Publication - FOI/EIR release

Ferguson Marine Engineering Ltd funding: FOI release

Information request and response under the Freedom of Information (Scotland) Act 2002

Published:
4 Jun 2020
Ferguson Marine Engineering Ltd funding: FOI release
FOI reference: FOI/202000018506
Date received: 5 Mar 2020
Date responded: 3 Jun 2020
Information requested

“Please advise what the procedures and thresholds/limits are applicable to the Scottish Cabinet, and specifically provide details of the transaction that granted Ferguson Marine 45MM cash, with copies of the paper trail, the recommendation and the sign off for releasing the funds.
Also please provide the paper trail and copies of the documents for the appointment of Mr. Higgins as head of the Development Bank, and an explanation why this position did not conform with Normal recruitment procedures.”
Subsequent emailing confirmed you are referring to Willie Watt and not Benny Higgins.

Response

You ask a number of questions which for ease of reference I have broken down into three parts:
1. What procedures and thresholds/limits are applicable to the Scottish Cabinet in relation to the approval levels for payments.
2. Details of the transaction that granted Ferguson Marine 45MM cash, with copies of the paper trail, the recommendation and the sign off for releasing the funds.
3. The public appointment process generally and Mr Willie Watt’s appointment specifically.

Part One
What the procedures and thresholds/limits are applicable to the Scottish Cabinet?
Cabinet is the weekly meeting of the First Minister and her Cabinet Secretaries. Although Cabinet takes decisions on matters of strategic policy, Cabinet does not take detailed financial decisions in individual cases. These are made by Cabinet Secretaries and their junior Ministers on recommendations from their portfolio officials.
The Scottish Public Finance Manual (SPFM) explains the accountability for the use of public funds and what bodies should have in place with regard to delegations. Please see the link to the SPFM:  https://www.gov.scot/publications/scottish-public-finance-manual/.
This is a formal notice under section 17(1) of FOISA that the Scottish Government does not have information which sets out limits for individual Cabinet Secretaries or for the Scottish Cabinet collectively as the SPFM sets out the requirements for the proper handling and reporting of public funds.

Part Two
Provide details of the transaction that granted Ferguson Marine 45MM cash, with copies of the paper trail, the recommendation and the sign off for releasing the funds
I enclose a copy of some of the information you have requested in relation to this part of your request.
Some of the information you have requested is available from the links set out in Annex B. Under section 25(1) of FOISA, we do not have to give you information which is already reasonably accessible to you. If, however, you do not have internet access to obtain this information from the website(s) listed, then please contact me again and I will send you a paper copy.
The only recommendations that were made were in the form of the submissions to approve the loans in the first place that are already in the public domain, then Luke van Beek’s and PwC’s monitoring reports that have also already been released.

Part Three
The public appointments process and Willie Watt

Your question regarding authority for making appointments
You asked “In the corporate world there are normally procedures in place regarding the level of authority required in approving appointments… Please advise what the procedures … are applicable to the Scottish Cabinet”.
In relation to appointments, legislation often confers upon the Scottish Ministers an express power to appoint. Where no such express power exists, a Minister of the Crown (or an official on the Minister’s behalf) can exercise any power the Crown has to exercise to do things ancillary or incidental to the ordinary business of government - except where statute has set up a statutory appointments regime. 
Appointments by Scottish Ministers must be in accordance with the Ministerial Code (https://www.gov.scot/publications/scottish-ministerial-code-2018-edition/). The Code applies to all Scottish public appointment procedures.

Mr Watt’s appointment
You asked “Also please provide the paper trail and copies of the documents for the appointment of Mr. Higgins as head of the Development Bank”. You sent a further email stating “Correction should be Watt not Higgins”. We asked you to confirm you are referring to the appointment of Willie Watt as Chair of the Scottish National Investment Bank on 15 November 2019 to which you responded “The question relates to Willie Watts appointment!”.
We have therefore interpreted this aspect of the request as relating to the appointment of Willie Watt as Chair of the Scottish National Investment Bank on 15 November 2019.
I enclose a copy of some of the information you have requested in relation to this part of your request. 
Some of the information you have requested is reasonably available publicly and I have provided a list of where this information can be accessed in Annex C to this letter. Under section 25(1) of FOISA, we do not have to give you information which is already reasonably accessible to you. If, however, you do not have internet access to obtain this information from the website(s) listed, then contact me again and I will send you a paper copy.

