Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 120-139)



  120. I can see that was probably beyond your control. Why did you in the end agree to lease them rather than buy them?
  (Sir William McKay) We had advice, Chairman, from the industry that that would be the most economical way of proceeding, and I expect you are aware that the contract for the trees does cover their care and maintenance and replacement if they should fail. I myself, if I may intrude my personal griefs, have planted an awful lot of trees, and I would be very grateful for a contract which would allow me to pay a little more if the nurseryman would come and replace the duds.

  121. But not if, after five years, they came back and said, "Well, we either take the trees away or you buy them again"?
  (Sir William McKay) I think this contract was in line with the best advice we got from the industry.

  122. But I am right in saying that you have only leased them for five years?
  (Sir William McKay) Yes.

  123. So in a couple of years' time—I do not know when they actually went in, but in a couple of years' time—you will either have to lease them again or get some new ones?
  (Sir William McKay) They look quite healthy to me. I expect we will lease them again on a kind of service contract, which we would need anyway.

  124. Can I turn, in the last remaining minutes available to me, to the Jubilee Line. As I understand it, when the plans were originally being developed here, London Underground said that it was going to take them 41 months to build the station before they could hand it over to you, and you hired some extremely expert advisers who told you it was actually only going to take 27 months. Then you came to a deal that it was going to be 36 months, with London Underground, and then it actually took 48. I cannot remember what the total time was—I do not have it in front of me—but the delay was even longer than London Underground predicted. Were London Underground correct in giving a more accurate estimate in saying it was going to take a long time, and you did not believe them and your experts did not believe them, but they were correct?
  (Mr Webber) Chairman, the delay in London Underground's handover was largely derived from their trouble with the new Austrian tunnelling method, not with the methods of construction of the station.
  (Mr Makepeace) To add to that, Chairman, if I may, the exercise we did about the construction period, whether it was 26 or over, was all done jointly with London Underground. We did not do it independently and say, "Here is the result, go away and agree with it. It was a joint exercise to produce the 36 months that we came up with in the end.

  125. You sort of bullied them. They came up with an initial estimate of 41 months, and you bullied them into what seems like a sort of halfway between what you thought and they thought?
  (Mr Makepeace) "Bullied" is not the word I would choose, Chairman.
  (Sir William McKay) I do not think it is "we" either, Chairman. The Accommodation and Works Committee were in the lead on this.
  (Mr Barram) If I may say so, Chairman, there is much more narrative in paragraph 2.14 in the Report, which explains London Underground's view about the delays.

  126. Can I finally touch on the professional fees, in the last minutes available to me. We have been into the reasons why you did not renegotiate the percentage arrangements when you had various recommendations about that in the mid 1990s. It says in this Report that Treasury guidance way back in 1989, long before any of these things were arranged, was anyway that generally the public sector should use fixed fees rather than percentage fees, because a percentage fee did not give the people you were employing any incentive to reduce costs—in fact, quite the reverse.
  (Sir William McKay) For a building like this, fixed fees would either have included an immense insurance on the part of the contractor to make sure there was not going to be trouble, or if he did not put the insurance in his tender there would be claims afterwards.

  127. So you think that if you had gone for a fixed fee you would have ended up paying more?
  (Sir William McKay) We might have. At any rate, the thing to be said for percentage fees is that the client can control them to some extent through the capital cost, you can see them coming in.

  128. But there is no incentive on the people you are employing to keep their costs down—in fact, quite the reverse, there is an incentive to build up the costs, is there not?
  (Sir William McKay) Exactly. There is an incentive on us to keep an eye on them, to keep the costs down.

  129. With the refurbishments that are going ahead in other buildings—for example, Norman Shaw North wing—are you using fixed fees or percentage fees?
  (Mr Webber) Chairman, we are seeking to use fixed fees where we possibly can, and indeed we are going further and using methods such as develop and construct.
  (Sir William McKay) The refurbishment of Norman Shaw South is a horse of a different colour.

  Mr Osborne: Thank you.

