1 Wednesday, 6 September 2017 2 (9.30 am) 3 MS LESLEY HINDS (continued) 4 CHAIR OF THE INQUIRY: Good morning, Ms Hinds. You're still 5 under oath. 6 Could I ask you and anyone else who is speaking at 7 the moment, Counsel, if they could slow down and speak 8 clearly so that the shorthand writers can record your 9 evidence properly, and accurately. 10 A. Okay. 11 CHAIR OF THE INQUIRY: Thank you. 12 Examination by MR LAKE (continued) 13 MR LAKE: Thank you, my Lord. 14 Good morning, Ms Hinds. Yesterday we were just 15 looking at the question of counsellors sitting as 16 directors in arm's length companies, and we'd looked at 17 the question of part of their role, but I wanted to ask 18 you about the question of democratic accountability, to 19 what extent you think having councillors sitting on the 20 boards of arm's length companies provides democratic 21 accountability? 22 A. Do I have the statement, sorry? 23 Q. Sorry. I should arrange for that to be given to you 24 again. It's TRI00000099_C. 25 A. Could you maybe also refer to the questions and answers 1 1 that's related to my statement. That would be helpful. 2 Is that okay? 3 Q. Where I'm referring to a particular passage in your 4 statement. This one is rather more general. It doesn't 5 relate to a particular passage in your statement. 6 CHAIR OF THE INQUIRY: That's the wrong statement. I beg 7 your pardon. That one has come up. 8 MR LAKE: It wasn't a question really relating to any 9 particular part of your statement. It was more 10 a question, do you consider that having councillors on 11 board provides democratic accountability and if so how? 12 A. Well, they're there, we had the discussion yesterday, 13 and as I explained yesterday, in terms of governance, is 14 that you're first of all appointed on to the arm's 15 length company as a councillor, and then your 16 responsibility and governance is to the board, but also 17 there is a democratic process in terms of you sitting on 18 that board, you're appointed by the Council. 19 So I would expect there would be a feedback from the 20 board as we discussed again yesterday, in terms of 21 reporting back to the Council, and the elected member 22 who is appointed on that board is appointed by the 23 Council. 24 So I would expect them democratically to report back 25 to the Council. 2 1 Q. That takes me to one thing that is in your statement, 2 please. Could we look at page 168 of that document. It 3 should be page 168 of the paper copy as well. 4 A. Sorry, it's right at the end. 5 Q. It's towards the end? 6 A. Which one? 7 Q. It will be paragraph 684 on that page. 8 A. Okay. 9 Q. This is in relation to the passing back of information 10 and what you say there is: 11 "I think it was difficult for councillors to 12 exercise control over the Edinburgh Tram Project. Those 13 who sat on the board of TIE were in a difficult position 14 as they did not feel they could report back information 15 when much of the information was confidential." 16 That seems to be the situation that once you impose 17 requirements of confidentiality, you limit the flow of 18 information and limit the effectiveness of that. 19 A. Yes, that's correct. In terms of if you're sitting on 20 a board, board like TIE, at the time I remember, this is 21 my memory, I remember that some members of the TIE Board 22 did find difficulty in basically sitting on the board, 23 and were told that a lot of the information was 24 confidential, and therefore they shouldn't be reporting 25 it back to the Council. And that's my memory serving me 3 1 along those lines. 2 Therefore, that's why I'm saying that they were in 3 a difficult position, because my understanding is, and 4 this is just memory as well, in that people who sat on 5 the TIE Board were told that a lot of information they 6 would be given was confidential and therefore could 7 not -- that detail could not be fed back to the Council. 8 Q. So if we turn it the other way round, the oversight is 9 really only going to work if there is an understanding 10 that those councillor directors can pass back 11 information up to the Council? 12 A. Well, obviously if, as discussed again yesterday, if -- 13 very clear the Council sets a strategic and the policy 14 direction for the board. And therefore I would assume 15 that if -- I never sat on TIE, so it's difficult for me 16 to make assumptions about people who sat on there, but 17 I have sat on many boards, and if I was unhappy with 18 information, even if it was confidential information, 19 that that board was not carrying out, I suppose, the 20 strategy and the policy of the Council, then I as 21 a board member would expect to go back to the Council as 22 appointed by the Council to report my unhappiness 23 regarding the Council's policy, the democratic process 24 of policy and strategy of that board. 25 Q. I'll come back to ask you a few more questions about 4 1 confidentiality in a little while. 2 But just dealing with the role of councillors who 3 weren't on the board of the company, to what extent did 4 those councillors, the Council in general, have a role 5 in relation to oversight or monitoring of an arm's 6 length company? 7 A. That would be as part of the Council setting the policy 8 and the strategy, and then reporting back in a process 9 in terms of the committee, and the members of the 10 committee and the Council and the officers. And as we 11 again discussed yesterday about advisers, often the 12 officials would sit on the board as either a non-exec or 13 they would sit on as advisers. And there was obviously 14 that liaison then between the Council and the board, and 15 that accountability then, but also as elected members 16 sitting on a committee or the Council. And many 17 briefings that we had from officers would then do that 18 accountability as well, scrutinising the TIE and TEL and 19 what their role -- how they were carrying out the 20 policies and the strategies of the Council, and that 21 would be the role of the elected member, to scrutinise 22 and to ask questions at briefings, but also be reported 23 to the committees as well. 24 Q. And whether through the whole Council or through those 25 committees, do you consider that those methods of 5 1 scrutiny you have described to us were effective in 2 relation to TIE? 3 A. This is just me making a judgment. You know, I wasn't 4 on the two committees, so the two at length board, but 5 I would say there was a frustration on behalf of the 6 Council about the information that was coming from TIE 7 and TEL. There would be some, which is in my statement, 8 about some briefings that would have members of TIE and 9 TEL, either Chief Executive or cChair would come to the 10 briefings of each of the groups. So you would have 11 an opportunity there. 12 What I think there was that kind of frustration 13 about the information flow, and if I can remember 14 correctly, again, this is memory, because of that, and 15 a follow-up was that there was the report -- number of 16 reports have been to the Council following TIE and TEL 17 and arm's length companies, to set up a more robust 18 process in terms of the reporting back to committee and 19 reporting back to Council, and that was being agreed by 20 the Council. 21 So following the TEL and the TIE and arm's length 22 company, there is now in place a more robust, I would 23 say, process of being able to scrutinise and report back 24 to the Council in terms of arm's length companies. 25 Q. Do you consider the question of reporting back and 6 1 provision of information to the Council changed during 2 the project at any time? Got better or worse? 3 A. I think that's -- it's a very difficult question to 4 appears. It was over a longer period of time. There 5 would be times at the briefings where it would only be 6 officers of the Council who would be briefing us on the 7 tram project, and there would be other -- probably as 8 time went on, this is just my memory as well -- as time 9 went on, there would be more briefings where people from 10 TIE would come to the briefings of the groups. 11 So there would seem to be, as towards the end of 12 TIE, I suppose, as an arm's length company, tended to 13 then turn up the officers, invited them, and then 14 I suppose towards the end of when that process before -- 15 I suppose negotiations, et cetera, regarding mediation, 16 it was then more the Council and the Council officers, 17 and TIE was then not part of that process. 18 The fact -- that kind of explains the process 19 clearer to you. Again, just to kind of clarify. I have 20 never been on TIE, never been on TEL and therefore I'm 21 just making assumptions, but as an elected member, it 22 started off with very much Council officers briefing us. 23 In the middle part, I would say, would be people from 24 TIE, mostly Chief Executive, this again memory, and also 25 the Cchair would come and officers of TIE, and then 7 1 towards the end it would only be officers of the 2 Council. 3 Q. Thank you very much. It was your perspective as 4 a councillor that I'm after in this regard. 5 Can I just be clear to avoid confusion of terms. 6 When you talked about the middle period there, you 7 referred to the Chief Executive. Is that the 8 Chief Executive of TIE or the Council? 9 A. Both. 10 Q. Both? 11 A. Normally it would be the Chief Executive, Director of 12 Finance, Director of City Development -- again, this is 13 memory -- who would come to the briefings, and I do 14 remember Richard Jeffrey, for example, was one of the 15 names. So there would be -- you will know there was 16 changes within TIE in terms of Chief Executive and 17 Cchair, so at different times; but that middle part, 18 I would say, there was then definitely Richard Jeffrey 19 was the name I remember, and remember him coming to one 20 of the briefings. We had many, many briefings and that 21 would be one of them I can remember. 22 Q. Can you remember the names of any other people who came 23 for briefings, to give you briefings? 24 A. There was also people from some of the consultants who 25 would perhaps be there as well, in case there was any 8 1 detailed questions on behalf of the councillors. But 2 the majority of them were very much briefings from 3 officers of the Council and at a senior level. 4 Q. Resuming -- turning back to the question of councillors 5 sitting on companies, I would like to ask you to look at 6 another document, please. It's reference CEC02086791. 7 This, you can see, is a report to the Council for 8 a meeting which took place later on, 13 December 2012. 9 A. Mm-hm. 10 Q. With the title, "Council companies", and it's a report 11 from Alistair Maclean, the Director of Corporate 12 Governance. Have you seen this before? 13 A. Yes. As far as my memory, you know, it's -- this is 14 aspiring over a long period of time and many reports, 15 but it follows up looking at the date of it, it follows 16 up just what I said before about the robustness of 17 looking at Council companies in terms of particularly 18 the concern that councillors had regarding TIE and TEL. 19 Q. Just looking at the recommendations on -- if you go to 20 the second page of the 12 pages of the report, we can 21 see here that the recommendations are simply to instruct 22 the directors of the various elements within the Council 23 to proceed in accordance with the main body of the 24 report, and that is what the councillors were going to 25 be asked to consider. 9 1 If you then go to page 4, I just read -- sorry. Go 2 to page 4. If you go to page 4 in the last document, 3 not the statement. That's reference CEC02086791. We 4 can see here there's a heading, "Background". 5 A. Mm-hm. 6 Q. Paragraph 1.3 notes that: 7 "It is important that the Council is clear about the 8 anticipated benefits from using an arm's length company 9 to deliver services rather than retaining service 10 in-house or contracting or partnering directly with 11 a third party provider in the public, private or 12 voluntary sector. In some cases an arm's length company 13 can offer financial benefits, for example charitable 14 companies currently qualify for business rates relief. 15 In other cases, the rationale for a separate corporate 16 vehicle may be less clear. In order to ensure optimal 17 and efficient delivery of services and Council 18 objectives, it is important that the overall company 19 structure is rationalised." 20 Was that consideration that arose out of what had 21 happened in relation to the tram project? 22 A. I wouldn't say it was just a tram project. I could say 23 there was other projects as well. For example, ETI and 24 again I think we mentioned yesterday Edinburgh Leisure, 25 Theatre Trust. There was a number of arm's length 10 1 company, first of all had been set up in terms of 2 financial benefits. And other ones were, for example, 3 I would say, yes, probably the tram project was part of 4 that, but there would be other companies as well. 5 I know there was a feeling certainly from many members 6 of the Council that they wanted to have a more robust, 7 as I said previously, a more robust process to ensure 8 that the arm's length company were accountable to the 9 Council as the wholly-owned shareholder, as you would 10 say, of the arm's length companies. 11 Q. This requires in that paragraph, or directs, there 12 should be some specific consideration given to 13 identifying precisely what the benefits are for setting 14 up an arm's length company before it's done? 15 A. Yes, and that's what did happen in terms of any arm's 16 length company. A report would have been put forward by 17 the officers and to the Council, normally I would have 18 thought to the Full Council Meeting, rather than 19 a committee, for the councillors to consider what the 20 benefits would be of setting up an arm's length company, 21 where that was financially -- or whether that was for 22 a better way of delivering a project. 23 Therefore, that would be a report that would go to 24 the Council, if you talk about democratic process, and 25 the officers would lay out the benefits to the Council 11 1 and to the service, and a delivery of a project or 2 a delivery of a service, and the reasons why they would 3 be recommending the setting up an arm's length company. 4 Q. Looking at the further recommendations down the page, if 5 you look at paragraph 1.5 and its subparagraphs, you can 6 see this says: 7 "As part of the consultation process, the Director 8 of Corporate Governance made a number of key 9 recommendations." 10 These include, 1.5.1: 11 "Elected members should not be directly involved in 12 operational decision-making of Council companies. Given 13 the potential for conflict of interest between their 14 roles as councillors and as directors (where there is 15 a statutory duty to act in the best interests of the 16 company and not the shareholder), it is recommended that 17 elected members do not act as directors on company 18 boards, but carry out a strategic direction setting, 19 oversight and challenge role as members of the relevant 20 Council committees." 21 A. Mm-hm. 22 Q. We see there that the director seems to be putting more 23 emphasis on the councillors carrying on to sit as 24 councillors, and that they should not sit as directors 25 on the companies. What was your view on that? 12 1 A. I think there was a difference of opinion. I think the 2 officers were clearer, perhaps because of the experience 3 of the TIE and the tram project. And that, which again 4 we discussed yesterday about the conflict there is, or 5 the diversity there is between sitting on a board and 6 sitting as a councillor. 7 I think that people's view was that if we shouldn't 8 be because of the tram project and TIE and TEL, that 9 shouldn't be that every other company, arm's length 10 company as I said previously yesterday, has not been 11 successful. An example I gave was EICC, we're on 12 budget, on timetable, and is still going strong. 13 But I think the officers, because perhaps of the 14 experience of the TIE and the TEL, felt that direct -- 15 that councillors should not sit on arm's length 16 companies, but I think elected members thought it was 17 useful and helpful because it had been useful and 18 helpful in terms of delivering projects and delivering 19 services on behalf of the Council and arm's length 20 companies. 21 Q. We see the next recommendation is that: 22 "In light of the same potential conflicts of 23 interest, Council officials should not sit on company 24 boards. As an alternative to acting as company 25 directors, it is recommended we have an observer right 13 1 on the boards of Council companies." 2 Did you have a view in relation to that? 3 A. The majority of officers didn't sit as board directors, 4 whereas they were sitting as observers, rights on 5 boards. So I felt that was probably the right way 6 forward. 7 Q. 1.5.3 was that Council companies should recruit and 8 appoint executive and non-executive directors with the 9 appropriate skills and experience: 10 "The boards should meet at regular intervals with 11 the minimum of five meetings every year. Each board 12 should, where appropriate, have appropriately 13 constituted audit, remuneration and nomination 14 committees." 15 I take it that's not going to cause any concern to 16 the Council? 17 A. No, I would probably say my experience, that boards do 18 have audit, remuneration and nominations committees 19 that -- but it's probably just setting out very clearly 20 the guidance in terms of companies. 21 Q. The following -- if we look at the next three paragraphs 22 then together. 1.5.4 is: 23 "For each Council company, the relationship with CEC 24 should be set out in a funding agreement or 25 shareholders' agreement as the case may be and also, 14 1 where appropriate, a Service Level Agreement." 