Good morning and welcome to the 26th meeting of 2015. Everyone present is asked to switch off mobile phones and other electronic equipment as they affect the broadcasting system. Some committee members may consult tablets during the meeting. This is because we provide meeting papers in digital format. We have apologies today from Cara Hilton. Item 1 is to take evidence as part of our inquiry into arms-length external organisations. I welcome Ian Murray, chief executive of High Life Highland, and Bill Alexander, director of care and learning at Highland Council, giving evidence on High Life Highland, which provides cultural, sporting, leisure learning and health initiatives and projects on behalf of Highland Council. Erika Dair, operations and finance director of the EDI group, and Peter Watton, head of corporate property city of Edinburgh Council, giving evidence on EDI group a property development and investment business set up by the city of Edinburgh Council. Julian Ferry, chief executive of culture at North Lanarkshire, and Lee Sanne McMurrach, head of education skills and life-lover learning at North Lanarkshire Council, giving evidence on culture NL, North Lanarkshire Council's cultural services allure, and Sandra Ross, managing director of Bonacord care, which delivers a range of social care services for Aberdeen City Council. Before we begin hearing from witnesses, I would like to comment on the absence of witnesses from Aberdeen City Council this morning. Last week, the chief executive wrote to me indicating that they were not currently in a position to attend this inquiry. As officers with responsibilities relating to allios have been asked to focus on other activity, they did not think that they could give appropriate and useful input to an appearance at the committee. The clerk to our committee has had a series of conversations with Aberdeen City Council in this regard, reminding them of our powers to compel witnesses and urging them to reconsider. He has also reminded them of what I said on behalf of the committee in December last year, in response to similar issues that we were then facing. For the record on that occasion, I said that I would like to clarify the committee's approach to who we ask to appear before us and the general criteria that we adopt. That is directed towards roles from the public sector, including local authorities, in particular, although, for others, our approach is similar. When deciding who to invite, we look to achieve a balance from across the country that covers both rural and urban. We also have in mind coverage from affluent and less affluent areas. We aim to spread the coverage across the whole country, although we recognise that those in the larger urban areas might have more experience and knowledge of particular issues to share with us. We also recognise that staff in the larger urban areas can be more specialised and potentially handle a wider variety of issues, but we are always looking to impact on smaller areas too. We consider written submissions and other pertinent information before we select witnesses, and we are always interested to hear from those who provide an opinion that may differ from the status quo. If we receive submissions that provide similar opinions, we will try to avoid duplication on our panels, and we will strive to have contrary views available to test what we are told. When we issue an invitation, we expect witnesses to attend. We will cancel an invitation only in exceptional circumstances. Those invitations are not like invites to attend Government or other working groups, and we do not consider acceptance to be discretionary. We have powers to compel, but we do not want to use them as we appreciate that it is far better all around that people attend willingly. If witnesses feel they are not the appropriate person to attend, they should contact the clerk immediately. That will allow an opportunity to discuss whether there might be a better alternative. If witnesses leave it to the last minutes to contact the clerks, they will not be allowed to withdraw and we will expect them to attend. In this instance, I am going to ask the committee for their views on whether they consider the reasons for Aberdeen City Council's non-attendance today are acceptable and invite comment on what action they would wish to take. I open it up for the committee. I have a suggestion that we should summon the original witness, the chief executive of the council, and the council leader. Is there any alternative viewpoint to that? Can we agree that we will summon the original witness, the chief executive of Aberdeen City Council and the council leader? That is likely to take place on 2 December. I now invite opening statements from Highland Council and Highlight Highland, first of all, please. Thank you, Mr Stewart. Good morning, committee. I'm Bill Alexander and I'll give an opening statement for myself and Mr Murray. We've got to Highlight Highland, which was established as a council-owned company with charitable status in October 2011. It's four years old now. It was set up with a board of 12 directors, eight of whom are independent and four of whom are councillors, to run adult learning, archives, arts, leisure facilities, libraries, museums, outdoor activity, sport and youth work. Undoubtedly, the initial driver for the council was the capacity to achieve on-going savings and protect services, which might otherwise have had to be reduced. However, there were also aspirations that the new body could act more quickly, be more creative and, where appropriate, more commercial, utilising the skills of independent directors whilst retaining a clear focus on public service with strong links to council priorities. How has it been for the council? Well, very good, we would say, in that there have been definite service improvements in a range of areas, for example libraries, leisure facilities, museums and an on-going commitment to council priorities, for example the integration of adult health and social care or corporate parenting for children. In the past year, Highlight Highland has joined the community planning partnership as a full member as we begin to engage in very real partnership issues. Highlight Highland has also achieved savings, but it has done that largely through increased income and efficiencies, always with a focus on council priorities. It has also begun to develop partnerships with the private sector, and Mr Murray will say more about that. Why has it worked? I would suggest that it comes down in the end largely to attitudes and relationships. There was a positive challenge from the council that the Highlight Highland Board should have the responsibility and the freedom to improve services. There has been from the start a positive approach from the board to improving and developing services. It has not been about sitting back and simply managing budget reductions, it has been about achieving creativity with focus, a particular focus on the services that they provide. Highlight Highland has wanted to be and is regarded as a trusted partner by the council and other public bodies, and that approach has built confidence over the first few years that has helped to build the strong and stable relationship that we now have. Fundamentally, Highlight Highland is popular. It is popular with council members, it is popular with its own staff and it is popular with the public and with communities. It seems to be working with the council, but it also has its own identity and there is a creativity and a focus that that brings. Okay, Mr Murray, do you have anything to add briefly to that? I am not at this stage. Okay, thank you. Do the City of Edinburgh and EDI group wish to make an opening statement? I will just make a short opening statement this morning. I joined this morning by Peter Watton from the head of corporate property from the City of Edinburgh Council. The EDI group is wholly on subsidiary of Edinburgh Council that was established 25 years ago with the purpose then of leading the development of Edinburgh park, which it did successfully. Today it has two objectives. First, to carry out property development in specific areas of regeneration, those areas are specifically identified by Edinburgh Council and in this case it is Craig Miller and the grant in areas of Edinburgh. The second objective is to take land and buildings that are now surplus to the council's operational needs and to develop those for profit. Examples of our current work would include designing and building a hotel in a gap site in the old town of Edinburgh. We have designed a new town centre in Craig Miller, and we are attracting retailers to that in order to improve the local shopping facilities. We are creating a master plan for the former industrial site at Fountainbridge and is part of that developing a £300 home £100 million private rented sector scheme with the support of a joint venture partner. I have been a director of EDI since 2006. Peter has the privilege of being the council's observer attending all of the EDI board meetings. He has also for a period of time worked within EDI, so he has been on both sides of the fence. The board structure has changed various points, various times over the time that I have been involved in EDI. It currently consists of one executive director myself and six non-executive directors of those three are councillors appointed by the council and three are external independent directors appointed for their experience. There is a shareholders agreement between the council and EDI. That was reviewed and reworked and updated in 2014, and that sets out the governance, the practical arrangements of governance between the council and EDI. North Lanarkshire Council and Culture NL, Julian Ferry, please. I would like to give you some background information to Culture NL. On 1 April 2013, operational responsibility for North Lanarkshire Council's cultural and associated services transferred to Culture NL, a specially created company, limited by guarantee, with charitable status, agreed in accordance with approved charitable objectives and principal activities. The transfer followed a full and transparent options appraisal led by KPMG, utilising a toolkit devised by museums in Galeries Scotland. The council established Culture NL in order to provide a sustainable future for cultural services to allow continuous service improvement in the years ahead, to reach new audiences and develop strong partnerships, to enable services to operate in a more responsive way and to undertake new developments besides making a financial saving on the non-domestic rates. Culture NL is responsible for the management and operation of performance venues, arts development and community arts activity, community facilities, including letting of school halls and sports pitches, museums and heritage, libraries and information and play services, along with catering, cleaning and caretaking associated with those above services. Since the inception, Culture NL has embraced its responsibility for delivering services of major importance to the communities of North Lanarkshire. The organisation has flourished in its first two years of operation, placing culture at the centre of our activity, providing a sustainable future for cultural services, recognising the importance of arts and culture in day-to-day life and recognising the positive health and wellbeing impact of participation in cultural activity. Could you give us an indication of the makeup of the board of Culture NL, please? We have 13 directors on the board, seven of which are independent and five are partner directors appointed by North Lanarkshire Council, six are appointed by the council. Are they all councillors? Six of them are. Six are councillors. I understand that Bonacord care do not wish to make an opening statement. Could you, Ms Ross, give us an indication of the makeup of the board of Bonacord care, please? Certainly. There are two executives. There is myself as mansion director or finance director. We have a chairman and four non-executive directors. There are no elected members when I vote. There are no elected members at all, so the chairman and four others yourself and a finance director. We also have at each board meeting an observer who attends from Aberdeen City Council. So there is an officer without a vote who attends on behalf of Aberdeen City Council. Okay, thank you very much. I ask Highland Council and Highlife Highland first of all. What scrutiny, how does the council scrutinise Highlife Highland? I am sorry? Yes, thanks. There are bi-annual meetings of the adult children's bill. Would you please give the right name? Children and adult services committee. Sorry. So twice a year I report directly to that committee. In between that, there are monthly informal meetings with the council's leader the chair of that committee and the convener, the chief executive and Bill. In addition to that, there is quarterly input into the care and learning services performance report which goes to the council, the council's