Examination of Witnesses (Questions 240
- 259)
WEDNESDAY 28 JANUARY 1998
SIR RICHARD
MOTTRAM, KCB
240. I am very interested in the chronology
of the decisionmaking process, not having been privy to this.
At what level would the decision have actually been made to pursue
a sell-off rather than continue, if it were possible, with a housing
trust?
(Sir Richard Mottram) It was not possible to continue
with the housing trust.
241. Yes, I understand that.
(Sir Richard Mottram) The level at which we would
have taken the initial decision to pursue this option, that is
to proceed to see whether we could sell the estate on a satisfactory
basis, would have been the Secretary of State for Defence in consultation
with the Prime Minister. The level at which the decision was taken
to sell the houses on the basis described in this report on exactly
the same advice, since it is all taken from the advice we offered
Ministers, was the Secretary of State for Defence in consultation
with the Prime Minister.
242. The nature of the sale would have been
ratified at that level.
(Sir Richard Mottram) Yes, it was. It was partly
at that level because of a sensitivity in relation to the Services.
243. Can you recall when the decision was
actually made not to pursue the housing trust and to pursue a
sell-off? I know that the housing trust was effectively abandoned
in August 1994. When would the decision have been made?
(Sir Richard Mottram) I cannot tell you that because
I was not there at the time but I can find out for you.[18]
244. Could you also find out whether you
took to the Ministers the news that the housing trust option was
not appropriate or whether they called you in and asked how it
was going and what was to be done next?
(Sir Richard Mottram) We certainly took to the
Ministers the fact that the housing trust was not appropriate.
The question of what we did next was a question of three sorts
of things: what is feasible, what represents value for money,
what is Government policy. All these things are dealt with in
this report.
245. There were limited options as to what
you could have done: the housing trust was dead in the water on
the assessment you had made; the possibility of maintaining the
status quo which was you owning the properties and managing them;
the one which you actually chose, which was to sell off the properties
and to retain the management of those properties was taken at
Ministerial level. I say this simply because I am intrigued that
there was a change of Ministers of State in the summer of 1994
and a lot seems to have changed in the MOD as a result. This is
why I am pursuing at what level the decisions would have been
made, whether or not there were new brooms coming in and effectively
sweeping clean and choosing particular options which would have
a political or perhaps even an ideological line to them. You have
been very helpful.
(Sir Richard Mottram) I am sorry I do not actually
have in my mind how the Ministers of State were changing but there
was a change between two Secretaries of State for Defence in this
period. Without getting into what advice they were offered and
the decisions they were taking, you would not be right to draw
any conclusion that they had a different approach to this because
in fact the then Government had a consistent policy that it wanted
by various means to change the basis on which it was running this
part of the defence activity. That was the strong view of the
two Secretaries of State, one after the other. Obviously the decision
on the housing trust was effectively taken for us, for reasons
we discussed earlier. The decision in relation to whether to proceed
with this proposition or not, was taken by the then Secretary
of State but I personally think there was no significance in who
the Secretary of State was.
246. As it happens the Secretary of State
did not change in the period we are talking about; the Secretary
of State did not change until a year after the decision had been
made. What was noticeable was that other people within the department
did actually change.
(Sir Richard Mottram) It was a decision being
taken at a higher level so it would not have been significant.
All these things are discussed between the Secretary of State
and the other Ministers.
Mr Campbell: I am just intrigued
as to why there were so many changes at that particular time.
If it is a coincidental matter that there were Ministerial changes,
then so be it.
Mr Williams
247. I have rarely known you to be so unassuming
in accepting responsibility for matters within your department.
Listening to your answers, and even more so when we read them,
one is left with the impression that at the time your Ministers
were a cross you had to bear and today they are a shield you are
glad to shelter behind. I have never heard you refer to Ministerial
decisions so frequently before.
(Sir Richard Mottram) Oh! I will have to look
at what I said.
248. Did you never at any time consider
the possibility of an Accounting Officer's letter, as we tend
to call them?
(Sir Richard Mottram) I very much considered whether
this sale was value for money within the terms of the Government's
stated policy. If it had not been value for money within those
terms I would indeed have thought of a direction, yes.
249. It was not value for money within the
originally stated policy and it became value for money in the
restated policy.
(Sir Richard Mottram) No, the policy had not changed.
The key policy consideration was the view of Ministers that this
was not an activity which they wished the Ministry of Defence
to be engaged in, in so far as it was possible without substantial
penalty for the Ministry to disengage. I say the second half of
that clause because we continue to own all the homes in Northern
Ireland, we decided to maintain our ownership of all the homes
in Scotland, we own quite a few homes in England and Wales. Their
policy was as laid out in this report and we operated within the
framework of that policy.
250. Which of the Defence Ministers was
in situ at the time the actual decision was made?
(Sir Richard Mottram) At the time the actual decision
was made the Ministers involved in the decision were Mr Arbuthnot
and Mr Portillo.
251. Looking at the maintenance costs and
the various elements in this deal, can we turn quickly to page
17, Box 2? Am I misreading this? It is conceivable that I am;
I am not making a point here. Does this mean that the rent you
actually pay is 42 per cent of the rent that would have been paid
had not these other elements been taken into account?
(Sir Richard Mottram) Yes, it means the rent is
58 per cent lower.
252. If we turn over the page to Figure
4, that shows you a diagram ranging over 25 years from £106
million to virtually £40 million in terms of guaranteed payments.
The median therefore is a constant line at £73 million and
that gives us a rental guaranteed payment over the life of the
25-year agreement of £1.8 billion.
(Sir Richard Mottram) Yes.
253. It does actually.
(Sir Richard Mottram) I am sure it does if you
say it does.
254. I have checked it twice, so I certainly
hope it does. If not, I apologise to you. Is not the imputation
of that then that since 42 per cent equals £1.8 billion,
the 28 per cent of maintenance equals another £1.2 billion,
two thirds?
(Sir Richard Mottram) Yes.
255. Therefore, having paid you £1.6
billion for these houses, they are getting £1.8 billion of
rent and £1.2 billion of maintenance giving a £3 billion
commitment of yourselves to them over these 25 years.
(Sir Richard Mottram) Yes.
256. It is not bad, is it?
(Sir Richard Mottram) What one has to remember
is that they have paid us £1,662 million at the prices that
are current. They gave us £1,662 million. These guaranteed
payments which you have multiplied up in the way you described,
will actually decline in value so that would be one dimension.
257. They are reviewable, are they not?
(Sir Richard Mottram) No, the guaranteed payment
is not.
258. In that case you cannot pretend that
over 25 years maintenance costs will not go up as they normally
do at least level with the cost of living so they are indexed.
(Sir Richard Mottram) I was coming on to the maintenance.
It is a complicated calculation but in relation to the maintenance--
259. It is calculated but it is a good deal
from their point of view.
(Sir Richard Mottram) They must think it was a
reasonable deal because they were willing to do it.
18 Note: See Evidence, Appendix 1, page 30 (PAC 172). Back
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