Draft Stormont Estate (Northern Ireland) Order 2006

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First Standing Committee on Delegated Legislation

The Committee consisted of the following Members:

Chairman:

Mr. Peter Atkinson

†Chapman, Ben (Wirral, South) (Lab)
†Coaker, Mr. Vernon (Lord Commissioner of Her Majesty’s Treasury)
Fraser, Mr. Christopher (South-West Norfolk) (Con)
†Gilroy, Linda (Plymouth, Sutton) (Lab/Co-op)
†Holloway, Mr. Adam (Gravesham) (Con)
Keeley, Barbara (Worsley) (Lab)
†McCarthy, Kerry (Bristol, East) (Lab)
†Mallaber, Judy (Amber Valley) (Lab)
†Milburn, Mr. Alan (Darlington) (Lab)
†Öpik, Lembit (Montgomeryshire) (LD)
†Osborne, Sandra (Ayr, Carrick and Cumnock) (Lab)
†Robertson, Mr. Laurence (Tewkesbury) (Con)
†Rosindell, Andrew (Romford) (Con)
†Smith, Angela E. (Parliamentary Under-Secretary of State for Northern Ireland)
Wallace, Mr. Ben (Lancaster and Wyre) (Con)
†Waltho, Lynda (Stourbridge) (Lab)
†Wilson, Sammy (East Antrim) (DUP)
Fiona McLean, Committee Clerk

† attended the Committee

 
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Monday 13 February 2006

[Mr. Peter Atkinson in the Chair]

Draft Stormont Estate (Northern Ireland) Order 2006

4.30 pm

The Parliamentary Under-Secretary of State for Northern Ireland (Angela E. Smith): I beg to move,

That the Committee has considered the draft Stormont Estate (Northern Ireland) Order 2006.

It is a pleasure to be before you, Mr. Atkinson. I have served under your chairmanship a number of times and I know that you are always fair in your deliberations.

A draft of the order was laid before the House on 23 January 2006. Its purpose is to remove in part restrictions that prevent the Government from selling or disposing of the land and buildings in the Stormont estate that comprise the 1933 conveyance. The order’s main provision empowers the Government to dispose of all or part of the land and buildings designated by a statutory rule. The statutory rule, which specifies the part of the estate from which the trust restrictions will be removed, was included in the public consultation and has been available to hon. Members.

The legislative change is to allow some Government office buildings on the Stormont estate to be included in a private finance initiative contract for the wider Government office estate. The buildings concerned did not exist when the trust was applied in 1933. The PFI contract will be the delivery mechanism for Workplace 2010, which is the major reform programme in Northern Ireland to update and improve the working environment of the civil service estate. Much of the estate, including the buildings at Stormont, is in very poor condition and needs significant investment to bring it up to standard. That programme will tackle the urgent accommodation problems and at the same time create a unique opportunity to reduce considerably the size of the estate and improve its efficiency. That is entirely in line with the Gershon and Lyons reviews nationally, facilitating modernisation in a way that safeguards funding for priority front-line services.

I need to make it clear, however, that Parliament Buildings, Stormont Castle and Stormont House are specifically excluded from the effects of the order. That means that they will continue to be subject to the trust conditions and will remain within the public domain.
 
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In summary, the order will allow the refurbishment and rationalisation of some very poor-quality office accommodation on the Stormont estate.

4.32 pm

Mr. Laurence Robertson (Tewkesbury) (Con): It is a pleasure to serve under your chairmanship again, Mr. Atkinson.

I thank the Minister for her explanation of the order. It states that Parliament Buildings, Stormont Castle and Stormont House are not included, which was one of the initial concerns. I know that one or two other hon. Members have a number of questions. My only question relates to an issue that was referred to in the House of Lords debate. Will the money saved by the order remain in the Province and be an addition to the block grant? Perhaps the Minister could confirm that when she winds up the debate, but I have no objection to the order.

