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Meeting of the Parliament 03 March 2011

03 Mar 2011 · S3 · Meeting of the Parliament

Item of business

“Session 3 reports of the Public Audit Committee—key themes”

Smith, Iain LD North East Fife Watch on SPTV

I think that the member misses my point, which is that the awards have come to the committee because attention was drawn to it through its persistence in prising out information that it should have got right away. It should not have to prise out such information and should not be in the public limelight as much as it is.

A couple of particular issues arose from the report on the First ScotRail franchise. I want to highlight one in particular, which is included in the key themes report that we are considering today, at paragraph 16, in relation to compromise agreements. It is important that such agreements are clarified, because there is concern that they can be used, particularly by arm’s-length bodies and quangos, to prevent proper scrutiny of certain items. That clearly happened in the case of the First ScotRail franchise consideration, and there is a risk that it could happen in other cases. I hope that the Government will take on board the Public Audit Committee’s concerns about that.

I want to talk about the gathering, to which Jamie McGrigor referred. I was one of the two MSPs who referred the matter to the Auditor General in the first place. His report led to the Public Audit Committee’s consideration of the gathering.

The First Minister is well known for trying to claim that the Scottish Government’s actions were vindicated by the Auditor General, by taking slightly out of context his comment in oral evidence to the committee that

“The ... Government, I guess, would have taken the not unreasonable view that in order to allow the event to proceed it should assist”.—[Official Report, Public Audit Committee, 23 June 2010; c 1820.]

However, my concern is about how decisions were taken, and the Government has yet to provide an adequate response in that regard. The temporary loan of £180,000 might have been reasonable if the money had been properly guaranteed against the cash flow for which it was put forward. It was needed, apparently, because there was a problem to do with getting the income from ticket sales, which was being held in an account by WorldPay. Surely it would not have been beyond the realms of possibility directly to have guaranteed the £180,000 against the income stream that the loan was supposed to deal with.

I am even more concerned that there appears not to have been a robust analysis of the event’s finances at the point when the loan was made, to determine whether cancellation or continuation was the best way forward. There is some evidence that The Gathering 2009 Ltd was insolvent by then. As Jamie McGrigor suggested, the small businesses in Edinburgh and throughout Scotland that became creditors might have been better off if they had known that, because they might not have offered their business to the event and thereby incurred losses. It might be that losses would have been greater if the event had been cancelled, but we have no way of knowing whether that is the case, because no robust analysis was undertaken.

I find it staggering that loans of public money of more than £250,000 were written off within days of the company’s financial circumstances becoming known. That is incredible, and I cannot understand why it happened. It normally takes a considerable amount of time, sometimes years, before a debt of that nature—

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Meeting of the Parliament 03 March 2011

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