6. Accountability report

Corporate Governance Report

Directors’ Report

Relationship with Scottish Government

Scottish Ministers are responsible for determining the overall policy and resources framework within which Transport Scotland operates. We are accountable to Ministers, and Ministers are accountable to Parliament for our functions and performance. Being an Executive Agency, our management and budgets are separate from core Scottish Government, and our Chief Executive is accountable for managing our performance and the budget required to deliver a high-quality service based on our values of dignity, fairness and respect.

Throughout the financial year 2025-26, Fiona Hyslop MSP was the Cabinet Secretary for Transport.

Jim Fairlie MSP was the Minister for Agriculture and Connectivity, with responsibility for Aviation and Air Services, Island Connectivity, Bus Services and Concessionary Fares and Scottish Canals. The Minister reports jointly to the Cabinet Secretary for Transport and for Rural Affairs, Land Reform, and Islands. The Minister has additional responsibilities sitting within the latter portfolio which are outside the remit of Transport Scotland.

Transport Scotland forms part of the Net Zero Portfolio within Scottish Government, overseen by Director-General (DG) Net Zero, Roy Brannen (until November 2025) and Andy Kerr (from November 2025). The relationship between Transport Scotland, DG Portfolio and the wider Scottish Government is outlined within the Agency’s Framework Document.

The Chief Executive

Alison Irvine is the Chief Executive and the Accountable Officer for Transport Scotland. The Chief Executive is appointed by the Permanent Secretary as Principal Accountable Officer for the Scottish Government under the terms set out in their letter of appointment, in line with the Scottish Public Finance Manual.

The Chief Executive is supported by the Transport Scotland Senior Management Team, comprised of Directors with specific responsibilities delegated from the Chief Executive, in addition to a direct support team. The Directors are, in turn, supported by their own teams, with responsibilities aligned to Transport Scotland’s corporate objectives.

Audit and Risk Committee

The external members of the Transport Scotland Audit and Risk Committee provide the Chief Executive with further assurance in that role; and are also members of major project boards within Transport Scotland. The Audit and Risk Committee was chaired by John Matheson until 30 April 2025 and was succeeded by Graeme Dickson who has been appointed chair until 31 August 2028.

Lesley Macleod served as a member of the committee throughout the reporting year, and her appointment has been extended until August 2028. David Climie, Gillian Bruton and Iain Stewart have been appointed to the Committee from 1 May 2025 until 31 August 2028.

Directors’ Register of Interests

A register of interests for all Executive Advisory Body and Executive Team members is maintained and published on our website.

Other disclosures

Personal Data Related Incidents

There were no personal data-related incidents reported to the Information Commissioner’s Office (ICO) in 2025-26 (2024-25: None).

Supplier Payment Policy

We are committed to prompt payment of bills for goods and services in compliance with the Scottish Government’s Public Finance Manual. We aim to settle all undisputed invoices within contract terms and in line with the Scottish Government 10-day payment policy. We settled 96% of invoices within this timescale within 2025-26 (2024-25: 96%).

Freedom of Information (FOI) Request Statistics

Under the Freedom of Information (Scotland) Act 2002 (FOISA), a person who requests information from a Scottish public authority which holds it is entitled to be given it by the authority, subject to certain conditions and exemptions set out in the Act. Within 2025-26, Transport Scotland received 709 information requests (2024-25: 568), 99% of which were responded to within the statutory working time of 20 working days (2024-25: 99%).

Basis of Accounts

Transport Scotland’s accounts are prepared in accordance with the Accounts Direction issued by Scottish Ministers under section 19(4) of the Public Finance and Accountability (Scotland) Act 2000.

Departmental Accounting

These accounts reflect the assets and liabilities of Transport Scotland as at 31 March 2026, and the financial results of the agency for financial year 2025-26, as required by and defined in the Government Financial Reporting Manual. As an Executive Agency of the Scottish Government, Transport Scotland falls within the reporting boundary and is consolidated within the Scottish Government accounts, as required by the FReM.

External Audit

The financial statements for 2025-26 were audited by auditors appointed by the Auditor General for Scotland. Audit Scotland carried out this audit and the notional fee for this service was £214,660 (2024-25: £205,750 plus an additional fee of £25,569), which related solely to the provision of the statutory audit service. There were no payments made for non-audit work in the year.

Statement of Accountable Officer’s Responsibilities

Under Section 19(4) of the Public Finance and Accountability (Scotland) Act 2000, the Scottish Ministers have directed Transport Scotland to prepare for each financial year a statement of accounts in the form and on the basis set out in the Accounts Direction. The accounts are prepared on an accruals basis and must give a true and fair view of the state of affairs of Transport Scotland and of its income and expenditure, Statement of Financial Position, and cash flows for the financial year.

In preparing the accounts, the Accountable Officer is required to comply with the requirements of the Government Financial Reporting Manual and in particular to:

• observe the Accounts Direction issued by Scottish Ministers, including the relevant accounting and disclosure requirements, and apply suitable accounting policies on a consistent basis.
• make judgements and estimates on a reasonable basis.
• state whether the applicable accounting standards as set out in the Government Financial Reporting Manual have been followed and disclose and explain any material departures in the financial statements.
• prepare the financial statements on a going concern basis; and
• confirm that the Annual Report and Accounts as a whole is fair, balanced, and understandable and take personal responsibility for the Annual Report and Accounts and the judgements required for determining that it is fair, balanced, and understandable.

The Principal Accountable Officer for the Scottish Administration has designated the Chief Executive of Transport Scotland as Accountable Officer for the agency, under Section 15 of the Public Finance and Accountability (Scotland) Act 2000. The responsibilities of an Accountable Officer, including responsibility for the propriety and regularity of the public finances for which the Accountable Officer is answerable, for keeping proper records and for safeguarding the assets of Transport Scotland, as set out in the Memorandum to Accountable Officers issued by the Scottish Government.

As the Accountable Officer, I have taken all the steps that I ought to have taken to make myself aware of any relevant audit information and to establish that Transport Scotland’s auditors are aware of that information. So far as I am aware, there is no relevant audit information of which the auditors are unaware.

The Accountable Officer is personally answerable to the Scottish Parliament for the propriety and regularity of Transport Scotland activities and for the economical, efficient, and effective use of all associated resources. The Accountable Officer is also responsible for signing the accounts of Transport Scotland.

Governance Statement

Framework

The corporate governance framework is comprised of the systems, processes, culture, and values by which Transport Scotland is directed and controlled. It is concerned with the structures and procedures of decision-making and accountability. It is used to monitor the achievement of corporate outcomes within the organisation. The framework includes, but is not limited to, the responsibilities of the Chief Executive, the Senior Management Team, the Investment Decision-Making Board and the Audit and Risk Committee.

The Chief Executive

The Chief Executive, as the Agency’s Accountable Officer, is responsible for maintaining a sound system of internal control that supports the achievement of Transport Scotland’s policies, aims and objectives as set out by Scottish Ministers, while safeguarding the public funds and departmental assets for which she is responsible, in accordance with the Scottish Public Finance Manual.

The Senior Management Team

The Chief Executive is supported in discharging her duties by a Senior Management Team (SMT), an advisory body of eight Directors until December 2025 and 10 Directors from December 2025, per Our Organisation (refer to the Organisation section for more details). In 2025-26, the SMT met on a twice weekly basis and provided support, advice, and challenge on a number of areas, including:

• Transport Scotland’s values, vision, strategy, and objectives
• Corporate performance, including policy across the remit of Transport Scotland’s and the operation of the transport network
• Governance and delivery of projects
• Assurance that Transport Scotland has the necessary financial, human, infrastructural and physical resources to deliver on its objectives
• Assurance on risk management, governance, and internal control

Investment Decision Making Board

The Investment Decision Making Board (IDM) is a forum where Directors meet to agree on investment decisions within Transport Scotland, providing the Chief Executive Officer with assurances on:

• Value for money
• Financial implications (current year and future commitments)
• Fit with overall transport policy and strategic aims
• Technical assessment of options
• Procurement strategy

IDM is a management forum used to ensure delivery of the business targets and strategic direction agreed by the SMT and Ministers. It is not a sub-committee of the SMT, but minutes of IDM are circulated to SMT members for information.

