Examination of witnesses (Questions 160
- 179)
MONDAY 30 MARCH 1998
SIR
RICHARD
MOTTRAM,
KCB
and SIR
ROBERT
WALMSLEY
and MR
FRANK
MARTIN
160. It is a bit late now. Why do you not
know?
(Sir Richard Mottram) Well, we looked into this
and the basis on which the matter was mishandled is the basis
that I described earlier. That is, a question was raised at the
time that——
161. And it was not answered.
(Sir Richard Mottram) And it was not answered,
yes.
162. Well, that is right, and this is where
points which have been made earlier come into focus. It is not
just a matter of £6 million, but it is a matter of parliamentary
accountability, the very thing you are at this Committee for.
It is why the NAO exists, it is why the Committee of Public Accounts
exists and it is why the job of the accounting officer exists.
Yet you still yourself had not even bothered to find out who could
not be bothered to reply to a question that you admit is the more
important question of the two.
(Sir Richard Mottram) I do not think through this
process we in any way fail to live up to our obligations to Parliament.
What we were talking about is internal delegations from the Treasury
which I regard to be a serious matter of control within our system,
but it is an executive issue. The second key question is did we
waste a lot of money on this——
163. I am not asking that one because while
that question is significant I have agreed with you that the more
important one is the question of accountability.
(Sir Richard Mottram) This is internal to us ——
164. It is of some significance to us as
well. It is one of the reasons you are here. You do understand
that? It meant that you spent £6 million irregularly. Now
from what level, since you do not seem to know who, was the request
issued and to which level was it addressed?
(Sir Richard Mottram) It was addressed from the
head of division. I do not know the level which received it, but
I can find out for you.
165. Which sort of level would that be?
(Sir Richard Mottram) The old style Grade 5[12].
166. Should it have been referred further
than that?
(Sir Richard Mottram) I will go back through the
correspondence and give you some more advice.
167. I am amazed that you are so unfamiliar
with this. You must have realised it is something the Committee
would focus on. When we get a report saying payment is irregular,
that the Treasury refused retrospectively to give it approval,
you must have known that this Committee would want to know about
it and want to know in detail about it. In fairness to you, you
always come to this Committee very well prepared. Why are you
so unprepared on this one?
(Sir Richard Mottram) I have not given it sufficient
attention obviously. I asked the question, the question was answered,
I have given an explanation[13].
168. Do you not see, Sir Richard, if you
did not think it was important, it is possible that people at
the level who should have been addressing the issue might also
have thought it was not important? You have not been concerned
to press them to make enquiries and find out for yourself.
(Sir Richard Mottram) I do not think I said it
was not important, because I regard it as important.
169. I think your answer indicates the degree
of priority you have given to investigating this issue. There
was a failure to get clear budgets, so no clear budgets, no clear
objectives, costs inadequately controlled and escalating expenditure
without the necessary budgetary checks. Who would have been responsible
for that?
(Sir Richard Mottram) The point is, Chairman,
the project was set up on a basis that was not satisfactory.
170. By whom?
(Sir Richard Mottram) The responsibility for it
moved around.
171. It tends to very quickly, particularly
when people are coming before the Committee of Public Accounts!
It is like the English three quarters.
(Sir Richard Mottram) I did not mean it like that.
It was a Defence Research Agency project managed by a bit of the
Property Services Agency. Its responsibility was transferred to
another bit of the Defence Estates Organisation. It was transferred
on twice. I can give you all this information. It was originally
set up on this basis. As it rolled forward it was not in my view
satisfactorily reviewed and put on a different basis. It was being
reviewed regularly and it was drawn to the attention of Ministers
in the then government, but the first fatal mistake was not to
think about the basis on which we were doing it and the second
basic mistake was not to go to our friends in the Treasury.
172. Your description of the evolution is
a very graphic explanation of why you got into the mess you have
got into. Let's look at the suspense accounts. If we look at paragraph
47, there were 99 suspense accounts. The total aggregate debit
was £130 million, the credit was £90 million. On 65
of 99 accounts there were uncleared transactions which because
they were over 12 months or more suggested they were long standing.
(Sir Richard Mottram) Yes.
173. Then we go to the next paragraph and
there we are told that the scale of the reported problem in reconciling
accounts is probably understated. We are then told that when a
sample was taken, I think we need to get clarification from the
NAO on this because the NAO goes on to say: "From a small
sample of accounts examined, over a quarter were found to have
balances that could not be fully reconciled." A quarter of
which accounts? Are we talking about accounts generally?
(Mr Daynes) We took a sample of 50 suspense accounts
and a quarter of those could not be reconciled.
174. That was 50 out of the general population
of 2,500 or just the 99?
(Mr Daynes) No, out of 2,500.
175. As a random sample, it is a small sample
I accept, but it is conceivable therefore that there could be
errors in a quarter, 600 of the suspense accounts?
(Mr Daynes) That is why we say that it is probably
understated.
176. You have a gift for understating your
understatements, if I may say so! That is an astonishingly high
figure, Sir Robert, or do you want to sing a duet?
(Sir Richard Mottram) I will answer for the Department
as a whole and Sir Robert can answer for the ones he has got within
that total. There is an issue, as I touched on earlier, over the
extent to which we identify the ones that really are in difficulty
and that is partly an issue of people failing to come back within
the system and explain the state they are in. The latest position
I think is at end of December there were 88 accounts reporting
difficulties. There were 85 certificates for that quarter not
yet received so I cannot be wholly confident about those. If you
want an estimate of how many accounts there might be where we
have to take action of various kinds, write off or write on, there
are certainly 20 and we are looking to get a handle on this number,
as I explained earlier. I am not aware of 600 on which there is
a problem.
177. You are not aware of? Are you willing
to sit there and tell us you are sure there are not 600?
(Sir Richard Mottram) Yes.
178. Sir Robert, would you go along with
that?
(Sir Robert Walmsley) I have suspense accounts
on Vote 2 and on Vote 3. There are 79 on Vote 2 of which five
are currently unreconciled. The estimates of write-on are of a
total of £61,000 on all those five aggregated down to at
the worst an adverse situation a write-off of £63,000. That
is Vote 2. On Vote 3 there are 96 suspense accounts of which eight
are unreconciled. One of these has only emerged in the last few
days and I am simply unable to give accurate figures for it. It
is transactions between us and the NATO Eurofighter Tornado Management
Agency in Munich and I simply do not have the numbers for it.
179. If we were to ask for ball-park figures
on the rest of them, the 2,500, where would your current information
lead you to feel the final figure would be?
(Sir Richard Mottram) Perhaps I could answer this
question, Chairman. At the end of March there are 95 that do not
reconcile out of 2,705. We believe that of that 95 up to 80 might
require action of some kind but some of them are very very small
amounts. So we might be talking about write-off action of around
£40 million perhaps, including the accounts that we discussed
earlier, in particular the £19.5 million on the first of
the pay suspense accounts. There is a further sum on the second
which would have to be included. So those would be numbers within
that total.
12 Note by Witness: The request was made by
the deputy Head of Defence Land Service, who was a Grade 5, to
the Head of Finance in the DLS, whose grade was Senior Executive
Officer. Back
13
Note: See Evidence, Appendix 1, page 23, paras 3-8 (PAC
253). Back
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