4.33 pm

Sammy Wilson (East Antrim) (DUP): I welcome the assurances that the Minister has given in respect of the historic buildings and the parkland on the Stormont estate. Many of the concerns that people initially had about the order revolved around both those aspects of the estate. Considerable money has gone into improving public access to the parkland, and of course there is a historical attachment to many of the older buildings on the estate. That said, I would like to ask the Minister some questions about the land that it is proposed will be sold off.

First, over the years—I am not saying that this has happened in recent years, although some of it has—the parkland has been diminished by the fact that, for example, some of it has had reinforcing placed on the grass and is now used for overspill car parking very close to Castle Buildings. Also, around some of the buildings are a number of annexes. They are mostly fairly shabby sheds, some of which are no longer in use, but those areas were, at one stage, part of the parkland. I would like the Minister to indicate whether those areas will be included in the sale.

My second point is about value for money. A figure of £200 million has been suggested, but no contract has yet been signed and it is difficult to produce transparency in such contracts. One of the best examples is the sale of more than 600 Inland Revenue buildings across the UK. It was impossible to find out rent and service charges, because the agreements were commercial ones that the Government and the private sector believed should remain confidential. We do not have a contract; the figure of £200 million is being bandied around, but we probably do not have the wherewithal to measure whether such savings have been made once the contract is signed. Will the Minister indicate how that figure has been arrived at?

Thirdly, on what basis will the land to be disposed of be valued? Will it be done as part of the tender process, will there be evaluation of the land and
 
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properties by the Valuation and Lands Agency, or will it be left to the market? If the value of the land is purely a market consideration, the time at which it goes to the market will determine its value. That will have long-term implications on the cost to the Northern Ireland civil service of the pay-back over the 20-year period.

There is another issue on which we need some assurance. The Minister will be well aware of the degree of change that is proposed by the review of public administration and other initiatives designed to reduce the size of the Government sector, and particularly of bureaucracy, in Northern Ireland. That will require some flexibility. Will she outline what flexibility will be built into the contracts? Will the Northern Ireland civil service be tied into a contract that leases buildings and may be appropriate now, but might not be in 20 years’ time, especially if the aim of trying to cut down the load of bureaucracy in Northern Ireland is achieved?

There has been considerable pressure for some dispersal of civil service jobs, which means that the existing building infrastructure may not be the same as is required in a number of years. My constituency does not have any major Government buildings, yet the roads out of it are congested every morning with people travelling to civil service jobs in the centre of Belfast or in Dundonald. In the interests of sustainability, if there is to be a dispersal of buildings, what flexibility will the Minister build in to the contract?

Finally, I wish to raise the issue of the effect on employees. I understand that the draft order is part of the Government’s initiative not only to replace buildings but to change the location of some activities of government in Northern Ireland. That will have a considerable effect on employees. It may also have an effect on the composition of employment in the civil service. As parliamentary answers have demonstrated, there is considerable under-representation of people from the Unionist community. Will the Minister guarantee that there will be full consultation? What plans has she to ensure that those affected by any relocation are not inconvenienced too much?

By and large, if this proves to be value for money and leads to money for front-line services, it is to be welcomed. However, we do not know whether all the savings will remain in Northern Ireland or will simply be taken from the block grant. Many questions have not been answered and were not answered in the consultation process. I hope that the Minister can give us some assurances this afternoon.

4.41 pm

Lembit Öpik (Montgomeryshire) (LD): May I also welcome you to the Chair, Mr. Atkinson? You find me in maudlin mood today. I am slightly surprised that others are not feeling the same about this order. I thank the Minister for publishing the consultation feedback; it has been very helpful. After reading the responses to the consultation I am concerned that the
 
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Government are continuing to press ahead with this order. None of the responses supported the principle of a private funding initiative arrangement to fund such a scheme. Indeed, several of the responses, including those from the First Division Association, a union that represents many of the managers and professionals in the civil service to whom the hon. Member for East Antrim (Sammy Wilson) has just referred, and those from the Northern Ireland Public Service Alliance, which represents all non-industrial staff in the Northern Ireland civil service, expressed grave reservations about the scheme.

