Examination of Wintesses (Questions 100-119)
VICE ADMIRAL
TIMOTHY LAURENCE
MVO, ADC, MR DAVID
OLNEY, MR
BILL CLARK
OBE AND MR
MIKE MARTINDALE
15 MAY 2007
Q100 Mr Jones: That is the big picture
stuff and, certainly, the change to the arms plot, for example,
is going to influence that, but what about day-to-day disposal?
Are you, for example, actively looking at sites across the UK
to see whether, for example, in the large, inner cities, you need
the garrisons or buildings? Does that include TA accommodation?
Does that come under your remit as well?
Vice Admiral Laurence: It does
indeed. We do look at the TA, increasingly. It has only recently
become part of Defence Estates, but I think that is very useful
because it brings the TA estate much more into consideration with
the regular estate, which I personally think is a good thing.
Q101 Mr Jones: Can I give you a suggestion?
There is a site that must be worth a fortune to you, mainly down
to the foresight of both Gateshead and Newcastle City Councils
at the time, who had the foresight into development, and that
is HMS Calliope, which sits on the banks of the Tyne. Talking
to the leader of Gateshead Council a few weeks ago, they are still
in discussion on moving this prime site, and apparently it is
the locals who like a very nice bar overlooking the Tyne Bridge
that seems to be holding this up. What, in effect, are you actually
going to have to do, because that is a prime site which is doing
two things: one, it must be worth a fortune for disposal and,
secondly, it is holding up development of the quayside on the
Gateshead side of the Tyne?
Vice Admiral Laurence: I suspect
Calliope is a classic example of where, in order to attract people
to join the Armed Forces, whether it be the reserves or the regulars,
we like to have our establishments close to centres of population,
ideally well located so that they are easily accessible.
Q102 Mr Jones: You have got one across
the other side of the river—the Royal Marines' new headquarters.
Vice Admiral Laurence: That is
very true. I visited that site myself and it is an excellent headquarters,
and there is probably scope for rationalisation there. However,
there is always a balance between ourselves wanting to maximise
the value of the estate and, perhaps, disposing of assets which
we can live without and which are high value, and the customer
saying: "No, we want to keep this because it's important
to us".
Mr Jones: Can I give you some advice:
I would look at it very closely, because the reasons for retaining
it, I think, are questionable.
Chairman: I thought you wanted to sell
off all the Generals' residences.
Q103 Mr Jones: I do as well! That
was just annoying because it is actually stopping some very good
development, and there is clearly accommodation locally for—
Vice Admiral Laurence: I know
we are looking at this individual issue and I will certainly take
it away and have a look at it myself.
Q104 Mr Jones: Can I turn to one
disposal, which is Chelsea Barracks. I wonder if you can tell
us something about it, and whether or not you could comment generally
on the rules that govern disposal, and what you can do with the
receipt you get from it. Are they too rigid? Do they need changing?
Does the money come back to you? Can you explain exactly what
the rules are?
Vice Admiral Laurence: I will
start on both the specific and the more general, and I may hand
over to Mike Martindale if I get my facts wrong. On the question
of Chelsea, the Army decided a couple of years ago that they no
longer needed the site. The decision was taken to retain Woolwich,
invest in Woolwich and release Chelsea for disposal. That disposal
has now proceeded to the stage where we have an understanding
with a prime bidder, the deal is effectively done, but it is,
though, not completed until January 2008. So the details of the
deal must remain confidential. On the general question of disposals,
effectively the receipts from disposals come back to the defence
budget. Now, it is not quite as simple as that because whenever
a spending review is held a calculation is done, a prediction,
with the Treasury as to how much we are likely to receive over
the next three years, and that calculation is built into the calculations
done as to the size of the defence budget. If we exceed those
targets, in principle the arrangement is that the money is retained
by the Ministry of Defence, but that is, of course, subject to
discussion with the Treasury, and I can well imagine that over
the Chelsea issue there will be quite an important discussion,
bearing in mind that we are in the process of negotiating spending
review 07.
Q105 Mr Jones: Do you think they
are flexible enough? I know when I looked after Newcastle City
Council's property portfolio, as chair of estates and property,
one of the things we used to do there is dispose of property.