The Chief Executive, as Accountable Officer, is the Investment Decision Maker within Transport Scotland. She may call on both Transport Scotland Directors and external experts to provide her with advice on the decisions to be made.

Project Boards

Some projects, due to their wider implications beyond Transport Scotland, have separately constructed Project Boards. These operate within a bespoke Investment Decision Making structure but retain the Chief Executive as the Investment Decision Maker. The decision-making process for these structures is consistent with the principles of the IDM Board.

Audit and Risk Committee

The Audit and Risk Committee is comprised of external members who bring constructive challenge and independent judgement to the governance of Transport Scotland. It meets four times per year, although the Chair has the power to convene additional meetings if required. The Chair also meets regularly with the Chief Executive and the Director of Finance and Corporate Services to keep abreast of developments.

In addition to the Committee’s members, it is normally attended by the Chief Executive, the Director of Finance and Corporate Services, a representative of internal audit and a representative of Audit Scotland. Other Transport Scotland officials may also attend to support the consideration of specific issues as required.

The Audit and Risk Committee advises on risk management, control and governance, audit and the approval of the annual report and accounts, and assurances on corporate governance. The external members are also invited to participate in boards appointed for the governance, approval and oversight of major projects, investments, and climate change.

The Audit and Risk Committee receives copies of the minutes from the monthly Corporate Senior Management Team meetings. In addition, the Committee meets individually with Directors and holds private meetings with representatives of both internal and external audit on an annual basis to support effective oversight and independent assurance.

The Committee produces an Annual Report, which supports this Governance Statement. This report summarises the Committee’s work over the reporting period and assesses:

• the reliability and comprehensiveness of assurances received
• issues pertinent to this governance statement
• financial reporting
• the quality of both internal and external audit
• its view of its own effectiveness

The Audit and Risk Committee met four times over the reporting period on 28 May 2025, 27 August 2025, 26 November 2025, and 25 February 2026. Its members over this period were:

• Graeme Dickson – Chair (attended all meetings)
• Lesley Macleod – Member (attended three meetings)
• Gillian Bruton – Member (attended all meetings)
• David Climie – Member (attended three meetings)
• Iain Stewart – Member (attended all meetings)

The Committee has considered the annual report and accounts, and the Accountable Officer has taken account of, and confidence from, their comments and observations prior to signing this governance statement and the other parts of the annual report and accounts.

Best value

Under the Scottish Public Finance Manual, Accountable Officers appointed by the Principal Accountable Officer have a specific responsibility to ensure that arrangements have been made to secure Best Value. Scottish Ministers expect all Accountable Officers to comply with the duty of Best Value placed upon them.

As part of this duty, arrangements are made to secure continuous improvement in performance whilst maintaining an appropriate balance between quality and cost. Regard is also to be made to economy, effectiveness, the equal opportunities requirements, and to contribute to the achievement of sustainable development.

The Scottish Public Finance Manual groups Best Value characteristics to reflect the key themes which will support the development of an effective organisational context from which public services can deliver key outcomes and ultimately achieve Best Value. Each of these have been listed below, alongside some examples from the reporting year to demonstrate how these have been achieved by Transport Scotland.

Vision and Leadership

Organisational Design

During the reporting year, we have been undertaking a programme of organisational design to develop options for, and actions to, deliver structural change, which will maximise efficiencies from flexible working across teams and economies of scale.

The main elements of this programme resulted in the formation of:

• A Transport Integration & Connectivity Directorate, established to drive integration and connectivity across Scotland’s transport system
• The consolidation of our policy approach to bus and active travel into a Bus, Concessionary and Active travel Directorate
• The formation of a Strategy, Performance and Analysis Directorate supporting the evidenced based strategic direction of the organisation
• The inclusion within our Rail Directorate of a specific Rail Reform function with responsibility for maximising the opportunities for reforms within Scotland of the Westminster Parliament’s legislative work on reform of the railway industry across Britain

Our programme forms part of the wider Scottish Government’s Transformation programme, under the Public Service Reform agenda. This programme has provided us with an opportunity to reset our priorities to align better with the second National Transport Strategy.

Governance and Accountability

Investment Decision-Making

In supporting the Accountable Officer in making investment decisions, the Investment Decision Making (IDM) Board provides advice on the major capital and resource investment programme, ensuring value for money and accountability in the delivery of the agreed investment programme, and providing advice on the progression of individual projects to the next stage. Core to supporting these decisions is a suite of appraisals, assessments, and evaluations (some examples below).

Appraisal, Assessment and Evaluation

The Scottish Transport Appraisal Guidance (STAG) supports the vision for transport in Scotland by providing a framework to identify and appraise transport interventions. It follows a structure and methodology that is consistent with the UK Government’s Green Book. The process is designed to provide investment decision-makers with the information they need in a clear, structured format. This forms a key part of a transport-related Business Case. STAG aligns with a Strategic Business Case (SBC) for interventions. An appraisal using STAG will generate the Strategic Case and the Socio-Economic Case included in the five-case model typically used in business case development. As part of the options appraisal, an assessment is required on how options perform against current Scottish Government policy objectives. In so doing, the Policy Assessment Framework (PAF) tool is used. The Scottish Trunk Road Infrastructure Project Evaluation (STRIPE) framework is used for the evaluation of road schemes costing over £5 million and considers whether the scheme’s Transport Planning Objectives were achieved and benefits realised; whether the outturns impacts of the project were as forecast; how well the project was implemented; what the impacts were on established policy directives; and what lessons can be learnt to improve decision-making.

Use of Resources

Procurement

For Transport Scotland, procurement and commercial capability are key enablers to successfully delivering our business and securing Best Value. While a large part of our budget is allocated to other public and private sector organisations through grants and support, our procurement spend is significant and almost £1.2 billion was spent on contracts under our management in 2025-26. During the last Scottish Government’s Procurement and Commercial Improvement Programme, Transport Scotland was assessed in the top performance category for the majority of areas assessed. Our mature procurement governance processes support the delivery of Best Value, with our contracts being awarded through genuine and effective competition unless there are exceptional reasons not to do so. In line with the Procurement Reform (Scotland) Act 2014, Transport Scotland reports on the strategic direction of its procurement activity for each financial year in support of the Scottish Government’s goals. The Corporate Procurement Strategy for 2025-26 was published in June 2025 and sets out our strategic direction for procurement activity, taking into account our legal obligations, ensuring that we make the best use of public money, whilst protecting our climate and improving lives. Our Annual Procurement Reports provide a summary of our regulated procurement activity over each financial year. At the time of publication, the latest Annual Procurement Report was for 2023-24 and was published in March 2025.

Continuous scrutiny of budgets

Throughout the reporting period, we have undertaken continuous scrutiny of budgets to drive efficiencies and ensure that our processes align with the Scottish Public Finance Manual (SPFM). Transport Scotland has used the Accountable Officer Spending Control and Accountable Officer Assessment processes as a key part of financial governance and to drive Best Value.

Estates Strategy

In May 2025 Transport Scotland moved to new premises in Glasgow where our people are benefiting from our fully flexible workspace. Transport Scotland also has office space in Victoria Quay, Edinburgh. As part of our own rationalisation of our estate, we have given notice to vacate half of our current VQ office space. The change will take place from April 2027 reducing our property costs further at that point.