Geraint Davies

  130. Sir William, can I say first of all that in terms of the relative value of other big projects one might think of—I am thinking now of the Dome—it is worth mentioning, of course, that we could build three of these buildings for the price of the Dome, and also this one lasts 120 years, so in those terms this is great value. Indeed, in terms of the management of the Jubilee Line I think it went 1 billion over what was planned and took a lot of extra time, nearly an extra year. That said, I do have some concerns. Can I start with the original design? In May 1993 I understand we were given one option. The background to this is described on page 46, paragraph 5.25, where Michael Hopkins had done some other work and then eventually on the back of a 25,000 project ended up with a multi-million-pound project. I must say that this compares not very well, in my view, with the previous history on page 11, where Sir Charles Barry, of course, came forward ultimately in 1854. My understanding of what happened after the Great Fire was that there was a competition, it was done on an anonymous basis and ultimately Sir Charles Barry came through to redesign the Palace. Have you any view on whether it might in hindsight have been better to have had a real competition for creative expression and new governance for this building, rather than to limit it to Michael Hopkins?
  (Sir William McKay) I think there has been, Chairman, a lot of evidence around this which one might sum up by saying we took the wheel when the voyage was well advanced. The choice of Hopkins' design was partly a function, as Mr Makepeace has said, of the fashion of choosing the designer and not the design—

  131. That is a very strange thing to do, do you not think? Let's pick a designer and come up with what you like, here it is, Bob's your uncle. That seems an absurd thing to do.
  (Sir William McKay) I am afraid, however, this was the line pursued by the Accommodation and Works Committee and its predecessor the New Building Sub-Committee. They liked what they saw.

  132. This was not the fault of the Department of the Environment at this point, was it?
  (Sir William McKay) The Department of the Environment were in charge but, as I said before, they were very properly consulting the House.

  133. It does seem to me, if one looks at this building, and obviously beauty is in the eye of the beholder but there are those people who do not like this building—I am not saying I am necessarily one of them—that a black building which looks a bit like a power station is not what they have in mind in terms of standing next to the Palace, and at least one would have thought that if one was going to spend hundreds of millions of pounds on this great building for 120 years that at least we, or some previous MPs, should have had some choices on the appropriate architectural shape. Do you not think in hindsight that would have been a good idea?
  (Sir William McKay) If they had wished to make a choice, Chairman, it was open to them to say. The other answer, of course, is that when this building was planned, English Heritage and other bodies with similar concerns were consulted, and since the building has been completed it has won I think seven awards, so as near objectively as you can, the choice even if it was Hobson's Choice was a good one.

  134. It was Hobson's Choice and, as you say, it has won some awards, but obviously it might have been the case that other options might have been still better and more popular. It seems to me the way this was done was to pick the designer, the next issue then is, "Okay, we will have his design", and the next issue is, "What should we spend?" Originally in June 1991 the Department of the Environment envisaged the project would cost 57 million and as we moved towards the design which was presented in 1993 we were up to the range of 151 to 164 million. Do you believe that in fact, because we were doing this marvellous building for the next 120 years, if the design which had come forward in 1993 had been valued at that time at 250 million, that would simply have been accepted?
  (Sir William McKay) No, I do not, because, as has already been said this afternoon, Chairman, when the House of Commons Commission came to consider how much should be spent on the final sketch plan which was presented to it, they cut bits out. They attempted to arrive at a figure which they thought was reasonable.

  135. So what was the original figure before they cut all these bits out? Approximately, what sort of order of cutting are we talking about here?
  (Sir William McKay) We are talking about the art budget which was 1 million which they cut off.

  136. Yes, but that is 1 million on the back of a project of 187 million in 1992 prices. It seems to me a strange approach that you have a building of great historic relevance, you are going to spend a couple of hundred million on it, and someone says, "We had better be seen to be cutting some money, we will take some of the art work out". That seems to be a rather strange thing to do. It perhaps would have been more sensible to have a building which was to a tighter physical budget with, at the margin, ability to spend a bit more on great art.
  (Sir William McKay) The Commission considered the possibility, as we have been talking about today, of another material to be used for the roof. That would have saved a considerable amount of money. They chose not to do that.

  137. As you have gone on to the roof, and we have been talking about the budget going through the roof, so to speak, can we come back to the black roof. It was said by Mr Barram—I think he gave the defence—that this was meant to be a bronze roof and everyone assumed it would look like bronze, but it just looks like charcoal. Is there any facility to go back to the manufacturer and recover any of the costs, given the impression is so far away from the fact? No one looking at this building would say, "There is a bronze roof", would they?
  (Sir William McKay) First of all, it is aluminium bronze which may or may not have been expected to result—

  138. But as clients presumably we have agreed it should look like this, with these big chimneys and it should be bronze, so presumably everyone assumed it would look the same sort of colour as Big Ben?
  (Sir William McKay) I do not think they did, Chairman.

  139. They thought it was going to be black, did they?
  (Sir William McKay) If they had read the Sketch Plan, they would have seen in paragraph 5.4—and certainly the Accommodation and Works Committee would have seen this—"The roof will be patinated bronze panels nearly black in colour to match the cast-iron roof of the Palace and the slate of Norman Shaw." So it was deliberate.


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