chief executive. The director of care and learning has a standing invitation to the senior management team of Highlife Highland. Similarly, I have a standing invitation to the management team of the care and learning service. That is on an as-and-when basis rather than a regular. So there is a range right from the committee through to informal meetings. In terms of performance indicators, are all of your performance indicators available for scrutiny at council committee? Yes, they are based on the single outcome agreements with the council and the Government. Our performance indicators are taken directly from those that affect and are influencing the nine areas of our work. Are you questioned on those performance indicators by the relevant council bodies at the end? Yes, I was at the committee just last week and there was a range of questions from youth work right through to larger facilities on almost everything. Is it easy for members of the public to scrutinise what you are up to too? We are developing, as part of our integrated health and social care arrangements, increasingly local community planning forums. In the future, we see those as the hub for community and public engagement. Mr Murray has recently been to those and engaged in discussion about the range of activities of High Life Highland, and that is where we expect both public community council and community organisations to be involved in that. I would not say that that was scrutiny. It is discussion about local delivery. Scrutiny happens in the council committee and in the officer processes and reporting in the performance framework. I would suggest that High Life Highland also has a very high profile. There is very active community debate and discussion about the delivery of services, and High Life Highland is very much part of that. In terms of scrutiny at City of Edinburgh regarding EDI, how is that carried out? The shareholders agreement sets out a number of requirements. Broadly, that would include the submission of all board papers that have to be provided to the observer, and that includes a number of specified finance reports. Those that are provided to the observer are also provided to the council's head of finance on a monthly basis. The council also requires the preparation of an annual business plan, which is looking three years ahead. In the first instance, that is submitted to the council as to council officers for their input and review, and then it is submitted to the council's economy committee for approval. There is also ad hoc summons to other committees. I attended the council's housing committee to present what we were doing in relation to housing delivery in our areas of development. At present, quarterly reports are presented by myself as the contract manager to the Learning and Leisure Services Committee of North Lanarkshire Council. In addition to that, there is an officer's meeting between the head of financial services at North Lanarkshire Council and myself with the chief executive and her team to look at performance measures and the financial position of culture in L. I also have meetings with the chief executive on an ad hoc basis regarding strategic matters. Ms Ross, in terms of Aberdeen City Council scrutiny of Bonacord care, we have a contract. Our contract states out our finance arrangements, which are monthly. We report monthly to the council on our finance. We also have service level agreements, which are in place, which stipulate our KPIs. Our key performance indicators are reported on a weekly basis. We also have ones that are reported on a monthly basis. We have operational management meetings on a monthly basis. We also meet with the director of social working now at the IJB on monthly to discuss the KPIs and the outcomes of those. We have to prepare an annual report and present that to council. We also share our annual accounts once they are audited. We present at the Allial Governance Hub, which is presented on a couple of times a year throughout the year. We have to report again on our KPIs and we will be asked how our boards operate in strategic areas that we are moving forward with a whole range of issues there. We have freedom of information on our website. We have robust complaints and comments procedure, which is in place and which is well utilised by our service users and members of the public. We also use local committees such as sheltered housing committees and things for access to allow us to gain a good understanding and to have direct contact with our sheltered housing service users. What you have said is the only opportunity for the councillors to scrutinise Bonacord care is at the presentation of your annual report. Is that right? No. The Allial Governance Hub was the shareholder scrutiny group. Can you tell us about the Allial Governance Hub then? Who is on that? The Allial Governance Hub is our officers at which we all the Allials present. What I am interested in here is the opportunity for councillors to scrutinise what is going on. Obviously, the others have said which committees they are responsible to. In your case, how does Aberdeen City Council councillors scrutinise what you are doing? The Allial Governance Hub asks specific questions that have been asked for by the Audit and Risk Committee. They then prepare and send the report goes to that Audit and Risk Committee and we attend to that as well. We are open there for questions directly from councillors. How often does that happen? Others are saying that they have to go quarterly in the case of Highland and others. How often do you have to attend to the Audit and Risk Committee at Aberdeen City Council? I cannot answer that question at the moment. I could come back to you with that. We have attended about three or four times, so I am not sure of the frequency. Thank you. John Wilson, please. Just to go back to Mr Alexander's opening remarks. Mr Alexander, you made reference to the reason for setting up Highlife was because it is a council and company, but it was seen for savings, increased aspiration, no partnership with the private sector and improving service delivery. The question that I put is why could those things not happen under local authority total control? Why was it felt that it had to go out to an arms-length organisation before these things can happen? That is the $64 billion question and it is one that we ask ourselves quite a lot. Undoubtedly, the initial motivation was about the fact that the cost base of the arms-length organisation would allow savings to be made. That clearly is with regard to domestic rates, but it was also felt that it could give a focus and it could bring a creativity to services that might otherwise be threatened. I do not think that there was a particular scientific analysis of that. I do not think that we necessarily knew what would happen. I think that we set around the arms-length organisation a policy framework and some parameters within which to operate, and we then encouraged it to fly. I think that it has flown. I think that there is some magic dust. I do not know if that is in part because it is not the council, that it has an identity, that it has a loyalty. It certainly has a focus around what its business is. It also has a degree of creativity. It has great passion from its independent directors who bring a range of skills to the board. It also has a passion from its staff who enjoy the identity and I do not think it would want to come back to the council. It is a range of issues. Some of those we can quantify and talk about. Others are less able to articulate, but it is about passion, creativity and focus, which is more than a council that delivers a whole range of services that could perhaps bring to these particular remits. Could you expand on the savings that you made in relation to domestic rates, the savings on domestic rates? What other savings have been made? Surely it is not just about saving on domestic rates. Has there been changes to staff terms and conditions? Has there been no introduction to zero hour contracts? Issues like that, because we have heard in other allios some of the issues that have been raised. A number of allios will make the same argument that the savings outwead no remaining part of the council. Has it just been the savings in terms of domestic rates? No, no, there has been many more savings in that. The intention was never to achieve savings through changes to staff terms and conditions. That was quite clear. It was to be savings from the business in terms of getting in income and also in terms of efficiencies. I suggest that Mr Murray might be able to bring detail to that, if that is all right. We have always been focused on not changing staff terms and conditions. The non-domestic rates and the VAT treatment that is available to a charity are different to that of a council. Therefore, the council is making approximately £1.1 million worth of savings simply from those two, the VAT and the non-domestic rates. However, since leaving the council's direct control, the ability to focus that Bill was talking about, as he says, there is a bit of magic dust in there. The staff feel part of a manageable organisation. That has led to a greater degree of focus in generating more income through our leisure centres, which is where most of our income comes from. A small but specific example is donations at the Highland Folk Museum in Newton Moore. That is a free entry museum, but attendances have gone up from 16,000 to 44,000 in the last couple of years, and the donations levels have gone up nearly three times as much as they were when we left the council. That is simply about staff having perhaps a better feeling of oneness with the organisation, understanding that it is important that we need to get donations up in order to protect services. It is difficult to explain why that was not achieved in the council and I was the head of service within the council, but it seems to be setting it free a little bit. Staff identification allows them to really focus on the business. I will go back to Mr Alexander's opening remarks. I have got you quoted as saying that the High Life was a council wholly owned company. If it is a council wholly owned company, why do staff who work for High Life feel that they are part of a separate entity or an entirely separate entity and seem more encouraged to work for that separate entity than they do for the council when, effectively, this is a wholly owned company in your own words, that is owned and controlled and, effectively, all by the day-to-day running of the organisation owned and directed by the council? I am not sure how aware the staff will be of the back-office joins. What they see is a standalone independent company of around 600-700 people, many of whom they know personally, a chief executive they know personally, with its own branding, with its own high profile. It has ties, it has badges, and you can get a jacket with the label on. It has an identity. People talk about High Life. We have a High Life membership scheme. The public and the communities want to be part of the High Life membership scheme. It just has a brand and identity that works, that seems to be separate from the council. We do not, in terms of governance, rigidly pull every single string that makes High Life Highland work. It has a degree of freedom and autonomy within the overall priorities, parameters and policies of the council. We have not yet come to any issue that would break that trusting relationship, and perhaps with the budget challenge that is down the road, that might get more difficult, but, to date, that has worked. I will turn to questions from North Lanarkshire Council. I need to make a declaration at this stage that I know the services fairly well as I rent some of the premises for my surgeries and I am aware of some of the intricacies that I have described as they exist within North Lanarkshire, because not only do we have cultural NL and representatives of speaking on behalf of cultural NL here today, but we also have NL Leisure, which is another organisation operated as an arms length organisation by the council. It also has premises, leisure facilities and other premises. I am interested in the comment that was made by Ms Ferry when she made reference to the cultural NL running services on operating services, particularly education services. Now, one of the issues that has been raised with me by constituents is the fact that when you try to book a council hall, as the local language for it, you can be sent to anything up to three different departments before you would actually get an answer whether or not you can book the hall, because some of the facilities are owned and controlled by education service up to five o'clock in the evening, then some of them can be owned and operated by NL Leisure, and others can be owned or operated by culture NL. In relation to the conflict that exists there, can I ask why the council, North Lanarkshire council, did not just make the decision to transfer some of the culture NL services to NL