The hon. Member for East Antrim also mentioned value for money. One of the concerns that has been expressed, which I share, is whether public finance initiatives will provide value for money. The cost of the proposed PFI scheme is estimated at £1 billion over the 20-year period of the contract. That equates to a commitment of £50 million per year, which Departments will have to fund directly from existing departmental budgets to meet the rental costs for the buildings that are currently owned by the civil service and the public. If I understand the order correctly and what it enables the Government to do, as with all PFI projects, the taxpayer is being asked to fund what really amounts to guaranteed profits for private sector companies. Can the Minister please explain why she believes that the scheme is the best option in terms of value for money?

I also have doubts about whether such an arrangement is flexible enough. A PFI contract for the Stormont estate would result in the Northern Ireland civil service being required to occupy fully the office accommodation for the duration of the 20-year contract, or have I missed something? I accept that the order exempts some properties, but would not the likely restrictions that would come with the PFI scheme prevent movement of certain Departments or offices outside the Belfast area? Should not the civil service retain its own ability to manage accommodation requirements in the future?

I stress that this PFI contract will probably mean the loss of flexibility to deal with relocation and transfer issues that may arise as a consequence of future reorganisations of Departments under devolution—but not just that. The Government have often said that they want to decentralise offices. The order seems utterly to contradict that stated principle, as it locks the civil service into the use of existing accommodation for a long time to come. Can the Minister explain how that can be reconciled with a firm commitment that the Government have given under the review of public administration that equality and targeting social need—TSN, to use the shorthand—considerations will and can be applied to the future location and dispersal of all civil and public service jobs? Surely tying the civil service to the PFI accommodation for 20 years directly contradicts that commitment?

I was also worried to discover in the response from the FDA that 64.3 per cent. of its workers felt that they had not been informed about the impact of the Workplace 2010 project. Does that not seriously undermine the project itself and the validity of the
 
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consultation that took place? The FDA further stated that it asked its members whether they had been able to highlight concerns about the project in their Departments, and almost four out of five felt that they had not been given the opportunity to do so. That is a disturbing state of affairs. What does the Minister propose to do in order to ensure that the employees who are affected by the project are properly engaged with it?

I am deeply unhappy with the order. I hope that the Minister can reassure me, either by clarifying any misunderstanding of mine about its intent, or explaining why, despite our experiences of PFI and value for money on the mainland of the United Kingdom, the Government nevertheless intend to press ahead with it on the pretence that it provides value for money. Unless the Minister can clarify those matters, I cannot support the proposal.

4.45 pm

Angela E. Smith: I am grateful to hon. Members for their comments and I shall do my best to address their concerns. I hate it when the hon. Member for Montgomeryshire (Lembit Öpik) is unhappy and I shall do my best to enlighten him during the debate.

The hon. Member for Tewkesbury (Mr. Robertson) asked for an assurance that any moneys gained as a result of not spending additional sums on the upkeep and refurbishment of the buildings will stay in Northern Ireland. Yes, it is anticipated that all moneys and any transactions will remain part of the Northern Ireland block. Also, any money not spent on maintaining and refurbishing buildings is money that is then available to be spent in Northern Ireland on other public sector priorities.

The hon. Member for Montgomeryshire raised some concerns about feedback from FDA and NIPSA and lack of support on the consultation process. It may help the hon. Gentleman to know that there was a full consultation process. We sought responses to the consultation from almost 300 bodies and a rush of five responded, two of which were from the trade unions that he mentioned. It would be wrong to say that there was no support for the order; the responses we received showed that there was not a great deal of opposition to it.