2 A. Yes. 3 Q. I think we will come to later in the Inquiry, there was 4 an Operating Agreement in relation to TIE. Were you 5 aware of whether or not there was a Service Level 6 Agreement, or a set of minimum standards put in place? 7 A. Memory, you know, I can't -- I can't say. But this -- 8 this report as previously said was set out because there 9 was concern that it wasn't a robust, but also a very 10 clear direction in every company, arm's length company, 11 had to come under the same strict guidelines, and 12 therefore 1.5.4, which sets out a Shareholders' 13 Agreement, a Service Level Agreement, it says where 14 appropriate, but I think I would suggest that Service 15 Level Agreement, each of the arm's length companies was 16 what the elected members at that time felt was a way to 17 go forward, learning from the experience of the previous 18 arm's length companies. 19 Q. 1.55 refers to those agreements that I have just 20 mentioned needing to set out the objectives of the 21 company, but 1.56 goes on to say: 22 "Given the large number of companies delivering a 23 range of services, there is the need to determine 24 whether these organisations still have a role to play 25 and demonstrate the rationale for this, or whether an 15 1 alternative delivery model would be more appropriate." 2 That seems to be a concern that perhaps it was time 3 to turn the tide against using arm's length companies 4 and consider whether it could be brought in-house. What 5 was your view on that? 6 A. I don't think it was seen as being against arm's length 7 companies. I think it was seen as that, as I explained, 8 that each of these arm's length company report would go 9 to the Council, giving the reasons why it was set up in 10 the first place, and what the benefits were; and I think 11 it was just needing a review of all of these arm's 12 length companies, to say were they still delivering and 13 was it the right way forward in terms of arm's length 14 companies, when they were originally set up in the first 15 place. 16 Q. What would the advantages to the Council be -- might 17 they be in bringing back in-house something that's been 18 dealt with by a company? 19 A. Well, it may well be that times have moved on. Services 20 have developed, have changed. IT might be an example, 21 or other example, there is legislation, as I understand 22 it at the moment, in terms of business rates or 23 recommendation, which is going forward at the moment, 24 which may well have a direct effect on the festival 25 theatres, may well have an effect on Edinburgh Leisure. 16 1 So that may be something the Council will consider, and 2 whether they wish to bring it back in house. 3 So there will be either legal or financial or 4 changing of the way the services is provided, in the 5 circumstances at that time. 6 Q. Would there be instances where bringing matters back 7 in-house would increase the amount of control that the 8 Council have, and that would be considered beneficial? 9 A. Well, it would be both. It would be financial delivery 10 of the service, but also accountability as well. 11 Q. Is it likely to be the case that there will be greater 12 accountability if the service is in-house? 13 A. It's kind of general question you are asking, which is 14 a difficult one to answer, because, as I said, certainly 15 the arm's length companies I were on were very 16 accountable, and very much had a good relationship with 17 the Council in delivering the service they were set out 18 to do, and financially delivering what they were asked 19 to do. 20 And I suppose it is -- it's whether you bring it 21 back in-house would be, as I said, financially, would 22 that be the best possible way, service delivery, and 23 would it be better bringing it back in house, and also 24 accountability, and I think you can't generalise, 25 because each of them were set up for a different reason, 17 1 not all different, but for different reasons, in terms 2 of at that time. 3 Q. If you look further down the page now, to the lower half 4 of that page, taking the whole of the lower half, it 5 will be readable, we can see under the heading, "Main 6 report", paragraph 2 notes there had been a capital 7 coalition working group of elected members to consider 8 the officer recommendations and set out the arrangements 9 that members wish to put in place. Were you on that 10 working group by any chance? 11 A. I genuinely don't remember. Sorry, I could go back if 12 you'd asked me beforehand and be able to say that, but 13 there were a number of working groups, and I genuinely 14 don't know. I would have been at that time Convener of 15 Transport Environment, but I'm not -- I genuinely don't 16 know. 17 Q. If we just look at the next paragraph which gives the 18 conclusions from that working group: 19 "The elected members have indicated their wish to 20 participate directly in decision-making as directors of 21 Council companies. It is proposed that (save as set out 22 in paragraph 2.2.3) three elected members will sit on 23 the board of each Council company, one member from each 24 of the capital coalition groups and one from an 25 opposition group." 18 1 That seems to be the Council was essentially making 2 it quite plain they did not accept the recommendations 3 of the Director of Corporate Governance and were 4 determined to continue their role on the boards of the 5 Council. Of the companies. 6 A. Yes. Well, I think particularly because of 7 accountability, but also some of these arm's length 8 companies had big responsibility financially and 9 delivery, whether it was a project or service, 10 and I believe at that time the elected members felt they 11 still wished on certain companies, arm's length company, 12 it was a benefit and we shouldn't just make decisions to 13 come off all arm's length company because of an 14 experience of perhaps one or two. 15 Q. One or two being the -- (Pause) 16 When you had said the experience of one or two 17 companies, was that the tram companies that you had in 18 mind? 19 A. I would say probably yes, in general, yes. As I said 20 previously, that some of the arm's length companies had 21 been extremely successful in delivering financially, in 22 delivering the service provision and delivering 23 projects, and I suppose you don't just throw the baby 24 out with the bathwater, I suppose is the expression, and 25 that at that time, this is again memory, back to 2012, 19 1 was a majority of elected members, all elected members 2 felt that there were some companies, there was 3 a beneficial benefit of having elected members on those 4 companies. 5 Q. I appreciate it was a decision of Council members as 6 a whole, and it may not be that every councillor had the 7 same view, but can you recall, was there a consensus as 8 to why it was that the councillors felt it important 9 that they sit on the boards? 10 A. Well, to repeat myself is that I would say the majority 11 felt, ones who had been on boards, there was an 12 advantage to be on boards and had been delivery, as 13 I said previously, and therefore they believed there was 14 an advantage for the Council and for elected members to 15 be on arm's length companies as directors. 16 Q. I'm sorry if you feel I'm repeating myself, but what I'm 17 really trying to get to is: what is that advantage? 18 What was the perceived advantage for the Council? 19 A. Well, it would be overseeing, being more involved with 20 the project, being able to ensure that that company also 21 was delivering in terms of service level agreements, in 22 terms of delivery of the strategy and policy of the 23 Council. 24 Q. I think your role in the project, you had quite an 25 involved role from 2012 onwards, when it was at 20 1 post-mediation stage? 2 A. Yes. 3 Q. In the early stages, pre-2007, you had a lesser role in 4 relation to them. Then I think it was in 2007 to 2012 5 you were in opposition; is that correct? 6 A. Yes. 7 Q. So you have experienced it both from being in opposition 8 and then going on to be leader of the Council? 9 A. No, I was not leader of the Council. Transport 10 Environment Committee. 11 Q. Pardon me. 12 A. So I was -- I have been 33 years on the Council. So 13 I was involved as an elected councillor in terms of the 14 decision-making process of the tram project at the 15 beginning. I was then for four years, up to -- from 16 2003 to 2007, the Lord Provost of the Council, which is 17 very much a civic role, and then went in opposition for 18 five years when the tram project, say, perhaps in more 19 difficulty. And then I took over in 2012 as the 20 Convener Transport Environment, which was following the 21 Mar Hall and the agreement to have a revised budget and 22 a revised timetable. 23 Q. Now, the reason I wanted to ask about your various 24 involvements there was what I wondered was throughout 25 those various stages, at the time, did you feel you had 21 1 all the information you required as a councillor to 2 decide the matters brought before you? 3 A. So this is general or is it related to any of these 4 questions. 5 Q. General. 6 A. I would say before, when we made the decision regarding 7 to go ahead with the tram project, the information was 8 available as a councillor. And I suppose if I refer to 9 the Audit Scotland in 2007 report, which was, if 10 I believe correctly, was commissioned by the Scottish 11 Parliament, gave what I would call a robust and clean 12 bill of health in terms of governance, and then if you 13 look at the Audit Scotland report of 2011, there's 14 a very different picture there in terms of the concern 15 regarding the governance and overview. 16 So I would say taking that into account, and re-read 17 them before coming here, and memory is that between 2007 18 and certainly 2011, I was personally, and also, I think, 19 our Labour Group, frustrated in terms of the information 20 available, and often much of the information would end 21 up in the press and in the front page of the Evening 22 News, that we would have no indication, had no 23 information for. 24 So I think as a Labour Group who were supportive of 25 the tram project, and the reasons are laid out in my 22 1 statement, felt very frustrated between that period of 2 2007 and 2011, in that we certainly felt we were not 3 getting information, and felt when we had briefings, we 4 were not getting the answers and the information, and 5 that's in my statement as well, and became extremely 6 frustrated in terms of the information we were being 7 given. 8 And also, if I -- when I was interviewed, there was 9 many documents and emails that I was shown that 10 certainly I'd never seen before, and certainly was quite 11 shocked to discover that officers were well aware there 12 was a real problem with the tram project months and 13 months before it ever became clear to us, myself as an 14 individual, but also as a Labour Group. 15 Q. As you say, those documents had been shown to you and 16 they're referred to in your statement. You think that 17 information should have been provided. Do you think it 18 would have made a practical difference to the decisions 19 you would have made or the approach you would have taken 20 to the tram project? 21 A. Yes. I think if we had known months and months more in 22 advance, we would have been more pressure -- I have been 23 in administration and then in opposition, and in 24 opposition it's a different position to when you're in 25 administration. 23 1 Also, the Council at that time was very split in 2 terms of that you had an administration that had 29 3 votes and the opposition together had 29 votes. So it 4 was a casting vote of the Lord Provost. So you didn't 5 have administration at that time that was -- you had an 6 overall majority and were very clear. 7 Also, as I say in my statement, as well, is you had 8 an SNP Group who were part of the administration who, 9 part of that agreement was not to support the tram 10 project. 11 So there was quite a fluid situation which, you 12 know, was in the Council at the time, and therefore 13 information -- I think if we'd known a lot more months 14 in advance, then we would have been able to try to, at 15 least in the opposition, put more and more pressure on 16 the administration to deal with it in a different way 17 than they were at that time. 18 Q. Just looking then at the reasons why you might not have 19 information, you have talked about emails were simply 20 things just weren't passed on. Were you ever given any 21 reasons why things were not passed on to you? 22 A. Well, some of them I have only seen since -- in December 23 when I did the interview. Documentation and emails 24 that -- first time I had ever seen them. So I can't 25 answer that because at the time I didn't know that 24 1 information was available and that documents were being 2 circulated that certainly we did not have access to. 3 Q. Were you aware -- you referred there to the difference 4 between the administration on the one hand and the 5 opposition on the other. 6 A. Mm-hm. 7 Q. Is the information provided different to the opposition 8 and the administration, in your experience? 9 A. I can't answer it in terms of whether the people in that 10 time from the 2007 to 2012 had the information I didn't 11 have. You would have to ask them that. But certainly 12 if you are in administration, then you tend to have 13 a closer relationship with the officers, because 14 ultimately there is a convener, you're responsible then 15 for that -- the responsibility, for example, for 16 transport and environment that I was, and therefore you 17 tend to have more information, but officers can be 18 different. 19 There are some officers who will, if you're in 20 opposition, feel it isn't their duty and some who will 21 feel that they will treat you as an individual 22 councillor, and say you are entitled as an elected 23 member representing your constituents and the city to be 24 able to get that information. 25 Q. Looking at that question of obtaining information from 25 1 officers, actually asking them for information or 2 getting briefings from them, is there in fact -- is it 3 easier to get that information in general from officers 4 if you are the administration? You say some are likely 5 to be more co-operative. Is that in practical terms 6 your experience? 7 A. Generally, it would be if -- I suppose I would say and 8 I have put in my statement that that situation from 2007 9 to 2012, and maybe in being in opposition, felt and 10 certainly looking at some of the documentation, we did 11 not receive that documentation. 12 So when I -- and I put this in my statement. When 13 I became the Convener of Transport Environment, I did 14 everything possible to ensure that all elected members, 15 particularly transport spokespeople from all political 16 parties, got all the information regarding the tram, so 17 there was no surprises, and they were briefed and given 18 all the information I was given, because I think that 19 was the way forward. And if you look at, you know, the 20 delivery of -- on the budget, the revised budget and the 21 revised timetable following 2012, which people were very 22 cynical, didn't think that would happen, and it did 23 happen; and I think one of the reasons was that we had 24 all party agreement during that period of time, and as 25 a convener, and I stressed to the directors and to the 26 1 people involved with the tram project, during that time 2 that we needed to ensure that all elected members, but 3 as I say, particularly transport spokespeople of all 4 parties, had all the information in front of them. 5 I think that's only correct and right that they had 6 that. 7 I believe between -- it's my perceptions between 8 2007 and 2012, but particularly 2011 -- 2007 to 2011, 9 I felt that -- I felt and our group felt frustrated that 10 we did not have the information, and often in briefings 11 we just kind of sigh when officers left the room, and 12 just think we are not getting all the information here, 13 and it was very, as I said, frustrating, as a group who 14 had previously and still supported the tram project to 15 be delivered. 16 Q. Just from what you say there, you sighed when the 17 officers left the room. That means a briefing was 18 taking place, but you didn't think it was sufficiently 19 full? 20 A. Yes. Towards -- I would say, 2010/2011, we just felt, 21 all of us in that group felt as if we were not getting 22 all the information. You know, it's very difficult. 23 You can ask the questions. You can put pressure on. 24 You can try to get -- but if you're not getting all the 25 information, and I did say within one of my answers as 27 1 well is that I very, very clearly remember one officer 2 going to give more information, another officer putting 3 his hand on his arm to say, no, you don't need to give 4 that. 5 So that gave very clear indication to me that one 6 officer wanted to give us more information, another 7 officer saying no. So it's very clear in my mind, and 8 other people who were in the room very clear about that 9 as well. 10 So I think we at that moment started to think we 11 were not being given all the information. 12 Q. Can you remember what that subject matter was when that 13 one officer intervened to stop the other speaking? 14 A. I genuinely don't. I can't remember what it was about. 15 Q. But as councillors, if you're faced with that situation 16 as a briefing, even that most extreme example where one 17 officer stops another from speaking, did you press the 18 officer to carry on and ask what he was about to say and 19 why you couldn't be told it? 20 A. Yes, we did. 21 Q. And the answer was? 22 A. Well, basically, he was told that he couldn't say any 23 more, and therefore it was difficult then, if that was 24 the situation, a more senior officer. 