Leisure, instead of setting up an entirely different organisation? The culture NL certainly lets community facilities after five o'clock in schools, and the pitches associated with them, as well as Mr Wilson's North Lanarkshire Leisure, are a sports trust, and they operate pitches as well. Within culture NL, we have one booking system, and within our booking system we can see any facility that we operate, so that you would only come to us once if you were actually trying to hire a facility from us or a sports pitch from us. I believe that it is slightly different for North Lanarkshire Leisure who focus specifically on areas, so they would focus on Airdrie Sports Centre or Ravens Craig. They do not have the same booking system as us. I cannot speak for the council as to why they did not transfer the sports pitches at the time when they established culture NL, but culture NL is much wider than sport. While we hire pitches, we can hire a pitch for anything. It does not have to be for a sporting activity, it could be for a galeday, it could be for anything at all. We are not responsible for what is on the pitch, but we hire the pitch where, as North Lanarkshire Leisure, I would say are different because they have football clubs and different sporting clubs that they would use their pitches for. I am not sure if that answers your question. Maybe Ms McMurrick could explain the council's reasoning for the decision. At the time when the council were considering through an option appraisal process the establishment of a separate cultural trust, at that point in time what was learning leisure services formerly, the education service, had one process for booking community facilities and school facilities, regardless of whether they were sports or whether they were cultural facilities. The council found it very difficult, I would say, to split school use down into a compartmentalised approach where it would be, this is about a community learning activity, therefore it has to be booked out in a particular way, this is about cultural activity and this is about a sports activity. It was about a holistic approach to better use of the school estate, so we felt at that point in time to fragment it into, well, a third generation sports pitch should be booked by a leisure trust rather than it should be about community use and community access to school, so that was the rationale originally for keeping that approach and vesting that in one particular of the allios. However, what we have done, which has perhaps muddied the waters, we have one particularly large enhanced facility, St Ambrose High School in Coltbridge, which has a lot of sports and community facilities, particularly sports facilities, and being a council that is constantly looking at pushing the boundaries of trying to find best practice and best value, we appreciated that there may be a sports element to that that it was important to consider whether the leisure trust should operate it or not, so we put in place a pilot for that particular facility to have a look at what would it be more appropriate to be operated by a trust whose thinking was very much about sport. That perhaps has led to some confusion in the community about, well, how do you book during the day for the community aspect of that, and how do you book in the evening for the sports element of it, so to answer the question, I think, we are still evolving our approach. When we established culture in L, it was about, it was predominantly cultural services and the points that have been made previously around that importance of the focus and what that brings to an arms length organisation, we didn't say we would never consider a merger between the two allios, and at a point in time that may be a consideration for the council. Can I ask the same question that I asked earlier, convener, in terms of the savings that have been made to North Lancer Council in relation to the establishment of the allios, because, as you quite identified, in L leisure has been established for, I think it was, 2009, and then we've had the 2013, we had culture in L established, over the period what savings have been made and what changes have taken place to allow those savings to be made. Thank you. In our first year it was mainly the non-domestic rate saving, so 2013-14 saw us save £1.15 million. That was the domestic rate saving. In the second year, we had a further efficiency saving to make of nearly £700,000, and by that time we had a year to bed in, we were a new organisation and we had increased our income generation, we had a very lean management structure, there is me and there are 14 monitors, you know, there's not a hierarchy. A question here because I want to get my heads round the non-domestic rates situation. While it seems clear to me in terms of high life, the transfer of properties to high life would make that saving a non-domestic rates. What you've just discussed in the exchanges with Mr Wilson is the fact that you are doing booking for leys in schools and various other things, so obviously those have not transferred to you. So how could there be non-domestic rates saving in that regard? I take it that there is none. The saving was the result of the non-domestic rates saving. We did save £1.1 million in non-domestic rates saving as a result of the establishment of cultural annuals. In terms of a lot of your activity, which seems to cross into educational establishments and the rest, there won't be any non-domestic rate savings there, am I right? We would save the non-domestic rates on the museums, the libraries and the community facilities, not the schools. I just wanted to clarify that. Sorry, John. In our second year, we had to save £695,000, and as I was saying, a lot of that was through increased income. By that time, we had managed to bed in the minute that we were trying to do, following the setup of the trust. We benefited greatly from venues and catering merging. Previously, catering sat within environmental services and the venues, the concert halls, the theatres, sat within learning and leisure, and there was no joined up working at all when cultural annual community being the leisure catering transferred as well. We benefited greatly from that, particularly in income generation and customer development, from those two services merging. They are located in the same building as well, so they work as one team. We benefited greatly from that. That helped towards our savings. We have a very lean management structure, as I was saying, and we have very careful vacancy management. Out of that, we did secure the second year's saving. John. The question to follow-up in that, convener, is in relation to terms and conditions for staff that transferred under the 2P regulations and other staff that we are taking on. Do you employ staff on zero-hour contracts? I know that Ms McMurriff will have heard this question and asked in the council chamber on a number of occasions. However, in relation to zero-hour contracts, terms and conditions, are those the same terms and conditions and rates of pay that would have been enjoyed if they were employed or continued to be employed by the council? Yes, they are. We have not changed the term conditions and we work with the council's job evaluation scheme, so everyone is on the same rates of pay as they were. When I go into my surgery on a Monday morning, I see a notice on the notice board from culture NL advertising vacancies saying that there is flexible working. Some time ago, there used to be a positive, there was a poster that used to say, talked about zero-hour contracts. However, certainly flexible working is still within that notice that I see regularly at my surgeries. Have there been savings in relation to staff going on to more flexible contracts? We have not changed the contracts. People have applied to work flexibly, as they are able to, and we have a number of people who undertake flexible working within culture NL. We have no one on a zero-hour contract. We have never advertised for a zero-hour contract. We have casual staff. For example, the front-of-house staff who work at the concert hall and theatre are casual. They cannot be given contracts because they are as and when required and they know that. It has always been the case, so nothing has changed since we became culture NL. Define the difference between a casual contract and a zero-hour contract. I know that we do not issue anyone in a zero-hour contract. The casual staff apply to be. As casual staff, for example, the pantomime is just about to start, so we would employ more front-of-house staff in order for the pantomime to take place. We would advertise for short periods of working. People know that they will be rotated, but we do not say that there is a zero-hour contract. You are just saying that they are casual staff? They are casual staff, yes. That is fine. Thank you very much indeed, convener. That is one of the questions. Before we move off, I want to make sure that we get details about terms and conditions from all of the witnesses. Could you give us the EDI position on terms and conditions? Are there people who work for you in the same terms and conditions that they would have had when they were working for the council? No, EDI employs people on separate terms and conditions from the council. I do not think that there are any employees now who have transferred from the council. There were some 25 years ago. Clearly, people transferred from the council then, but to pay probably did not apply then. I do not know what terms and conditions they transferred over on. Currently, all employees of EDI were recruited privately into EDI. Do you have any comment on that, Mr Wharton? No. We have, in the past, took base staff from EDI into the council and have respected the terms and conditions of their contract in that process. It is well known that EDI, when they advertise on the wider market, are offering different terms and conditions than what the council can offer. That is one of the reasons why they were set up and the ability to attract better commercial talent. Do you have any zero hours contracts? No. Ms Ross, in terms of terms and conditions at Bonacord Care, are they the same as staff had previously? Yes, they are. That includes new recruits as well? Yes. Do you have any zero hours contracts? No. And how life any zero hours contracts, because you already explained the position? As we were leaving the council, zero hours contracts were being discussed and there are a limited number of zero hours contracts for people who like coaches who are employed for three or four hours a week where there needs to be a mutuality of a mutuality of requirement to turn up. If you have a completely casual relationship with a member of staff for a fitness coach, for example, they can decide that next Tuesday they are not going to bother to turn up, which is difficult to maintain a public face. What a zero hour contract does in those limited number of cases is to make sure that there is a mutuality of you must turn up. If we are giving you those three hours a week, you have to turn up. Do you think that the staff that you have who are on zero hours contracts are happy with the arrangements that you have? I am not aware of any complaints. We do not stop. There is no suggestion that they cannot work for anybody else. It fits into their lifestyle that they are doing. So you have no exclusivity. Folk can do what they want in terms of other work and all of the rest. It is simply to make sure that we know that they are going to be turning up at the times that we have arranged with them. I was going to ask about zero hours, but I think that that has been answered. I would like to ask about employee involvement. I am asking all of you—I will expect an answer from each of you if that is possible today. Does anybody have things like employee representation on the board? What is the situation with trade union involvement? Many of you have said that your staff are happy. That is good to hear, but do you do any staff surveys? How do you test that? How are staff involved in the operation of your companies? What is the relationship with trade unions? Ms Ross, first of all. I meet with our union representatives every month and have done since we went live. That continues, and we share a lot of our key operational figures with them. We discuss points and move forward, so there is a good work in relationships there. With regard to our staff, I have a quarterly staff forum that is attended. It is an open agenda, so there are representations from every one of our services and all our staff. They attend one session in the morning, one in the afternoon. It is an open forum by staff. They can address and raise any questions that they choose. Anything that has been raised from solar panels to uniforms depends on—it is anything there. We then take the points from the staff forum and we put them into action points such as you asked what we did. That then goes into our quarterly newsletter. We have a staff newsletter and we make sure that each of our staff members has their own individual copy. Previously, they went up on notice boards and we found that some of our staff who are community-based and do not have a lot of access did not have them. We either use hard copies or electronic copies, but we ensure that everyone has a copy of that. We do staff surveys every quarter, so encouraging staff to complete those in. We use those. All of our services have to have regular staff engagement meetings, so every month we have those as well. We have encouraged recently some increase in trade union stewards in our organisation. We also have health and safety meetings, which are staff for their ground-based staff. We have one trade union director and one employee director on the board. I meet the joint trade unions three of them on a monthly basis, along with our HR manager, and that is our union negotiation and liaison. With regard to staff, we have undertaken one employee survey since we have come into being. We have about 700 staff who work for culture ennail. 