Partnership and Collaborative Working

As an Executive Agency that sponsors other public bodies, Transport Scotland works collaboratively and in partnership with other organisations. This is achieved in part through a Transport Scotland sponsorship hub for our sponsor teams and providing a platform for working collaboratively on key matters, such as the Public Service Reform (PSR) agenda.

To support delivery of the PSR agenda, the Transport Portfolio Cluster was established. The Cluster brings together six public bodies that collectively make up the Transport Portfolio: Transport Scotland, Scottish Rail Holdings, CalMac Ferries Ltd, Caledonian Maritime Assets Ltd, Highlands and Islands Airports Ltd and Scottish Canals. The Transport Portfolio Cluster was established to drive greater collaboration, rationalisation and support reform across the transport system, as further explained in the Fiscal Sustainability section below.

Working with Communities

Consultations: We engage with people and stakeholder organisations as a key part of our policymaking approach. Consultations play a key role in this public engagement. Both our open and closed consultations can be viewed on our website.

Fiscal Sustainability

The Transport Portfolio Cluster provides strategic oversight and direction on PSR activity and enables senior leaders to identify opportunities for collaboration, efficiency and system-wide reform. Transport is at the forefront of delivering transformative public service reform, fully aligned with the Scottish Government’s Medium-Term Financial Strategy (MTFS), Fiscal Sustainability Delivery Plan (FSDP), Public Service Reform Strategy (PSRS) and the Transport Portfolio Efficiency Plan (PEP). Our ambition is clear: to build a transport system that is affordable, efficient, future-proof, and responsive to the needs of all users, supporting a fairer, greener and more prosperous Scotland. Unlike many public services where reform activity focuses on demand reduction, the Transport Portfolio’s approach to PSR is centred on increasing patronage and use of transport services to improve fiscal sustainability, while delivering climate, economic and social outcomes.

The reform journey is guided by the National Transport Strategy, which sets out a vision for an inclusive, safe and accessible transport system, underpinned by priorities to reduce inequalities, take climate action, deliver inclusive economic growth, and improve health and wellbeing.

Key objectives include improving the affordability and accessibility of public transport services to encourage modal shift and increased demand, alongside driving greater efficiency and productivity across the Portfolio. Reform will focus on modernising service delivery, maximising the benefits of digital innovation, and reducing duplication, enabling improved outcomes within available resources.

Throughout this process, the Portfolio will maintain and enhance service quality, ensuring reforms strengthen reliability, safety and the overall user experience. Value from public assets and investment will be maximised through stronger commercial disciplines, whole‑life asset management and improved prioritisation of spend, supporting Ministers’ aspirations on both workforce management and financial efficiency.

Delivery of these objectives is underpinned by the actions set out in the Transport Portfolio’s Performance and Efficiency Plan (as set out in Annex B of the Scottish Spending Review), with clear accountability and performance management to ensure benefits are realised and sustained. Strengthened collaboration across the Transport Portfolio and with partners will be critical to achieving coherent, system wide reform and the continued delivery of high quality transport services for people and communities across Scotland.

During 2025-26, Transport Scotland continued to strengthen its own fiscal sustainability through a combination of rigorous financial management, organisational transformation and efficiency measures. Operating within a challenging public sector funding environment, the Agency maintained a strong focus on prioritisation, ensuring resources were directed towards Ministerial priorities and activities that deliver the greatest value for the people of Scotland. This included progressing the Transforming Transport Together programme, improving alignment of resources to strategic objectives, reducing duplication through organisational redesign, and rationalising its estate to reduce future operating costs. Alongside this, Transport Scotland maintained robust budget monitoring and forecasting arrangements throughout the year, supporting delivery within its overall budget envelope while laying the foundations for longer-term financial sustainability.

Fairness and Equality

Mobility and Access Committee for Scotland (MACS)

This is an independent advisory, non-departmental public body sponsored by Transport Scotland, whose members are appointed by the Cabinet Secretary for Transport. MACS considers matters relating to the needs of disabled people in relation to transport and gives advice to Scottish Ministers and Transport Scotland, reflecting the views and lived experiences of disabled people and promoting fairness and equality within the transport system.

Risk management

Risks are managed at the level most able to deal with them, with the most serious risks being escalated to the Senior Management Team/Audit and Risk Committee, and where appropriate, to the Director-General Net Zero. Transport Scotland categorises risk in line with the Orange Book: Management of risk - Principles and Concepts.

Our Risk Management Framework seeks to set out our approach to risk management, and it continues to be reviewed and enhanced, in line with arrangements in Scottish Government, to improve the transparency of our systematic approach, identify risks and to link them to Corporate Planning and Objectives. The Risk Framework provides additional guidance on assessing risks and their impact, with a scoring system that recognises both likelihood and impact.

There is a robust framework of responsibility for risk management in accordance with the Scottish Public Finance Manual. The system for assessment and control of risk is as follows:

• Managers identify and evaluate risks to delivering objectives successfully when they prepare and review their plans
• The Chief Executive meets regularly with the Directors and Ministers, where both strategic and operational matters are discussed
• The Chief Executive reviews the strategic and operational risks to achieving the objectives of Transport Scotland, in conjunction with the Directors, regularly at Senior Management Team meetings
• The Audit and Risk Committee provide oversight of our risk management processes, strategy and Corporate Risk Register

Risk Management Group

The Risk Management Group is appointed by the Senior Management Team to review, oversee and advise the SMT on the Transport Scotland Risk Register and risk management processes. Chaired by the Director of Finance and Corporate Services, it has representation from each of the directorates and meets every three months, aligned to directorate SMTs and the DG Assurance process.

Risk appetite

Within 2025-26, the Transport Scotland Risk Appetite Statement was reviewed. This Statement aligns with the agreed risk appetite for the wider Director-General Net Zero Portfolio.

Further detail on these risks is included in the performance report.

Managing information and information security

We are committed to ensuring information is managed and valued, with appropriate protection and use of our information assets. The handling of data and information carries significant risks, and we take information security very seriously, in compliance with Scottish Government sponsored and adopted Security Frameworks and Data Handling policies.

The Transport Scotland Agency Data Protection Officer oversees the process for handling personal data security incidents and staff guidance is available on what to do in the event of a breach. All information security incidents are logged, and lessons learned exercises are carried out for all reported security incidents. In addition, we follow the Scottish Government key principles for good information management in that:

• We know what information we have and where it’s stored
• We collaborate with others to share knowledge and information
• We know how to protect information and manage it appropriately
• We have the skills needed to manage information
• We know why this matters because our organisation values knowledge and information
• We know what’s expected when creating and using information
• We have the tools needed to manage information

All our users of Information Technology must comply with the Scottish Government Code of Conduct.

All staff are required to complete a mandatory General Data Protection Regulation (GDPR) e-learning course on an annual basis. The Information Governance and Data Protection team regularly monitors completion rates and issues reminders where required.

During the year 2025-26, no incidents relating to personal data were reported to the Information Commissioner’s Office (ICO) by Transport Scotland (2024-25: None).

Counter fraud

All cases of actual or suspected fraud are investigated promptly and appropriate action is taken, in accordance with our fraud, bribery and whistleblowing procedures, which specify how cases will be dealt with and how staff can report suspicions or concerns.

Our Fraud Officer updates these procedures in our Fraud Response Plan, which is reviewed annually, with updates communicated through staff notices and awareness sessions.

The Plan also includes a bespoke section on Cyber Resilience, in order to recognise its importance. Cyber Resilience retains a high profile throughout the agency, and our ICT colleagues continue to improve staff awareness and monitor systems. We have joined forces with the Scottish Government and other agencies in terms of developing and sharing best practice. The Scottish Government Information and Technology Services Division and the Traffic Scotland Information Service have achieved Cyber Essentials accreditation for 2025-26. Traffic Scotland Information Service has also achieved Cyber Essentials Plus accreditation for 2025-26 awarded by ISAME.