25 Q. Did the senior officer give any reason why it was you 28 1 couldn't be given the information or shouldn't be given 2 the information? 3 A. No. Not that I can remember. This is a long time ago 4 as well, quite a number of years ago. But that was why, 5 there's one of the motions and the Council had more than 6 one motion which then did -- a long motion which in fact 7 the Liberal Democrats ended up agreeing to. It's in 8 here as well. Which said clearly we as a Council were 9 frustrated in terms of the way the tram project was 10 going and the information and how we were getting -- we 11 were not getting the right information and that is 12 a motion that was passed by the Council. 13 So, you know, we did everything possible and 14 Andrew Burns, as Leader of the Council, I can remember 15 almost every single meeting of the Council where you 16 have leaders' questions, he would ask, particularly when 17 we were going through the difficulty or challenge with 18 the contractor, he would ask: have you had a meeting 19 with the contractor, how were you pursuing this, 20 et cetera. 21 And therefore, you know, you are out there in the 22 open, in the public, asking all these questions and 23 pushing for answers. And as I say, I may be using the 24 word, but it was frustrating in terms of getting answers 25 to the questions that we were asking. 29 1 CHAIR OF THE INQUIRY: I think you refer to Andrew Burns as 2 Leader of the Council. At that time he was Leader of 3 the Group. 4 A. Sorry, Leader of the Group. Apologies: so much 5 of timescale. Yes, he was Leader of the Group, but the 6 main opposition member. 7 MR LAKE: Did you ever hit upon situations where it was 8 officers of one of the tram companies who was attending 9 and they declined to answer questions put to them? 10 A. Not that I can remember. Just one very clear memory in 11 terms of that. 12 Obviously, again within the statement, there was 13 a lot of briefings, terms of the dispute resolution. 14 And that would tend to be when we did have officers of 15 the tram companies, TIE would come to the briefings, and 16 that was more -- and that was about dispute resolution 17 and quite heated discussions, because, again, we felt 18 that at that time, we would be told that TIE would be 19 winning these dispute resolutions, and it became very 20 clear that was not the position. 21 So at that time, that was when they tended to come 22 to the briefings on that particular period of time 23 regarding the dispute resolutions. 24 Q. Did they answer the questions that you had for them at 25 these briefings? 30 1 A. Well, not fully, I would say. Not for satisfied, no. 2 We felt, I think, that -- well, this is again 3 recollection. We felt -- I'm not quite sure what the 4 words would be, but we felt that the answers we were 5 getting, and then as time went on, it was quite clear 6 that in fact the dispute resolutions were not being won 7 by TIE, but the contractor was winning them, and 8 therefore then we felt we were not being given all the 9 information, and giving a slanted position. 10 Q. So in that situation, you are referring to information 11 you were being given, but you weren't satisfied it was 12 accurate or truthful information? 13 A. Yes. Well, I wouldn't say -- I would just say we 14 questioned whether it was accurate information we were 15 given. 16 Q. You've already referred to the fact, and it is in your 17 statement, that a motion was put before the Council 18 about the provision of information to councillors. Do 19 you have any other remedies you could use to try and get 20 further information when you're being met with 21 a refusal? 22 A. Well, there would be obviously a process in terms of the 23 Andrew Burns as the Leader of the Labour Group would 24 have meetings with the Chief Executive, and I'm sure -- 25 you would have to ask him, but I'm sure -- and it would 31 1 be fed back to us, our concern regarding the way the 2 tram project was going during that period of time. 3 So there would be an opportunity for him on behalf 4 of our group to voice our concern regarding the way the 5 tram project was going and regarding the information 6 that was available to us. 7 Q. You refer to heated discussions over the briefings 8 concerning dispute resolution. Were there other 9 particular areas where you felt you were being denied 10 information? 11 A. Dispute resolution was a particular one I can remember. 12 Also, the issue of Princes Street and the -- wrong 13 concrete and the digging back up of Princes Street 14 again, which if I remember correctly, we only found out 15 on the front pages of papers. 16 So those are the kind of two that I can remember in 17 particular, dispute resolution, the issue of 18 Princes Street, and those are the two in particular that 19 I can remember. 20 Q. Were you faced sometimes with express claims that you 21 couldn't be given information because it was 22 confidential? 23 A. Yes. 24 Q. Did those claims, the refusal to provide information on 25 that basis, affect your ability to do your job as 32 1 a councillor? 2 A. Yes, probably, yes. 3 Q. Nonetheless, is it your view that there is some need to 4 keep information confidential? 5 A. I think within my statement as well, I do say that there 6 is a balance between obviously contracts and contractual 7 issues in particular, and if you're negotiating with 8 a company regarding contracts and finances, et cetera, 9 then confidentiality has to be at that level, but also 10 there is a balance to that as elected members and 11 democratically, if you don't have that information, then 12 it's difficult then to make a decision without all the 13 information. 14 Q. The question then is how to strike a balance between 15 those two competing objectives, isn't it? 16 A. Absolutely, and that is a real -- and again, I can't 17 answer on behalf of people who sat on TIE regarding 18 that, but certainly on a number of occasions, I do 19 remember that people who sat on TIE -- previously as 20 I stated were told it was confidential information, and 21 therefore they should not be divulging that to elected 22 members, and I think that was a frustration and as you 23 say, it is a balance to be struck. 24 But as I said yesterday, I think if people who sat 25 on that board felt that the Council's policies and 33 1 strategies are of concern, then that should have been 2 fed back, I would have suggested, to the Chief Executive 3 and the -- and/or the Leader of the Council. 4 Q. Dealing with the question of dispute resolution, just to 5 be clear, was the confidentiality being claimed in 6 relation to giving you information about the outcome of 7 those disputes, or the thoughts about whether or not 8 they were likely to succeed or the arguments? Can you 9 remember what it was that was said to be confidential 10 about them? 11 A. I don't think it's so much about the dispute resolution. 12 I think it was more about the discussions with the 13 contractor. Dispute resolution, we did have information 14 in terms of the number of disputes there were and the 15 numbers that they believed they would be able to win in 16 terms of dispute resolution. There was some information 17 on that. So I wouldn't quite say dispute resolution. 18 It's difficult to remember from so many years back, 19 but certainly on a number of occasions, but I can't 20 remember all the details, that members of TIE who were 21 councillors were told and had said they could not say 22 because it was confidential, but I think that was more 23 a discussion between TIE and the companies. 24 Q. Do you accept that sort of thing might be sufficiently 25 delicate that it does need to be kept confidential if it 34 1 was going to work? 2 A. I think that's -- you know, I think giving an individual 3 premise, you know, individual example, I don't think 4 I can answer that. 5 Q. Put it in a more general way. The examples were if TIE 6 are considering what approach they want to take to the 7 contractors, a tactic, say, try and get them somewhere, 8 that's the sort of thing they might want to keep 9 confidential because they don't want the contractors to 10 know about? 11 A. That may well be the case, but I don't think that would 12 be appropriate because I think that, as elected members, 13 you would want to have some indication of what -- you 14 might not want to know all the details, but you would 15 want to know what the tactics were in terms of going 16 forward and trying to get a resolution with the 17 contractor. 18 Q. But would you accept that if that's leaked to the 19 contractor, the tactics are likely to lose all effect? 20 A. Yes. And that's when you said it's a balance, isn't it? 21 And it's also about trust as well. 22 Q. I think there were leaks from time to time that you 23 record in your statement, issues with leaks? 24 A. Yes. 25 Q. Presumably that created or was detrimental to the trust 35 1 between the companies and the Council? 2 A. And it does come down to trust, and if information was 3 then leaked to the press, it wouldn't do benefit, and 4 again I'm expecting that if you're sitting on a board 5 and you are doing the best for that board, and you're 6 also an elected member doing the best for the project, 7 then you -- would you wish all of that information to 8 then be in the press, which would then undermine your 9 position in terms of getting a best deal in terms of the 10 company and the Council. 11 Q. We have been discussing for some time now these 12 briefings. I'm looking at both formal briefings that 13 might take place from time to time of your group and 14 informal briefings where you request information. 15 Were written records ever kept of the information 16 that had been provided? 17 A. There were on some occasions -- and I think they are 18 included in the many documents that you have -- there 19 would be -- sometimes there would be briefings where 20 there would be documents or an overhead presentation 21 regarding the position. 22 I have to say there would be notes taken by our 23 staff, but whether they've been kept or not, or they 24 would be mostly people would just take their own notes, 25 et cetera. Those briefings weren't formal meetings. 36 1 The only way they would be officially recorded would 2 be at the Labour Group, when we had a formal meeting and 3 it would be recorded then. But that would be only the 4 decision-making or the discussion that happened at that 5 meeting. 6 Q. Just to be clear about the end of that, you said it 7 would only be the decision-making or the discussion at 8 that meeting. Which meeting are we talking about? 9 A. The Labour Group meetings. We had, as recorded in my 10 statement, as a Labour Group have weekly, what they'd 11 call Labour Group Executive meetings, where conveners, 12 or when we're in opposition, would be the opposition 13 spokespeople, would report on a weekly basis to the 14 Executive, and other members of the group could attend 15 as well. So that would be the opportunity then for any 16 questions or answers, et cetera, and then the Tuesday 17 before the Thursday Council meeting would be the group 18 meeting, a full group meeting. 19 They would discuss any other kind of business or 20 what was -- mostly for the Council meeting that would 21 happen on a Thursday, and often we would meet at 22 9 o'clock before the Council meeting as well, if there 23 was any changes from the Tuesday night. 24 So they were regular Labour Group meetings where 25 there would be an opportunity for all group members to 37 1 ask questions of the spokesperson, and then latterly, in 2 2012, as a convener, I would report to them, give them 3 an update on issues to do with transport and 4 environment, but obviously on the tram project, on 5 a weekly basis. 6 Q. Just dealing with that role that you discharged as 7 convener later on in the project, you said that you made 8 sure information was disseminated so that everybody had 9 the sufficient information. How did you do that? What 10 changes did you make? 11 A. There was a -- following, I think, 2011, I think, there 12 was an oversight group, an all party oversight group. 13 And that was, if memory serves me, from 2012 was chaired 14 by Andrew Burns, and there was an update basically at 15 that group from Sue Bruce, Chief Executive, and 16 Colin Smith, and they would give an overview at that 17 meeting. So all parties were part of that. 18 But also I would ensure that if there was 19 information that I thought was -- would be useful and 20 helpful, and that the opposition spokespeople, I would 21 do it through the opposition spokespeople, I would make 22 sure they had that information, whether that was calling 23 them, emailing them, or getting them all together to 24 discuss it outwith those oversight groups. 25 Q. Just referring again to the All Party Oversight Group, 38 1 where briefings were given to all the parties at once, 2 was that helpful? 3 A. Absolutely. Absolutely. I think between that period of 4 2007 and up to 2011/2012, you know, as I said, it was 5 29/29, and therefore the Council was very split and you 6 had that administration who -- the smaller group, but 7 still SNP Group who did not want anything to do with the 8 tram project, and an agreement between, as I understand 9 it, Lib Dems and the SNP, that they would oppose the 10 tram project. 11 So you had that kind of turmoil. Following 2012, 12 I just really tried to make sure that -- I think all of 13 us, as elected members, felt the reputation of the 14 Council and the reputation of the city had been damaged 15 by the tram project, and we wanted to get that back on 16 track. And we wanted to all make sure, and I found that 17 the opposition spokespeople were helpful, were 18 supportive, because I think they wanted to ensure, like 19 I did, the reputation of the Council and, more 20 importantly, the city, could get the tram -- would make 21 sure that we got the tram on the revised budget and the 22 revised timetable and get it up and running and be 23 successful in terms of financially, and what was set out 24 in terms of passenger numbers and get that up and 25 running. 39 1 Therefore, from that 2012 until up and running, 2 I just ensured that all the spokespeople in particular, 3 and that meant they could then feed back into their 4 group, and having that all party group, I think, just 5 made such a difference of people working together for 6 the benefit of the delivery of that revised budget and 7 revised timetable. 8 Q. I want to talk now about briefings and talks and things 9 like that. Also I want to consider the question of the 10 reports that you were provided in relation to the tram 11 project. 12 Did you have a view on the adequacy or usefulness of 13 those? 14 A. That's a kind of -- I don't know how many reports there 15 were. I'm sure you maybe know. But in general, some of 16 the reports, I would say, if we look at -- in my 17 statement again, and this is coming towards 2011, was on 18 the Haymarket decision, for example, and the decision of 19 the Council at that time to go to Haymarket. 20 I was concerned about the information that was given 21 in the report that went to the Council, and I say in my 22 statement, I can't remember quite what question, but 23 I say in my statement that I was concerned that 24 information would be given regarding passenger numbers, 25 only information that had been asked for Lothian Buses, 40 1 for example, was to go to St Andrew Square at that time, 2 and not go on to Haymarket. 3 So that's one report, I felt concerned that the 4 information that we should have had wasn't robust enough 5 and wasn't full enough for me to feel comfortable. 6 Q. Going back to the reports that you had been given in 7 2007, when the decision was made to go ahead with the 8 project, they feature a number of -- when they have 9 a Final Business Case attached, technical items such as 10 contingency sums, provisional costs, optimism bias and 11 risk. 12 Were these concepts adequately explained to you in 13 the reports or in the briefings? 14 A. I would say at the time, yes. 15 Q. They were? 16 A. And I also want to go back to -- but the comfort was in 17 the Audit Scotland, which is an independent 18 organisation. In 2007 the Scottish Parliament made 19 a decision to fund the tram project and Audit Scotland, 20 independent organisation, gave what I would say a clean 21 bill of health in terms of governance and finance of the 22 project. 23 So I think all of us, certainly myself, felt at ease 24 that an organisation like Audit Scotland had given 25 a report which gave it a clean bill of health, maybe, 41 1 you know, but had -- given that the project was, in 2 terms of governance, robust and financially viable, 3 et cetera, and information. 4 So that gave me comfort, as well as information from 5 the officers, but also from an independent organisation 6 like Audit Scotland. 7 Q. Just looking still a little bit before we move on to the 8 further decisions in 2007 about the role of the Council, 9 you've explained the representation and how finely 10 balanced things were within the Council when the 11 decisions were taken. You said -- it's probably easier 12 to refer you to your statement. If you look at 13 paragraph 54 of your statement which is on page 12. 14 A. Yes. 15 Q. There's a sentence. It begins on the third line there: 16 "There were mistakes, I believe, that were made 17 between 2007 and 2012, in that the tram project did not 18 have all party support. I also often felt during that 19 period that the Lib Dem councillors would only come to 20 the other groups looking for our support very late in 21 the process. For example, they might seek our agreement 22 to a proposal the day before or the morning of a Full 23 Council Meeting. This was unfair because we did not 24 really have the information we needed to make 25 decisions." 