Examination of witnesses (40-59)
MONDAY 19 JUNE 2000
MR ROBIN
YOUNG AND
MS PAM
ALEXANDER
40. The Iveagh Bequest that you were talking
about, what are the terms under which Kenwood could be rented
out for a wedding? To do it now it must be in the terms of the
Iveagh Bequest.
(Ms Alexander) We believe it is.
41. At any time, even if it meant closing part
of the house to the public?
(Ms Alexander) No. The issue of closing the house
to the public is one which we would do as rarely as we possibly
could, and in doing so last July we did everything we could to
make sure that the public had maximum access at all times. In
that case we did feel that it was appropriate. It is something,
as I said, we would do very rarely. We do not allow, under our
corporate hospitality, the house to be shut.
42. Is this within the terms of the bequest
that the house can be shut to the public in that way?
(Ms Alexander) We believed it was. We make it available
very—
43. You say you "believed" it was,
do you believe now that it was?
(Ms Alexander) Yes, I do believe it was.
Mr Rendel: Thank you, Chairman.
Mr Gardiner
44. Ms Alexander, how many people have visited
grant aided properties?
(Ms Alexander) We do not have a figure for that.
45. I thought that was the case.
(Ms Alexander) We are about to launch our July questionnaire
on grant aided property owners and it will contain a question
about how many visitors they have had.
46. So basically over the past three years £23
million has been spent on providing access, but we have no idea
how many people it has provided access to.
(Ms Alexander) Of course, the primary purpose of that
spending is to achieve the conservation of the building which
it is funding. We do know that we have achieved that because I
am delighted to say that the NAO has found that we make sure of
that before we give the grant.
47. Good. I appreciate that that is the binding
purpose, although access is one of the major conditions attached.
Let us look at some of the other conditions attached to the grant.
Why were no financial appraisals carried out in 25 per cent of
the cases before awarding the grant? It seems to me that if you
are going to give somebody a grant the first thing you do is look
and see if they need it, or that the building needs the work done
to it, and how much is that going to cost, and then you should
be looking at what the financial circumstances are of the people
to whom you propose to award the grant. Is that not fair? It is
public money.
(Ms Alexander) What we look at when we do a financial
assessment—and the NAO did confirm that we did a financial
assessment in all of the 20 cases where it was required—we
look at the market value of the building and the cost—
48. Let us not talk at cross purposes, let us
talk about the financial appraisals of the people who were receiving
the grant.
(Ms Alexander) I think you are talking about the five
cases where although a financial assessment had been done there
was no formal financial appraisal.
49. I am talking about the financial appraisal
of those people. There were cases in which the individual had
not had their own financial situation assessed.
(Ms Alexander) That is what I was trying to explain.
We do not assess the means of the individual, we assess the market
value of the property or the income from the estate, and a financial
appraisal should result in a conclusion that a certain amount
of grant is justified and a recommendation as to the percentage
of grant which should be awarded. The assessment is not the final
decision, it advises a decision. That is considered by a Needs
Assessment Panel who then make the recommendation to the grant
team who take the final decision. In all the 20 cases the Needs
Assessment Panel met and discussed the case. It should have been
supported in all cases by a formal financial appraisal written
by the management accounts branch. The management accounts branch
were at the Needs Assessment Panel in all 20 cases, but they did
not present formal written appraisals in five of those cases,
and those are the five that we are talking about. I am confident
that the advice that the Needs Assessment Panel gave was informed
by a full understanding of the market value of the property as
against the cost of the repairs, which is what should have happened,
in the form of the advice that they gave when the decision was
taken. In the cases where formal appraisals were not presented,
the reason for that was that the material which the management
accountants had at their disposal led them to conclude that in
one case, for example, the feasibility study had to be allowed
to go ahead before a view could be taken on the final grant.
50. Ms Alexander, we are time limited here.
Let me refer you to page 33 and the key points of the agreed report.
It states there: "English Heritage undertake financial appraisals
of applicants' ability to contribute to repair costs for certain
types of application, which accounted for about half the number
of grants in our sample. They carried out financial appraisals
in most cases where one was required, but for a quarter of those
we examined there was no evidence of an appraisal prior to the
grant being awarded." This is an agreed report and it seems
to me that that is key a point, but that sounds at variance with
what you have just told the Committee. Who is right and who is
wrong?
(Ms Alexander) Indeed. As you will see from another
part of the report the NAO observe in paragraph 3.6 that in each
the Needs Assessment Panel have considered and recommended what
rate of grant would be appropriate. They go on to say that there
was no evidence of appraisals. That is what would normally inform
the Needs Assessment Panel. We certainly agree with the NAO that
they should be formally recorded and we have already taken the
lessons of this and given instructions that in all cases a formal
appraisal should be recorded.
51. Please stop there because now it seems to
me that we have established the ground that those appraisals which
should have been done were not done. Can we now go back to my
original question which was why were no financial appraisals done?
We have come a long way round here.