While our aim is to provide information whenever possible, in this instance we are unable to provide some of the information you have requested because exemptions under FOISA apply to that information:

  • Section 30(c) - substantial prejudice to the effective conduct of public affairs;
  • Section 30(b)(i) and 30(b)(ii) – free and frank provision of advice [in relation to Cabinet/Ministerial/official discussions and policy formulation/development];
  • Section 38(1)(b) - personal information

The reasons why those exemptions apply are explained in Annex A to this letter.

Your question regarding “… Normal recruitment procedures”
Finally, you also asked for “an explanation why this position did not conform with Normal recruitment procedures”.
The role of Chair is key to the recruitment of the Chief Executive and Directors and the appointment of the Non-Executive Directors. For the Scottish National Investment Bank to be operational in 2020 meant that the Scottish Government had to proceed on an accelerated timescale with the view to appointing a Chair during the autumn of 2019. This would enable the Chair to contribute effectively on appointments to those other Non Executive Director roles, the recruitment process for the Chief Executive and Directors, and on the final set-up of the Bank.
Willie Watt’s appointment as Chair of the Scottish National Investment Bank followed the process for public appointments in those circumstances where a public body has not yet been created as outlined in my earlier paragraph.

When we began this process, legislation setting up the Bank was not yet in law and the appointment would therefore be ‘unregulated’. This is set out in letters from the then Cabinet Secretary for Finance to the Scottish Parliament Economy, Energy and Fair Work Committee which are available on the Scottish Parliament’s website:
(https://www.parliament.scot/parliamentarybusiness/CurrentCommittees/109855.aspx). This route was agreed with the Scottish Parliament who raised no concerns regarding the Scottish Government’s rationale for proceeding with an ‘unregulated’ process.
The Scottish Government also engaged with the Ethical Standards Commissioner about the potential for her office to ‘take oversight’ of this appointment process. However, the Commissioner declined due to legislative restrictions limiting their involvement in ‘unregulated’ appointments. 
While there was therefore no requirement for the appointment to be ‘regulated’, the appointment process followed the Ethical Standards Commissioner’s Code of Practice for Ministerial and Public Appointments (https://www.ethicalstandards.org.uk/publication/code-practice), to ensure an open, transparent and fair process to secure the best possible field of candidates. The required fit and proper person test was also completed satisfactorily.

The Scottish Parliament has now passed the Scottish National Investment Bank Act 2020. An Order, under section 3(3) of the Public Appointments and Public Bodies etc. (Scotland) Act 2003, was approved by Parliament on 2 April 2020 meaning that process for the appointment of other Non-Executive Directors of the Board of the Bank will be regulated by the Ethical Standards Commissioner. All future appointments can and will therefore be regulated. 
Further information on the appointments process and a list of regulated bodies is available on the Ethical Standards Commissioner’s website: https://www.ethicalstandards.org.uk/.
Annex A
The public appointments process and Willie Watt - exemptions applied
Section 30(c) – substantial prejudice to the effective conduct of public affairs 
An exemption under section 30(c) of FOISA (prejudice to effective conduct of public affairs) applies to some of the information requested. Disclosing this information would substantially prejudice our ability to conduct public appointment recruitment because disclosure of applications, assessments, opinions, views and advice would substantially  prejudice the likelihood of candidates applying for such appointments; panel members volunteering to undertake interviews, provide assessments, opinions and advice or having a confidential space within which to discuss such things, if they knew such information would be disclosed. This would constitute substantial prejudice to the effective conduct of public affairs in terms of the exemption.

This exemption is subject to the ‘public interest test’. Therefore, taking account of all the circumstances of this case, we have considered if the public interest in disclosing the information outweighs the public interest in applying the exemption. We have found that, on balance, the public interest lies in favour of upholding the exemption. We recognise that there is a public interest in disclosing information as part of open, transparent and accountable government. However, there is a greater public interest in protecting the process of public appointment recruitment and ensuring that the Scottish Government is able conduct this aspect of its business effectively.

Sections 30(b)(i) and 30(b)(ii) - free and frank provision of advice and exchange of views for the purposes of deliberation
Exemptions under sections 30(b)(i) and 30(b)(ii) of FOISA (free and frank provision of advice and exchange of views for the purposes of deliberation) apply to some the information requested. These exemptions apply because disclosure would, or would be likely to, inhibit substantially the free and frank provision of advice and exchange of views for the purposes of deliberation. The exemptions recognise the need for Ministers to have a private space within which to seek advice and views from officials and, in this case, assessment panel members and to consider and discuss candidates before reaching a settled public position on an appointment. Disclosing the content of free and frank assessments and advice on candidates will substantially inhibit such briefing in the future.

