Examination of witnesses (Questions 180
- 188)
MONDAY 30 MARCH 1998
SIR
RICHARD
MOTTRAM,
KCB
and SIR
ROBERT
WALMSLEY
and MR
FRANK
MARTIN
180. My final question, Chairman: as someone
who regards £20 million as a relatively small amount, what
would your adjective be for £40 million?
(Sir Richard Mottram) Chairman, in my own daily
dealings I regard £40 million as a very large amount, but
I regard £20 million as a fairly large amount.
181. But in your dealings in the job you
are accountable for here, you thought £20 million was a relatively
small amount.
(Sir Richard Mottram) Well, if I said that, I
should not have done.
182. Well, you did say it and I wrote it
down at the time, so do you withdraw that?
(Sir Richard Mottram) I do.
Chairman
183. Does the Treasury have any comments
to make before I wind up?
(Mr Martin) Thank you, Chairman. It was in the
context of Mr Love's questioning, where I did not want to leave
the impression that there is no sanction for the fact that the
Department exceeded its cash limit. The normal course is for a
Department to be fined by an equivalent or a near amount in the
subsequent year and that indeed was the case with the Department;
they were fined in 1997/98.
184. So can I be clear on the actual impact
of this? If, as appears to be the case, some tens of millions
or millions were brought forward from next year to this year,
all that would happen is that that would be subtracted from next
year?
(Mr Martin) If they breach their cash limit again,
do you mean, in this current year?
185. I think Sir Robert actually described
a circumstance where he thought he was going to be under budget
and, therefore, he spent, I have forgotten the number now——
(Mr Martin) £38 million.
186. Yes, £38 million, which could
have fallen in either year and by spending it in this year, he
was, as it were, saving it falling on the budget of next year.
Now, what would happen in those circumstances? Would the fine
just correct that or would the fine be in addition to that?
(Mr Martin) I do not think we would take account
of that particular element in the fine. The other point to add
to fill out entirely is that the Department does have very generous
arrangements for carry-forward of underspend. They are able to
carry forward an unlimited amount of underspend on their operating
cost limit and to carry forward up to 5 per cent of their underspend
on capital expenditure, so we would not regard the Department
as having any incentive to bring forward expenditure to avoid
underspend.
187. It does bring into question the tactic
of doing that in the first place. Can we have a note on this from
the Treasury of exactly how this works[14]?
(Mr Martin) Certainly, yes.
(Sir Richard Mottram) Just to be clear, Chairman,
we were of course fined that £38 million.
188. But you would have spent it in that
year anyway.
(Sir Richard Mottram) Yes, and, as you said, it
does call into question why we brought it forward.
Chairman: If it zeros
out, why do it that way, yes. I want to finish, gentlemen, just
by making a couple of points. The first one is this question of
accountability to and the authority of Parliament in both the
Waltham Abbey and the other case. I would like to know, and I
was not quite clear at the end of Mr Williams' exchange with you,
but I think that the Committee would like a note on precisely
who did not raise with their superior the extent of the expenditure
on Waltham Abbey beyond parliamentary or Treasury approval, so
could we have a note on that please in the next couple of weeks[15]?
The other point to make really is that throughout this whole meeting
there have been two themes apparently underpinning it. One was
that the Army, in particular, and the military, in general, have
special problems about the dispersion of the resources and manpower
they have to deal with and, secondly, that these numbers are not
very big percentages with respect to the overall budget and the
Committee does not appear, and I agree with them, to have been
very impressed with either argument. The first one goes back probably
as far as Marlborough and certainly as far as Wellington and one
would have thought that there would be an answer to that by now,
and the second one sounds rational at first, but if you carry
the logic to its extreme, I could turn to you and say to you,
"Give the Chairman of PAC 100th of 1 per cent of your budget",
and you would, I hope, consider that a very improper suggestion,
and with the £2 million in my pocket, notwithstanding, so
would I. I think it highlights quite how peculiar this line of
argument is because we are not talking about a measure of the
GDP here, we are not talking about something which is uncontrollable,
but we are talking about something which is supposedly under control
and perhaps more practically, I think, this Committee feels that
you should be expected to control that at the unit level, particularly,
and this particularly applies to the pay suspense accounts which
you should be controlling at the unit level at much, much higher
levels of accuracy than appears to be the case at the moment.
It is not about subtle mathematical techniques, but it is about
grip and control, bluntly, a little more, a little less. I would
like within four weeks, Sir Richard, for your Department to provide
the Committee with an analysis, as best you can do it, of the
causes of error in the suspense accounts on pay3[16].
You have told us several times during the course of the meeting
that you have not been able to get to the bottom of it, but, as
far as you can within the next four weeks, we would like to know
what the causes were, as best you can assess them, even if it
just comes down to highlighting the units that have got these
suspense errors, and there is no other word for it, they are errors,
because on my back-of-an-envelope calculations, even given the
write-off, after the write-off of the £16 plus million, you
were running at something like £60 per capita per year for
everybody in the service in terms of this expense account rate
of accrual, so that does not seem to us to be acceptable. I finish
by making a point which I think is particularly important to your
whole Department. This is not just about bean-counting, but this
is about the precise use of money and the accurate use of money
to get the best value for money and about getting the best outcome
in defence terms for the nation given the budget you have, and
if you cannot hit the target with the amount of money you think
you are spending, then you are not going to be able to achieve
value for money. You made an amusing comment about Waltham Abbey
when asked about the value for money there and said that you are
not sure whether you did or you did not get value for money. Well,
if you asked one of your soldiers or airmen or sailors whether
they had hit the target and they said to you, "Well, prove
that I didn't", you would not be very satisfied with that
answer and I think we are not very satisfied with that sort of
approach. We consider it really a quite serious set of problems
facing us and I hope, I am quite sure from what you said, that
you see it in the same light as we do and I look forward to those
notes. Beyond that, thank you both very much for delivering your
evidence today. Thank you.
14 1 Note:
See Evidence, Appendix 4, page 28 (PAC 265). Back
15
2 Note: See
Evidence, Appendix 1, paras 3-8, page 23 (PAC 253). Back
16
3 Note: See
Evidence, Appendix 3, page 25 (PAC 279). Back
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