Examination of Witnesses (Questions 180
- 199)
WEDNESDAY 28 JANUARY 1998
SIR RICHARD
MOTTRAM, KCB
180. That is about £8,000 per property.
(Sir Richard Mottram) Yes. It will not be spent
on that basis. Some will have more money spent on them and some
will have not so much.
181. Some houses may have more than £8,000
spent on them over the next seven years.
(Sir Richard Mottram) Yes.
182. The answer you gave earlier that nearly
half of our occupied houses with Service families in them living
in below Grade 1 standard will not be the case in seven years'
time.
(Sir Richard Mottram) The aim is that they should
all be Grade 1 standard in seven years' time.
183. I am looking forward to seeing that
report come through. A final point on page 73. A question put
to you right at the start of the meeting referred to external
advisers and costs. I just wanted to check that I had heard the
answer correctly from you. In the top half of Figure B it talks
about fees to external advisers under scenario five being £16
million.
(Sir Richard Mottram) Yes; net present value.
184. External advisers to the MOD, in the
bottom half of the table being £39 million, a £23 million
difference. Have I got that right?
(Sir Richard Mottram) Yes.
185. Why is it costing us more?
(Sir Richard Mottram) Because we would have a
requirement to manage the interface and be advised on the interface
with Annington. These numbers are likely to be lower than shown
here. Perhaps I could give you the detail of by how much they
are going to be reduced.
186. The amount we are about to spend or
are forecast to spend on external advisers to the MOD is likely
to be less than is written here.
(Sir Richard Mottram) Yes.[13]
187. Significantly less.
(Sir Richard Mottram) Yes. I cannot put my hand
on the number but I can let you have it.
Jane Griffiths
188. I am interested in the implications
of the variation in types of housing, that housing is allocated
by rank and not necessarily strictly according to need.
(Sir Richard Mottram) Yes; it is charged for differently
as well. You have different entitlements at different ranks and
you pay different rents according to the nature of the property
you are occupying.
189. Forgive my naivety. You could therefore,
for example, have a sergeant and family in need of housing but
not be able to allocate them housing because the only housing
available was not appropriate to that rank.
(Sir Richard Mottram) Yes, you could have a situation
where a sergeant needed a house and the only house available was
an officer's house and there would be an issue over whether they
could occupy that house.
190. Do you not think it would be a better
use of public resources to help alleviate the pressures on local
authorities in military areas to find social housing by working
with them? Could not civilian families be housed outside the wire
and former Service personnel or serving personnel inside the wire
because those personnel would not be expected to present a security
risk of any sort? Have I understood that correctly?
(Sir Richard Mottram) Yes, there is an issue over
security inside the wire.
191. Therefore, in the interests of value
for money, would it not be better use of taxpayers' money to house
Service personnel and their families in vacant properties rather
than incur expense which is incurred by billeting families in
the private rented sector which does happen, if I have understood
correctly?
(Sir Richard Mottram) Yes. You could hypothetically
have a situation where we were carrying empty houses but they
were not of an appropriate type for the people who needed a house
so we were paying for those people to be on the private rented
market. Yes, you could have a situation like that.
192. This was what I was wondering about.
I did not want to go into the other aspects of it, particularly
as other people have. There are figures which show that one in
four rough sleepers come from an ex-Service background.
(Sir Richard Mottram) Yes.
193. Should that not be a little worrying?
I am not asking you to comment on how to prevent ex-Service people
becoming rough sleepers. However, there are clearly housing issues
around Service and ex-Service families who may become homeless
later in their lives. I believe it was this very Committee who
reported in 1991-92 that the Metropolitan Police had offered vacancies
in their housing for ex-Service families. This generated extra
income for them and did not threaten security. Would you consider
doing the same as the police have done?
(Sir Richard Mottram) There are at least two issues
here. I have not touched on this before but it is the case that
a significant number of the Ministry of Defence's married quarters
are currently being occupied by people who are not Service families.
Yes, there is a case and there is an argument, for example let
us take the case of behind the wire where there might be security
issues. Of course we should be looking at whether we could put
police there or put civil servants there or put all sorts of categories
of people there. We should look at those issues. There is then
a second set of issues which is whether we can do more to find
options for the social sector, for housing associations and so
on, which we were touching on earlier. The answer to that is that
we should look at that and we should be trying to do more. We
are looking at a number of areas where we would hope we could
do somewhat better. This may be my fault but we have focused too
much on questions about social things: there are basic practical
problems as well in sorting out sensible bits of the total which
you could then either get rid of or offer in packages which would
be attractive to people. We are looking at all of that. I do not
want to give you the impression that we have a closed mind about
the issues you are raising, because we do not.
Mr Clifton-Brown
194. May I take you to Figure 6 and talk
about the actual process by which you sold this vast amount of
property? According to Figure 6 you started off with some 5,500
copies of the prospectus being sent out. This then came down to
43 prequalified, 18 confirmed bids, four short-listed bidders
and then you ended up with only two confirmed bids at the end
of the day.
(Sir Richard Mottram) Two selected bidders.
195. Does this not indicate to you that
the sale was so large and so unattractive that you were bound
to have the eventual sale figure heavily discounted?
(Sir Richard Mottram) We did not have the eventual
sale figure heavily discounted on the basis of the two benchmarks
which were what a reasonable private sector company might be willing
to pay for the housing. It was not discounted; far from that it
was actually over the benchmark in both cases.
196. Does common sense not tell you that
this is such a large purchase that there are bound to be very
few people in the market who could possibly entertain this size
of purchase and that you would have obtained a better price overall
by splitting it into small lots?
(Sir Richard Mottram) We touched on that before.
The judgement of our advisers and the judgement of our Ministers
and the judgement of the department was that you might have generated
more interest that way but you might also have been left with
bits which were very unsaleable. What we did was to bundle the
whole lot up, we offered it in circumstances where we had a lot
of interest in the sale. We had a highly competitive process.
That process led to our exceeding the benchmark on two bases.
197. A lot of interest but very few final
bidders.
(Sir Richard Mottram) No, we were selecting people
out. They were not dropping out, we were selecting them out.
198. May I suggest to you that on the basis
of the impediments and the restrictions and the sale restrictions
you put in, it was a self-select process and the bidders were
selecting themselves out?
(Sir Richard Mottram) That is not true. May I
make this clear? We were selecting the bidders out. We were saying
that we had 18 bidders and we only wanted four to go to the next
stage. Fourteen of them were not dropping out: we were saying
we wanted to deal with four at the next stage. We then ended up
with two; eventually one plus a reserve via the four. This was
an absolutely classic process of an auction effectively conducted
with the help of advisers. People were not dropping out because
they were not interested: they were very interested. It was highly
competitive. It produced an answer which was bigger than either
of the two benchmarks of our advisers.
199. It seems to me that the critical aspect
of this sale is the rent. In paragraphs 1.12, 2.7 and the very
helpful summary in Appendix 6, paragraph 10, there seem to be
three contradictory bases on which the rent is to be reviewed.
Can you tell us which is correct?
(Sir Richard Mottram) What is the contradiction?
13 Note: See Evidence, Appendix 1, page 30 (PAC 172). Back
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