Examination of Witnesses (Questions 160-179)
SIR RICHARD
MOTTRAM KCB AND
MR DUNCAN
HALL
MONDAY 4 MARCH 2002
160. In paragraph 3.10 it says, "At the
end of February 1998, . . . one month prior to the end of its
operational life, the Corporation still had at least 80 sites
requiring disposal and more than 75 outstanding liabilities which
needed to be settled." You were meant to get the whole thing
sorted out by the end of your period. Are you proud of your record
as Chief Executive of this Corporation?
(Mr Hall) I have to say that I am proud of the achievements
of the Corporation, yes.
Chairman: There was one question which Mr Hall
had difficulty answering, do you want to come back to that?
161. I suspect the answer will be, he does not
remember. Can we go back to the Durham case, and the splitting
up of it? Page 21. I asked whether you split up those projects
in order to avoid having to get approval. Is that correct? If
it is not correct, did you then get approval for these projects?
(Mr Hall) Again my answer would be that I am not aware
that we did deliberately split up these projects, and my assumption
would be that we got approval. I am deliberately qualifying my
last comment in the context of whether approval was otherwise
needed under our delegated authority for these schemes because
of the sums of money involved.
Mr Bacon
162. Sir Richard, on page 2 it says, "Not
all Board members had a clear understanding of their responsibilities
or of the public sector financial framework", just returning
to the point the Chairman made at the beginning. Indeed, "They
focused on the Corporation's regeneration efforts, and looked
to the Corporation's external auditors, Price Waterhouse, and
the Department for assurance on financial management issues even
though these were primarily the Board's responsibility."
Who ensures the Board understand their responsibilities?
(Sir Richard Mottram) In the first instance I think
it is the responsibility of the Chairman of the Board to ensure
the Board understand their responsibilities, within the framework
of the basis on which the Chairman is appointed.
163. So do you think the Chairman failed in
his responsibilities?
(Sir Richard Mottram) I am constantly being asked
to criticise people who are not able to answer for themselves.
164. I asked you who was responsible and you
said the Chairman. It says in the NAO Report that Board members
did not understand their responsibilities, I asked who was responsible,
you said the Chairman, I am asking you, do you think the Chairman
failed in his responsibilities?
(Sir Richard Mottram) If it is true, there was obviously
a weakness in the—
165. If what is true?
(Sir Richard Mottram) If it is true that Board members
did not understand their responsibilities—
166. Is this an agreed Report?
(Sir Richard Mottram) This is an agreed Report and
these are opinions ascribed to some Board members.
167. Not all Board members?
(Sir Richard Mottram) I do not think they are ascribed
to all Board members.
168. It says, "Not all Board members",
meaning some.
(Sir Richard Mottram) Exactly.
169. So in relation to the Chairman's responsibilities—
(Sir Richard Mottram) The Chairman read out an example
and I do not wish to query that example.
170. Can I ask the Treasury about the guidance
on anticipating money. It says on page 15 of the Report, "The
Department and the Treasury gave directions to Corporations on
. . . their annual financial statements." In particular,
that money voted by Parliament, parliamentary grants, should not
be anticipated. Mr Glicksman, do you have that guidance?
(Mr Glicksman) Yes, I have got it.
171. Can you read out the relevant bit?
(Mr Glicksman) That statement came from Guidance in
1989 which said, "As grants should not be anticipated, the
accounts will normally show the amount of grant received in the
financial year. However, where grants are assured . . ."
et cetera, et cetera, ". . . credit may be taken for amounts
receivable at the year-end, in accordance with the concept of
accruals accounting." This is guidance about how to draw
up accruals accounts.
172. It says on page 15, "The Department
and the Treasury gave directions to Corporations on the form and
content of their annual financial statements." In particular,
in 2.7, "Trading Accounts guidance issued by the Treasury
in 1989 stated that parliamentary grants should not be anticipated
. . .". I am asking you to quote the exact guidance where
it says that parliamentary grants should not be anticipated, loudly
enough so that the Committee and the stenographer can hear it.
(Mr Glicksman) "As grants should not be anticipated,
the accounts will normally show the amount of grant received in
the financial year. However, where grants are assured, ie have
been received by the body or voted by parliament during the period
between the year-end and the date of management's approval of
the accounts, credit may be taken for amounts receivable at the
year-end, in accordance with the concept of accruals accounting."
173. Mr Hall, were you aware of that guidance?
(Mr Hall) I cannot say that I was aware of that guidance.
It may be I should have been aware of that guidance.
174. So you were not aware that you were not
supposed to anticipate money that had not been voted by Parliament?
(Mr Hall) Effectively, almost from the inception of
the Corporation, we anticipated grants.
175. There is a difference, as Sir Richard was
saying, between monies which have been assured because they have
been voted by Parliament, and monies that are not assured, in
Mr Glicksman's words, which have not been voted by Parliament.
You understand that distinction?
(Mr Hall) I understand the point you are making.
176. I am asking, did you understand that distinction?
(Mr Hall) Yes.
177. Did you understand the distinction then,
when you were operating the Corporation, between monies which
had been and had not been voted by Parliament? It is a simple
yes or no.
(Mr Hall) It may be no, shall I put it that way.
178. You did not understand the distinction?
(Mr Hall) The reason I am qualifying my statement
and trying to answer your question is quite simply that we continued
to anticipate grant in aid on a very significant basis almost
throughout the life of the Corporation. Whether this is a hindsight
statement or not, at no time was it indicated to us that we should
not anticipate that level of grant by either the Department or—
179. Indeed the Department told you you could
anticipate it.
(Mr Hall) Yes, so we continued on that basis. As the
Report also points out, if we came to a point where we could not
do that, then we would have stopped.
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