Examination of Witnesses (Questions 40-59)
MONDAY 9 APRIL 2001
SIR RICHARD MOTTRAM, KCB, MR ROBERT HOLDEN, MR STEVEN MARSHALL, and MS LOUISE HART
40. So you agree with that criticism?
(Sir Richard Mottram) I do not think it is particularly a criticism. I agree we might have done that.
41. For a Department to use out-of-date economic growth assumptions is a criticism and a pretty serious one because it does mean, does it not, that the time saving benefits were overestimated?
(Sir Richard Mottram) It does on those assumptions, yes.
42. It is economic growth assumptions so the out-of-date economic growth assumptions led to the overestimate in the savings benefit?
(Sir Richard Mottram) Yes, you value time differently.
43. You accept that that was not good practice but that has been corrected?
(Sir Richard Mottram) I accept that it is right to do these things on a comprehensive basis every so often.
44. Back to paragraph 23, what you agree and disagree with, we have now got agreement on that. On (b) "the assessment made incorrect assumptions of the amount of time savings by assuming that all Eurostar services would benefit from average time savings of around 30 minutes following the opening of the Link." Do you agree or do you not agree with that?
(Sir Richard Mottram) I do not.
45. So you do not believe that it is an incorrect assumption?
(Sir Richard Mottram) No, we made a correct assumption and what we assumed was that some of the trains come out of Waterloo, some out of St Pancras, and we took the weighted average of those two things. There were then, as is also covered in this paragraph, different views about the time savings at St Pancras. The NAO has taken one assumption, there is a later assumption which I think we should now take so, no, I do not accept we made an incorrect assumption.
46. What is the assumption now?
(Sir Richard Mottram) The current assumption would be roughly one-third of the trains might come out of Waterloo. That is an issue we need to look at as we go along, so I do not accept that we made an incorrect assumption of this kind.
47. What was the previous estimate? It is one-third following the opening.
(Sir Richard Mottram) I think the suggestion here is that we did not take into account the idea that there would be a split between Waterloo and St Pancras, but as far as we are concerned we did. There is a second issue which is the evaluation of time gains out of St Pancras. They have certainly changed more than once during the period in which this project has been under consideration, having gone down and now gone back up.
48. Why did the Department remove the £170 million costs for the King's Cross ticket hall and London Underground works?
(Sir Richard Mottram) I do actually not know why we did that.
49. Does someone in the Department know?
(Sir Richard Mottram) A lot of this was rounded. What I do now believe is that it is appropriate to include a figure but not £170 million.
50. Hang on a second. A £130 million removal is some rounding.
(Sir Richard Mottram) If you notice we rounded the benefits by £400 million. I do not think it is that significant. We rounded them down by £400 million. I accept we should include a figure now for that but I do not believe it is £170 million.
51. You do not know why £130 million was removed?
(Sir Richard Mottram) I do not know why £130 million was removed. Does anyone know why?
52. While you are getting that information, you seemed to question the £170 million figure, but what the report says is ". . . following discussions with the Department these cost estimates have been increased to £170 million."
(Sir Richard Mottram) The NAO did discuss them with us; we do not agree with the £170 million.
53. That is astonishing. How do you explain that there have been discussions but the cost estimates have been increased? What was the result of the discussions?
(Sir Richard Mottram) The result of the discussions was that a number should be included, but I am querying the number. It is a fairly small argument. In our view the number should be about £100 million. If I could just explain, Chairman. This is an argument about how you value two parts of the modernisation of King's Cross tube station, so it is a fine argument.
54. Before we leave this point does NAO have any observations on that?
(Mr Burr) I think we thought the £170 million was agreed but we have now been told otherwise.
55. Sir Richard, was it or was it not?
(Sir Richard Mottram) Whether it was or it was not, we think the answer is £100 million.
56. It is not whether it was or whether it was not because the whole point of having agreed reports is we do not get into this sort of tangle in the middle of a hearing, and this is a rather big difference, is it not?
(Sir Richard Mottram) I agree with that, Chairman, but I double checked because I thought you would make this point to meand quite rightly soand I double checked whether the Department had agreed to paragraphs 3.35 to 3.40, and I was assured by my staff that the Department did not agree to these paragraphs. I am not in any way criticising the NAO because it is quite clear that these paragraphs are ascribed to the NAO; they are not ascribed to the Department.
57. Sorry, Nigel, but this is rather important. How could this disagreement arise?
(Mr Colman) I am at as much of a loss as you are, Chairman. We did think we had agreed these paragraphs except those sentences that explicitly say "in the view of the NAO so-and-so . . ." So I must say I had thought 3.35 was agreed on a factual basis. Where our opinion comes in is in the table that summarises all this in figure 20 where there is a column clearly headed "NAO assessment" which is our opinion and we know that is not shared by the Department. I had not understood that the Department's view of the whole of 3.35 to 3.40 was that it was our opinion.
58. Had they expressed any reservations to you on it?
(Mr Colman) Not to my knowledge.
59. Sir Richard, how then can we
(Sir Richard Mottram) Because I asked my staff.