We then used to acquire the property or, perhaps, reinvest some
of that money in other areas which improved the quality of your
overall assets. Are you allowed to do that? Is it allowing you
the flexibility to not just, perhaps, purchase new estate but,
also, perhaps, sort out freehold issues and anything else like
that, which makes the value of the overall estate more?
Vice Admiral Laurence: Effectively,
the receipts from disposals are used by Defence Estates to invest
in other parts of the Estate. That is how it works. If we can
make higher receipts from selling rather better, my first response
to the Ministry is: "I would like to keep that money and
invest it in the estate", but of course this is a matter
for theDefence Management Board to decide because they may decide
that they have priorities to provide protective vehicles for our
troops or something.
Q106 Mr Hamilton: You indicated at
the beginning and, indeed, reiterated again about relocation into
North England. I think you said there is a garrison in that area.
Is that then an opportunity to sell some of the substantial land
that you have in the South, which is extremely high priced? If
you are going to move substantial numbers of people up to the
North, surely it makes sense to move the headquarters if nothing
else, and make a nice, tidy profit which could then be reinvested
in the North.
Vice Admiral Laurence: Yes, with
a caveat. As you know, we have been subject to the Lyons Report
and we have been moving people and properties out of the South
East of England, and that continues to be our intention. The caveat
is, of course, that if we are bringing people back from Germany
we are not able to sell sites in the UK that they are vacating;
they have to come back into new sites. So it may be that the Germany
equation means that we might have to invest in new areas, possibly
in the North, possibly in the East Midlands, and not have anything
to sell in return. Most of the defence estate in Germany is leased
or is used by us but is owned by the Federal Government.
Q107 Mr Hamilton: The land value
in the South East is such that you could get substantial amounts
of land in the North, surely—and it would go further in
Scotland, where you can get a better deal.
Vice Admiral Laurence: Where we
do not need properties in the South East we would hope to dispose
of them and invest the proceeds elsewhere. Chelsea is an example
of that.
Q108 Robert Key: In March the National
Audit Office produced their report into managing Defence Estates.
On page 25 they have a section called: "The Department does
not fully understand the overall cost of its estate". We
know that the Ministry of Defence has its own arrangements for
the payment of Council Tax. Does Defence Estates or other parts
of the Ministry of Defence pay national, non-domestic rates on
their property?
Mr Martindale: Yes, they do.
Q109 Robert Key: Do you have different
arrangements with each district valuer then?
Mr Martindale: I do not think
different arrangements; I think we have the same approach with
each district valuer rather than different arrangements.
Q110 Robert Key: Is Ministry of Defence
property—for example, vehicle sheds, training workshops
and so on—rated differently, at different levels, from commercial
property beyond the wire?
Mr Martindale: I believe it is
rated in the same way as commercial property beyond the wire.
We have valuations in the normal way and we settle by negotiation
our rates bill, as do commercial organisations.
Q111 Robert Key: What assessment
have you made of the impact on Defence Estates of the Rating Empty
Properties Bill, which was published last week?
Mr Martindale: I was not aware
of that Bill, I must say, and I could not possibly comment.
Robert Key: I raised the issue in the
debate on the resolution of the Bill last Thursday, and neither
the Treasury Minister nor the DCLG Minister knew the answer to
this, but it appears that this Bill is going to mean that the
Ministry of Defence, like everybody else, will no longer get any
business rate relief on empty property. I know, for example, in
the case of Dean Hill, in my constituency, that that is having
a huge impact because it means it is going to be very hard to
sell any surplus Ministry of Defence estates which have anything
that could be rated as industrial or business premises. If you
have not done any work on it, may I please suggest you do because
the taxpayer is going to lose out big time?
Vice Admiral Laurence: Thank you
for that suggestion.
Mr Martindale: The normal approach
to all empty property is to try and demolish it to make sure we
have no liability for maintenance or rates.
Robert Key: Which is exactly what the
Treasury Minister said the Government wishes to avoid, because
we went through a period in the 1970s when the rules on empty
properties changed, which led to dereliction of industrial property.
Chairman: Moving on to a completely different
subject, sustainable development.
Q112 Linda Gilroy: The National Audit
Office report has some good things to say about the performance
on sustainability but it also has some fairly significant criticisms.
In what way is sustainability being integrated into new building
projects such as Project SLAM and the Allenby/Connaught contract?
