Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 80-99)



  80. And he agreed that it was good advice?
  (Mr Cook) He agreed that it was a contingent liability.

  81. That it was good advice?
  (Mr Cook) I presume so. The implication of that must be that, yes.

Mr Cousins

  82. But the decision to place those contingent liabilities in the private sector rather than the public sector was yours.
  (Mr Lynch) The contingent liability is with the Government. The Government owns the contingent liability.

  83. The decision to classify these liabilities as private sector liabilities was made by you when you decided that because of the way these people had been appointed and who they happened to be, therefore this was not a public sector entity.
  (Mr Lynch) Can I clarify one thing? I have been advised that it is not people's employment that determines which sector they are in; sorry, I misled you. Householders are part of the private sector, so if you had appointed the consultants as householders that would have been private sector.


  84. Sorry to interrupt here. Had the 11 of them been directors of the London Underground would that have meant they were then public sector?
  (Mr Lynch) If they were there in their capacity as directors of London Underground, yes, they would.

Mr Plaskitt

  85. I am really doubtful about this. This cannot be right. I just want to ask you to have a little think about this. It surely cannot be the case that an outfit is defined as to whether it is public or private by the background of the people appointed to its board. What has happened to the articles of association for this outfit? Surely they define its status?
  (Mr Lynch) The articles of association determine the make-up of the membership and the make-up of the board. The articles of association shall say that 11 out of 12 members of the board shall come from the private sector. If that is what it says in the articles of association the people on the board will be there in their own personal capacity, or perhaps a private sector organisation such as the Campaign against Accidents on the Railway.

  86. But this is important, is it not, because it shows that there is a step back behind the decision as to who to appoint. The decision as to who to appoint is driven by the definition put down in the articles of association. It is not an accident—
  (Mr Lynch) No.

  87.—as you implied in your answer to Mr Cousins.
  (Mr Lynch) Did I? Sorry; I did not mean to imply that. It is not an accident.


  88. So had the articles said that no more than four must be appointed from London Underground and a further three from the Department of Transport itself and so on, that would have made it a public sector organisation?
  (Mr Lynch) We would have had to examine that case and determine whether the majority was from the private or public sector.

  89. You have made this ruling on the evidence. Is there a comparable example you can give us where you have done this elsewhere?
  (Mr Lynch) We make classification decisions all the time.

  90. Give me a comparable example.
  (Mr Lynch) Welsh Water is another example whereby most of the members of that board come from the private sector.

Mr Cousins

  91. It is not where they come from that counts.
  (Mr Lynch) Most represent the private sector. I am not quite sure what you mean.

Mr Beard

  92. They are appointed as being in the private sector?
  (Mr Lynch) In their personal capacity, for example, as a representative of a charity, these people would be from the private sector. If they were appointed to the board as a director of London Underground, that would be from the public sector.


  93. Just for the sake of the argument, and I hope my colleagues will not take offence at this, supposing the Secretary of State happened to appoint 11 former Labour Members of Parliament. Would you still say this was a private sector organisation?
  (Mr Lynch) If they were appointed in their personal capacity, yes, that would be private sector.

  94. Eleven former Labour Members of Parliament would be private sector? No relationship with the Secretary of State or the Government?
  (Mr Cook) I think, Mr Chairman, you are moving us into the realms of hypothesis. Our job is to make classification decisions about practical options presented, whether it is by ministers or the private sector, for organisations. I think that it is quite wrong to draw inferences about what this entity is like and the nature of its control by hypothetical examples which may not exactly take place, because you may come to the wrong conclusions based on different ways in which you interpret those attributes.

Mr Cousins

  95. But there must be principles that underpin this.
  (Mr Cook) There are principles and what we deal with is actual cases that are presented—


  96. This is not hypothetical, Mr Cook. The nature of the railway authority has changed in the last two years. It is not hypothetical.
  (Mr Cook) No, but I do not believe it is appropriate for us to give you answers as to hypothetical mixes of board members for situations that would not actually in practice be presented.

Kali Mountford

  97. Are we not being misled a little here? Is not the answer really what is in the articles? Who was then selected? We have been taken down a winding lane often into the realms of mystery here that I really would rather have avoided. It seems to me it is the articles. They are there; they are matter of fact. What relationship is it to that? Is that what you took account of, or did you go and investigate the background of these people? What did you actually do?
  (Mr Lynch) The articles, of course, the articles.

  98. Perhaps we should stick with the articles.
  (Mr Cook) If people that were appointed were in contradiction to the articles that would lead us to question the very basis of an intent, so discussing the appointment of people who are inconsistent with the articles is moving us into the realms of hypothesis where I do not think we could give you answers that could be helpful.

Mr Plaskitt

  99. I want to talk to you about productivity but just before I do that there is an interesting section in your annual report where you talk about modernising the ONS. I just want to read you part of paragraph 53: "The implementation of the re-engineering projects (REPs) will ensure that existing activities are migrated to the new information management environment. Each REP will help bring the IM infrastructure to life and extend it as necessary to meet the needs of ONS. . . . the Neighbourhood Statistics programme . . . is a pathfinder for the infrastructure and will be a key enabler . . . in driving forward the creation of the infrastructure." I could not find a translation of that anywhere in the report. Can you tell me what it means?
  (Mr Cook) What we are doing is creating a common information management environment for the Office for National Statistics.

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