42 1 Then you refer to the fact: 2 "From 2012 onwards, as Transport Convener, as well 3 as trying to deliver the ETP on a revised budget and 4 revised timetable, I saw that we had to learn from the 5 previous five years." 6 What I'm interested in is the linking in that first 7 sentence I read out between the mistakes on the one hand 8 and the tram project did not have all party support. 9 Are the mistakes you are referring to simply the manner 10 in which the administration went about getting the 11 support of the other parties? 12 A. I think it was both. I strongly believe that the 13 agreement between the Scottish Liberal Democrats and SNP 14 to go into administration with 29 councillors which 15 then -- if all the opposition voted together, would be 16 the casting vote, the Lord Provost, made it a weak 17 administration, but in my view, made it even weaker in 18 terms of the SNP insisted in the agreement that they 19 would not support the tram project. 20 So therefore I think that undermined the tram 21 project, and if you take the difference between 2007 and 22 2012, when Labour, who were the largest party, went into 23 agreement with the SNP, it was written in that they 24 would deliver the revised budget and revised timetable, 25 the SNP would agree to that as part of a capital 43 1 coalition agreement, and also there was a bigger 2 majority in terms of well over 29. 3 So I think the agreement as set out at the beginning 4 of 2007, I think, made it very weak for the tram 5 project. And I believe, you know, and this is just my 6 experience, is that the Convener, Councillor Mackenzie, 7 would often come the day in the morning at 9.30 when the 8 Council meeting started at 10.00, to try to look for our 9 support and I assume he did the same -- that's 10 assumption on my part -- to other political groups, we 11 were the major largest group in terms of opposition, 12 asking for support for their proposal or their motion. 13 I just felt that was not a very efficient or a very 14 good way to go about making decisions, and so I suppose 15 when I say mistakes at that time, that as Convener 16 I would make sure that all, as I said previously, and 17 I think it's just worth repeating, that all the 18 information and background were given to all 19 spokespeople, and party spokespeople, and they knew that 20 come the Council meeting, in fact all of the time, there 21 was all party agreement all the way forward, or 22 a support for either a motion that would be put forward 23 in terms of a Council decision. 24 Q. Just following that on, if you look at paragraph 56, 25 which is at the foot of this page and goes on to the 44 1 next one, the bit that's on this page is: 2 "We ensured that all of the parties were kept ..." 3 This is while you were convener: 4 "... were kept up to date from 2012 onwards. For 5 example, we set up the Transport for Edinburgh Board and 6 made sure that it was an all party group ... had members 7 from all the political groups. We also had the All 8 Party Oversight Group. As Transport Convener, I kept in 9 contact with all the opposition transport spokespeople." 10 The bit of particular concern: 11 "If there is anything that I have learned from this 12 project, it is that unless you can get all party 13 support, then party politics come into it. That can 14 damage the project as a whole." 15 A. It's such a large project in terms financially, and if 16 you consider other tram projects, which I say within my 17 statement as well, whether it be Nice or Dublin, is that 18 you cannot help but know that tram projects are 19 controversial, and therefore if you can get all party 20 support, I think it just helps with the process, and it 21 helps with the project. 22 I suppose if you don't get all party support, then 23 you do end up -- you mentioned earlier on about leaks to 24 the press, et cetera. Then you tend to then get people 25 who will use the project as a political football, and do 45 1 it as that. 2 For example, I do mention in my statement that there 3 was a by-election in the city centre prior to 2012 4 elections, where the SNP put on every single leaflet 5 that -- I was out campaigning, so I saw the leaflets 6 that they put out: we're very much anti-tram, we oppose 7 the tram. And if you compare that with the 2012, when 8 the SNP Group voted in September, I think it was, to go 9 to York Place, then there was very little mention of the 10 tram project then, and I think then that helped us 11 deliver it. 12 I'm not saying you have to, because all party, but 13 if you can get a majority, and I think when it is 14 projects of that scale, then it is important to be able 15 to do that. 16 Q. That could present quite a significant hurdle for having 17 local authorities implement this sort of project? 18 A. Sorry, I'm not quite -- 19 Q. Could that present quite a significant hurdle for local 20 authorities implementing this sort of project, in that 21 changes in politics, the political balance of a Council, 22 which happens from time to time, could imperil the 23 project part way through? 24 A. Well, except that politicians are elected and they're 25 accountable to their electorate, and the manifestos they 46 1 put forward would put that forward. So therefore, you 2 know, whether you can get all party support is -- I'm 3 saying, you know, it can damage the project, which 4 I think it did, but it doesn't mean that every single 5 project has to have all party support. 6 But what you will find is that within councils 7 throughout Scotland, is that the majority of the 8 decisions are taken on an all party basis. All I'm 9 saying is that if you can get all party support, I think 10 it facilitates and it helps the project. 11 Q. You referred to a situation as happened in Edinburgh, 12 where there was greater consensus after 2012 towards the 13 end of the project. If it happens the other way round, 14 you start with consensus, and then because of a local 15 election, you end up with a weaker majority or you lose 16 your consensus, that would suggest there could be damage 17 to a project in that situation? It could become 18 a political football part way through? 19 A. Yes. Except that it -- depending on -- this is kind of 20 surmising that depending on the political make-up of the 21 Council, and that's why I'm suggesting that if there was 22 a large project like this, if you can, I'm just 23 suggesting, that if you can get all party support, then 24 I think it does deliver the project easier than it does. 25 Yes, it can change, but normally now, rather than 47 1 four years before, you have a five-year term of local 2 authorities, and setting out at the beginning your -- 3 the projects you want to deliver, I think, is important, 4 and you have that period. 5 You could say that about every single service rather 6 than just projects like the tram project. 7 Q. I want to ask you about two passages in your report as 8 to where the balance of control lies in relation to 9 these matters. 10 If you could first look at paragraph 98, which is on 11 page 23 of your statement. 12 It's the last sentence of this. You emphasise that: 13 "Any process of making decisions was for the 14 Council, while the implementation of those decisions was 15 for TIE or TEL." 16 I think you pick up on that at a much later stage on 17 page 169 of your statement. 18 A. Which paragraph? 19 Q. We come to paragraph 688. It's just the sentence at the 20 top. We are missing the first word: 21 "... TIE were taking more policy decisions than they 22 should have done." 23 Right at the very top of page 169. 24 A. Okay. 25 Q. What were the policy areas which you considered TIE were 48 1 trespassing into? 2 A. One, I suppose, is the policy decisions in terms of 3 a direction -- I'm trying to think. In terms of going 4 forward in negotiations with the company, with the 5 contractors. In terms of what -- a policy in terms of 6 how they should be negotiating with that contractor and 7 what -- you mentioned about what type of discussions and 8 what their tactics should be, and I think that was 9 a policy decision rather than just being left for them 10 to do. 11 Q. So that should have been a matter that had gone back to 12 the Council? 13 A. I would say so, yes. I'm just giving that as an 14 example. Again, it's many, many years ago, and to just 15 pick out one policy decision. But I think that you 16 talked about, you know, confidentiality and that, and 17 I think in that middle period of time, and towards the 18 end, was whether TIE were making decisions that didn't 19 really tie up with the Council. 20 Q. I'm just interested in how this matter, in something as 21 ongoing as a commercial negotiation, how that could 22 effectively be reported to the Council so that they 23 could provide input or say what they wanted to do? 24 A. Well, that would be the -- with the Chief Executive and 25 the senior management team of the Council and presumably 49 1 the Leader of the Council, in terms of were they going 2 in the right direction that the Council wished to in 3 terms of policy, and whether that was for the example of 4 tactics in terms of negotiations with the contractor. 5 Q. Right. So you see it's a matter to be dealt with by the 6 Council Executive, rather than the Council members? 7 A. Yes. 8 Q. If you could also look, different passages within your 9 statement. Looking back at the role of the Council. 10 A. Which one? 11 Q. It's at page 78. 12 A. I have just mixed them up now. Sorry, which was that, 13 sorry? Page? 14 Q. It's page 78? 15 A. Okay. 16 Q. In paragraph 322 you talk about the relationship between 17 the Council and the contractors. There's a breakdown in 18 the relationship: 19 "When the dispute was at its height later on, tools 20 were put down and no work was happening, at every full 21 Council meeting there was an opportunity to ask 22 questions of the Council Leader. I remember Andrew 23 Burns, the Labour Group Leader, asking Jenny Dawe, the 24 Council Leader at every Full Council Meeting around this 25 time what she was doing or what actions she was taking. 50 1 It seemed they were doing nothing. The Labour 2 councillors were very frustrated that the administration 3 were sitting back and saying it was nothing to do with 4 them." 5 If you could also look at the following paragraph. 6 If you just look at the bit about six lines up from the 7 end, you record that: 8 "We were therefore very frustrated that there was no 9 political leadership." 10 What did you expect the Council to do? Or the 11 administration, I should say, to do? 12 A. If we're talking about this time, this was the ongoing 13 dispute between TIE and the contractor, and all tools 14 went down. Again, this is memory as well. All the 15 tools went down and nothing was happening. 16 Bits were dug up all over the city and there was an 17 impasse, and there was lots of stuff in the press about, 18 you know, robustness, so I am just giving you an 19 example -- 20 Q. I should have given you context for the passage we 21 looked at. If you look at the previous page, page 77 of 22 your statement; it is the difficulty of putting things 23 on screen like this. 24 A. I know. 25 Q. What we're looking at, it's a consideration by you of 51 1 the Princes Street dispute, which is the one that arose 2 in February 2009, and then you go on to two paragraphs 3 on the following page. 4 What you were crying out for was -- what you were 5 concerned by was a lack of political leadership and 6 I was wondering what it was you expected the leadership 7 of the Council to do? 8 A. If I -- I wasn't the Leader of the Council, but if it 9 was myself, I would have felt the opportunity to go and 10 speak to TIE, first of all, if I felt that they were 11 not -- all tools were down, nothing was happening, 12 then -- I'm only doing this on my view, and I think it 13 was a view of the Labour Group, that the Leader of the 14 Council should have got more involved and actually 15 should have -- as I said, I think, by the scruff of the 16 neck and tried to sort this out, and I would have 17 thought, and this is just my view, was at the time, was 18 that she should have then gone directly to Bilfinger and 19 the other contractors, but Bilfinger was the main 20 contractor, to try to resolve the dispute, because it 21 was obviously not being resolved by TIE. 22 Maybe that's undermining of TIE, et cetera, but at 23 the time, and I can only reflect on the time, is that it 24 seemed to go on for months and months, with no way 25 forward, and I think at the end of the day, the Leader 52 1 of the Council and the administration should have put 2 a more on hands kind of approach. 3 I think that was the -- this is again recollection 4 of Andrew Burns and our group was that -- she was the 5 Leader. Jenny Dawe was the Leader of the Council and 6 the Convener of Transport and what were they trying to 7 do to resolve it, and I can't tell them what to do, but 8 I just felt that the answers were: that's not up to me, 9 almost like, I'm only the Leader of the Council; 10 and I felt there was no action being taken by them. 11 Maybe there was action being taken, but it certainly 12 didn't come over at the Council. It was like, well, you 13 know: we are waiting for -- TIE is dealing with the 14 contractor and it will all be sorted out; but there was 15 like no action, and Andrew Burns would ask: what action 16 are you taking as Leader of the Council? And the answer 17 that came in, I can't verbatim say it, but the answer 18 that seemed to come back, and our perception was no 19 action. 20 Q. That sort of, as you described it in your statement, 21 taking by the scruff of the neck and going and 22 approaching the contractors directly, is that not the 23 exact undermining the whole purpose of having an arm's 24 length company? If you just do away with the company 25 and manage it direct from the Council? 53 1 A. That's ultimately what happened. That's ultimately what 2 happened towards the end of the project, that TIE were 3 wound up and the Council took it back in-house, 4 and I suppose what I'm suggesting, would that have been 5 more appropriate to take it earlier on, rather than 6 having months and months of that protracted kind of 7 discussion. And that is about a judgment to make, and 8 I'm just saying from our group's perspective, and 9 certainly Andrew Burns' perspective, was that the Leader 10 was sitting back and the Convener and not taking action 11 to try to resolve the situation. 12 Q. If it might have been appropriate to take control, to 13 take it back in-house earlier on, might it have been 14 appropriate to have that it that way from the very 15 outset? 16 A. I can't answer that. It's history. It's -- at the 17 time, back to -- at the time, it was deemed appropriate 18 to have TIE as an arm's length company for the delivery 19 of that project. We could go back to the reasons for 20 that, and that was honoured at that time, so that was 21 deemed as being appropriate to be able to deliver that 22 project. 23 Q. But by -- 2009 -- 24 CHAIR OF THE INQUIRY: I think in fairness, TIE wasn't 25 created only for the tram project. There were other -- 54 1 there was transport initiative, which are a series of 2 projects, and the impression I got from reading some of 3 the material at least was that TIE was set up to bring 4 into effect a lot of different projects, although the 5 tram project was by far the most significant. Is 6 that -- 7 A. That's correct. That's correct, yes. 8 MR LAKE: Moving on to a different matter, I want to 9 consider the governance structure of the tram. 10 Can you remember who the various companies and 11 organisations were, involved in the delivery of the tram 12 project? 13 A. In terms of the companies or -- 14 Q. Yes, companies and -- entities outwith the Council. 15 A. Well, obviously there's the contractor which was -- you 16 mean Bilfinger, CAF and Siemens, but Bilfinger were the 17 main contractor so the three of them were part of 18 a consortium. There were also other consultancies in 19 terms of latterly Turner & Townsend and I can't remember 20 all the names, but there were obviously people who had 21 been involved with other tram projects as well that were 22 brought in as consultants and expertise. 23 Q. I was thinking more of the client side when the project 24 was first established, 2007/2008? 25 A. Transdev, you mean as well? 55 1 Q. You had Transdev. You had TIE. Do you know which other 2 companies were involved on the Council side? 3 A. I'm not sure. It goes back to 2007. So ... 4 Q. Were you aware of Transport Edinburgh Limited and its 5 role? 6 A. Yes, it was very much seen as being a minor role. As 7 I can remember at the time. 8 Q. The Tram Project Board? 9 A. Yes. 10 Q. What was its role? 11 A. Its role was to bring in, for example, Transport 12 Scotland officers who had some expertise, and also 13 Lothian Buses, to bring in obviously their expertise in 14 terms of the delivery of a public transport system in 15 the city. And obviously they were 91 per cent owned by 16 the City of Edinburgh Council as well. 17 Q. That's Lothian Buses are owned by 91? 18 A. Yes, 91 per cent. It's 100 per cent publicly owned, 19 it's 91 per cent by Edinburgh, and then the other local 20 authorities make up the other 9 per cent. And obviously 21 they were key in terms of their very good reputation of 22 delivery of a public transport owned company. 23 Q. And then of course you had the Council and its 24 sub-committees as well? 25 A. Yes. 56 1 Q. Were you happy that there were so many different bodies 2 involved? 