We have continued to encourage staff to undertake training and review regular updates and staff notices distributed by the Fraud Officer, guiding colleagues, particularly to counter fraud eLearning training courses available on the Civil Service-Learning website.

Details of cases of actual or attempted fraud that become known during the financial year are reported within the Fraud Log that is reviewed by the Audit and Risk Committee, together with responses and any further mitigation. There were two cases of suspected fraud highlighted during the year and, there continues to be investigations into prior year fraud cases to ensure they can safely be closed. Information continues to be shared with Police Scotland where this is deemed appropriate.

There is a separate Concessionary Fares Fraud Team due its unique operating environment. We participate in the National Fraud Initiative (NFI) in Scotland, led by Audit Scotland, which matches electronic data within and between public and private sector bodies to prevent and detect fraud. This is also reflected in the contribution to the Scottish Government project designed to review and enhance the overall approach to fraud detection and prevention. This project is designed to assess all areas of fraud prevention, consider the need for new approaches to training and the potential resources available for increasing the awareness and profile of this work.

Business continuity

Our Business Continuity Plan sets out our approach to dealing with events that could cause business interruption.

The aim of the Plan is central to keeping the organisation safe, secure, and resilient. Transport Scotland requires all directorates to develop, exercise and keep up to date the business continuity plan to deal with the consequences of business disruption. The Plan was updated within the 2025-26 financial year.

Our Business Continuity Plan has been successfully tested and demonstrated to operate effectively, with lessons learned reflected in updated plans. We also have a Cyber Incident Response Plan, which details how we will respond to any live cyber threat and provides guidance on processes and procedures that should be followed in response to any cyber incident.

Internal audit

The Scottish Government’s Directorate for Internal Audit and Assurance (DIAA) reviews specific areas within Transport Scotland as identified and agreed in the Annual Audit Plan. After reviews have been undertaken, reports are submitted which provide an assurance rating to the Chief Executive.

The annual rating of Assurance Controls provided by DIAA were reported as “Reasonable.” This is defined as “Controls are adequate but require improvement”. The annual rating was based on the assurance reviews and advisory activity undertaken over the year; the findings and actions put in place to address recommendations. A total of four assurance reviews were completed in-year:

• Sponsorship
• Investment Decision Making (IDM) Processes and Governance
• Analysis and Use of Evidence to Inform Decision Making
• Concessionary Travel Technology

Transport Scotland continues to work with DIAA to progress and build actions to implement the recommendations into our future work programme.

External audit

Audit Scotland prepared an Annual Audit Report in August 2026 as part of their audit of the Annual Report and Accounts 2025-26 for Transport Scotland. The matters and recommendations that were raised have either been addressed by management or actions have been put in place to address these within Transport Scotland. An Audit Tracker is presented quarterly to the Audit and Risk Committee to manage progress.

Whistleblowing

We are committed to ensuring a high standard of conduct in all that we do, with a duty to identify and remedy any area of malpractice. We achieve this through encouraging a culture in which employees feel confident to raise their concerns about potential wrongdoing. Employees can report any suspected wrongdoing through their own line management or via a Nominated Officer. All whistleblowing cases are investigated thoroughly, ensuring that lessons are learned to encourage continuous improvement. Transport Scotland follows the Scottish Government’s Raising a Concern under the Civil Service Code and Whistleblowing Policy.

In 2025-26, there were no cases reported under the Whistleblowing Policy within Transport Scotland (2024-25: one).

Review of effectiveness of Internal Control

I, as the Accountable Officer, have responsibility for reviewing the effectiveness of the system of internal control. This is informed by the work of Internal Audit, Directors’ assurance, the Audit and Risk Committee and external auditors.

Directors provide annual certificates of assurance covering their areas of responsibility. These are supported by completion of an internal control checklist on an annual basis, covering all areas of corporate governance.

In addition, we maintain an assurance map, which sets out both corporate and directorate processes that provide assurance on achievement of our objectives and identifies officers responsible for ensuring these are accurate and up to date. This document is shared with internal and external audit and reviewed by the Audit and Risk Committee.

Our internal audit is provided by the Scottish Government’s Directorate of Internal Audit and Assurance, and they submit regular reports to the Audit and Risk Committee on the adequacy and effectiveness of the organisation’s system of internal control, together with any recommendations for improvement. Follow-up work is carried out to confirm the effective implementation of recommendations agreed as a result of the audits.

The Performance Audit Group (Turner and Townsend working in association with The Waterman Group, WSP and Price Waterhouse Coopers) audits, monitors, and reports on an independent basis on the financial, technical and performance aspects of the work carried out by the Trunk Roads Operating Companies, and this provides external assurance for trunk road maintenance.

The Office for Road and Rail also reviews and reports on an independent basis on the financial, technical and performance aspects of Network Rail undertaking the operation, maintenance, and renewal of railway infrastructure in Scotland to provide assurance on the adequacy and value for money of the discharge of these obligations.

Audit Scotland, external auditors, assess the extent to which they can place reliance on the individual reviews undertaken by Internal Audit to inform their opinion on the financial statements, depending on their relevance.

Based on these assurances, I can confirm that sound systems of governance, risk management and internal control, consistent with the requirements of the Scottish Public Finance Manual (SPFM) were operational over the year ended 31 March 2026 and up to the date of approval of the Annual Report and Accounts.

Remuneration and staff report

Remuneration policy

The remuneration of senior civil servants is set in accordance with the rules set out in chapter 7.1, Annex A of the Civil Service Management Code and in conjunction with independent advice from the Senior Salaries Review Body (SSRB). In reaching its recommendations, the SSRB is to have regard to the following considerations:

• the need to recruit, retain, motivate and, where relevant, promote suitably able and qualified people to exercise their different responsibilities.
• regional/local variations in labour markets and their effects on the recruitment, retention and, where relevant, promotion of staff.
• Government policies for improving the public services including the requirement on departments to meet the output targets for the delivery of departmental services.
• the funds available to departments as set out in the Government’s departmental expenditure limits.
• the Government’s inflation target.

Performance based pay awards are based on an assessment of performance against objectives agreed between the individual and line manager at the start of the reporting year. Performance will also influence any bonus element awarded. In line with Scottish Public Sector Pay Policy, there will be no non-consolidated performance payments.

The remuneration of staff below senior civil service level is determined by the Scottish Government. In determining policy, account is taken of the need for pay to be set at a level which will ensure the recruitment, retention, and motivation of staff. Also considered is the Government’s policy on the Civil Service and public sector pay and the need to observe public spending controls.

Service contracts

The Constitutional Reform and Governance Act 2010 requires Civil Service appointments to be made on merit on the basis of fair and open competition but also includes the circumstances when appointments may otherwise be made.

Unless otherwise stated below, the officials covered by this report hold appointments which are open-ended. Early termination, other than for misconduct, would result in the individual receiving compensation as set out in the Civil Service Compensation Scheme.

Further information about the work of the Civil Service Commissioners can be found at Home - Civil Service Commission (independent.gov.uk).

Whilst Transport Scotland does not have a Board with Non-Executive Directors, the Audit and Risk Committee has external non-executive members to ensure independent oversight and challenge. The Audit and Risk Committee is comprised as follows:

• John Matheson – appointed July 2017, appointment ended 30 April 2025
• Graeme Dickson - appointed as chair on 1 April 2025; appointed on 7 March 2021
• Lesley Macleod - appointed on 1 August 2021
• Gillian Bruton – appointed 1 May 2025
• David Climie – appointed 1 May 2025
• Iain Stewart – appointed 1 May 2025

Remuneration group

Remuneration for Transport Scotland’s senior civil servants is considered by the Scottish Government’s Remuneration Group. This Remuneration Group has six members, two of whom are non-executive directors. Further details about the Remuneration Group can be found at the website Remuneration group.