41 per cent of those people responded to the first survey, which we thought was very encouraging. 82 per cent of those respondents said that they were proud to work for culture ennail, so we are taking that as the basis to work for them. We have a number of staff working groups, particularly focusing on things such as health and safety, which are chaired by other members of staff and include members of staff from each of the groups within culture ennail. We have one-to-one meetings on a regular basis and monthly team meetings. We also do a annual review for all the staff, and that is emailed out to or put notice boards so that everyone has a copy of that as a highlight report each year. I would engage all the staff where they need to be if there is anything of importance. For example, savings have just come out, so we have had to tell everyone about the savings, so there is quite a lot of email contact. No employee representatives on the EDI board. We are a small company, we only have 16 employees, so our engagement between board executive and staff is very open and very informal. There are two members of staff, I believe, who are members of trade unions. All staff have personal development plan meetings twice a year, and any trends that are emerging from that are reported to the senior management team. On a quarterly basis, we meet the three unions that involve staff representations at that. There are staff on the health and safety committee as well. Every second year, we run a company-wide staff survey, and the results of that are reported directly to the board with any action plan that comes out of that. We have a staff awards ceremony where we are rewarding excellence. I am going to ask about the living wage. The Scottish living wage has just gone up to £8.25 an hour. Many councils have declared themselves to be living wage employers and have become accredited as living wage employers. I know that many arms length organisations who rely on council funding find it difficult to get that accreditation because they do not have the continuity of the certainty of the funding going forward. I would like to ask about the living wage. Is your council a living wage employer? Is your alio able to be a living wage employer, or are there issues about the funding that prevent that from being the case? First and then I will ask the alios. Obviously, you are in a tricky position, Ms Ross, and we will ask the council later. Mr Alexander, is Highland Council a living wage employer? Yes, it is. In terms of high life, it is a living wage employer. City of Edinburgh Council, EDI Group, North Lanarkshire Council, Culture NL, and is Bonacord Care a living wage employer, Ms Ross? We are. We are currently applying. Okay. Cameron Buchanan, please. I am more interested in the non-executive directives. Do all alios have non-executive members, and also how are they recruited? Are they recruited internally or externally? We will go to high life first, please. Out of our 12 on the board four councillors, we look for eight independent non-executive directors, and they are advertised openly in the newspapers and through community planning partnership websites and things like that. Then they come in for a general discussion, and that gets it down to a short lead. We then have a nominations committee, which makes its nomination, and then the final recommendation goes to the council for sign-off. The nominations committee. The director of care and learning from the council and two directors from the existing board. Okay. There is a fair amount of council input into that nominations committee, and then that has to be signed off by the council. The individual person needs to be signed off. If somebody does not meet the council's wishes, then the council can veto that non-executive director. They could. We also use a skills matrix to look at the range of qualities that we would want on this particular board. Indeed, that matrix has now been used more widely across other council services. In terms of EDI in the city of Edinburgh, it is very similar. Up until two years ago, there was no non-execs on the board, but the revamp of the company and the rewriting of the shareholders agreement brought in three non-execs. They were advertised for in the press.  So the council could again veto any non-executive director that it didn't like? Technically, that's correct, yes. Okay, and in terms of North Lanarkshire? Yes, we have 13 directors on the board, seven of which are independent. A tree union director was appointed by the tree unions. The employee director was balloted through all staff groups. They were appointed by the staff themselves. The other five independent directors were appointed following open advert. Like the other authorities here, we have a skills matrix for what we require on the board. We know where we have some gaps on the board and who we would like to fill. So we developed a skills matrix. We went to open advert. We ran a workshop for all the interested applicants and then it went to an interview process. The interview was conducted by three members of the board and then it is taken to the living and leisure committee for ratification. Again, the council could veto any one that they didn't want. Am I correct in saying that? Yes, they could, but it hasn't happened. Okay, Mr Wilson, if it's on this point. It's on that point, convener. It's just that you said that in terms of cultural NEL, they were interviewed by three members of the board. I'm assuming that the three members of the board were elected members. Initially, when we first appointed the first lot of independent directors, we had five vacancies initially and we only had elected members as the shadow board at the time. We've had since another vacancy on the board and the second panel consisted of two elected members and an independent director. For Bonacord? I have to say that the board had been advertised and appointed when I came into post and our board is still current that we started with. We haven't had any vacancies. Sorry, we've got five non-execs. Yes, if you have any idea how those folks were appointed? My understanding is that we're externally advertising and they were interviewed and appointed through the council. Do you know who did the interviews, Ms Ross? The local authority. Councilors or officers? Sorry, I can't answer that. I'm not sure. Okay, thank you, Cameron. I was interested also, do you refer to looking for particular skills? Does that include commercial expertise and external skills generally, just to try and balance the non-execs? We're getting lots of nods of heads there. Mr Alexander, do you want to give comment on that? No, very definitely. That would be something we particularly want to look for. We might also look for interests in particular areas of activity. We don't have anyone with a sports background or we don't have anyone from a third sector background. We'd look for those as well, but certainly we would want to make sure that there will be people from a commercial background. Any of the others want to comment on that? No, Cameron? That's fine, thank you. Ms Ross, you're in a very unusual position in the fact that there are no elected members on your board. I'm not going to ask you to comment on that because that's Aberdeen City Council's bag and we will get the opportunity to speak to them later. However, I want to ask the other councils that are here before we move off this topic if they could ever see a scenario where there would be no councillors on their board. In terms of culture NL at the moment, we have an elected member who chairs the board. I think that if there was to be a development in terms of culture NL at the point at which the board independent directors are to be re-appointed or we bring in new members, we may consider whether the chair should be an independent director. That wasn't my question. My question was, do you ever envisage a position where there would be no elected members on the board of culture NL or any other North Lanarkshire Alley? It's a difficult decision for me to say that yes or no to because I think that that would be for the council to decide and for the elected members to decide whether they were minded to do that. Do you envisage that there ever will be a board of BDI without councillors on it? No. The board, as I previously said, was predominantly councillors. I think at one point there was seven, along with three executives. The council acknowledged that that was the wrong mix in terms of moving forward and agreed to change the make-up to three councillors, three non-execs and one executive. Mr Alexander. Can I suggest that there's perhaps a pre-quote of the question, which is what is the role of the councillor on a board? I think that that's something that we wrestle with and it's not just about ALOs, it's about, for example, councillors on NHS boards. A councillor on the High Life Board is a member of the High Life Board. They're not the council at the board and it's quite difficult to work out what that's about. It isn't about governance. We don't operate governance through the council of being on the board. That happens within council committees. It's about partnership and it's about communications. High Life Highland, however, is a council-owned company.  I don't envisage that would change because the council likes having the council-owned company and it wants that partnership. I think what's quite interesting is that High Life Highland is developing into new areas that aren't council activity. It's developing private partnerships with agencies that don't have relationships with the council, so we are going to new areas, but I think that the council would still want to have members on the board. They would still see it as a council-owned company, but that isn't where they exert governance. We'll come back to that probably. I just wanted to ask a couple of questions about income generation and that side of your work. Perhaps one of the great hopes when alias were conceived was that they would open up new opportunities for funding streams that weren't available to our councils. That was one of the clear purposes and reasons behind establishing many of them. By and large, has that been a route that you have explored and has that been successful for you? Who is going to answer that, Mr Murray? I think that the hopes are greater than the reality, but there are limited funds that are available to non-council organisations and we have gone looking for them. The flexibility of being an unliketh organisation, for example, being able to get into partnership with the private sector, we are just beginning to develop that. For a specific example, at the small Inverness Botanic Gardens in Inverness, we have had a three-way capital funding partnership between a private catering organisation, the Inverness Common Good Fund and the council's own capital funds to completely upgrade the visitor services cafe, et cetera. We were able to do that because we were acting as the halfway house broker. We do not have a great deal of experience in commercial catering, but that facility was crying out for a decent cafe. The council did not have that at the top of its list for capital funding, but by being able to bring in a third of the money that was needed from the private sector, that opened up doors through the other two funders. Just going out there and getting grants that are not available to councils, that is overstated in many people's minds, but it does exist. The flexibility allows us to do other things. I think that the fundamental reason why EDI exists and why the common view that EDI should exist is that its purpose is to create income. The view is that by operating as an arms-length entity from the council with a specific focus on property development, that entity should be able to realise greater property values than it would if the same activity was undertaken within the council. That is our fundamental purpose. Apart from 2009, 2010 and 2011, when there were some other major circumstances impacting