(Ms Alexander) Three of the five cases to which you
have referred were for what we call non-beneficial grants. They
were properties which had no beneficial use and, therefore, no
market value. In these cases management accounts had no basis
for making a market value assessment of need, they could only
inform the overall assessment of need by their view that this
is a non-beneficial part of the building and the costs are justified
or otherwise. They gave that advice at the Needs Assessment Panel
when it met; they should have given it in writing before the Needs
Assessment Panel met and we would then have understood the reasons
why they had not carried out a financial appraisal in those three
cases. In the other two cases they carried out an assessment of
the market value of the property and the cost of the repairs and
concluded that on that basis a grant was not justified. In one
case, for example, a property worth £180,000 had repairs
needed of £110,000, therefore if the owner of the 15th Century
farmhouse which was unoccupied, for which this grant was sought,
had been willing to sell it he might have got £70,000 for
it and we might have found a purchaser willing to put £110,000
into it. The financial appraisal was given to the Needs Assessment
Panel who then recommended that on financial grounds alone the
grant could not be justified.
52. Was it awarded?
(Ms Alexander) It was, because it was justified on
other grounds which were that there was absolutely no chance of
the farmer who currently had that property unoccupied in his ownership
either selling it or finding the funds to repair it and we were
needing urgent repairs to keep a very important historic property
together. There is no requirement to take the advice of the Needs
Assessment Panel, it is proper that it should inform our decision.
53. Why were the grant conditions about the
competitive tendering not enforced in 20 per cent of these cases?
(Ms Alexander) For very good reasons. In relation
to the cases to which you are referring in relation to competitive
tendering, in one case single tender action was justified by the
urgency of emergency repairs needed and we do allow single tender
action if it has to be done immediately. In one case the developer
was the contractor. We were looking at someone who was going to
be developing the building and instead of requiring competitive
tendering we first of all assured ourselves that his costs were
reasonable and would have been acceptable in terms of value for
money, and, secondly, put in place a condition for profit recovery
so that if in selling the property following repairs he made a
profit we would share in that profit. That seemed a more effective
and better value for money solution in that case. In four of the
ten cases we needed continuity of very specialist expertise over
a number of phases of the grant programme in each case and it
made sense, as indeed I think is recognised in the Report, that
where such specialist expertise was needed it was retained through
the whole of the project. So we did not require competitive tendering
at each stage. One example would be lead statues at Castle Howard
as part of the multi-phased programme of grants at Castle Howard.
We had someone working on the rest of the project capable of doing
that. I think there were only two people in the country capable
of doing it and it was sensible to let that go ahead.
54. Would it not have been equally sensible
to put it out to tender and then if the other one person in the
country who might have been able to do it had put in a lesser
bid, given that this is part of your grant condition that this
should be CCT, you could have appointed that person?
(Ms Alexander) The other person, in fact, was the
consultant on the project. It was perfectly clear in that case
that it was good value for money to retain the specialist who
was already working on the earlier phases of the project. We believed,
having looked at them, that in six of those ten cases[8]
it was right not to press for competitive tenders. We do not require
them in absolutely every circumstance because, as I have just
described, there are circumstances where it is not good value
for money to go through the process.
55. Can I turn to the question of insurance
that you mentioned earlier. As I understand it, English Heritage
recommend that insurance cover is maintained after the works are
completed, and indeed they enforce that insurance is in place
whilst works are going on, is that correct?
(Ms Alexander) Yes.
56. So why is there no enforcement on insurance
cover after the public, through you, has expended substantial
sums on the repair of a particular building? Why is it not a condition
of grant that the work which the public has just paid for goes
on to be insured so that you do not have to find yourself in the
position of paying for it again should it burn down the day after?
Let us take a roof, for example, that you have spent three-quarters
of a million pounds to repair. You have carefully maintained that
it is insured during the period of repair but two days after the
period of repair there is an unfortunate fire, it is not insured
because you have not enforced that as a condition, and then of
course the owners come to you and say "please can you help
me repair the roof", presumably the same reasons that you
engaged in the project in the first place would apply and the
public would be spending money on that again?
(Ms Alexander) In all of the grant work that we do
there is a balance between the costs that we require of the owners
if they wish to have anything to do with that grant and the value
that we get out of those costs. We do believe it is important
to insist on insurance while the work is going on. We do advise
owners as to the insurance that we believe they should take out
afterwards but we do not insist on it.
57. I know that, I have asked you why not.
(Ms Alexander) We do not believe that we should insist
on it because the owners will be taking their own decisions about
insurance for their whole properties. We do not perceive that
it is an important element of our conditions for the future.
58. So you would accept the scenario that I
have painted could actually take place and you would accept no
criticism if it did take place?
(Ms Alexander) No. We think there are decisions that
we have to leave to the owners to take. We give them advice and
we must leave them to take those decisions.
59. My question to you was would you accept
no criticism of English Heritage if the scenario that I have painted
took place and you ended up having to spend three-quarters of
a million once and then twice?
(Ms Alexander) We would certainly take it into account
in taking the decision a second time.
8 Note: See Evidence, Appendix 1, page 14 (PAC
1999-2000/224). Back
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