The Remuneration Group’s remit is to consider:

• annual pay proposals for chief executives and board members and make recommendations to Ministers.
• annual guidelines for flat rate increase for chief executives and senior civil servants and consider the Public Sector Pay policies which will apply for the annual pay round and make recommendations to Ministers.
• pay remits which look at pay proposals for public bodies in Scotland.

The Remuneration Group will, as a minimum, report annually to the Scottish Government Strategic Board.

The following sections of this report are subject to audit: total remuneration (including salary, bonuses, benefits in kind, accrued pension benefits, fees), fair pay disclosure and exit packages.

Directors' remuneration (Salary, benefits in kind and pensions)

The single total figure of remuneration, comprising the salary and the value of any bonuses or taxable benefits in kind of the Directors for the year 2025-26, along with comparative figures are shown in the table below.

Directors’ remuneration

Current Directors	Salary £000		Bonus £000		Benefits in Kind £000		Pension Benefits £000		Total £000
Year	25-26	24-25	25-26	24-25	25-26	24-25	25-26	24-25	25-26	24-25
Fiona Brown (Strategy, Performance & Analysis)	95-100	90-95	-	-	-	-	33	36	125-130	125-130
Morna Cannon (Environment, Climate and Sustainability)	90-95	90-95	-	-	-	-	37	35	130-135	125-130
Hugh Gillies (Roads Delivery & Operations)	95-100	90-95	-	-	-	-	-	72	95-100	160-165
Alison Irvine (Chief Executive)	110-115	105-110	-	-	-	-	45	42	155-160	145-150
Bill Reeve (Rail Reform)	95-100	125-130	-	-	-	-	42	53	140-145	180-185
Lawrence Shackman (Infrastructure Projects)	95-100	90-95	-	-	-	-	35	56	130-135	145-150
Bettina Sizeland (Transport Integration & Connectivity)	95-100	90-95	-	-	-	-	28	47	125-130	140-145
Chris Wilcock (Ferries and Ports)	90-95	0-5	-	-	-	-	21	-	115-120	0-5
Graeme Cook (Rail Delivery)	65-70	-	-		-		25	-	90-95	-
Mary Docherty (Bus, Concessionary & Active Travel)	50-55		-		-		16	-	65-70	-
Catherine Jess- Gibson (Interim Finance and Corporate Services)[1]	55-60	-	-		-	-	-	-	55-60	-
Former Directors
Kerry Twyman (Finance and Corporate Services)	60-65	110-115	-	-	-	-	28	66	90-95	175-180

 

¹Catherine Jess Gibson is on secondment from the Foreign, Commonwealth and Development Office (FCDO) and is not on Transport Scotland’s payroll. FCDO retain responsibility for the underlying pension arrangement.

Single total figure of remuneration

In respect of the included information, the value of pension benefits accrued during the year is calculated as the real increase in pension multiplied by 20, less the contributions made by the individual. The real increase excludes increases due to inflation or any increase or decrease due to a transfer of pension rights.

Chris Wilcock was appointed Interim Director of Ferries on 12 March 2025 and was appointed on a permanent basis from 10 October 2025.

Kerry Twyman left post as Director of Finance and Corporate Services on 26 September 2025. The £60-65,000 for the year represents salary to leaving date. 2025-26 full year equivalent banding would be £110-115,000.

Mary Docherty joined post as Director of Bus, Concessionary and Active Travel on 23 October 2025. The £50-55,000 for the year represents salary from starting date to the end of the financial year. 2025-26 full year equivalent banding would be £90-95,000.

Catherine Jess-Gibson joined post as Interim Director of Finance and Corporate Services on 1 October 2025. The £55-60,000 for the year represents salary from starting date to the end of the financial year. 2025-26 full year equivalent banding would be £110-115,000.

Graeme Cook joined post as Director of Rail Delivery on 4 August 2025. The £65-70,000 represents salary from starting date to the end of the financial year. The 2025-26 full year equivalent banding would be £95-100,000.

Salary

Salary and allowances cover both pensionable and non-pensionable amounts and include gross salaries; overtime; recruitment and retention allowances; private-office allowances or other allowances to the extent that they are subject to UK taxation. This total remuneration is shown in the figures in the table on the previous page. It does not include employers’ pension contributions or amounts which are a reimbursement of expenses directly incurred in the performance of an individual’s duties or employers’ national insurance.

Where a director has joined or left Transport Scotland during the year, their salary reflects only that which they received whilst a member of the senior management team. Where an individual has been a member of the senior management team for only part of the year, but they have been employed by the agency throughout the year, their annual salary has been reported on a “days served” basis as well as the full year equivalent salary.

Any amounts payable on early termination of a contract will be in accordance with the individual’s circumstances.

Fees

External members of the Audit and Risk Committee are entitled to receive fees for regular attendance at Audit and Risk Committee meetings. External members’ expenses incurred in attending these meetings are also reimbursed.

All external members of the Audit and Risk Committee were entitled to a daily fee of £330 for attendance at Audit and Risk Committee meetings during 2025-26.

The remuneration of the Transport Scotland external members, for all commitments, were as follows:

Name	Title	Fees £000
		2025-26	2024-25
John Matheson	External Member ARC	0-5	15-20
Graeme Dickson	External Member ARC	5-10	5-10
Lesley Macleod	External Member ARC	0-5	0-5
Gillian Bruton	External Member ARC	0-5	0
David Climie	External Member ARC	5-10	0
Iain Stewart	External Member ARC	5-10	0

This is in line with Scottish Government remuneration of external members.

Fair pay disclosure

Reporting bodies are required to disclose the relationship between the remuneration of the highest paid director in the organisation and the median remuneration of the organisation’s workforce, as well as the 25th and 75th percentiles. Total remuneration includes salary, performance-related pay, and non-cash benefits. There were no performance-related pay or non-cash benefits made during the financial year.

The calculations include directly employed staff paid through SG Core payroll and cover both permanent staff and those on fixed term contracts. They also include agency temporary employees who are covering staff vacancies. They do not include consultant’s costs, nor staff costs employed in arm’s length bodies.

The full year equivalent banded remuneration of the highest paid director was £125k-£130k (2024-25: £125k-£130k). Please note the below year to year comparisons in relation to the highest paid director.

• This was 2.3 times (2024-25: 2.6) the median remuneration of the workforce, which was £54,701 (2024-25: £49,472).
• This was 3.1 times (2024-25: 3.3) the 25th percentile of the workforce, which was £41,643 (2024-25 £38,271).
• This was 1.9 times (2024-25: 2.0) the 75th percentile of the workforce, which was £67,454 (2024-25: £64,859).

Changes in pay ratios are attributed to changes in remuneration of the highest paid director and the pay and benefits of employees taken as a whole; increases in remuneration are in line with approved pay policies. The table below provides a summary of these pay ratios:

Pay ratios

YEAR	MIDPOINT £	MEDIAN £	RATIO	25th PERCENTILE £	RATIO	75th PERCENTILE £	RATIO
2025-26	127,500	54,701	2.3	41,643	3.1	67,454	1.9
2024-25	127,500	49,472	2.6	38,271	3.3	63,241	2.0

Changes in year

The average percentage change decreased by 1% primarily due to reduction in overtime costs and new staff starting on lower grade banding.