on us, we paid approximately £60 million in dividends to the council over the previous 20 years. We are returning back to a profitable position and we are budgeting to pay dividends to the council in the coming years. We secure a reasonable level of external funding. We will probably bring in about half a million pounds of our income in the last year through external funding. I do not know that very many of the sources were new sources. We attract a lot through museums and galleries in Scotland and creative Scotland organisations such as that. I think that being a charity has let us apply for more trust funding. It maybe wins that you would not be applicable to a local authority, but they are usually for a small amount of money. I do not think that yet we have managed to make great inroads there. Opportunities for more different sources of funding at the moment. Can you give us an indication of what those might be? Yes, certainly. The way that our contract is set up, the funding that comes across is for the commission services that we have through local authority. Any other additional services that we provide have to be funded independently through that. We are currently exploring the use—we will have a pilot that is looking to start looking at more traditional home help services, for example. Can you give me some idea, though, if your improved performance in terms of your income is a result of just putting prices up, or is it by generating new income streams and income markets? Gell, I am not picking a new, but you said that you had to save £695,000 in your money to do it, so did you have to cut that, or did you make that income from other sources through price increases or developing new services? Obviously, we have developed a few new services. We do increase the prices every year, in accordance with what we always have, as part of the council. We increase the prices by 3 per cent every year. It is quite a small amount of money when you add it all on to community lets. For example, it could be 10 pence on a let. It is not a massive amount of money, but what we have found through culture and ale is by bringing the organisation together. We are working more closely together. The managers and the teams are beginning to develop their working patterns much more closely together. That lets us focus on the culture, as opposed to everyone doing different things. We have come together as one organisation, which has led us to develop activity. We have a cultural festival called Encounters, which was established in the council. However, we have managed to grow that. It takes place every year in October. We now have an Easter encounter, a summer encounter. We are looking at adult learning week, which is next week. It is branded Encounters. We are beginning to roll out that brand with input from everyone in all the sections in the organisation. We have developed new working streams. As I mentioned earlier, the link between catering and venues has been very successful. It has led us to bring substantial income. As we build the catering income, it lets us slightly change the programming that we do. It allows us to take a bit more of a risk going forward with the programming. We would be very careful previously to book activity. We knew that we would get lots of people to attend. As we go on, we develop, we become a bit less risk averse. It lets us spread the cultural activity across and develop new audiences that way. That is where we are aiming to go. Could none of that happen, though, unless you were an allio? That improved performance and that income generation? Could that not have been possible? I do not think that you would have had the same focus, to be honest. Previously, I was a creative services manager, so I worked with the venues side of things in the community arts activity within the council. Now we have libraries on board and museums and heritage on board. We bring together a much more diverse group of people who all have culture at the heart. We can play in each other's strengths and use each other's strengths to widen the offer. We are hoping that that brings in new audiences as well. On public perception about how happy they are, I think that Bill will not be any new either, but you said that public like is popular with the communities. How do you generally assess public perception? How do you measure your performance and your public acceptance and support for you in the work that you do? I think that there are two particular issues to that. Firstly, the pricing scheme has gone down well. Ian describes it as stack-em-high-sell-em-cheap. It has been about a mass-volume membership scheme, which is very popular. Take-up is high. If you are looking at libraries, if you are looking at leisure centres, if you are looking at some of the museums that Mr Murray has spoken about, footfall is up and usage is up. We also have a citizens panel, as we call it in Highland. It is a representative sample of just over 2,000 people, which cuts across the Ohio communities and high-life services figure prominently in the positive satisfaction rates from that. On the other side, how do you measure public satisfaction? EDI is somewhat different in that regard, is it not? I will provide a public service. Ms Ross, in terms of public satisfaction about Bonacord care? We have surveys. We do service user surveys and attend local meetings. Those are part of our recognised KPIs that we report back. It would be a variety of methods, including surveys carried out by Culture NL, the Residence Survey. We also report to committee as part of that quarterly monitoring process on the number of comments and complaints that there are in the nature of those. Before we move off of that, how many folk in the general public actually see the difference between the leisure trust, care trust and the council? On a visit recently to Inverclyde, if you were to ask members of the public what we did, they thought that it was still a council. In terms of high life, in terms of the general public, what do they think? Do they see the difference? I think that that is another very pertinent question. I have been in this room before being asked about health services and social work services and sometimes I think that the public don't really know who provides, they just want the service and I still get letters of complaints about services that the council don't provide. Around the arm's length organisation, there is a bit of an identity that is different. I think that people understand that that is not the same service that picks up the bins and provides social work or schools. I think that there is an awareness that it is different but I don't know if the public in general have got a very sophisticated understanding of that. I don't know if Mr Moray wants to add. I would agree with that. It looks both ways as both a separate identity but at the same time occasionally we get comments but you're the council, aren't you? I'm not sure it matters. There is an understanding that there is a difference but I'll probably echo what Mr Alexander and Mr Moray said. From the North Lanarkshire perspective. I think that from the council's perspective we are concerned on the quality of the service provided and that there is a confidence in the brand that is culture NL. We haven't specifically asked the question of the public as yet, we're just about to undertake a reputation survey and we'll see what comes back from that one. George Adam, please. Just to follow on from that point of view, I used to be a member of Remshaw Leisure when I was a councillor. As far as everybody was concerned, the leisure services were still the council. If swimming pool paths went up, it was the council that did it. I know that Mr Alexander said that the brand seems to be going well. Remshaw Leisure tried to create the brand and it didn't. It was still, as far as they are concerned, the council. One of my issues that I have, and it's fallen on from what my colleague Mr Coffey said, was the fact that one of the criticisms from the public with regard to allios is that it's just an excuse to put money up. It's to the cost of services, whether it be pitches, whether it doesn't affect EDI so much, but whether it be leisure services, it's an excuse because it's arm's length. It's not that the full scrutiny of the council, the councils end up getting told they've got to represent the board, not the council. Therefore, it seems that it's a easy way for you to generate more income by putting services up, the cost of services. What is your opinion on that? We'll start with North Lanarkshire, please, Ms Ferry. We do have a pricing strategy, but we have a number of criteria for pricing. For example, in community facilities, there's possibly five different price ranges depending on where you fit into that system, so they're very heavily subsidised, very heavily subsidised pricing. Museums are free. We may apply small charges for activities or a small charge to go in the tram, for example, at summer league, but generally the activity is free. For community arts, we have a number of pricing as well. We have an over-25s and under-25s pricing range, and my passport to leisure range, but there's a variety of pricing for everything that we do. Did you see you did football pitches as well? We do. That's always a contentious issue with the public. We hire the school pitches. Our pitch price higher is exactly the same as North Lanarkshire leisure, so there's no competition between the two. That is a very interesting scenario. There's no competition between culture, NL and North Lanarkshire leisure. Is there a written agreement about that? I don't know that there's a written agreement, but we do mirror each other's pricing for pitches. We have agreed that previously that we aren't the same as each other, but, as of the past year, they have mirrored each other. They're the same now. Are there any councillors on North Lanarkshire leisure and culture, NL boards, both of them? Sorry, Josh. I can only speak from our perspective, but our, as Bill described it, stack-and-high-sell-and-cheap model was actually developed as part of when we were still within the council, and that has not changed and the prices have not gone up apart from inflation. That means that, for example, somebody that's in receded benefits can use any of our facilities at any time, including all the courses and classes and swimming lessons for £50 a time. An all-inclusive family membership is only £28, and that includes absolutely everything. That's not changed apart from inflation since we left the council. That is a different operating model to many others. We took the view early on that we were absolutely not going to compete with the private sector. The private sector can do its thing and attract people at a higher level of cost. We were aiming for the family market, the absolute mass participation market and particularly focusing on those people who would find family budgets stretched in order to take a healthy lifestyle. That's very interesting, because one of the other criticisms that tends to be of allios is the fact that they end up working in parts of the safe and the leisure point of view. They start competing with the private sector and we all know in certain areas that when someone jumps in at a swimming pool, it's massively subsidised, but some are offsetting that by moving into parts of the leisure industry that people wouldn't traditionally think was something that a local authority should be backing from the point of view that a local authority should be having a spa when competing with the private sector, when we've got kids that we need to get involved in other sporting, some of the minority sports and things like that. That's quite an interesting point that you brought up there. I'd be interested to see you develop that further and to hear from others as well. It's an operating model that was looked at by Mr McLeish's working group on sport. It was mentioned as part of that. It's a different approach. The Western Isles adopted the same approach or the same pricing structure about three years ago. We've been running it now for 13 years and the difference from before to now, if you take out inflation, is an increase in attendances at our centres of 88 per cent and, importantly, an increase in income by 89 per cent. It's the little model versus the Marks and Spencer model. It's getting more people through the door rather than putting prices up all the time. Moray Council has recently begun it this financial year again on the same model and they're already seeing significant increases. The Western Isles have only been, as I said, they've been doing it three years and my understanding is that their increase, even in some of the remota places where they're only open on an island half a week, is now seeing overall totals of over 30 per cent increase in usage and I think it's 27 per cent on income. I need to check those figures, but it's a model that does work and seems to be being taken up elsewhere. I feel that I should do the BBC announcement