3 A. I can't answer that in terms of back to that length of 4 time. 5 Q. Were you happy at the time? Do you recall any concerns 6 on your part at the time? 7 A. No, I don't. I mean, I suppose if you do go back to the 8 Audit Scotland Report, they believed in that time, in 9 2007, that the governance process -- if you've got the 10 document, I did say that it was -- the governance set up 11 in their opinion was robust. So therefore I wouldn't 12 have concerns if that Audit Scotland report was saying 13 in 2007 that the governance, which is part of the 14 Council and the outside organisations was robust in 15 terms of the tram project. 16 Q. I think at the time of that Governance Report, Transport 17 Scotland was still involved in the governance, and you 18 will be aware that Transport Scotland, during 2007, 19 withdrew from the governance of the project? 20 A. Yes. 21 Q. Did that cause you any concern? 22 A. Yes, but at the time I wasn't aware of it. It wasn't 23 until I think there was a Freedom of Information request 24 that it became clear that -- and this is again memory -- 25 that John Swinney had instructed, as I understand it, 57 1 whether that's the word or whatever, but had told 2 Transport Scotland to withdraw from the Project Board 3 and it was -- some of those ones. I think I do say in 4 my statement, I think that was one of the reasons 5 perhaps I think it was detrimental to the project. 6 Q. Do you know which one of these various bodies actually 7 had the responsibility to execute the tram project? 8 A. Ultimately the Council sets the policy and the strategy, 9 but to deliver it would be my understanding, would be 10 TIE. And obviously TEL and perhaps that, you know, 11 having the two organisations, but there was, you know, 12 this is again -- unless you can show me, it was very 13 clear what the responsibility of TIE was, and what the 14 responsibility of TEL was. 15 Q. We will -- I want to come to look at the Final Business 16 Case in a little while, but firstly taking a little look 17 at TIE and the rationale for that in your statement. 18 Could you look at page 26 of your statement. I want to 19 look at paragraph 111 with its subparagraphs. You set 20 out there what you believe were the four important 21 reasons for the creation of TIE. 22 Just looking at the first one, first of all, is that 23 it allowed party scrutiny of the project because there 24 was representation of all political parties, apart from 25 the SNP. 58 1 Do you consider that that objective was met? 2 A. Probably not. But I think that's difficult for me to 3 answer. It's more -- I think it would be more for 4 people who sat on that board to believe. All I'm saying 5 is that in my view was one of the reasons, and I can't 6 answer that since I wasn't part of that board. 7 Q. Did you feel it was being subject to scrutiny by your 8 party while it was going on in those early stages? 9 A. Yes, and it then comes back to the previous question 10 about confidentiality, and we got reports from the 11 people who were on the board, but a lot of it was about 12 confidentiality, but they did report back in terms of 13 giving assurances that on certain issues, and that was 14 over a long period of time as well. 15 Q. The second important reason was said to be management 16 ability. That's buying in management ability for the 17 project. 18 In your view, was that objective satisfied? 19 A. I think -- this is just my view, and I think it was 20 a lot of elected members' view, is that a lot of the -- 21 a lot of management changes happened. I can't remember 22 how many Chief Executives there were. And changes in 23 the personnel at TIE and TEL, and therefore I would 24 probably say not, because the changes that seemed to be 25 people left and new people came in, and I don't think 59 1 that's very -- it's not very good in terms of stability 2 of the management and giving confidence to the people 3 who worked within the organisation. 4 Q. The third reason you look at is the opportunity to 5 engage non-executive directors who were not councillors 6 with experience of trams, transport projects, 7 construction and those types of areas. 8 Now, do you consider that TIE was successful in 9 engaging non-executive directors who had experience in 10 those areas? 11 A. My memory served me at the time, the individuals' names 12 did have experience, and were brought in for that, and 13 that was my memory at the time, and that there were 14 people who had a reputation and at that time was 15 reasonably happy with the individuals at the beginning. 16 But as you know, there was changes in the non-execs as 17 well. 18 Q. Finally, the opportunity and capability to review 19 funding for the projects. Did TIE engage that? Is that 20 still a justification for its existence? 21 A. Well, also, as well, is that when -- I haven't put it in 22 there, but perhaps one of the issues -- I know that one 23 of the issues was whether funding could be facilitated 24 from other organisations, whether it be European funding 25 or other ways of getting funding in as well. The 60 1 Council might not be able to do, but TIE would have that 2 opportunity to use some of their expertise as 3 non-executive directors, and some of the people that 4 were there to bring in funding that would help the 5 project as well. Not just that project, but as 6 I previously mentioned, other projects as well. 7 Q. Was the performance of TIE -- are you aware of the 8 performance of TIE being subject to any review? 9 A. No. 10 Q. Would that have been useful? 11 A. Yes. 12 Q. Was there any examination of the track record or 13 previous experience of TIE on other projects before they 14 were engaged to do the tram? 15 A. If my memory serves me, no. 16 Q. I think it's established that the approval of the tram 17 project, the ultimate decision to go ahead, took place 18 in December 2007. I'm just interested to establish what 19 was being weighed up by the Council at that time? 20 Because the money that the Council were being asked to 21 expend was 45 million maximum. 22 A. Mm-hm. 23 Q. In return for that, they were getting something which 24 would have a benefit in the region of GBP545 million 25 because of the Scottish Government contribution? 61 1 A. Mm-hm. 2 Q. Did that not make really as far as Edinburgh were 3 concerned, the benefit of the trams was always going to 4 be far exceeded by the city's contribution? 5 A. Yes, because the Scottish Government had made a -- 6 sorry, the Scottish Parliament had made a decision to 7 allocate 500 million and the project at that time, for 8 both line 1a and line 1b, was to be around about that 9 745 million and the contribution from the Council was 10 45 million, but the contribution from the Scottish 11 Government was 500 million. And obviously the advantage 12 of that, and being able to deliver earlier on, I talk 13 about what the benefits are, but deliver publicly owned 14 public transport, and a different mode of transport in 15 the city, was seen as an advantage for the city. 16 Q. The benefit to Edinburgh was always going to be greater 17 than GBP45 million? 18 A. The benefit to Edinburgh would be to bring in a new 19 publicly owned public transport system and part of it 20 was also how it would integrate with Lothian Buses as 21 well, which I said previously, is 91 per cent, but 22 wholly owned by the Council. So 91 per cent and to have 23 an integrated public transit system. 24 We, as a city, were growing. We have a fantastic 25 Lothian Buses, and increased public transport use in the 62 1 city at that time as well and it's growing, and the 2 challenges we have in terms of congestion, in terms of 3 getting more people on public transport, and the 4 advantage also in terms of a tram is that you will get a 5 mode shift. There was a lot of discussion regarding 6 that, in that people who perhaps might not use a bus 7 would use a tram, and that was an experience from other 8 cities. 9 So the benefit of Edinburgh financially, yes, but 10 also the benefit of increasing use of public transport 11 and integration with Lothian Buses was seen as an 12 advantage for the city. 13 Q. And all these advantages flowed to the city were just 14 a maximum -- intended maximum of GBP45 million? 15 A. Yes. 16 Q. So because of the contribution from the Scottish 17 Government, the GBP500 million, it was almost 18 a no-brainer for Edinburgh to say yes, this made sense 19 for Edinburgh? 20 A. Well, if you take -- obviously you take the principles 21 of what the reasons why you're -- why the project, you 22 want to do it in the first place, and how you finance 23 it, and obviously how it stacks up in terms of, you 24 know, the benefit, but also, yes, if you're going to get 25 500 million out of a 545 million project, then that 63 1 would obviously be advantageous for the Council and the 2 city. It's an investment into your public transport, 3 not directly from the Council, but from the Scottish 4 Government. 5 Q. Looking back at 2007, trying to do away with hindsight, 6 how important was it to the Council that the 7 GBP45 million should not be exceeded -- their 8 contribution? 9 A. I would say it was pretty important because we had lots 10 of other challenges in terms of education, in terms of 11 school buildings, in terms of leisure facilities, in 12 terms of investment in our roads, and investment in 13 other projects. And therefore I would say that at that 14 time, and we were given assurances that when the 15 contract was signed, that it was a 95 per cent -- it 16 sticks in my head very clearly, as I probably say quite 17 often in my statement, 95 per cent fixed price, and 18 therefore our assumption with putting in contingencies, 19 et cetera, that we would not be asked for any more than 20 the 45 million. 21 Q. If I could ask you to look at page 35 of your statement, 22 please. 23 A. 35? 24 Q. 35. 25 A. This is getting mixed up now. Okay. 64 1 Q. At paragraph 151 and its subparagraphs. You refer to 2 the significant risks facing the project. The first one 3 there is the advance utility works, and you note in your 4 statement that this was a big concern for the Labour 5 Group. What was the concern? 6 A. Well, as I also say in my statement, that Edinburgh is 7 a very old city, and the issues were when you start 8 digging up what you will find. I think you did find 9 quite a few interesting past burial grounds et cetera 10 and that as well. So what were you going to dig up. 11 But also it was very clear there was not a clear map 12 of where all the utilities were situated as well. So to 13 me that was -- and the Labour Group was a risk in terms 14 of the utility works and ensuring there was enough 15 contingency in the budget to ensure that, because it's 16 not something you can anticipate. You can do some kind 17 of preparatory work, but it wasn't something you could 18 anticipate. And that's why -- this again memory -- is 19 there was lots of questions about contingencies in terms 20 in ensuring there was a large enough contingency in the 21 budget to ensure if there were challenges in terms of 22 when you dug it up, or where the utility works were, and 23 what these changes were. 24 Also you will have the working with utility 25 companies as well. 65 1 Q. The second risk you refer to is changes to project scope 2 or specification. Were you given any information about 3 what could be done to try and address that or prevent 4 that? 5 A. Well, particularly is design issues. And I think it 6 came very clear to me during the project, probably not 7 at this time you are asking me the question, but to my 8 experience, and particularly if I go back to very early 9 on in the EICC, that what I was very much taught then is 10 that you must have your design issues sorted out really 11 totally before you sign any contract, because after 12 that, then that's when you get into difficulties in 13 projects that I have been involved with, where every 14 single design issue is nailed down before you sign 15 a contract, it's absolutely crucial. 16 So that's why I'm saying that that project scope or 17 specification, but particularly the link to design 18 issues needs to be, and at that time, was given 19 assurances that was the case. 20 But it's obviously clear from the documentation that 21 I have been shown in December last year that in fact 22 that was not the case. I think it was only 40 per cent 23 of the design issues had been resolved, but I was not 24 aware of that at the time and I was only aware of that, 25 the December last year, when the documentation and other 66 1 information was given, but at the time, you know, 2 I would have asked them, I am positive I would have 3 asked the questions because of my experience on other 4 projects, design issues are absolutely crucial in terms 5 of delivering the project on your time and on budget. 6 Q. You referred there to the figure of design 40 per cent 7 completed. What difference would it have made to you if 8 you had known that back in December 2007? 9 A. I wouldn't have been happy to sign a contract. 10 Q. This is inviting a little bit of -- are you aware what 11 the response might have been of your fellow councillors 12 if they were aware that it was only 40 per cent 13 complete? 14 A. I think they would have been similar, because many of 15 them had experience of other projects and had sat on 16 other board, but also had experience as conveners at 17 that time. The group had experienced councillors who 18 had been either convener and responsible for projects 19 and they would have been, I'm assuming, similar to 20 myself in terms of design. 21 Q. Could we look at the following paragraph, please. 22 That's 152. Particularly the second subparagraph of 23 that. This is in relation to maintaining control of the 24 capital cost of the project, certain steps would be 25 taken and the second was: 67 1 "Negotiations with bidders should continue with 2 a focus on achieving a high proportion of fixed costs in 3 the final contracted capital cost." 4 It's an obvious question, but what did you 5 understand by the expression fixed costs? 6 A. 95 per cent fixed costs. 7 Q. That was the number of costs that were fixed? 8 A. Yes. 9 Q. But what did it mean to have a cost fixed? 10 A. It meant that the budget would be 95 per cent fixed 11 cost, which would mean that the budget would be then 12 including contingencies, but the 95 per cent was fixed 13 cost, which meant all the designs were sorted out and 14 the costs, then the budget would not exceed the 15 545 million. And that's my understanding and as I say, 16 the 95 per cent is fixed in my head, that these were 17 fixed costs so we would not go over the 545 million. 18 MR LAKE: My Lord, if there was going to be a morning break, 19 I'm going to go on to another document now. 20 CHAIR OF THE INQUIRY: We will adjourn until 11.20 for 21 a break. 22 (11.01 am) 23 (A short break) 24 (11.20 am) 25 CHAIR OF THE INQUIRY: You're still under oath. 68 1 A. Yes, thank you. 2 MR LAKE: Thank you, my Lord. 3 Just before we broke, I said I was going to refer to 4 another document. But there's just something I would 5 like to pick up from matters you were discussing this 6 morning. You mentioned that when you were being given 7 briefings by Council officers, claims for 8 confidentiality were made from time to time. 9 Can you recall now which Council officers said that 10 matters were confidential? 11 A. I mean, we had how many briefings. Probably, you know, 12 tens if not hundreds, but probably coming up to that. 13 I think it was, to be honest, it was more the people 14 who sat on the TIE at TEL Boards, the elected members, 15 who had said that it was confidential and they couldn't 16 give some more detailed information. And if -- the 17 majority of the people who briefed, it would be 18 Tom Aitchison, the Chief Executive, Donald McGougan and 19 the Director of City Development and Corporate Services. 20 They were the four main people who would normally brief 21 us. I can't -- you know, in terms of the number of 22 briefings, name one individual or all of them or 23 whatever in terms of confidentiality. 24 Q. The same problem may arise in relation to my next 25 question. 69 1 In addition to briefings you might get from the 2 directors, the councillors who were directors on the 3 company, did you get briefings from other directors of 4 the companies or from the officers of those companies 5 where they said they couldn't disclose matters because 6 of restrictions on confidentiality? 7 A. I don't -- I genuinely don't remember, what the 8 individuals, et cetera, but there was times when people 9 would say they couldn't say because it was confidential, 10 and because of the negotiations with the contractor, and 11 they didn't feel they could give that information, 12 because I think they believed that it may well end up in 13 the public domain. 14 Q. I understand. Now if I can turn to the document which 15 I said I was going to look at. It's got reference 16 CEC02083536. 17 You can see from the title page of this that it's 18 for -- it's item or a paper, a presentation that was 19 going to go forward to a meeting of the Council taking 20 place on 25 October 2007? 21 A. Mm-hm. 22 Q. If you can just take it from me, that by that time you 23 had the first version of the Final Business Case had 24 been made available. 25 I just want to ask you first of all, although it was 70 1 a long time ago, can you remember who gave this 2 presentation to the Council? 3 A. I don't remember, but normally it would be the person to 4 sign off the documentation would be the Chief Executive, 5 Director of Finance and Director of Corporate -- 6 Director of City Development, but ultimately I would 7 assume at that time it would be the Chief Executive. 