not allowed to apply what is the general government scheme. What right of the government to turn round to say one class of employees that we're now going to take responsibility for are perfectly entitled to 21 months, but the rest of you—no, I'm sorry—we're only going to fund 13 months? What right has the government got to do that? Did you point out to the government that that was at odds with a general scheme that was available? The colleges had the right, should they wish, to have a 21 month scheme for all of their staff. What we objected to in Coatbridge was that it was only for some staff, but any college could decide to have a 21 month scheme. We—without a business case, because presumably the government scheme, you're telling us now, and correct me if I'm wrong, but the government scheme is that you do not decide—it's not exceptional, there's nothing exceptional about it—you get up to 21 months of your employment long enough. Bang. I don't know the details of the government scheme at hand at the moment. We were quite clear that we were trying to achieve the mergers across the country with the resources that we had. We wanted to, as John said, make that money available to support as many colleges as we possibly could to merge in a very short space of time, and that's why we offered 13 months. That's why we encouraged people. I'm not blaming you for what you did in that respect, because you operated on the basis that the money the government gave you, and the scheme that presumably the government told you to operate, which is a 13 month scheme. The decision to limit funding to a one-year payback was the funding councils that wasn't the government's. But it was based on your examination of the funds you were being—did you ask the government then for 21 months? Did you ask for them to follow what Telford and Stevenson and Angus and Aire had all got 24, 21 months' severance payments? Did you ask for that in 2013 that it should be enough money? We didn't ask for 21 months across the system as a whole. However, the government did provide and went off additional money—I think it was £15 million—to support this merger programme. That was what enabled us to afford our contribution of 13 months of one-year payback. The actual redundancy scheme was £90 million. We now know that the college redundancies as a whole cost £90 million, so 34 million of that was met from college reserves that would otherwise be applied to teaching and students and the rest. I think that there is a lot of responsibility on the government here for not laying out an absolutely clear programme and funding it that was fair in terms of what the civil service would have had. Can I just continue that line of argument in the sense that, when the government announced the merger process and gave the funding council the resources that you were provided to deliver the merger process, was there any discussion between either civil servants or ministers and the funding council about the political controversial nature of high severance payments? I mean, we were clear what we would be offering in terms of schemes— That's gone down. No, and I know—I don't recall a particular attention to that. Do you mean payments of £249,000 a year, £202,000, £126,000 of 58, £174,000 and £304,000 by any standards, pretty high payments? I'm simply trying to clarify whether you meant 21 months as opposed to four months. No, I'm interested in the sums involved here, which you provided to us on this table. There was frequent discussion with the government on every aspect of the merger. On severance payments? On severance payments, certainly, when Coatbridge— No, because, as Dr Simpson has just been raising, there was before Coatbridge, Coatbridge in some ways is a red herring in its argument, because it started in 2011-12, didn't it? Did, at any time, ministers or senior civil servants say, hold on a minute, are we really going to start paying out £249,000, £202,000, £126,000, £174,000 in public money, taxpayers' money? Did that get raised at any stage? In many cases, these payments are simply the standard scheme. That's not what I asked. What were applied by a house? That's not what I asked. That's not what I asked. That's not what I asked. That's not what I asked. I asked, was it raised, was it discussed? Not specifically. No, okay, so we clarified that. So in that sense, there was no interest from senior civil servants or ministers about how much money was going to be used for specifically people leaving the colleges at principal level and senior management level at that time because of the merger process. Everybody accepted that if there was going to be change, then there would h