first thing and say that other supermarkets are available. I'm being a cultural trust. Our competition is anyone else who provides cultural activity or a social event. I think that we've already established that you're a little bit more than just a cultural trust if you're dealing with football pitches and other things too. Yes, the focus of the organisation is culture. The football pitches, the school letting, the community letting is one aspect of what we do, yes, but we're not in competition. I wouldn't say that we're in competition with hotels, for example, if somebody wanted to hire a community centre or a hotel we would be the much more, you know, less expensive option. We don't try and price ourselves in accordance with such things. You could have a situation where somebody wants to hire a football pitch and their choice is either through you or North Lanarkshire Leisure or through somebody like Goals, for example, which operates in various parts of Scotland. Do they not? Yes, they do. As I say, we match North Lanarkshire Leisure prices, the equally matchers, that's the only information I have on the pitches. That's one final question, convener. It's basically on the operational board level as well. I haven't been a counsellor, I've seen the challenges that you've got to balance the two, and I'm wondering how often have counsellors actually declared an interest at a board meeting or at a council meeting, declared an interest and withdrawn from a discussion that they believe is giving them a conflict of interest? Mr Alexander? They would routinely declare their interest. I'm not aware that they've ever felt on any particular discussion that there was a conflict. I can't recall a member leaving a council committee because of any particular discussion with regard to High Life Island. I think that members like the standard test and decide at the time whether or not it's severe enough for them to leave the room. I want to get that straight, so folk have declared but have not left the room. Declaring an interest is normal, but to leave the room, there'd have to be a particular conflict. At any council meeting, it's quite often unusual for counsellors not to declare an interest because they're involved in all sorts of groups and boards and have employee relationships with the council, but for there to be a conflict of interest that would compromise them in any particular discussion would be a different level of that test. Mr Watson and Mr Dailer, in terms of Edinburgh? All directors have to declare their interest in every board meeting. I'm aware that a number of counsellors who were on the EDI board also sat on the council's planning committee and if our planning applications were being considered with drew from that planning committee and were not partied to any of the discussions on that. Let's move away from the planning aspect. The economy committee is the one that you report to in the main, is it? I think that you said earlier. Are there any directors of EDI on the economy committee? Yes, two. Have they ever declared an interest at that economy committee and left? They've declared an interest. They did not leave, if I remember correctly. Thank you. North Lanarkshire? The members of the culture NL board declare an interest against each relevant paper at the beginning of the learning and leisure services committee. They take no part in the discussion that they do not leave the chambers. George, do you want to come back on that point? No. I have one point for the record. We recently have a new chair of the education children adult services committee. At that time, he was a board member of High Life Highland and he chose to stand down as a board member of High Life Highland when he became the chair of the committee. I will put that on the record because I think that it needs to be done. Previously, in another life as a councillor, the last lot of advice that we received was that, if you declared an interest on anything, you had to leave proceedings. I know that the advice that is given in some places is different from the advice given in others. I know that all of that is down to the judgment of the individual anyway. I think that we, as a committee, need to get some clarification from the Standards, Commission and others around this matter. I suggest that we write to them. Can we agree that? Mr Wilson? Thank you, convener. I was just on that point by Mr Adam about members excluding themselves from discussion on the issue. The matter that I would like to examine is where elected members sit on a board of an allio, where a committee is making a funding decision regarding that allio. In those circumstances, what do elected members tend to do? There is a difference between being partied to a discussion as opposed to making a committee, because all the organisations are possibly the exception of EDI. Local authorities are making funding decisions that are applied to the allios that they may be sitting on, and do members exclude themselves when a committee is making a funding decision or when a full council is making a funding decision when it applies to the allio that they sit on the board? It is difficult to recall specific examples, so we can recall some examples where that has happened, but we would probably have to organise some check of council minutes. I think that that would be useful. If you could do that and if you could write to the committee, that would be fine. Ms McMurrach. The Planetary Council would ask for the same. Do you want to write to us? Yes, please. Okay. Jane, did I see you indicating there? Sorry. I want to go back to the establishment and terms and conditions, and I want to ask some questions round about pension funds, because we have recently been undertaking a little bit of a look at local authority pension funds. Are high-life members of the Highland Pension Fund? We are an admitted body in the council's fund. Do they have the same terms and conditions that your employees are Highland Council staff? Is there any deficit that you have in the value of that? I would need to check the exact figure of around £5 million for our share of the pension fund. Is that a manageable figure for high life, or is that a burden that was transferred that is difficult to cope with? As with all pension deficits, if it was called in tomorrow, it would be very difficult to deal with, but, as those things are longer term, it is manageable on a year-to-year basis. Is that going down or up? It fluctuates. It went down after the first year and then it was back up again last year. Same question for EDI. We are an admitted body to the Lothian Pension Fund. Staff have an option of joining the Lothian Pension Fund or having a private arrangement majority of staff have taken the option to join the pension fund. All staff who join have the same terms and conditions as employees of Edinburgh Council. The deficit in the pension fund is running about 94 per cent, and EDI's share of that is about £500,000. It has increased recently as bond rates have changed and changed overall deficit. It is manageable within EDI's resources. We are an admitted body with Strathclyde Pension Fund. Like the other organisations here, there is a deficit. Unfortunately, I don't have the figures with me today. I'll be happy to present them later. I would be grateful for those figures. We're an admitted body, and yes, we do have a deficit as well. All our staff are on the same terms and conditions. Our deficit is around about £8 million. Is that growing or decreasing? This is our second year operating. It has increased in the last two years. Is it manageable, do you think? Our pension contributions have increased to help us to manage that. Our employer's contribution has increased. I thank you all very much for your evidence today. We will be considering the evidence that we will get from Aberdeen City Council at a later date, and then the committee will consider its draft report. I will now briefly suspend the meeting to allow a change over for witnesses. Next, agenda item 2, our inquiry into fixed odds betting terminals. We're now going to take evidence from Scottish Government officials as part of that inquiry, which, of course, are proposals in the Scotland bill. I welcome Quentin Fisher, Head and Walter Drummond Murray, policy officer from the licensing and human trafficking team. Do you want to make any brief opening remarks, gentlemen? Can I first of all clarify that you watched last week's or have read the official report from last week's committee? We've read the official report, yes. We've read the official report, yes. Okay, in which case we will move straight to questions. One of the things that came up last week was planning, and the local authorities seemed to feel that they couldn't use planning to the extent that they feel that they should be able to in terms of the siting of bootmaker shops, which, of course, leads on to in most cases fixed-odd betting terminals. Do you have any comments from a Government perspective on that, please, gentlemen? I think that we naturally and underlying point is that we feel that licensing is the more appropriate mechanism to deal with these things, that whether a betting shop should be allowed or not allowed should more naturally, as I say, fall into licensing. That said, obviously, we don't have the power and that regard. So, in answer to your question on planning, Mr Neil did indicate to Parliament that we would look at amending the use classes order if we did not get the most effective powers on controlling payday lending and gambling from the UK Government. Obviously, the Scotland bill is now gone to the House of Lords, and the Scottish Government will be considering the next steps. We are, however, clear that whether a betting shop is allowed or not is, as I say, more naturally a licensing decision rather than a planning one. One of the things that many of us around the table have found previously in our previous lives as councillors, Mr Buchanan, being the only one who has escaped being a councillor, is that you find yourself in situations where, as Mr Adam described earlier, you are wearing one hat or in another place and you are wearing another. Often difficulties arise between planning committees and licensing boards. Would it not be much easier to have some kind of joint up approach in those regards? Is that possible for the Scottish Government to consider? I think that it is not possible, as things currently stand, because there is this distinction between the reserved powers in regard of licensing of betting and the devolved powers in respect of planning. However, I think that it is familiar territory for the local authorities, not just in the context of betting but in pubs and all the other licensed activities that there is this distinction where you are purchasing things from a very different mindset with licensing being concerned with the typical licensing objectives of protecting public health, preventing criminality, reducing disorder, etc. Planning is something very different. We heard also last week that there was a flaw in the gambling act of 2005 in terms of being able to police with a small p some aspects of the gambling act. I understand that there was an attempt to amend that during the course of the Scotland bill, so we were told. Has the Scottish Government made any representations to the UK Government to try and amend that to ensure that licensing boards have the ability to police some of those outlets better than is currently the case? I would take it that you are referring to the provision around the licensing standards officer and their ability to do that. We have raised the issue with the UK Government. Having said that, this is not a new thing, this is an old thing, the Gambling Commission has also made representations. I know that the Gambling Commission offered evidence to this committee in which they raised this particular point. What we have done, of course, because we cannot change the legislation, needless to say, UK legislation, but what we have done is supported the work that the Gambling Commission has done. The UK Government's response being to the Scottish Government's requests for that to be changed. Will you note that there have been no amendments to the Scotland poll? I understand that, but you said to Mr Fisher that the Scottish Government had made representations to the UK Government in this regard. Were the responses from the UK Government, I understand that the amendment itself was rejected during the Scotland Bill's passage through the House of Commons, but in terms of written responses from the UK Government, what has the Scottish Government actually received back? From memory, Kenny MacAskill, as Cabinet Secretary for Justice, did right to his counterpart at the time, who gained from recollection, I think it might have been Jeremy Hunt, raising the matter, and then Mr Hunt did reply with a willingness to work to do something on this more recently. Officials again have indicated a willingness to approach the problem, but the point is that it