8 Q. If we go on to the next page, and rotate it, you can see 9 just the title page, explains that this does relate to 10 the presentation, it does relate to the Final Business 11 Case. 12 Then if we go to the following page, and rotate it 13 once again, you can see under the heading of June 2007, 14 one of the matters noted is the review of the tram 15 project by Audit Scotland, and there are two quotations 16 or sound-bites from that relating to financial management 17 and procurement strategy. And you have already 18 explained to us this morning the reliance you placed on 19 that. 20 What I want to ask you about, is if you look at the 21 foot of the page, under September 2007, you will see 22 there's reference to a further external audit being 23 carried out by OGC, that's the Office of Government 24 Commerce, confirming project status green. 25 Were you aware of that at the time? 71 1 A. If it was a presentation to the Council, then I would 2 have read the reports and we would have had a briefing 3 before. So if it's on the report, then I suppose Audit 4 Scotland was more what I was looking at and the two 5 quotes that are there, but if it's in the document, it 6 would have mean then, it would have given me and other 7 members of the Council comfort that the status was green 8 as well. Which would mean, presumably green means it's 9 okay. It was robust, is the word I would probably use. 10 Q. I know it's a long time ago once again, but do you 11 recall ever having seen the report from the Office of 12 Government Commerce? 13 A. I genuinely don't know. I can't remember. I'm assuming 14 if the preparation was there, then the documentation -- 15 this is where it's very difficult to work out the 16 timeline because towards either the end of the project, 17 but certainly after 2012, there became a process, 18 particularly under Sue Bruce, there was a process which 19 would be before this, but there was a process where 20 elected members could go into what's called a data room, 21 and there would be an officer there. You would sign in, 22 and you would be able to see all the documentation, the 23 back documentation, and I don't know whether that was 24 the case then or not, but certainly after 2011/2012, as 25 I say, there was a data room where elected members could 72 1 go in and see all the papers and be -- ask -- a large 2 number of documents and ask questions. 3 Q. Was everything placed in the data room or were there 4 some restrictions? 5 A. Most -- I would say my recollection is all of the 6 documentation was in the data room, but you had to sign 7 a document saying that it was -- you would not repeat 8 outwith and you couldn't take copies and things, but 9 everything -- as far as I can remember, that was after 10 I would say, this time. I'm not sure if we had a data 11 room then or not, but certainly towards 2011 and 2012 12 onwards, and it still continues to this day, there's 13 a data room for the current position regarding the 14 extension of the tram where every elected member can go 15 along and have a look at all the documents, and that's 16 my recollection, that all the documents were available. 17 Q. In the period 2007 to 2011 there were concerns about 18 leaks. 19 A. Mm-hm. There's always concerns about leaks in 20 a Council. 21 Q. But notwithstanding that, from what you are saying, 22 everything is made available. People sign an 23 undertaking not to disclose it, but -- 24 A. If my memory serves correctly, I do not think it was at 25 this time, but it became basically after -- this is my 73 1 recollection. And Sue Bruce and Alistair Maclean is 2 that they then had a data room that you could have all 3 the documentation, and maybe that was a lesson from 4 previous -- you would have to ask them but certainly as 5 an elected member, I have been to data rooms for 6 different projects, but particularly the tram one where 7 all information, all the appendix, all the information 8 was available for you to request and to have a look at 9 and ask questions to the person that was sitting there. 10 Q. Just going back then to 2007, could we go forward in 11 this document to page 14. 12 We can see there that the second last bullet point 13 refers to 99 per cent of the costs now firm, fixed or 14 based on agreed rates. 15 How important was that to you in being faced by this 16 in October 2007? 17 A. Very important. I think -- I'm not quite sure why it 18 changed from 95 to 99, but certainly that gave, as an 19 elected member, kind of a comfort that we were going to 20 bring in the project on the budget. 21 Q. If you go to the following page, the second bullet point 22 there notes that if the programme and scope are adhered 23 to by the Council and TIE, very limited exposure to cost 24 overrun. 25 Once again, what importance was attached to that 74 1 when you were considering this at this time? 2 A. Very important, yes. Obviously you're looking at the 3 timescale and budget, are the two important points of 4 the project, and obviously quality as well, but you're 5 obviously wish it to keep within the budget. But also 6 delays as well in terms of whether it's financial or 7 whether its timescale is very important, because of the 8 disruption in terms of for businesses and for the 9 public, and therefore I think that's really probably 10 saying financial, but both were quite important. 11 I presume based on no major delays means delays in terms 12 of timescale and cost overruns probably means financial. 13 I read it as that. 14 Q. Yes. Then look at another document. This is at 15 CEC01395434. You will see this is the Final Business 16 Case Version 2, dated December 2007. Do you recall 17 seeing this document round about the time? 18 A. If my memory serves me correctly, it would have been -- 19 if it's a Final Business Case Version 2, it would have 20 been presented as a briefing. 21 I'm not sure if this was presented to the Council as 22 well or was it just for a briefing? I don't know 23 because it doesn't really have details of whether it's 24 Council report or whether it's a briefing report. But 25 it would be one or the other. 75 1 Q. What might make it clear is if I go to another document, 2 which is CEC02083448. 3 A. Okay. 4 Q. This is a report to the Council for a meeting on 5 20 December, recommending approval of the Final Case 6 that's been prepared. So this is I think what would go 7 with the Final Business Case -- 8 A. This one had obviously definitely gone to the Council, 9 so it would be seen by us all as elected members, but 10 the problem is that previous document, unless it was, 11 I suppose, put down as briefing to elected members, 12 I wouldn't -- because there were so many briefings and 13 so many papers, I can't say whether it definitely was or 14 whether it was just to other people. I don't know. 15 Q. If you look at page 4 in this document, which we have on 16 screen, in paragraph 5.1 we can see that Final Case 17 Version 2 is included as a background paper to this 18 report. 19 A. Okay. 20 Q. And reflects no material. So that would seem to record 21 the document that we saw before had gone to Council. 22 Can we go back to looking at the Final Business 23 Case. That was CEC01395434. 24 Without having to go through every page, if you take 25 it from me, it's over 220 pages long, this report? 76 1 A. Okay. 2 Q. Did you have an opportunity to consider this in detail, 3 read it fully before the meetings took place to consider 4 the position? Make this decision? 5 A. Did you say this was part of a appendix? 6 Q. This was the appendix to the report? 7 A. Well, if it was an appendix to the report, then the 8 appendix would be available for elected members to -- 9 whether it was included -- because we are going back to 10 2007. And I'm not sure if everything was on computers 11 by that time or it was paper. But mostly at that time 12 it would be paper. So if the appendix was there, then 13 you would have an opportunity to go through it, and as 14 I explained, we would have before the Council meeting on 15 the Thursday, the Labour Group meeting on the Tuesday 16 evening, and obviously there were times when -- and 17 I can't say this is the case or not. There was times if 18 this was extremely important, obviously, Final Business 19 Case, you might have the officers at the beginning of 20 the Labour Group meeting, and I would expect it to go in 21 detail as part of the discussion of the Labour Group 22 about the Final Business Case. And would have read the 23 document. 24 Q. Was it your experience that members would read through 25 the document in full, or would they rely on the briefing 77 1 that was being given by the officers? 2 A. It's a mixture. It's down to the individual. Obviously 3 this is really important because it's the Final Business 4 Case to be signed off by the Council. So I would expect 5 all elected members to have read it in detail, and 6 obviously if you've got a briefing, that briefs as it's 7 called, it's a briefing. So you get an overview, but 8 I think an important document as this, I would have 9 expected all of the elected members to read the 10 document. 11 Q. Go forward to look at section 6 of the report, which 12 begins on page 84. You can see the heading, 13 "Governance", at the top of the page. If you look at 14 paragraph 6.4, it notes: 15 "The structure deployed in this period to mid 2007 16 is described in the following sections and highlights 17 the following four key bodies, the roles of which are 18 represented in two figures which are on the following 19 page." 20 But we have got the TEL Board, Transport Edinburgh 21 Limited, the Tram Project Board and then two 22 sub-committees of the Tram Project Board. 23 A. Mm-hm. 24 Q. Were you surprised, do you recall why it was that TIE 25 was not by that time regarded as one of the key bodies? 78 1 A. I genuinely can't remember and don't know. But looking 2 at it now, and I can only look at it now, then yes, it 3 does look a bit peculiar. 4 Q. If we jump forward then to page 91 of this, and we look 5 at paragraph 6.32, it notes that the TEL Board is 6 focused on its overall responsibility to deliver an 7 integrated tram and bus network for Edinburgh on behalf 8 of the Council: 9 "It will make formal recommendations to the Council 10 on the key aspects of the project." 11 Did you understand that that role of making 12 recommendations to the Council had switched to TEL by 13 that stage? 14 A. Not aware of that. 15 Q. At paragraph 6.38, towards the foot of the page, we can 16 see that it is envisaged that certain of the elected 17 members of the TIE Board and its independent 18 non-executive directors will join, if not already 19 members, the TEL Board or the Tram Project Board, 20 including specific sub-committees, to ensure consistency 21 of approach and utilise relevant experience 22 productively: 23 "The redeployment of the elected members and the 24 independent non-executive directors will reflect the 25 emphasis of the TEL Board on oversight on behalf of the 79 1 Council of matters of significance to the elected 2 members in relation to the project delivery and 3 preparation for integrated operations ..." 4 Two: 5 "... the emphasis of the Tram Project Board on 6 delivery of the tram system to programme and budget and 7 the preparation of integrated operations." 8 It seems to me there is a lot of emphasis there that 9 it will be the Tram Project Board responsible for 10 delivery of the tram system to programme and budget. 11 Does that reflect your understanding at the time of how 12 it was to be done? 13 A. My understanding was that both TIE and TEL had a job to 14 do. But the Transport Project Board had, for example, 15 as I understand it, at the time, had Transport Scotland. 16 I don't know when they came off it, but they were 17 Transport Scotland and Lothian Buses and other people 18 that were on that Transport Project Board which would be 19 more for the delivery in terms of their expertise and 20 knowledge. 21 Q. So if you look over the page, if you look at 22 paragraph 6.45 on the following page, you can see it 23 says that the Tram Project Board maintains its role as 24 the pivotal oversight body in the governance structure: 25 "The Tram Project board is established as a formal 80 1 sub-committee of TEL with full delegated authority 2 through its Operating Agreement to execute the project 3 in line with the proposed remit set out in section 6.32. 4 In summary, the Tram Project Board has full delegated 5 authority to take the actions needed to deliver the 6 project to the agreed standards of cost, programme and 7 quality." 8 If the Tram Project Board has that full delegated 9 authority and is there to execute the project, what did 10 you understand the role of TIE to be? 11 A. TIE was the overall organisation to presumably 12 scrutinise and -- the Transport Project Board would then 13 feed into the TIE Board as well in terms of an overview 14 of delivery. 15 Q. It's just that the start of that paragraph, we saw that 16 it said that the Tram Project Board has its role as the 17 pivotal oversight body. I'm just wondering if the Tram 18 Project Board is the pivotal oversight body and is also 19 the one executing the project, what is left for TIE? 20 A. My understanding at the time with the information I was 21 given at the time was that TIE was the overall, and they 22 appeared to be the ones who would be part of the 23 briefings and were seen as the organisation where they 24 had elected members and other non-execs on it, would be 25 the ones that would be having the oversight and 81 1 delivery. Not so much delivery, but the oversight and 2 scrutiny, which would then feed in. 3 So perhaps the TIE's -- I'm just surmising in terms 4 of at that time. The TIE would be the organisation that 5 would feed into the Council, and report to the Council 6 what the delivery of the project and design matters, 7 et cetera, would be. The Project Board. 8 I'm just -- you know, this is back to 2007, and as 9 you say, quite a few hundred pages of reports, 10 and I would expect the people and the elected members 11 who were on the TIE and the TEL Boards, but the TIE 12 Boards in particular, to feel comfortable that this was 13 a way to go forward. 14 Q. So I think what you are describing there, a certain 15 reliance on the people who are closest to the companies 16 to be comfortable with what was happening? 17 A. Yes. And also you have the conveners and the 18 spokespeople, and you can rely on them as an elected 19 member to keep you up to date as well. If you do all 20 the reports, what you would expect them to highlight any 21 changes or any issues that they may well think is 22 appropriate, and that's what you would expect, that 23 spokesperson or convener to be able to keep elected 24 members up to date, but also if they were a member of 25 that board, to at least say -- this is going back to 82 1 2007 -- if there was changes, what were the reasons for 2 the changes and what was the positives. What was the 3 reason for the changes. 4 Q. If you go forward -- we will start with page 97, just to 5 get some context. 6 I'm going to section 7 of the report now where it's 7 dealing with procurement. 8 If we then turn to page 104, you get to discussion 9 of the SDS contract. I think we understand that's the 10 design contract that had been awarded to Parsons 11 Brinckerhoff. 12 Under that heading, if you look over the page to 13 paragraph 7.53, you can see there it says: 14 "The original assumption was that overall design 15 work to detailed design would be 100% complete 16 when the Infraco contract is signed. Due to a number of 17 delays, largely outwith TIE's control, this is now not 18 achievable. However, by identifying key risk areas and 19 prioritising SDS activities, TIE is completing several 20 key elements of the detailed design in time to inform 21 the Infraco bids on price critical items. This has 22 enabled the Infraco bidders to firm up their bids based 23 on the emerging detailed design and thereby reduce the 24 provisional scope allowances and design risk allowances 25 that they would otherwise have included." 83 1 Now, I think you've said earlier that you thought 2 the design was going to be 100 per cent complete at the 3 time. We're told here that it's not 100 per cent 4 complete. Were you told how complete it was? 5 A. I don't remember from that time, but I'm assuming there 6 would have been questions. If it wasn't 100 per cent, 7 what percentage. But if -- in that paragraph also, it 8 does say there's completing several key elements of the 9 detailed design in time. So you would expect, if that 10 several key elements, it would be quite a high 11 percentage. My assumption at that time would be there 12 were questions asked about what the percentage -- 13 I can't remember, but if it was an example, I only found 14 out last December, it was only 40 per cent, I think, 15 most of us would have been extremely concerned. 16 I assume that it wasn't 100 per cent, but it was by that 17 wording, which is there, several key elements are there. 18 In time to inform the bid, you would have expected that 19 was key elements, then it would be quite a high 20 percentage. But I can't remember what percentage at the 21 time. 22 Q. You can't remember what you had in mind reading this at 23 the time? 24 A. I would have thought, if it was a key element, we would 25 be looking at, you know, probably 80, 90 per cent. If 84 1 it wasn't, then if that was the answer that would be 2 given, I would be then concerned. 3 Q. Jump forward then to page 109. We can see part way down 4 the page, "Activities under MUDFA". If we look at the 5 paragraph at the foot of the page, 7.78, we can see that 6 it was reported to you that: 7 "The physical diversion of utilities commenced in 8 July 2007 and is scheduled to end in winter 2008. This 9 will result in the majority of utilities diversion works 10 being completed prior to commencement of on-street works 11 by Infraco. This means that potential conflicts between 12 the utilities and infrastructure works will be 13 minimised, and any remaining time overlap can be managed 14 so as to avoid programme conflicts on the ground. To 15 date work has commenced on some of the most congested 16 sections, such as Leith Walk, and is expected to be 17 complete on cost and programme." 