	2025-26 TOTAL SALARY    £	2025-26 AVERAGE FTE	AVERAGE SALARY PER FTE	2024-25 TOTAL SALARY      £	2024-25 AVERAGE FTE	AVERAGE SALARY PER FTE	AVERAGE % CHANGE
TS EMPLOYEES	33,066,658	586	56,428	31,743,000	557	56,989	(1)

In 2025-26, no employee received remuneration in excess of the highest paid director (2024-25: None). Remuneration across Transport Scotland ranged from £26k - £129k (2024-25: £25k - £125.5k).

	2025-26 MIDPOINT £	2024-25 MIDPOINT £	PERCENTAGE CHANGE
HIGHEST PAID DIRECTOR	127,500	127,500	-

Total remuneration includes salary, non-consolidated performance related pay, and benefits in kind. It does not include employer pension contributions and the cash equivalent transfer value of pensions.

Civil Service and other Compensation Scheme

Within Transport Scotland, two members of staff agreed departures under the Civil Service Compensation Scheme rules in 2025-26.

Exit Package cost band	Number of Exits Under Civil Service Compensation Scheme
Less than £10,000	1
£10,001 - £25,000	0
£25,001 - £50,000	1
Total number of exit packages	2

Pensions

Accrued pension represents the Directors’ total future entitlement to benefits payable from the Civil Service pension schemes based on reckonable service on 31 March 2026. The pension entitlements of the Directors of Transport Scotland are shown in the below table. These are calculated on normal retirement age (NRA) where pension entitlement is due at that age or current age if over NRA. The value of pension benefits accrued during the year is calculated as (the real increase in pension multiplied by 20) plus (the real increase in any lump sum) less (the contributions made by the individual). The real increases exclude increases due to inflation and any increase or decreases due to a transfer of pension rights.

A Cash Equivalent Transfer Value (CETV) is the actuarially assessed capitalised value of the pension scheme benefits accrued by a member at a particular point in time. The benefits valued are the members’ accrued benefits and any contingent spouse’s pension payable from the scheme. A CETV is a payment made by a pension scheme or arrangement to secure pension benefits in another pension scheme or arrangement when the member leaves a scheme and chooses to transfer the benefits accrued in their former scheme.

The pension figures shown relate to the benefits that the individual has accrued as a consequence of their total membership of the pension scheme, not just their service in a senior capacity to which disclosure applies. The figures also include the value of any pension benefit in another scheme or arrangement, which the member has transferred to the Civil Service pension arrangements. They also include any additional pension benefit accrued to the member as a result of their buying additional pension benefits at their own cost. CETVs are worked out in accordance with The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 and do not take account of any actual or potential reduction to benefits resulting from Lifetime Allowance Tax which may be due when pension benefits are taken.

The real increase in CETV quoted in the table below represents the increase that is funded by the employer. It does not include the increase in accrued pension due to inflation, or contributions paid by employees (including the value of any benefits transferred from another pension scheme or arrangement) and uses common market valuation factors for the start and end of the period.

This pension data was supplied to Transport Scotland by Capita. Further details on the different schemes available to employees can be found in Note 2 to the accounts. Further details about the Civil Service pension arrangements can be found at the Civil Service Pension Scheme website.

	Lump Sum at NRA as at 31 March 2026	Real Increase in Lump Sum at age NRA	Accrued Pension at age NRA as at 31 March 2026	Real Increase in pension at age NRA	CETV as at 31 March 2026	CETV as at 31 March 2025	Real Increase in CETV in 2025-26
Current Directors	£’000	£000	£000	£000	£000	£000	£000
Fiona Brown	-	-	20-25	0-2.5	287	251	16
Morna Cannon	-	-	15-20	0-2.5	190	159	18
Hugh Gillies1	-	-	45-50	0-2.5	959	921	(18)
Alison Irvine	-	-	30-35	2.5-5	512	456	32
Bill Reeve2	-	-	0-5	0-2.5	41	-	34
Lawrence Shackman	80-85	-	35-40	0-2.5	800	753	28
Bettina Sizeland	-	-	25-30	0-2.5	610	558	18
Chris Wilcock	-	-	40-45	0-2.5	731	704	13
Graeme Cook	-	-	35-40	0-2.5	538	508	16
Mary Docherty	-	-	30-35	0-2.5	527	503	13
Catherine Jess-Gibson3  Gibson	-	-	-	-	-	-	-
Former Directors
Kerry Twyman	-	-	45-50	0-2.5	813	764	20

Accrued pension benefits included in this table for any individual affected by the Public Service Pensions Remedy have been calculated based on their inclusion in the legacy scheme for the period between 1 April 2015 and 31 March 2022, following the McCloud judgment. The Public Service Pensions Remedy applies to individuals that were members, or eligible to be members, of a public service pension scheme on 31 March 2012 and were members of a public service pension scheme between 1 April 2015 and 31 March 2022. The basis for the calculation reflects the legal position that impacted members have been rolled back into the relevant legacy scheme for the remedy period and that this will apply unless the member actively exercises their entitlement on retirement to decide instead to receive benefits calculated under the terms of the Alpha scheme for the period from 1 April 2015 to 31 March 2022.

Staff report

Equality, diversity, and inclusion

As part of the Scottish Government, Transport Scotland shares its vision to be a world-leading, diverse employer where colleagues can be themselves at work. We are committed to giving all our colleagues the opportunity to shine; we strive to nurture talent at all levels and develop a diverse workforce reflective of the communities we serve. We foster an inclusive workforce culture which values the contribution of staff from all backgrounds because we know a more inclusive workspace is more productive and innovative.

The Scottish Government is committed to tackling inequalities in Scottish society and knows that having a diverse workforce is key to this. As an agency of the Scottish Government, we also know that the value of this diversity can only be realised through acknowledging and removing barriers that prevent people from flourishing. Building an inclusive culture where everyone is valued because of the unique perspectives they bring also builds a strong sense of belonging to the Scottish Government as an employer.

Transport Scotland’s Equality, Diversity and Inclusion group has met frequently in the last year. The group has sought to highlight suitable networks and learning opportunities. We are committed to increasing the diversity of our workforce and to ensure every colleague sets a diversity objective as part of their annual objectives. We encourage all colleagues to increase their diversity understanding through learning activities and accessing all our diversity networks, and to ensure that everyone can link with an appropriate Diversity Champion in their area. We also direct colleagues to the provisions within the Equality Act 2010, so that they can fully understand how this affects their rights and responsibilities and ensure they know how to access support at all times.

Non-discrimination and equality of opportunity are cornerstones of our approach to pay and reward. We are committed to advancing equality of opportunity in the workplace regardless of protected characteristic or other reason (sex, marital/civil partnership status, age, race, ethnic origin, sexual orientation, disability, religion or belief, gender identity (Trans status), socio-economic background, working pattern, employment status, caring responsibilities, or trade union membership).

The Department for Work and Pensions is responsible for developing, formulating, and disseminating equal opportunities guidance for the Civil Service as a whole, but operational responsibility rests with individual departments.

As at 31 March 2026, the gender profile of Transport Scotland, was 46% Male and 54% Female.

The table below provides an overview of the gender composition of Transport Scotland in 2025-26.

2025-26				2024-25
Gender	CEO and Directors	Employees	Total	Gender	CEO and Directors	Employees	Total
F	5	349	354	F	5	310	323
M	5	299	304	M	4	306	318
Unknown		3	3
Total	10	651	661	Total	9	616	625

Staff relations

We give a high priority to the development of all our staff. Training, development, and learning opportunities are all regularly reviewed, content checked and updated to reflect valued staff feedback.

We recognise that the success of any organisation depends largely on the effective performance and full attendance of all its employees. People are a valued resource, and as an employer, our attendance management procedures are designed to maintain a happy, well-motivated and healthy workforce.

The aim of the procedures is to:

• be supportive and positive.
• promote fair and consistent treatment for everyone.
• encourage, assist, and make it easy for people to stay in work.
• explain employees’ entitlements, roles, and responsibilities.