These exemptions are subject to the ‘public interest test’. Therefore, taking account of all the circumstances of this case, we have considered if the public interest in disclosing the information outweighs the public interest in applying the exemptions. We have found that, on balance, the public interest lies in favour of upholding the exemptions. We recognise that there is a public interest in disclosing information as part of open, transparent and accountable government, and to inform public debate. However, there is a greater public interest in allowing a private space within which officials can provide free and frank advice and views to Ministers and to allow them to consider such matters.
They need full and candid advice from officials to enable them to do so. Disclosure of this type of information is likely to undermine the full and frank consideration of applicants by Ministers, officials and the assessment panel which in turn will undermine the quality of the decision making process, leading to a reduction in the comprehensiveness and frankness of such advice and views in the future, which would not be in the public interest. 

Section 33(1)(b) – commercial interests
An exemption under section 33(1)(b) of FOISA applies to some of the information you have requested because it relates to commercial information that may prejudice the Scottish Government or other parties should it be released. In particular, details of commercial contracts, costs and other sensitive financial data that if released could impede the Scottish Government achieving the best value for public money in the future and potentially hinder the sustainable operation of the business. This is the case for both the information already published and the information released in your response. 

This exemption is subject to the ‘public interest test’. Therefore, taking account of all the circumstances of this case, we have considered if the public interest in disclosing the information outweighs the public interest in applying the exemption. We have found that, on balance, the public interest lies in favour of upholding the exemption. We recognise that there is a public interest in disclosing information as part of open, transparent and accountable government, and to inform public debate.
However, there is a greater public interest in protecting the commercial interests of companies and the Scottish Government itself, to ensure that we are always able to obtain the best value for public money and protect the commercial interests of the businesses who enter into contractual relationships with the Scottish Government.

Section 38(1) – personal data
An exemption under section 38(1) of FOISA applies to some of the information you have requested as  this relates to personal information of third parties, including names and contact details of Scottish Government and third party organisation officials and information relating to Mr Willie Watt (and to the assessment panel and unsuccessful candidates). Disclosing this information would contravene the data protection principles in Article 5(1) of the General Data Protection Regulation and in section 34(1) of the Data Protection Act 2018. This exemption is not subject to the ‘public interest test’, so we are not required to consider if the public interest in disclosing the information outweighs the public interest in applying the exemption.

Annex B
Details of transactions between Scottish Government and Ferguson Marine: Hyperlinks to documents available on the Scottish Government Website

Drawdown Reports from Luke van Beek   
Drawdowns - September 2017 - £6M – October 2017 - £3.5M - PWC Report
Drawdown - June 2018 - £6M – PWC Report 1
Drawdown - June 2018 - £6M – PWC Report 2
Drawdown - June 2018 - £6M – PWC Report 3
Drawdowns - August 2018 - £5M and September 2018 - £6M – PWC Report 1
Drawdowns - August 2018 - £5M and September 2018 - £6M – PWC Report 2
Drawdowns - August 2018 - £5M and September 2018 - £6M – PWC Report 3
Drawdowns - August 2018 - £5M and September 2018 - £6M – PWC Report 4
Drawdowns - January 2019 - £3M and February 2019 - £5M – PWC Report 1
Drawdowns - January 2019 - £3M and February 2019 - £5M – PWC Report 2
Drawdowns - January 2019 - £3M and February 2019 - £5M – PWC Report 3
Drawdown - April 2019 - £5M – PWC Report

Annex C
Appointment of Willie Watt - list of information reasonably available publicly 16 May 2019
Cabinet Secretary for Finance letter to Scottish Parliament Economy, Energy & Fair Work (EEFW) Committee:
https://www.parliament.scot/S5_EconomyJobsFairWork/Inquiries/20190516-Letter-CabSec-FEFW.pdf

August 2019
Advert for Chair on Appointed for Scotland website (includes links to video, applicant pack and Declaration, Conflicts of Interest and Equalities monitoring form):
https://applications.appointed-for-scotland.org/pages/job_search_view.aspx?jobId=1672
Various dates
Further information on the EEFW discussions / consideration of the Chair’s appointment is available on the Committee’s webpages on the Scottish Parliament website and in the Parliament’s official report:
https://www.parliament.scot/parliamentarybusiness/CurrentCommittees/109855.aspx
and
https://www.parliament.scot/parliamentarybusiness/Bills/111153.aspx
15 November 2019
Scottish Government website ‘Blogs’ Chair of the Scottish National Investment Bank:
https://blogs.gov.scot/scotlands-economy/2019/11/15/chair-of-the-scottish-national-investment-bank/

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