18 What did you take from that? 19 A. I took that the utilities and the moving of the 20 utilities as it says, the majority of utilities 21 diversion work were completed prior, and therefore that 22 would be -- it was two sections that were sorting out 23 the utilities and then the contract would then -- be -- 24 for the tram would then come into place, and that the 25 majority, if not all of that, would be commenced before 85 1 the contract would then come into place for the delivery 2 of the tram project. 3 Because obviously one of the key issues, as we 4 previously discussed, was about utilities and one of the 5 concerns out of the three was about utilities. So 6 therefore, you know, if it's saying the resulting 7 majority of utility diversion works will be completed 8 prior to commencement of the on-street works by Infraco, 9 then I would have taken comfort by that that as one of 10 the three key issues that I mentioned in my answer, was 11 being dealt with. 12 Q. Can we turn to page 168. We just see here we are moving 13 into the section that was entitled "Risk Management", 14 and I want to move forward through this to 15 paragraph 11.48 which is on page 179. We see that the 16 first thing is the discussion there of allocation during 17 the development period, and we notice one of the key 18 risks, the fourth bullet point, is that there would be 19 detailed design development during the period. Do you 20 see that? 21 A. Yes, I do. 22 Q. Moving on to the following page, we can see the new 23 heading of "Allocation during the Construction Period". 24 If we look over the page you see what it says about that 25 at paragraph 11.59. 86 1 It notes that: 2 "Changes in design which are required by the public 3 sector after the signing of the Infraco contract will be 4 at risk of the public sector. The progress of detailed 5 design has somewhat mitigated this risk." 6 Dealing with the first sentence of that, from what 7 you say about your experience in other companies, you'd 8 not be surprised that changes in design required after 9 signing the contract would be at the risk of the public 10 sector. 11 A. Yes. 12 Q. What did you understand by the next sentence, that the 13 progress of detailed design has somewhat mitigated this 14 risk? 15 A. I'm assuming that the progress was progressing well. 16 Q. Were you given any indication at the time to the 17 contrary for any cause for concern? 18 A. No, other than the previous paragraph that you mentioned 19 about the 100 per cent. And what -- no. And I said -- 20 repeating myself -- I was quite shocked when I saw the 21 document last year. First time I was informed that 22 there was that percentage design, the officers were 23 aware of, had not been -- and presumably TIE had not 24 been sorted out before signing the contract and on this 25 date for the councillors. 87 1 So from information -- from what I can remember from 2 2007 and then reading it here, I would have felt at ease 3 that the design had been -- detailed design had been -- 4 basically the risk was not high. 5 Q. If you turn to page 189 of this, we can see a heading 6 about a third of the way down the page, "Milestone 7 summaries", and then different tables for different 8 elements of the project. 9 You can jump forward two pages to 191, we come to 10 the table for design and TROs. 11 I think we can see that the -- within that, the 12 third element on the table is the completion -- the 13 fourth element, completion of detailed design phase 1a. 14 A date was being given of 6 November 2008. 15 Was there any discussion with you as to how that 16 date had moved or was moving, or did you understand that 17 date to have always been the one that was being used? 18 A. If it was in the report, I would expect that that was 19 the one that was being used. I really genuinely don't 20 remember such a detail. 21 Q. Again, I appreciate it's a long time ago. Was there any 22 discussion of slippage in that date at the time? 23 A. As I previously said, if I thought that the design had 24 not been all sorted out before signing the contract, and 25 the utilities, et cetera, and these timescales, I would 88 1 have thought that we wouldn't be comfortable by agreeing 2 this report and agreeing the Final Business Case. 3 Q. If we could look back at the report which accompanied 4 this which we looked at a couple of minutes ago, it is 5 the document reference CEC02083448. If we can turn to 6 page 5 of this, and paragraph 8.1, the report notes 7 that: 8 "The report to Council in October 2007 provided 9 a detailed financial analysis of the Final Business 10 Case, based on the design work completed at that time 11 and upon the firm bids received for tram vehicles and 12 infrastructure. Some cost allowance has been made for 13 the risk associated with the detailed design work not 14 being completed, at the time of Financial Close." 15 What did you understand that to mean, that cost 16 allowance had been made for the risk associated with the 17 detailed design work not being completed? 18 A. There would be a contingency within the overall 19 financial details, and I'm assuming at that time there 20 would have been questions about that. What was the 21 percentage? I can't remember back then what the 22 percentage was because I think it changed. What there 23 would have been -- remember very clearly people asking 24 what the contingency was for certain parts, and did the 25 contingency -- was it in their opinion as officers, the 89 1 risk and the contingency matched up together in terms of 2 the contingency put aside was enough in terms of the 3 risk associated with it? 4 Q. I know I'm asking you to look back ten years, but do you 5 recall those questions being asked, or are you of the 6 view that those questions were likely to have been 7 asked? 8 A. I'm pretty clear on the design issues and on the 9 utilities, and I'm pretty clear that always a very key 10 issue for elected members about what contingency has 11 been made and within the contract. So I'm almost 12 positive those questions would have been asked about the 13 contingency, and whether officers felt that contingency 14 was at the amount that would balance up with the risk 15 associated with it. 16 Q. Can you say of whom that question would be asked? Would 17 have been asked? 18 A. I assume it would be the Chief Executive and Director of 19 Finance. But I can't say because -- they were always 20 the ones that were there, including the other directors 21 I mentioned. Because obviously it's to do with finance. 22 So you would expect -- and contingencies and -- 23 et cetera. That would be finance and director, and the 24 Chief Executive. 25 Q. If we can go now to a different document with the 90 1 reference CEC00906940. 2 This is a report to the Council for a meeting of 3 1 May 2008, entitled "Edinburgh Tram - Financial Close and 4 Notification of Contract Award". 5 If we see there's a narrative given of the situation 6 in paragraph 2.3: 7 "Negotiations have taken longer than expected, due 8 to the complexity and scale of contractual and related 9 issues arising from the contract suite. There has also 10 been a substantial amount of work undertaken to minimise 11 the Council's exposure to financial risk, with 12 significant elements of risk being transferred to the 13 private sector. This has resulted in 95 per cent of the 14 combined Tramco and Infraco costs being fixed with the 15 remainder being provisional sums, which TIE Limited have 16 confirmed as being adequate. The net result of 17 negotiations is a final estimate of phase 1a of the tram 18 network of 508 million. This figure secures the best 19 deal possible for the Council and Transport Scotland and 20 is well within the agreed funding envelope of 21 545 million." 22 We can see there a reference to the figure of 23 95 per cent which you have already talked about in your 24 evidence. 25 There's reference there in that context to 91 1 significant elements of risk having been transferred to 2 the private sector. That's in the negotiation since 3 December. Were you informed at the time of what risks 4 had been transferred? 5 A. I don't have -- genuinely don't have a memory of that. 6 But obviously the question would have been about the 7 risk to the Council, and I assume there would be 8 questions asked at that time of what was meant by 9 transferring into the private sector and what did that 10 mean. But I genuinely can't remember the details of it. 11 Q. You can't remember what was said. Again, I appreciate 12 time has elapsed, but can you remember for definite 13 whether or not these matters were raised as questions, 14 or whether it was just you would have expected them to 15 have been raised. 16 A. I would have expected it to be raised because it's all 17 about risk, it's all about contingencies, but also the 18 risk, as we had previously been told in the previous 19 year, when we finalised the contract, the risks would 20 not be to the public sector, and I assume we would be 21 asked the question about why -- what did it mean by 22 being transferred to the private sector, what was being 23 transferred to the private sector, and I would expect 24 that question to be asked. I genuinely can't remember 25 whether it was answered. 92 1 Q. If you look, it may be the same answer to paragraph 3.5 2 on the following page. You see that the increase in 3 baseline aggregate cost is largely due to the firming up 4 of provisional prices to fixed sums, currency 5 fluctuations and the crystallisation of the risk 6 transfer to the private sector as described in the Final 7 Business Case. I take it you wouldn't have a -- from 8 what you said already, you wouldn't have a recollection 9 of what risk transfer that is considering? 10 A. No. Sorry, but if you look at it, it's saying it's the 11 same risk transfer in terms of the report in 12 December 2007, which was part of the contract. So 13 I would expect from that that it was included in the 14 risk provisions reported to the Council in 20 December. 15 So from December to this time, looking at it now, 16 and I assume at the time when I read it, it would have 17 meant that it hadn't changed since that report on 18 20 December, the previous year. 19 Q. For completeness, could you look, please, at another 20 production with reference USB00000357. Now, this is 21 a report, not to the whole Council but to the Policy and 22 Strategy Committee of the Council, for a meeting on 23 13 May, headed "Edinburgh Tram - Financial Close and 24 Notification of Contract Award". 25 I don't think you sat on the Policy and Strategy 93 1 Committee at that time? 2 A. I think I did, and looking back, I didn't sit on the 3 Transport and Environment Committee, but looking back on 4 the committees, I think I did. 5 Q. You did? 6 A. Yes. 7 Q. Could I ask you -- 8 A. Sorry, it's just there was changes in leadership, and so 9 it might be later on, so it's quite difficult to work 10 out exactly the date. I might have. But I'm not 11 absolutely sure. 12 Q. I'll ask you questions about this as well and see if you 13 can tell me your understanding, even if you weren't on 14 the committee. 15 If we look to the following page, paragraphs 2.9 16 through to 2.11, 2.9 notes that: 17 "Following the introduction by Bilfinger Berger 18 Siemens of additional cost pressures late in the due 19 diligence process, TIE held negotiations with 20 Bilfinger Berger Siemens to substantiate its requests 21 for contract price increases and to seek to limit the 22 increase. To help reduce the risk of programme delays, 23 the price increase agreed will be paid as a series of 24 incentivisation bonuses over the life of the contract on 25 achievement of specified milestones. This approach 94 1 should minimise the risk to businesses and residents of 2 Edinburgh of delays to the agreed programme of works. 3 These changes increase costs by GBP4 million to GBP512 4 million, but have corresponding advantages by further 5 transferring risks to the private sector." 6 Again, do you have any idea, any recollection of 7 what further risks had been transferred between 1 May 8 and this? 9 A. I don't, no, sorry. 10 Q. In 2.11: 11 "In return for the financial amendments, TIE has 12 secured a range of improvements to the contract terms 13 and risk profile. Currently these areas are regarded as 14 highly confidential but, subject to contractual close, 15 a more detailed report will be submitted to the tram 16 sub-committee." 17 We have a clear example. You have been told 18 something has happened but you are not going to be told 19 what it is? 20 A. Correct. 21 Q. Do you recall ever being told what the changes were? 22 A. No. 23 Q. I'm finished with that document. 24 I would then like to return to your statement and to 25 look at paragraph 331 which you will find on page 80. 95 1 It's something we have touched upon earlier in your 2 evidence, but I just want to be quite clear about. 3 When you're referring to asking questions about the 4 risks associated with the disputes, was that being asked 5 of Council officers or representatives from the 6 companies? 7 A. Both. 8 Q. Both. Can you recall who you were asking the questions 9 of? 10 A. It would be -- it would have been the Chief Executive, 11 Director of Finance and the other directors I named. 12 And also, if my memory serves me correctly, and I would 13 have to kind of look back, it was Richard Jeffrey, 14 I think, was there. I can't remember who else, but I do 15 remember, I think, at that time that was when -- you 16 need to look to see whether that was the time that he 17 was there, but certainly someone from TIE/TEL -- TIE who 18 were giving us reassurances regarding dispute 19 resolution. 20 Q. Did they indicate whether or not that was their view, 21 the reassurance was their view or whether it was on the 22 basis of legal advice they had taken? 23 A. In this again memory, it serves me that at that time, 24 there was quite a lot of legal advice taken. So if my 25 memory serves me correctly, I think it was legal advice 96 1 as well as their advice, because at that time, if you 2 were in dispute, then you would have got legal advice in 3 terms of the likelihood of you winning those disputes or 4 not, and I don't think they would have taken legal 5 advice. That would be my memory of it. 6 Q. Can I ask you then to look at a different passage in 7 your statement. It's page 95, paragraph 386. You are 8 referring there to something that was noted in the 9 report, and perhaps I should say for completeness that 10 the report in question is identified on page 93 of your 11 statement as one from 20 August 2009. 12 But you note that it indicated that it was no longer 13 possible to forecast the final outturn of the tram 14 project and you were concerned about it? 15 A. Sorry, which paragraph? 16 Q. That's 386, the one that is enlarged on screen at the 17 moment. 18 A. Okay. 19 Q. The effect of that report was it noted that it was no 20 longer possible to indicate how much the tram project 21 would cost. 22 A. I don't think so. I think it was at that time when all 23 of these -- the majority that we were told at the 24 beginning that the disputes between TIE and the 25 contractor would be won by TIE, and then it became 97 1 clear, as I think further briefings happened, that -- 2 and also from -- probably, I think if I remember 3 correctly, from the press as well, that TIE were losing 4 the cases and that -- I can't remember the percentage, 5 but a high percentage were being won by the consortium, 6 and we did press very hard because we'd been told very 7 clearly, and assuming legal opinion, that TIE would be 8 winning these disputes; and I think that's when at that 9 point in time the Labour Group in particular started to 10 be extremely concerned about whether this was going to 11 be kept on budget, because if we were losing disputes, 12 obviously there would be a financial consequences for 13 that. 14 Q. You say that the Labour Group were concerned, in that 15 you were being told it was no longer known how much the 16 project was going to cost finally, what was the reaction 17 to being told that? You just couldn't get that 18 information? 19 A. Frustration. Sometimes a bit of anger because, again, 20 look back at 2007. Audit Scotland said it was 21 governance financially robust, et cetera, and then we 22 were getting to this time where, you know, it was about 23 the reputation of the Council, and we as individual 24 councillors as well, because we were associated 25 obviously with the business plan, signing off the 98 1 business plan. It was all the groups actually, who all 2 signed off the business plan, and therefore it was a bit 3 of anger as well, to be honest, at that point in time, 4 in that we were told these disputes would be -- the 5 majority would be won by TIE, and it was very clear that 6 was not the case. 7 So the information had been given to us. Then ended 8 up the risk and all of that seemed to be coming to TIE 9 and to the Council. 10 Q. Did you just have to accept the position that you could 11 no longer be given an anticipated final cost for the 12 project? 