The Annual People Survey is run across the UK Civil Service, and the contract and survey design is managed by the Cabinet Office. All colleagues are encouraged to participate and provide feedback on what is working well and what could be improved across the organisation. Transport Scotland receives its own set of headline and directorate results from the survey.

The engagement index for Transport Scotland’s 2025 Civil Service People Survey (CSPS) was 62%, compared with 61% in 2024. Results improved across seven of the headline themes, reflecting positive progress in a number of areas. The largest improvements were in Organisational Objectives (81%) and Leadership and Managing change (56%) compared with 76% and 52% respectively in the previous year.

The strongest overall scores were in My Work (84%), My Team (83%), and My Manager (82%), highlighting the positive experience many colleagues have in their day-to-day roles and working relationships.

While the survey results demonstrate positive progress across most themes, they also show that there is more to do. Resources and Workload (73%) and Learning and Development (51%) remained unchanged from the prior year, while Pay and Benefits (54%) declined by 5 percentage points, driven primarily by lower satisfaction in the overall benefits package. We recognise that improvements are an ongoing journey and will continue to use staff feedback to identify priorities, target improvement and strengthen Transport Scotland as a great place to work for all.

Wellbeing continues to be a top priority, and whilst our environment has changed considerably in the last few years, we place significant importance on staying connected and matching resources to increasing demands. We will continue to respond appropriately and help to support a good work-life balance for our colleagues.

Sickness Absence Rates

In 2025-26 an average of 8.4 working days (2024-25: 9.1) were lost due to sickness absence per staff year for Transport Scotland. This is consistent with an average of 8.4 working days lost due to sickness absence in core Scottish Government in 2025-26.

In 2025-26, the percentage turnover for Transport Scotland permanent staff was 4.66% (2024-25: 4.94%). There were 28 permanent leavers within the period, and an average headcount of 586 permanent staff. This compares to a percentage turnover of 4.09% in core Scottish Government in 2025-26, and an average headcount of 9,244 permanent staff.

Health, safety, and wellbeing

Transport Scotland is committed to achieving the highest standards of health, safety and wellbeing for our staff, visitors, contractors, and any others who may be affected by our acts or omissions. We continually engage to promote a positive health and safety culture across the organisation, and we seek improvement through role specific and compulsory health and safety training and e-learning, which in turn is supported by the IOSH Chartered Health & Safety Adviser and Health and Safety Liaison Officers.

We also have a bespoke and robust health and safety management system, which is set out clearly within our policy manual. This provides guidance on roles, responsibilities, and proposals for achieving our health, safety, and wellbeing goals, all of which are in alignment with Scottish Government Occupational Health and Safety strategies.

Transport Scotland Wellbeing

At Transport Scotland, we are committed to fostering a supportive and healthy working environment for all our staff. In 2025-26, our Wellbeing Strategy and Action Plan has continued to inform our approach to supporting and embedding a positive wellbeing culture in the workplace – wellbeing is an overarching principle woven into other people-related activities such as Learning and Development and Leadership. Looking ahead, we will continue to prioritise and expand our wellbeing activities in the next financial year, ensuring our people feel valued, supported, and empowered.

Trade union membership

Transport Scotland values strong employee relations and has a Partnership Board in place. Our Partnership Agreement sets out the terms of reference for the Board in matters affecting staff. The Board itself is made up of Transport Scotland management, with a representative from Human Resources as well as representatives from the Scottish Government Trade Unions. The Board meets on a monthly basis throughout the year, or additionally on request by Board members.

Details of Scottish Government's trade union facility time including Transport Scotland are published on the Scottish Government website.

Employment of disabled persons

We are a “Disability Confident Leader Employer,” which recognises our commitment and our positive attitude towards removing the barriers faced by disabled people. Our Diversity and Inclusion Employer Strategy policy was published in May 2024 and sets out our employer visions, commitments, and equality outcomes to support more disabled people into work within the Scottish Government and to enable existing disabled employees to thrive and succeed at work.

In doing so, we offer interviews to all disabled applicants and staff who meet the minimum criteria for any post; equip line managers to understand and take action in respect of their management responsibilities; implement workplace adjustments to enable disabled employees to thrive; have appointed Disability Champions at Senior Civil Service level and at Executive team level; and our Disabled Staff Network and our Mental Health Network are critical to our strategic approach to advancing diversity and inclusion, offering rich insights into lived experience and building empathy and understanding.

The number of staff as at 31 March 2026 who had a declared disability employed by Transport Scotland was 62 (2024-25: 68).

Staff numbers and costs

Details of staff costs for the year are contained within Note 2 to the Accounts. Transport Scotland incurred £47.6 million in relation to total staff costs in the year 2025-26 (2024-25: £43 million). Of this, £47 million was in relation to permanent staff, who are civil servants with an employment contract with Transport Scotland (2024-25: £42 million). The balance of £0.6 million related to agency staff (2024-25: £1 million).

Note 2 includes the costs of staff employed on the design, procurement and management of capital projects undertaken by Transport Scotland. Totalling £5.9 million (2024-25: £4.7 million), these costs have been charged to capital expenditure in respect of the projects identified in the year and are included with the project costs in Note 4.

In addition to the staff costs for the year contained within Note 2 to the accounts, the agency paid out £8 million in professional consultancy costs in 2025-26 (2024-25: £6.1 million) in relation to professional services required in the procurement of key projects and the delivery of the agency’s transport objectives.

At the end of financial year 2025-26, Transport Scotland’s headcount totalled 661, as analysed in the table below:

Staff Category	Headcount at 31 March 2026	Headcount at 31 March 2025
Permanent Staff	617	579
Agency Staff	2	2
Consultants	42	44
Total	661	625

Pension liabilities

The pension entitlements of the Directors of Transport Scotland are contained within the Remuneration and Staff Report. An indication of how pension liabilities are treated in the accounts, and references to relevant pension schemes, are also contained within the Remuneration and Staff Report and in Note 2 to the accounts.

Parliamentary Accountability and Audit Report

Regularity of expenditure

The expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000; and the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the expenditure shown in the financial statements were applied in accordance with section 65 of the Scotland Act 1998

Fees and charges

Transport Scotland does not raise any significant income through fees and charges. Where relevant, Transport Scotland complies with the cost allocation and charging requirements set out in the Scottish Government Public Finance Manual (SPFM).

Remote contingent liabilities

The Government Financial Reporting Manual (FReM) states that where information about contingent liabilities is not required to be disclosed because the likelihood of a transfer of economic benefits is considered too remote, they should be disclosed separately for parliamentary reporting and accountability purposes. Transport Scotland has a number of these liabilities, and they are disclosed in Note 19 (b) to these accounts.

Gifts

We have clear policies regarding acceptable levels of gifts and hospitality, both given and received. We ensure all colleagues are aware of their obligations under the Civil Service Code and their conditions of employment. The Scottish Public Finance Manual requires gifts to be reported and individual gifts of more than £250,000 to be noted separately. Transport Scotland accepted a limited number of gifts and hospitality of a minor nature for the year ended 31^st March 2026. None of these were in excess of £250,000.

Losses and special payments

Irrecoverable costs no longer being pursued amounted to £69,969 (2024-25 £196,702) of which £53,000 is in respect of loan write-offs on the Energy Savings Trust scheme.