There is, and will continue to be, full consultation with all those affected, especially the civil service unions. I can give a commitment that full mechanisms are in place for that consultation, which will be adhered to in the appropriate way. Issues such as the scope, space standards and human resource elements of the contract are part of the discussions on mechanisms that are already in place, which we have fully adhered to.

The hon. Members for East Antrim and for Montgomeryshire were anxious about the contract’s flexibility. Once a contract has been signed there is no flexibility within it, but the point was made that if the contract were signed and the PFI arrangements proceeded, there would be no flexibility to move civil
 
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servants or for dispersal. That perhaps misunderstands the nature of the matter. We are not talking about the entire civil service estate under this PFI; it is one phase—one small part of it. We need to ensure that the buildings are fit for purpose for our staff and that they are decent places to work, and at present we cannot guarantee that in all cases. The reason for the programme is to ensure flexibility within the civil service estate for the future. The issue of dispersal has been fully considered. The order will not put a constraint on dispersal for the future, but for the next 20 years it will ensure that the buildings are brought up to standard for the staff who work in them.

The hon. Members for East Antrim and Montgomeryshire asked us to guarantee the best deal for the taxpayer. The Government would not be introducing the initiative if we did not consider that it was the best deal for the taxpayer. The hon. Member for East Antrim mentioned the Revenue and Customs STEPS programme. There were difficulties with that programme at the beginning but the Public Accounts Committee and the National Audit Office have now given it a clean bill of health. Another prime example is the Department for Work and Pensions. A very experienced team of advisers, which has an excellent track record on these kinds of deals, has been working on that project, and we are confident that our approach is the best way forward to achieve value for money for the taxpayer.

I was asked for assurances on how the estimated £200 million savings were arrived at. A crisp analysis of the outline business case clearly showed that PFI was the preferred option, and I assure hon. Members that it gives the taxpayer value for money.

Lembit Öpik: I cannot accept that argument. When in opposition, the Minister’s party opposed PFI because her colleagues quite rightly argued that it means selling off something that one owns and then renting it back for more over the long term. Although I accept that, in the short term, it is possible to realise some assets by turning them into liquid assets and producing a short-term cash advantage, the Minister needs to explain why, instead of doing what most people do, which is to buy a house and then pay off the cost of buying it, the Northern Ireland Office wants to sell off property that it owns and then rent it back from the new owners. I simply cannot see the logic.

Angela E. Smith: The hon. Gentleman probably is not aware of the different kinds of contract. We have looked in considerable detail into the contract that will be taken forward. We need to bring the buildings up to the standard that I would expect for buildings in which our civil servants work. To do that is expensive. The best option for the taxpayer and our civil servants is to have a PFI arrangement to ensure that money can be spent. The measure goes much wider than the sale and the lease-back that he implied. We are talking about life-cycle maintenance and services for the lifetime of the contract. I assure hon. Members that we would not put this measure forward if we were not confident that it offered value for money for the taxpayer.

 
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The hon. Member for East Antrim asked about the rateable value and the valuation that will be undertaken. We are working closely with the Valuation and Lands Agency to ensure the appropriate valuation and we will make that information available as soon as we can. He raised another point about equality. There has already been an initial equality screening exercise. A full equality impact assessment is currently being prepared.

Sammy Wilson: I do not share the scepticism of the hon. Member for Montgomeryshire regarding PFI schemes, because there are appropriate times to use them, but on the basis of the business case and given the uncertainties, will the Minister explain how the figure of £200 million has been reached in the absence of the receipt of any tenders?

 
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Angela E. Smith: Although the tenders have not yet been received, the outline business case indicates the kinds of contract that the Government would prefer. On the basis of the kind of contract that we would seek to enter into, those are the kind of savings that could be realised.

I hope that I have dealt with the queries raised by hon. Members and that they will give their full support to the measure.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Stormont Estate (Northern Ireland) Order 2006.

Committee rose at seven minutes to Five o’clock.

                                                                                           

 

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Prepared 14 February 2006