13 A. No, I don't think we accepted it, but it was very 14 difficult as the opposition to press it, and that is why 15 certain motions and certain Council meetings, we would 16 be pressing for more information and pressing the 17 officers, but also the Council, of where we were in this 18 moment in time. 19 Q. Did you get any further information from this time as to 20 the anticipated outcomes of dispute resolution 21 procedures or the likely final cost? 22 A. No, not as far as I can remember. And also, when I look 23 at the documentation, and this is about looking at 24 timing, if I look at the documentation that was given 25 last December, I was quite surprised that -- obviously, 99 1 from my perception, is that officers were well aware and 2 with some of the emails and documents, that they were 3 well aware that the budget was not going to be kept to 4 545 million, but that didn't appear for a number of 5 months to come -- this is me reflecting about March, at 6 that time, and it wasn't until probably later on that 7 year, the latter part of the year, that it came clearer 8 that the budget was not going to be kept to. 9 Q. If that had been made known to you earlier, what 10 difference do you think it might have made to decisions 11 made by councillors on the project? 12 A. Would we have then have pursued, because I think by the 13 end of that year, both the officers and the councillors 14 had lost trust in TIE. And therefore would, if we'd 15 known that then, would we have said, and asked for: how 16 do we get out of this situation, what are the options? 17 Were there options to come out of the contract and -- 18 altogether and what were the options in terms of taking 19 the project forward? 20 Should we bring it back internally, as was done 21 latterly? Would we have made that decision earlier? 22 This is all in reflection, would that have made 23 a difference? I just leave a question mark. Would it 24 have made a difference if we'd known a lot earlier that 25 the budget was not going to be kept to? 100 1 Q. Can I put the question back to you. Do you think it 2 would have made a difference? 3 A. Yes. 4 Q. Do you have an idea what difference it might have made? 5 A. Well, I think financially, and in terms of finances and 6 also timescale, et cetera, because my memory is very 7 clear at that time, it just seemed to -- everything 8 seemed to drag on from months upon months with no action 9 being taken, and it just seemed to be that kind of long 10 period of time where just nothing was happening. And 11 I think if we'd known earlier on, then hopefully I would 12 have thought action would have been taken then, rather 13 than waiting until months later. 14 Q. Can I ask you to please look at page 109 of your 15 statement, paragraph 445. I really want to check, is 16 that what we've just been talking about, that had you 17 had the information, it might have had an effect on your 18 decisions? 19 A. Yes. 20 Q. If you look further on then at paragraph 465, which 21 appears on page 114, you set out in your statement here 22 what you were being told as of October 2010 in the 23 report. We can see the second element is contingency 24 planning work had been carried out by TIE and the 25 Council to identify funding options for up to GBP600 101 1 million in costs: 2 "Due to the current uncertainty of contractual 3 negotiations, it is not possible to provide an update at 4 this time on the ultimate capital costs of the project." 5 What was your reaction to that? Firstly, trying to 6 get funding up to GBP600 million but it's not possible 7 to say what it will ultimately cost? 8 A. I'm just repeating myself in terms of, you know, 9 unhappy, costs were spiralling out of control, I would 10 say, by this time, and we weren't getting the 11 information in terms of what was then going to happen 12 and what action was being taken to resolve the 13 situation. 14 Q. We can see on the fourth point there is that you were 15 given information regarding the dispute resolution 16 procedures, and told that the outcome remains finely 17 balanced and subject to debate between the parties. 18 A. Mm-hm. 19 Q. Over the page, paragraph 467, you made the comment that 20 by that time you did not really believe: 21 "... the senior officers, TIE or the Transport 22 Convener were providing us with accurate or sufficiently 23 detailed information." 24 Did that apply to the comments we have just seen 25 specifically in that October report, regarding costs and 102 1 the dispute resolution procedures? 2 A. Yes. I mean, it's always difficult to just know the 3 timeline. But as time went on, and obviously dispute 4 resolution was pretty crucial, design issues as we found 5 out later was pretty crucial and also utilities, and it 6 just came to the point that I believe myself and other 7 members of the Labour Group just lost trust, I suppose 8 is the word. Lost trust in the information and details 9 we were being given about the project, and I do say a 10 sense of despair, because it was the reputation of the 11 Council and the reputation of the city of Edinburgh. 12 CHAIR OF THE INQUIRY: Can I ask you, you say this was the 13 position as at October 2010. You had effectively lost 14 trust in the information you were being given. 15 Were you aware that in March of 2010 Richard Walker 16 had written to the Chief Executive, the Director of 17 Finance and the Director of Development as well as 18 Councillor Mackenzie, pointing out or claiming that the 19 information that the Council was being given about 20 the -- or expressing concerns about the accuracy of the 21 information that the Council was being given? 22 A. I wasn't aware of that letter, but I was aware -- I'm 23 not absolutely sure of the timing but I think it's 24 within the statement as well, that there was a letter 25 that came from Bilfinger to every single individual 103 1 councillor, and I'm assuming this is round about this 2 same time, but I'm not aware of that previous letter, 3 but obviously every councillor received a letter from 4 Bilfinger, which then did also question basically the 5 information we were being given. 6 MR LAKE: Have there been other situations when you had the 7 same loss of trust between the councillors on the one 8 hand and the Council officers on another? 9 A. Right, okay. I think this one is probably the most 10 serious. Also, when -- I'll just give you an example. 11 So I suppose that it was around about the same time, 12 I would say, was the care and support tender process, 13 which was people with disabilities, and this was 14 previous to this time, or round about this time as well. 15 I was health and social care spokesperson for the Labour 16 Group, and it was a report that went to Council which 17 was about putting out the Health and Social Care 18 Contract, for people with disabilities et cetera, out to 19 the private sector, away from the voluntary sector, and 20 during that time I did become very aware -- it was 21 a long protracted process, in fact, to the point of kind 22 of summarising because it was a long process. I worked 23 with the voluntary sector and some of the individuals 24 and organisations, and it came to the point that in fact 25 the Council, I think it was only two votes in the whole 104 1 of five years, that the Council overturned the 2 administration, but that the care and support tender 3 didn't go out to the private sector, and it was kept in 4 as it was. 5 That was at that time as well, I was feeling unhappy 6 with a lot of the information I was being given by 7 officers, particularly on that subject. 8 Q. That was a particular example there of the consequence 9 of the loss of trust, the tender not going out? 10 A. Yes. 11 Q. Did you have a view of what the consequences were of the 12 loss of trust that developed in the tram project? 13 A. Loss of trust meant that we didn't trust what was being 14 said to us by officers and by TIE and officials, and it 15 then -- I suppose you then -- it's very difficult to 16 make decisions, because the information you were given 17 at that time, you didn't begin to trust. And there is, 18 as I say, a motion that was passed by the Council, by 19 the Liberal Democrats, who were part of the 20 administration, which criticised the way the process, 21 the way the information was being given out. We could 22 probably bring it up, but I think at that time then, 23 they agreed to that, which was like -- criticising 24 themselves, which seemed to me at the time quite 25 peculiar. But that was that kind of loss of trust in 105 1 the officers and the information we were being given. 2 Q. I want to move on now to the mediation that took place 3 in 2011. 4 What role did the councillors have in that mediation 5 once it had been decided to go to mediation? 6 A. We would be -- in terms of the mediation, there was 7 no -- as far as I'm aware, there was no direct 8 involvement at the negotiations. It was left with 9 officers, but obviously they would come back and would 10 brief, I'm assuming, the Leader of the Council and the 11 Convener of Transport Environment, and also we were 12 briefed on why -- if I remember correctly, there was 13 a report agreeing we would go to negotiations at 14 Mar Hall. And at that time then there was -- the 15 appointment of the Chief Executive, Sue Bruce, and as 16 I say in my statement, I felt certainly my work with her 17 from 2012 onwards, I think we built up a trust with each 18 other in terms of that. 19 So I think there was a feeling at that time of 20 elected members, certainly myself, that we had trust in 21 the Chief Executive and was more open, and also in 22 Alistair Maclean as well, who gave information, and we 23 began to build up a bit more trust following up to that 24 Mar Hall. 25 But I would say involvement in the direct part of it 106 1 would not -- was not part of what -- what we were doing, 2 but we would be briefed in terms of what the 3 negotiations -- what they were likely -- negotiations 4 were likely to be and then the outcome of negotiations. 5 Q. That was information provided by the officers to you as 6 councillors? 7 A. Yes. 8 Q. In terms of being briefed as to likely outcomes, did the 9 Council officers give you any indication of what they 10 hoped or expected to achieve? 11 A. If memory serves me correctly, yes, they did give us 12 an indication. Well, basically they wanted the project 13 to get back up and running and they wanted to achieve it 14 at a cost and a timescale that would be in order to 15 deliver the tram project. 16 Q. Did they discuss with you their goals regarding cost and 17 timescale? 18 A. I think not until after rather than before. That's just 19 my memory serving me. I don't remember, because that 20 would be obviously part of negotiations and that 21 wouldn't be -- I would assume, given that information in 22 terms of confidentiality before the negotiations. 23 Q. Even before the negotiations, did the councillors give 24 any guidance or directions as to what they wanted out of 25 the negotiations? 107 1 A. Well, yes, we wanted as near to the price as we'd gone 2 out for the contract and also the timescale. So -- 3 Q. Essentially as quick as possible, as cheap as possible? 4 A. Yes, because of the time that had taken months and 5 months and months, it seemed like, seemed like years at 6 the time, of just no action and nothing happening on the 7 streets, and the frustration of particularly businesses, 8 but also the communities and the residents that nothing 9 was happening. 10 So we just wanted, basically, the instruction 11 was: try to get it, I suppose, at a price that's 12 affordable, but also deliver the tram project at 13 a timescale that is as quick as possible as well. 14 Q. Was there any discussion of what affordable meant in 15 this context? 16 A. No, not as far as I can remember, no. 17 Q. Just the best deal you can? 18 A. Yes. 19 Q. Now, presumably you didn't expect the Council officers 20 to actually sign the deal and commit the Council at the 21 mediation? 22 A. No. 23 Q. What did you expect them to bring back for your 24 consideration? 25 A. Either one option or several options. And whether it 108 1 was a recommendation in terms of -- they'd been in 2 negotiations. So they would have a clearer picture in 3 terms of what would be the best deal for the Council. 4 Q. So there might be a number of options but with 5 a recommendation? 6 A. That would have been normal process in terms of, you 7 know, different -- normal process would be 8 a recommendation from the officers. That doesn't 9 necessarily mean the Council would agree it, but 10 normally there would be a recommendation from the 11 officers. 12 Q. And different -- there might be different prices 13 obviously attached to different options? 14 A. Yes, and it's expected -- I think at the time expected 15 whether it would be the whole of line 1a or would it be 16 part and what would the cost be et cetera. I think that 17 was the expectation anyway. No, probably the 18 expectation was that it would be the whole of line 1a, 19 to be honest. 20 Q. But in terms of what you're saying about cost, you 21 anticipated that you would have them present a costed 22 option to you and the councillors would either take that 23 option or leave it. They wouldn't be able to negotiate 24 the price. It was just a fait accompli as far as that 25 was concerned? 109 1 A. Yes, because we weren't part of the negotiating body and 2 you gave trust for them as officers to get the best deal 3 possible, in terms for the Council, in terms of risk, in 4 terms of pricing, in terms of timetable. 5 Q. Post Mar Hall, I think you said already, the concept of 6 the arm's length company was dropped, and the matter was 7 managed essentially in-house by the Council with the 8 benefit of consultants Turner & Townsend? 9 A. Yes. 10 Q. What was your view of how well that worked? 11 A. Well, if we're jumping on to -- I'm not sure if you're 12 jumping on to the revised budget and the revised 13 timetable. 14 Q. Yes. 15 A. I thought it worked very well because we delivered it on 16 the revised timetable and revised budget. Sue Bruce was 17 very hands on, and my understanding, I wasn't part of 18 the interview process, but obviously getting the tram 19 project up and running and sorting it out, I suppose, 20 was one of the main duties of the Chief Executive. So 21 she was very much leading that, and as I said, there was 22 a very good trust built up between myself as a convener 23 and herself. We worked very well together. 24 Q. Mm-hm. 25 A. I was going to say, so much we got an award for it. But 110 1 we worked together very well. 2 She also brought in Colin Smith, who I think she'd 3 worked with in Aberdeen previously, and she had trust 4 between him, and I think I had built up a very good 5 working relationship with Colin as well, in terms of him 6 keeping me informed and then me keeping the other 7 spokespeople informed as well. 8 And obviously Turner & Townsend worked in 9 partnership with Colin Smith, but the two main people, 10 I would say, would be the Chief Executive and 11 Colin Smith that built up keeping elected members 12 informed and working with the consortium, and one of the 13 key points of the working with the consortium was that 14 Colin would always say to me was sorting out the little 15 minor problems before they became big problems. 16 And he would have very -- charts that he took me 17 through and a better understanding of sorting out what 18 were the minor problems and sorting them out with the 19 consortium, rather than waiting until they got into real 20 problems and real difficulties. And I felt comfort that 21 that was being -- there was a good relationship, which 22 had not been previously between the Chief Executive and 23 Colin Smith with the consortium. 24 Q. Just to be clear. Colin Smith was a consultant who was 25 engaged on Sue Bruce's recommendation? 111 1 A. Yes, as I understand it. 2 Q. You have also referred to Turner & Townsend. Did you 3 have any direct dealings with them? 4 A. Mostly, I would say, with the Chief Executive and with 5 Colin Smith. I also at the beginning, when I was first 6 convener, attended meetings on a weekly basis in the 7 morning. I can't remember exactly which group it was, 8 but it's recorded in here, which included 9 Transport Scotland, communications people, and other 10 people who were involved with the project. I just 11 wanted to make sure that I felt comfortable that the 12 project was going in the right direction, and attending 13 those meetings gave me that comfort in terms of the 14 discussion, in terms of the updating, and also 15 contributed towards those meetings as well. 16 I also attended, I think, just the one, but another 17 meeting out -- with the group that were delivering the 18 project, more delivery group, and again, just to get 19 that better relationship in terms of working together, 20 and we all wanted a common aim to get it on the revised 21 budget and the revised timetable, and how that was 22 communicated and how we communicated with traders in 23 particular, but also the community as well. And how we 24 worked together, I think, built up a very good working 25 relationship. 112 1 MR LAKE: Thank you very much. I've got no further 2 questions. Thank you, my Lord. 3 CHAIR OF THE INQUIRY: I take it no-one else has any 4 questions? 5 Thank you very much, Ms Hind. You're free to go. 6 You are still subject to the citation, but in case it's 7 necessary to recall you. I'm hoping that won't be 8 necessary? 9 A. So am I. 10 CHAIR OF THE INQUIRY: If it does prove necessary, Ms Fraser 11 will make contact with you and have a discussion. 12 A. Thank you very much. Thank you. 13 (The witness withdrew) 1 INDEX 2 PAGE 3 MS LESLEY HINDS (continued) ..........................1 4 5 Examination by MR LAKE (continued) ............1 6 7 MR EWAN AITKEN (affirmed) ..........................113 8 9 Examination by MR LAKE ......................113 10 11 MR DONALD ANDERSON (affirmed) ......................193 12 13 Examination by MR LAKE ......................193 14 15 16 17 18 19 20 21 22 23 24 25 236