Select Committee on Public Accounts Minutes of Evidence

Examination of witnesses (60-79)



  60. So you would say that because the owner had not insured it the first time you would be less likely to support a worthy scheme the second time?
  (Ms Alexander) We would take into account all of the elements surrounding the circumstances of whatever the tragedy had been. We would take a view on the responsibility of the owners and the benefits that we would get from re-investing.

  61. Can I just briefly and finally ask you, there was a phrase in paragraph 3.19 which disturbed me. This is about recovery of grant on the sale of property: "The conditions attached to repair grants require the grant recipient to inform English Heritage immediately in writing if they intend to sell or dispose otherwise of their interest in the property." Then it says: "We confirmed that English Heritage had recovered sums where information on disposals had come to light." ". . . had come to light" is less firm than where English Heritage were notified. Is it the case that there had been sales where there had not been notification and where you had to pursue people in order to recover the sums?
  (Ms Alexander) I do not think I can answer that question. What I can say is that wherever we are notified, and however we find out, we do pursue it all the way through.

  62. Perhaps you could provide the Committee with a note just clarifying whether some of those sales you found out about rather than were notified of and, if so, which[9]?

  (Ms Alexander) I am sure that will be the case.

  63. Might I just ask why it is that on death the grant conditions then die at that point? Why are there no provisions to extend them?
  (Ms Alexander) Because the statute does not give us powers to extend beyond.

  Chairman: It conjures up an interesting idea of pursuit of the afterlife.

Mr Williams

  64. I am rather interested in the point Mr Gardiner has just raised. Frankly, I have to tell you I find it astonishing that you do not insist on insurance. This is taxpayers' money, is it not? Is it not slightly cavalier just to leave it to the discretion and whim of the persons who have already benefitted from substantial sums of our constituents' money?
  (Ms Alexander) They will be taking out their own insurance in relation to their positions on their overall property. There are a number of conditions we could think of imposing but the more conditions we impose, the more the costs that can be attributed to our involvement are likely to require higher grant. We do have to take a view on which are the elements which we consider are essential to achieve value for money and at the moment that is not one of those we insist on.

  65. I hate to disturb your period of contemplation, Mr Young, but does the Department have any misgivings about this attitude? If it were you as a Department I would have thought it is highly likely you would insist on insurance to back up grant provision by the Department.
  (Mr Young) I think it is a difficult issue. You have got to remember a bit about the variety of works we are talking about here. Some of these things are just roof repairs to existing buildings and you can hardly insure the roof separately from the rest of the building. There is a huge variety of issues here. I think it is highly desirable indeed that the person receiving the grant should adequately insure, which is what 3.11 says: "Recipients must ensure that the property is adequately insured while the works are in progress", but after that—

  66. Coming back to Ms Alexander, you said you take account of various matters. I accept the point that has just been made by the Department, it may be a relatively minor grant, but have you ever insisted on insurance in relation to one of the grants you have given? What is the biggest grant you have ever given to a private individual?
  (Ms Alexander) Oh, I could not possibly answer that off the top of my head I am afraid. I would say that nearly 80 per cent of our grants go not to private individuals but to local authorities, building preservation trusts, a number of different public bodies, who of course will be in a particular insurance position in their own right[10].

  67. Let me come back to the other question since you cannot give me a top figure. Since you take all of these factors into account, have you ever found a situation where you have insisted on insurance?
  (Ms Alexander) I do not believe that we have because, as the Permanent Secretary has said, it would be very difficult to find insurance—

  68. You have given me the answer I want and I have had Mr Young's view of it which I assume will be very similar to yours. We have been told, and it would have sounded much more reasonable, every case is dealt with on its merits. That was the impression we got from what you said, that you take everything into account, but the reality is that was just a smoke screen, you never do this. All right, it is for you to defend but all we want to know is whether you do or whether you do not and we have got our answer. Mr Rendel raised this fascinating situation in relation to ex-King Constantine. Who paid for the marquee?
  (Ms Alexander) All of the costs were met by the ex-King of Greece.

  69. All costs associated with it?
  (Ms Alexander) Every penny to my understanding. Certainly it came through his consultant.

  70. That is more reassuring than the answer in relation to the insurance. So there was no cost incurred by English Heritage as a result of that arrangement?
  (Ms Alexander) Our requirement was that he should meet all of our costs.

  71. Good, that is fine. That clarifies that. This again comes back to one of Mr Gardiner's points about grant conditions, lapse on death. Thinking in terms of inheritance tax and so on it seems rather strange that the people who are going to possibly benefit from the situation do not then have to carry on the obligations that existed before. Why?
  (Ms Alexander) Because we have no powers under our statute to require that they should do so.

  72. You do not need it under statute, you can do it under contract.
  (Ms Alexander) We have specific powers to set conditions on grants, we cannot set conditions, I do not believe, that tie successors who inherit property.

  73. Would that be so, Mr Young? Would they not be able to say "we are willing to give it to you but we are only willing to do it on the understanding that there is an insurance agreement"?
  (Mr Young) My advice is that the Act precludes just that.

  74. It precludes it?
  (Mr Young) Yes, the grant is tied to the individual.

  75. When was the Act passed?
  (Mr Young) 1953.

  76. What about any stake in the enhanced value? Does the taxpayer stand to benefit if these properties change hands at increased prices as a result? What happens then and what formula applies?
  (Ms Alexander) That is the purpose of our claw-back provision and that is why when we are notified or find out about a sale of a property we will take back the full grant if appropriate, and only in circumstances where there is some good reason would we not claw-back the grant.

  77. But the grant may have enhanced the value of the property beyond the value of the grant. The taxpayer does not get any share of the windfall, does it?
  (Ms Alexander) The purpose of our financial appraisal is to identify the market value of the property after repairs and to see whether there is a deficit between that and the cost of the repairs themselves. So if we take the view that the repairs will enhance the property by more than their cost, we will not give the grant.

  78. Somewhere I have come across a case where you have lent money to a developer. I cannot pin it down, but you will be familiar with it. It is due to reach fruition towards the end of this year, so I realise we cannot have a final position on it, but where do we stand there in terms of securing the taxpayers' interest?
  (Ms Alexander) In that case we have an agreement that we will share the profit of the development over and above a certain amount in equal parts[11].

  79. Over and above the market value at the time at which you made your grant available, is that it or what?
  (Ms Alexander) Over and above the amount which we believed the developer needed to achieve in order to have the incentive to do the development in the first place.

9   Note: See Evidence, Appendix 1, page 14 (PAC 1999-2000/224). Back

10   Note: See Evidence, Appendix 1, page 14 (PAC 1999- 2000/224). Back

11   Note by Witness: English Heritage shares in the profit by recovering grant at the rate of 50 per cent of the amount by which income exceeds project costs plus overheads, up to the full amount of the grant paid. Back

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