Scottish Parliament Committee appearances

Details of appearances before Scottish Parliament committees by Transport Scotland officials for the year were as follows:

Net Zero, Energy and Transport Committee

Date	Heading
Tuesday 27 May 2025	Planning and Infrastructure Bill (UK Parliament legislation)
Tuesday 7 October 2025	Update on Scottish Government transport policies and performance
Tuesday 4 November 2025	Sustainable Aviation Bill (UK Parliament legislation)
Tuesday 9 December 2025	Companies Act 2006 (Scottish public sector companies to be audited by the Auditor General for Scotland) Order 2026
Tuesday 20 January 2026	National Bus Travel Concession Schemes (Miscellaneous Amendment) (Scotland) Order 2026
Tuesday 3 February 2026	Draft Climate Change Plan
Tuesday 3 February 2026	Budget Scrutiny 2026-27
Tuesday 17 February 2026	National Bus Travel Concession Schemes (Miscellaneous Amendment) (Scotland) (No2) Order 2026 and the National Bus Travel Concession Schemes (Miscellaneous Amendment) (Scotland) Order 2026
Tuesday 10 March 2026	Railways Bill (UK Parliament legislation)

Finance and Public Administration Committee No officials attended the Finance and Public Administration Committee from 1 April 2025 to 31 March 2026.

Alison Irvine

Chief Executive

Independent Auditors' Report

Independent auditor’s report to Transport Scotland, the Auditor General for Scotland and the Scottish Parliament

Reporting on the audit of the financial statements

Opinion on financial statements

I have audited the financial statements in the annual report and accounts of Transport Scotland for the year ended 31 March 2026 under the Public Finance and Accountability (Scotland) Act 2000. The financial statements comprise the Statement of Financial Position, the Statement of Comprehensive Net Expenditure, the Statement of Cash Flows, the Statement of Changes in Taxpayers’ Equity and notes to the financial statements, including material accounting policy information. The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards, as interpreted and adapted by the 2025/26 Government Financial Reporting Manual (the 2025/26 FReM).

In my opinion the accompanying financial statements:

• give a true and fair view of the state of the body's affairs as at 31 March 2026 and of its net expenditure for the year then ended;
• have been properly prepared in accordance with UK adopted international accounting standards, as interpreted and adapted by the 2025/26 FReM; and
• have been prepared in accordance with the requirements of the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Basis for opinion

I conducted my audit in accordance with applicable law and International Standards on Auditing (UK) (ISAs (UK)), as required by the Code of Audit Practice approved by the Auditor General for Scotland. My responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of my report. I was appointed by the Auditor General on 15 April 2026. My period of appointment is two years, covering 2025/26 and 2026/27. I am independent of the body in accordance with the ethical requirements that are relevant to my audit of the financial statements in the UK including the Financial Reporting Council’s Ethical Standard, and I have fulfilled my other ethical responsibilities in accordance with these requirements. Non-audit services prohibited by the Ethical Standard were not provided to the body. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Conclusions relating to going concern basis of accounting

I have concluded that the use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work I have performed, I have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the body’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from when the financial statements are authorised for issue.

These conclusions are not intended to, nor do they, provide assurance on the body’s current or future financial sustainability. However, I report on the body’s arrangements for financial sustainability in a separate Annual Audit Report available from the Audit Scotland website.

Risks of material misstatement

I report in my Annual Audit Report the most significant assessed risks of material misstatement that I identified and my judgements thereon.

Responsibilities of the Accountable Officer for the financial statements

As explained more fully in the Statement of Accountable Officer’s Responsibilities, the Accountable Officer is responsible for the preparation of financial statements that give a true and fair view in accordance with the financial reporting framework, and for such internal control as the Accountable Officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Accountable Officer is responsible for using the going concern basis of accounting unless there is an intention to discontinue the body’s operations.

Auditor’s responsibilities for the audit of the financial statements

My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. I design procedures in line with my responsibilities outlined above to detect material misstatements in respect of irregularities, including fraud. Procedures include:

• using my understanding of the central government sector to identify that the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers are significant in the context of the body;
• inquiring of the Accountable Officer as to other laws or regulations that may be expected to have a fundamental effect on the operations of the body;
• inquiring of the Accountable Officer concerning the body’s policies and procedures regarding compliance with the applicable legal and regulatory framework;
• discussions among my audit team on the susceptibility of the financial statements to material misstatement, including how fraud might occur; and
• considering whether the audit team collectively has the appropriate competence and capabilities to identify or recognise non-compliance with laws and regulations.

The extent to which my procedures are capable of detecting irregularities, including fraud, is affected by the inherent difficulty in detecting irregularities, the effectiveness of the body’s controls, and the nature, timing and extent of the audit procedures performed.

Irregularities that result from fraud are inherently more difficult to detect than irregularities that result from error as fraud may involve collusion, intentional omissions, misrepresentations, or the override of internal control. The capability of the audit to detect fraud and other irregularities depends on factors such as the skilfulness of the perpetrator, the frequency and extent of manipulation, the degree of collusion involved, the relative size of individual amounts manipulated, and the seniority of those individuals involved.

A further description of the auditor’s responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website www.frc.org.uk/auditorsresponsibilities. This description forms part of my auditor’s report.

Reporting on regularity of expenditure and income

Opinion on regularity

In my opinion in all material respects:

• the expenditure and income in the financial statements were incurred or applied in accordance with any applicable enactments and guidance issued by the Scottish Ministers, the Budget (Scotland) Act covering the financial year and sections 4 to 7 of the Public Finance and Accountability (Scotland) Act 2000; and
• the sums paid out of the Scottish Consolidated Fund for the purpose of meeting the expenditure shown in the financial statements were applied in accordance with section 65 of the Scotland Act 1998.

Responsibilities for regularity

The Accountable Officer is responsible for ensuring the regularity of expenditure and income. In addition to my responsibilities in respect of irregularities explained in the audit of the financial statements section of my report, I am responsible for expressing an opinion on the regularity of expenditure and income in accordance with the Public Finance and Accountability (Scotland) Act 2000.

Reporting on other requirements

Opinion prescribed by the Auditor General for Scotland on audited parts of the Remuneration and Staff Report

I have audited the parts of the Remuneration and Staff Report described as audited. In my opinion, the audited parts of the Remuneration and Staff Report have been properly prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Other information

The Accountable Officer is responsible for the other information in the annual report and accounts. The other information comprises the Performance Report and the Accountability Report excluding the audited parts of the Remuneration and Staff Report.

My responsibility is to read all the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If I identify such material inconsistencies or apparent material misstatements, I am required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work I performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard.

My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon except on the Performance Report and Governance Statement to the extent explicitly stated in the following opinions prescribed by the Auditor General for Scotland.

Opinions prescribed by the Auditor General for Scotland on Performance Report and Governance Statement

In my opinion, based on the work undertaken in the course of the audit:

• the information given in the Performance Report for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers; and
• the information given in the Governance Statement for the financial year for which the financial statements are prepared is consistent with the financial statements and that report has been prepared in accordance with the Public Finance and Accountability (Scotland) Act 2000 and directions made thereunder by the Scottish Ministers.

Matters on which I am required to report by exception

I am required by the Auditor General for Scotland to report to you if, in my opinion:

• adequate accounting records have not been kept; or
• the financial statements and the audited parts of the Remuneration and Staff Report are not in agreement with the accounting records; or
• I have not received all the information and explanations I require for my audit.

I have nothing to report in respect of these matters.

Conclusions on wider scope responsibilities

In addition to my responsibilities for the annual report and accounts, my conclusions on the wider scope responsibilities specified in the Code of Audit Practice are set out in my Annual Audit Report.

Use of my report

This report is made solely to the parties to whom it is addressed in accordance with the Public Finance and Accountability (Scotland) Act 2000 and for no other purpose. In accordance with paragraph 108 of the Code of Audit Practice, I do not undertake to have responsibilities to members or officers, in their individual capacities, or to third parties.

Michael Oliphant FCPFA
Audit Director
Audit Scotland
4^th Floor
102 West Port
Edinburgh
EH3 9DN