requires primary legislation that Scotland Bill may not necessarily be the right vehicle to do that, whether expressed a willingness, but there has yet been no sign of that being undertaken. I can speak for colleagues here and say that we would be interested in seeing the lobbying that has gone on and the responses that have come back from the UK Government in that point. I think that correspondence has been published previously, but we have certainly— If you could turn that to the committee, Mr Drummond Murray, I think that that would be useful for us indeed. Is there anyone else at this point? Thank you, convener. Good morning. It is just a question regarding what the Scottish Government's perspective is on fixed-order betting terminals, and whether or not they are a problem in themselves, or is it the users of those machines that are the problem? I think that we share the concern that has been expressed by many stakeholders that fixed-order betting terminals may be particularly problematic. It may be due to the speed of play, the stakes and the nature of the casino-type games, such as roulette, that are played on them. Nevertheless, as regulators, we do acknowledge that the empirical evidence is currently in concluses, or at least in the differing views on how it should be interpreted. Against that, the anecdotal evidence of harm is substantial, and we note the position of the gambling commission, which has said that there is a case for taking action on fixed-order betting terminals on a purely precautionary principle. Fundamentally, however, we do not have the policy responsibility or legislative powers for fixed-order betting terminals or gambling more generally. We have not, therefore, developed and agreed a detailed policy approach on what specific steps could or should be taken to mitigate possible harm. As I said, measures such as reducing stakes, reducing prizes, slowing the speed of play and limiting the number of machines are worth looking at, but in terms of the current constitutional arrangements, as well as those that are set out in the Scotland bill, it is for the UK Government time to take that work. Some of the evidence that we heard last week in the round table discussion was that there seemed to be a flaw in the Gambling Act 2005 regarding enforcement officers and the role of enforcement officers, which are different in Scotland as they are to England and Wales. Some of the evidence that we heard suggested that, if the enforcement officers had the same powers in Scotland, they would be able to deal with some of the issues that are being raised with fixed-order betting terminals. What would be your position on that? I think that the issues around fixed-order betting terminals are more fundamental than enforcement. The issues that are being raised in terms of staking or what have you in terms of the speed of play are not something that would actually be addressed by enforcement. Having said that, better enforcement would obviously be welcome and could only be a good thing. There may be very specific instances where a particular betting shop isn't following the codes of practice, etc. However, there are more fundamental issues that regulation wouldn't address. Had there been any discussions with the UK Government regarding licensing officers' remits in Scotland to amend the 2005 act? I think that that's really the issue that's just discussed with the convener that we have raised it with the UK Government on a number of occasions. Ministers have raised it in correspondence, but the ball is firmly in the UK Government's court to actually do something about it. We find the right legislative vehicle. In terms of the UK Government and the Scottish Government's policy position, I'm sure that you will be, if not already, having done so, conveying what happened last week's committee to the cabinet secretary and the relevant ministers. Has there been any discussions with the UK Government in recent times about the lack of empirical evidence, as you have said, to see if something can be put together in co-operation with both Governments to see exactly what harm those machines are doing? That's something that we have written to UK ministers about previously. I think that we will again share that information, the letters with you, the correspondence with you, if that would be helpful. I think that from our perspective, in terms of the survey that we carried out, the written submissions that we have received and the evidence that we took last week, where it seems that everyone, apart from the bookmakers, including other folks from within the gambling industry, felt that there were real difficulties with those machines. It seems that there has been inaction on the part of Government to address those concerns. Is that the case? I was going to ask if you meant the UK Government or the Scottish Government or both. I said Governments and I meant both. Well, obviously, from a Scottish Government perspective, work that we have done, we have, for example, commissioned research some years ago, not into fixed odds betting terminals particularly but gambling more broadly, we are constrained by the fact that this remains a reserved matter. Whatever we do has to be within those confines and, consequently, the main thrust of our efforts have been in terms of engaging with the UK Government and with the Gambling Commission to try to improve the regulation that is already there. Possibly add to that. Whilst there may be a view that not enough has been done and that it is not the case that nothing has been done, the Gambling Commission did produce a new code of practice that came into effect in April 2014, which took some steps that required people staking over £50 on those machines to go to the counter to seek authorisation or have some sort of interaction. There is going to be a triennial review that they conduct on stakes and prizes for gaming machines and that is due in 2016. There is on-going work to improve the research picture and there is a willingness of a recognition that there is already a case for doing something on a precautionary basis and they are going to see what effect the measures that have already been taken have before considering next steps. I will look at some of these measures and, if you look at the evidence, some of the evidence that we received last week, the registration for over £50 seems to be being used as a marketing tool by many of the betting companies. We were told that folk were getting text messages to their mobile phones because they have to register with their mobile phone, with adverts such or slogans such as big men bet big. None of that seems to be particularly precautionary to me. In terms of what has happened thus far, it seems that we have just created yet another marketing tool for the betting shops. What is the Scottish Government's view on that? I think that we would be deeply concerned about that practice as we are going on and it would be something that the Gambling Commission should certainly be aware of and discussing because it seems to be counter to the spirit of what it is signing up for and what that specific tool was for. What are the Scottish Government's going to do in terms of ensuring that the Gambling Commission and the UK Government take cognisance of those very real concerns? We have an ongoing relationship with the Gambling Commission and speak to them numerous occasions over the course of the year. In answer directly to your question, we have no power to ensure that they do anything. I am sure that the committee is aware of that, but the Scottish Government's position in respect of the regulation of gambling more broadly and not just on FOPTs is that we believe that that power should be devolved to Scotland and that that would give us the ability to look at those issues, do the necessary research, do the necessary development work and then make the regulation as effective as possible. In terms of the Law Society of Scotland's concern about the constitutional position whereby licensed premises are in Scotland currently are regulated by both the UK and the Scottish Government, the Scottish Government's position is that all of those regulations, all of the legislation, all of that should be devolved so that the Scottish Government can deal with it in entirety. Is that correct? That's correct. Thank you. Mr Wilson. Thank you, convener. Just to extend that slightly, we've talked about the Gambling Commission and we've talked about the UK Government, negotiations with the UK Government. Could you indicate what discussions have taken place with licensing boards in Scotland about the use of their powers to restrict the number of premises, but particularly the number of fixed-out betting terminals that are located in betting shop premises? My understanding is that, at the present moment, there are some powers there to allow licensing boards to restrict the numbers, but has there been any discussion with the Scottish Government to use those powers to try to get licensing boards to cut back? We heard one contribution last week that effectively said that the chain of betting shops that they operated were maxed out in the number of fixed-out betting terminals in each of the shops, so there didn't seem to be any restrictions on the number of terminals that were being placed in betting shops. Could it not be something that the Scottish Government does with licensing boards to say, look, you have the power to restrict numbers? Why don't you use those powers? He's going to take that one. Mr Drummond. As a general point, there has been engagement with licensing boards done under the auspices of the gambling commission. It's most predominantly been focused on enforcement and the points about what powers they have and they don't have. I'm not aware it's specifically gotten to the issue about what powers they might have in relation to limiting numbers of fixed-out betting terminals, but I think there's a general assumption under the legislation that there is a maximum of four per shop, and that tends to be what they get. I'm not aware of any suggestion that licensing boards have significant powers in that regard to an application for a betting shop in the first place or once they've granted it to significantly limit the number to something less than four. What you're saying, Mr Drummond Murray, is that there's a free-for-all out there, and licensing boards basically have no powers whatsoever in those regards. I'm saying— That's what you've just described to me, I would say. I don't think I misheard that. I won't characterise it as strongly as that. I think there is a regret that licensing boards do not have more powers, particularly prior to 2005, in the passing of the Gambling Act 2005, there was a demand test that would have enabled application to be dealt with on the basis of we've got one betting shop in the Scottish Street already, we don't need another, and it would be the onus on the applicant to prove that there was unsatisfied demand. That test was removed under the 2005 act and we very much regret its passing. What licensing boards and local authorities are telling us is that they do not feel they have enough powers about determining applications, so I'm not going to say it's as far as a free-for-all, I think that they do have powers. Describe to us the powers that a licensing board would have in terms of restricting the amount of betting shops and FOBTs in their area. Very little on that regard, and I was referring to the powers that they do have in terms of monitoring behaviour, ensuring that under-ages are kept out, ensuring that the codes of practice are being complied with in terms of… Basically what you're saying to me is that licensing boards would have basically no way of stopping the issuing of licences to as many booties as could possibly fall into that area and would have no ability to restrict the amount of FOBTs other than to shoot at the max of four. Is that what you're saying to me? It's correct that the maximum number of FOBTs in each betting premises is set in UK legislation and that's not… To my understanding that's not my discretion, that's not a licensing board discretion. In terms of the amount of booties, they would have to licence whatever number, that's basically what Mr Drummond Murray has said. There was no mechanism for dealing with overprovision under the gambling act 2005. So there's no ability whatsoever for a licensing board to use the overprovision powers that they have in terms of alcohol, for example, in dealing with bootmaker shops. Exactly. So the only way that in a local authority area they would be able to stop an increase in the amount of bootmaker shops would be through the planning system. Is that correct? I think that the view of planning that it is, as we said at the start, is not the right mechanism for dealing with planning. Can I stop you there Mr Drummond Murray? Because you've already said that planning is not the right mechanism, but there seems to be no other mechanism in terms of licensing. So if I was sitting in a local