Vice Admiral Laurence: I will
just make some general points and then, again, hand over to David
Olney, if I may. We have our own assessment mechanism for environmental
standards which is the equivalent of the Government's overall
assessment standard, and they are applied to all new contracts.
Q113 Linda Gilroy: Is that DREAM?
Vice Admiral Laurence: This is
the DREAM equivalent of the BREEAM. It was one of the first questions
I asked when I arrived in post, as to whether the DREAM is easier
to meet than BREEAM but, in fact, I am told that it is not; it
is a very tough standard.
Q114 Linda Gilroy: How does it differ?
Vice Admiral Laurence: It differs,
principally, because the kind of properties that we are maintaining
or constructing—for example, aircraft hangars, runways,
naval bases and so forth—are very different to the properties
intended to be covered by BREEAM. So it is, if you like, a more
tailored version of BREEAM for us. Those standards are applied,
they are built into contracts, and I think the question that I
am looking at is how exactly do we monitor that the contracts
are being delivered. David, I do not know if you want to add anything.
Mr Olney: No. What I can give
you are some examples of where we have introduced sustainability
work into our new builds or refurbished builds. For argument's
sake, at Cosford we worked with the Waste and Resource Action
Programme to ensure that some 13% of the materials used on that
product are from recycled materials.
Q115 Linda Gilroy: Is that a local
aspiration, the Cosford one? I am not familiar with the programme.
Mr Olney: It was to refurbish
an existing hangar. We looked at seeing how much we could use
recycled materials. At the Garrison at Woodbridge (I do not have
the exact figures) we reused a lot of the waste because we had
to demolish a considerable number of buildings to rebuild the
garrison there. We reused an awful lot of waste on the site, saving
hundreds of lorry loads on to the public highways, to name but
two. We have got a rainwater catchment system at Yeovilton associated
with the air traffic control tower. So there are a number of examples
where we are building sustainability into our new construction
and refurbishment programmes.
Q116 Linda Gilroy: How do you ensure
that the private companies with whom you are working put sufficient
emphasis on sustainability?
Mr Olney: Three ways: firstly,
there are elements and targets within the contracts. Secondly,
when we look at projects we have the DREAM assessment, so that
is considered alongside every other technical aspect, and we look
at opportunities to introduce sustainable ideas into projects.
Thirdly, of course, those same companies are interested and are
leaders in this field anyway. So, for argument's sake, Bovis Lend
Lease, who are on our SLAM project, have done some good work at
Greenwich on sustainable communities in the private sector. So
we work with them. Lastly, we have what is called a supplier association
where we bring our major contractors together to work in a spirit
of co-operation rather than antagonism and we set up a sustainability
working group where ourselves, plus all our prime contractors,
are looking at sharing best practice and sharing ideas so the
whole estate can benefit.
Q117 Linda Gilroy: Admiral, in your
introduction, when you said sustainability was one of your four
key priorities, you also mentioned the trade-off with affordability.
How do you actually build into the relationship with the companies
you are working with incentives which ensure that you are then
able to feed into what will become increasingly challenging programmes
and targets, as we see the Climate Change Bill and various other
new measures come in?
Vice Admiral Laurence: I think
this is a question of everything boils down to the contract—the
way the contract is written—and we have to continuously
improve our contracts to build sustainability targets into them.
It is one of the issues that I will be looking at very closely
to see how well we do that at the moment.
Q118 Linda Gilroy: On carbon emissions,
the direction of travel is apparently in entirely the wrong direction.
So on energy efficiency, particularly, what is your Department
doing?
Vice Admiral Laurence: The good
news is that since the NAO report the figures for 2005-06 have
been published and the direction of travel was downward again,
so we have reversed the trend since the figures in the report.
Q119 Linda Gilroy: What has contributed
to getting it in the right direction of travel again then?
Vice Admiral Laurence: A great
deal of effort has been put in over the last two or three years;
trying out pilot schemes—the pilot scheme at RAF Kinloss
was mentioned in the report, and lessons have been learnt from
that. We have been doing a series of audits, as I think the report
also mentions, initially with the Carbon Trust and then elsewhere.
In order to really embed this across the organisation we have
imposed, in the latest planning round, a 15% energy efficiency
cut in budgets over the next four years, and that itself, I think,
will be the major factor in focusing people's attention on reducing
consumption of energy.
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