Examination of Witnesses (Questions 240-259)|
MOTTRAM KCB AND
MONDAY 4 MARCH 2002
240. This has resulted in a cost to the taxpayer
of £2.6 million, and the fact is you failed to inform your
Board of certain key matters which have resulted in this cost.
You are now telling this Committee that you cannot remember what
happened. I wonder if you have taken advice before you came here
(Mr Hall) No, I have not.
241. You have taken no advice of any kind? You
just happen to have a poor memory.
(Mr Hall) No, I do not happen to have a poor memory.
You are asking me some details of something which happened in
whatever year it was four years after I had finished at the Corporation.
I think it reasonable for me to say that having not got the files
and the information, not got the staff resources to go with it,
and having been out of office for four years, it can be difficult
to answer your questions as fully as I would like.
242. I think it is convenient you have forgotten
some matters, which seem to be of crucial importance but seem
to remember other matters. Can I quickly move on to another point.
It seems to me that this was a flagship project of the Government,
and I seem to remember leading politicianswho we must not
stray into, must we, Chairmanmaking this into a flagship
enterprise. I also heard Sir Richard mention ministers and again
we probably ought not to spend too much time on that either. Did
you feel that you had powerful friends and that you would ultimately
be judged by the results rather than the modus operandi?
(Mr Hall) I think the Corporation believed it had
a duty and responsibility to the people of Teesside. Its fundamental
aim and its prime responsibility was to regenerate that area.
243. Some people say you cannot make an omelette
without breaking eggs, and maybe you felt if you broke some bones
you could bring about regeneration while the rules came second
to the objective. Is that how you felt?
(Mr Hall) I do not think the rules came second to
the objective, but I would remind you at the time the Corporation
came into existence we were bordering on 25 per cent unemployment
and we had not had any private sector investment in the area for
more than 10 years. So the crucial aim of the Corporation was
to create a situation where that regeneration could take place.
It is apparent in terms of the Report today, but I hope I have
stressed for the period of time of the Corporation we felt we
were acting in a proper manner.
244. You have not established that to anybody's
mind, except possibly your own, it seems to me. Can I turn to
Sir Richard. The Department's defence is that the balance was
struck between on the one hand the achievement of objectivesand
clearly this was a very high profile Government objective, without
talking about politics at alland the modus operandi
on the other. At the end of the day, a judgment was made and the
balance came down in favour of not taking too firm action because
they were delivering allegedly regeneration. Is that correct?
(Sir Richard Mottram) They were not delivering "allegedly
regeneration", they were delivering regeneration. The position
of the Department was not, "We will turn a blind eye to breaches
of the rules because they are delivering regeneration", the
issue we focused on earlier was the question of confidence in
1996 and at that point there was certainly a trade-off in people's
minds between, "Do we make a big thing of where we are or
do we work it out together", and the view was we should work
it out together.
245. Is it not true that a judgment was made
that this Corporation had powerful friends, was delivering regeneration
as defined by the Government, and to have brought some of these
facts out into the open and to have taken disciplinary action,
which was clearly warranted, would have cut across the general
thrust of the objectives which the Government had set itself?
Is that not the case? A blind eye was closed because they were
delivering high profile Government objectives?
(Sir Richard Mottram) No blind eye was closed.
246. It did not need to be!
(Sir Richard Mottram) And no blind eye was left open.
I do not want to be accused of being flippant again. I do not
think that is the case, no. The case was, there was a serious
discussion going on between the Department, through the Government
Office, and the Corporation about these matters. The Department
took them very seriously, the Government Office took them very
seriously, I am not implying the Corporation did not take them
very seriously. What was clear was, this was a flagship corporation
which had done a very good regeneration job in very difficult
circumstances. So to that extent, yes, the Government was sympathetic
to what it was trying to do.
247. I did not make notes but I think the record
will indicate that earlier you said a balance had been struck
between the achievement of objectives on the one hand and the
breaking of eggs to make the omelette on the other.
(Sir Richard Mottram) I think it was in relation to
1996 that we were talking; the question of confidence.
248. I remember 1996 very well. I wonder if
you can give us an assurance that such a balance will not be struck
again, that if the rules are hampering the Government's objectives,
that the rules themselves ought to be reviewed, preferably with
the help of the auditors, rather than simply ignored?
(Sir Richard Mottram) The balance which was being
struck, which I was referring to earlier, was, did we want to,
in a sense, change the governance arrangements or did we want
to ensure that the governance arrangements remained in place,
that the people doing the job remained in place but they were
behaving properly. We chose the second of those. We did not ever
condone the breaking of rules in order to achieve a regeneration
249. You are the accounting officer and you
have to take responsibility, give me a feel for how these things
work. How much do these discussions actually get beyond the local
Government Office and get anywhere near the Permanent Secretary's
(Sir Richard Mottram) The way in which this would
work is that inside the Department there was a thing which here
was called the Regeneration Directorate, and effectively that
still exists with a different label now. If there were to be sensitive
matters of this kind now in relation to Regional Development Agencies,
as the accounting officer of the Department I would expect these
issues to be drawn to my attention.
250. Mr Hall, can I start with one or two questions
to you. I have been told that when he was the minister, Richard
Caborn made a visit to the Teesside Development Corporation, can
you confirm that?
(Mr Hall) Yes, he did.
251. Was it also true on that visit he instructed
you not to proceed with any further deals apart from routine matters?
(Mr Hall) I do not recall that.
252. Did he write to you afterwards?
(Mr Hall) To me?
253. To the Corporation. I do not know if he
wrote personally to you but to the Corporation.
(Mr Hall) Again, I am not aware that he did. I simply
do not know, is the answer.
254. Do you think you would have remembered
if he had written to you to say you should not carry on with any
further deals apart from routine matters?
(Mr Hall) I can only repeat what I have said. My expectation
is that I would have remembered but I have to give you the frank
and honest answer that I just do not know. It is certainly the
case from our point of view that we, so far as I am aware and
believe, were spelling out quite clearly what we were trying to
do to wind up the Development Corporation.
255. I will cut you off there if I may because
I would rather go on to ask Sir Richard the same question. Are
you aware of any letter sent by Richard Caborn after a visit to
Teesside Development Corporation, Sir Richard?
(Sir Richard Mottram) I am not but I can probably
Mr Rendel: I think, Chairman, if I may, I would
like to have a note on that to see whether such a letter did exist
and, if so, whether we can see it to see exactly what it did tell
Mr Hall. I have some reason to believe it told Mr Hall that he
should not continue making deals without referring everything
back to the Department. If that is true, I think that is very
Chairman: Yes, please, Sir Richard.
256. Can I go on to the firm of solicitors,
Mr Hall, which you say you employed to tell you what you could
or could not shred. What is the name of the firm?
(Mr Hall) It used to be called Richardson, Boyle,
257. Does it still exist; you say "it used
(Mr Hall) It does not exist now.
258. Did it ever have any other clients apart
(Mr Hall) I believe it did but by far and away its
major client was the Corporation.
259. So it was set up and got the job of advising
you what you should or should not shred and then it disappeared
(Mr Hall) Yes.
5 Ev 32, Appendix 1. Back
Note by witness: I believe I misheard this question and
for that I apologise. As a matter of record Richardson, Boyle
& Blackmore acted for the Corporation from the early 1990s
until the Corporation's wind up in 1998. I understand they subsequently
acted in a limited capacity for the Commission for New Towns,
the Corporation's successor body. Ref footnote to Q 212. Back