authority at this moment in time, what I would be trying to do if I had concerns about the amount of bootmakers in my area, as Councillor Rooney indicated last week, where in a small parade of shops in his ward there are three bootmakers with 12 FOBTs, and I've since found out since then that there's also a pawn shop there, which is being used, and then folk are going into these booties. He feels that that's overprovision. It seems that his community feels that there's overprovision there. It seems that there is cross-party agreement in Glasgow City that there is overprovision. Now, to him, the only way that he can deal with it, and you have basically just said the same to me today, is through planning legislation. So what can be done in these regards? I think the point that I was trying to make is that we're just not sure how effective planning would be, but nonetheless Mr Neil did say that we would look at the use classes order following the conclusion of the Scotland bill, and that may provide a route for something to be done through planning, but there are questions about how effective that would be. Let's hit the specifics here. Has the Scottish Government considered revising those planning rules to create a separate planning class for licence betting premises, thereby ensuring that planning permission must be sought from a licensing board to open a licence betting premises? Is there scope to include that in the current independent review that is taking place? I have to say that I'm not the planning expert. I'm aware that there was a consultation done in 2014 on the very question of expanding use classes order. The conclusion of that was not to go forward with what you're describing in terms of betting shops and putting them in a separate use classes order. However, Mr Neil has subsequently said that we're happy to look at it again following the Scotland bill. There is a strong preference for us to have the powers through licensing to deal with those issues, but if that doesn't happen, then yes, planning may provide us some routes to do something and we're happy to look at them. I have to say that I would like to see those powers come here too, but as it stands at this moment and less similar amendments are lodged into past in the house of lords, it's unlikely that that is going to happen. We have got some difficulties that we need to deal with using the legislative competencies that we currently have, and I would hope—I think that I could speak for everyone here—that during the course of the review of planning—and I realise that you're not a planning expert—that those things would be looked at. Mr Wilson, please. Thank you, convener. Just to follow up on my earlier question, the issue for us today is to look at what we can do to try and restrict or control the number of FOBTs. As part of the paperwork that we received for this meeting, we received a note to allow us to consider the questions that we were asking. In that note—I will quote it exactly because I want a response to your views on what we received as a committee and as committee members—the Gambling Act 2005 gives licensing boards the powers to, among others, review premises' licences and attach conditions or revoke them. In doing so, it should be mindful, among others, of the licensing objectives relating to preventing crime, fairness, protecting children and vulnerable people and the licensing authority statement of licensing policy. The licensing policy can reflect local issues, priorities and risks and underpinn its approach to local regulation. Do you know of any licensing boards that have been encouraged to set up licensing objectives that outline the concerns that are not only being raised by this committee but raised by others in relation to the unfettered market for betting shops and FOBTs in Scotland at the present moment? Who's going to take that? Mr Glynmarie. As I mentioned earlier, the Gambling Commission did do a particular session with licensing boards on the very question of their policy statements and what could be in. They are encouraged to take account of the licensing objectives and formulating their policy. The more fundamental question is to how far you can use those policies to tackle the problems specifically on fixed odds betting terminals. I am aware of a case in England—I think it was Newham Council—did try to prevent a betting shop being opened on public health grounds and I think they lost it on appeal. It's my recollection of how that ended up. I'm going to come back to the point that boards do feel very circumscribed in terms of legislation about what action they can take. My question was about the Scottish Government and discussions with licensing boards, not the Gambling Board, because I want to be clear about the guidance and the advice and the information that is being provided by the Scottish Government in relation to the operation of licensing boards and whether or not policy decisions—you mentioned the local authority south of the border that tried to invoke certain conditions that those decisions were overturned. The court system in Scotland is different and whether or not the Scottish Government would be seen to be actively supporting licensing boards, such as Glasgow, where we heard last week that there were serious concerns about the number of licensed betting shops and the number of FOPTs that were in operation in Glasgow at the present moment. Has the Scottish Government encouraged or entered into discussion or debate with licensing boards about using those powers to restrict the number of betting shops and FOPTs in their own local authority area? I will take it in the first instance. Officials from justice have not engaged with local authorities to have that discussion to my knowledge. I am afraid that whether or not planning officials have, I cannot say, I do not know, but we have not engaged with them, I think, primarily for reason that we actually have no particular locus in this matter. I just want to say that the Scottish Government has no particular locus on the matter of the number of betting shops, the number of FOPTs that are currently in operation in Scotland. The Scottish Government has no locus on that. That is one word that I should have said. It was power is what I meant. We have no particular powers in respect of addressing that issue. Mr Drummond, do you want to come in? I was only going to add that we attended the discussions that the Gambling Commission did organise, so we do so to see ourselves as involved in this process. However, as we come back to the constitutional position, which is that DCMS are people responsible for this, they charge the Gambling Commission to take forward this work and the Gambling Commission has undertaken that process of engagement with the licensing boards in trying to develop their policy statements to be the most effective that they can be. Jane Baxter, please. Thank you, convener. It is now two questions. I am just wondering, Mr Drummond, when did all this discussion between the Gambling Board and local authorities take place? This year, April, perhaps? This year? Okay, thank you. My next question is for you, convener and members of the committee, because I think that this planning review is an opportunity for us to put some sort of marker down. I completely agree with you that we should try and do what we can do. I am wondering if the committee could write to the independent review body and just raise this issue or make the point or reflect the discussions that we have had. I think that that is a likely scenario and we will discuss that in some more depth, but I think that that is the way we are going if I am reading everybody around the room properly. I do not want to pre-empt anything, but I think that that is where we are at. Mr Cofay, please. Very much, convener. It sounds like a discussion about a transfer of power that does not actually confer any powers. It is a very strange discussion to have, but I am going to take a chance and ask another related question. Last week, I was asking about the deployment of technology, particularly with the point of view of protecting individuals who might be tempted to gamble beyond their means and how technology could be better deployed to stop that. There was some discussion about it, convener. I think that William Hill's organisation had put in place some kind of system to try to identify people at risk. Is there any way that we can progress this matter further? It seemed to me that the deployment of the technology was about enriching and hooking a person to the experience of gambling rather than protecting them from it, if they were vulnerable. Is there any scope for us to influence that kind of direction of travel to try and protect individuals from making those kinds of mistakes? Who is going to take that? I noted the discussion in committee last week and the discussion on the value of the algorithms, et cetera, et cetera. Because these machines are basically one from servers in the companies, it is actually very easy to make a change to the machine, which they have already done, for example. A pop-up message comes up after you have spent £20 or £50, whatever it might be, saying, should you be taking a break, what have you. Our more fundamental concern is that all of these things are aimed at the gambler rather than the product itself. We do not think that technology would be the whole answer in that regard. It needs to be wider than just trying to provide little discrete measures that might assist an individual gambler. That brings you back to the discussion about the stakes and the speed of play, et cetera, et cetera, and more generally, rather than just trying to tailor something for an individual. We must have an interest in whether harm is being caused. You mentioned that in your remark. There is an extensive amount of data gathering that will take place here in the whole gambling experience that a person has. The industry will have all that data. Do we have any opportunity or right of access to that data to see if we can help to protect people? I very much doubt it, convener, but surely there has to be an opportunity there to ask the industry if they would share that data. I think that there is a willingness to share data on which they do to the research bodies, such as the responsible gambling strategy board and the responsible gambling trust, under them, who have undertaken substantial research studies into the issue, albeit that the conclusions are subject to different interpretation. I cannot say that we haven't specifically asked for this data. I'm not quite sure what we would do, but certainly the experts in the field who are conducting those sorts of studies could make use of it. How much contact has the Scottish Government had with betting organisations and anti-gambling organisations since the start or since we indicated that we were going to have this inquiry? I haven't gone back a little further over the past two or three years since the whole question of constitutional arrangements changing. We've moved from a position of virtually zero engagement from different companies to substantial engagement. The Association of British Bookmakers has been in touch with us, and William Hill has been in touch with us on a couple of occasions. We have met from memory Money Advice Scotland and the RCA Trust, who work in the support sector, providing support for problem gamblers. The Senate? Only via William Hill, who is a member of the Senate but not the Senate itself. So William Hill is not the Senate but William Hill is on behalf of the Senate? No, he doesn't portray himself as speaking on behalf of the Senate. He portrays himself as being a member of the Senate and told us about it. But not any lobbying from the Senate itself for meetings and discussions with the Senate itself. No, it will be that this is quite a new organisation, as I understand it. In terms of discussions with officials and other parts of Government, how regularly have you met planning officials regarding those matters? We have an ongoing regular contact by email when I spoke to planning officials yesterday. And what was that discussion about? Could you give us an indication? It was about the point about the use classes order and what exactly the commitment may be to look at that following the Scotland bill. And what were the responses from those planning officials in that regard? That's really the remarks that I made earlier in terms of Mr Neil's commitment to look at amending the use classes order following the Scotland bill. So do your own team or the responsible minister's cabinet secretary intend to submit anything to the independent review of planning on that issue? I'm afraid I can't say. Has there been any discussion about that at all? I would assume that there has been some discussion but not that I've been involved in. OK. Thank you for appearing this morning as part of our consideration. As the committee agreed, we'll now move into private session and I'll suspend the meeting to allow for the clearance of the room.