Examination of Wintesses (Questions 120-130)
VICE ADMIRAL
TIMOTHY LAURENCE
MVO, ADC, MR DAVID
OLNEY, MR
BILL CLARK
OBE AND MR
MIKE MARTINDALE
15 MAY 2007
Q120 Linda Gilroy: There has been
some criticism in the NAO report about being very slow in relation
to implementing the Defra "Quick Wins" programme. The
Kinloss example itself has not been speedily followed by others
using that as an example. Why do you think that is? Is it because
there has been lack of targets that are now established that you
think will drive that?
Vice Admiral Laurence: Again,
David may wish to comment on this, but there has been a lot of
work going on behind the scenes; there has been a lot of discussion
about what will work and how much—for every investment of
£100,000—benefit you are going to get, both in terms
of cost reductions and energy consumption reductions. I think
we are at the stage now where we really are beginning to roll
this programme out across defence. I accept the criticism the
NAO report made that, perhaps, not enough had been done at that
stage, but I think we are going to see a great deal of progress
on this in the next year or two.
Q121 Linda Gilroy: Mr Olney, can
you tell the Committee exactly what the project RAF Kinloss was?
I understand that it was a very good return—pretty well
a one-year payback—but was that a typical example or was
it just a very wasteful building and very wasteful use, which
might not be replicated across the estate?
Mr Olney: The Kinloss project
was to put in place an energy management system which cost £100,000
and resulted in savings of £343,000 in its first year of
operation. The lesson we have learnt from that is that, clearly,
by measuring what you are consuming better you can understand
why and where you are consuming it and take steps to reduce it.
The sorts of things we did were automatic switching of lights
off at the end of the day and turning down the heating systems
on aircraft hangars which were not going to be utilised. We have
now rolled that out across 10 other sites. For argument's sake,
at Fort George we found that the heating system could be better
controlled. That has cost us £300,000, we will save 12% in
energy use per annum and £33,000 per year in maintenance
costs. So, again, you can see a very quick payback. We have now
taken those 10 and have calculated that the top 220 MoD sites
consume 70-odd% of our energy bill, and we are now working to
put in place similar measuring systems across those sites—it
is not going to happen overnight—so we can benefit from
the Kinloss and Fort George lessons. In addition to those, we
have done other work, like putting photovoltaic street lights
at Wilton, solar power has gone into sites, and the Neptune new
single living accommodation and mess will have the largest photovoltaic
array in Europe, which will aid our energy efficiency. I think
you can say, maybe, a slow start but one which is gathering pace
and momentum as we take these initiatives forward.
Q122 Linda Gilroy: In terms of the
end-users, particularly in the single living and family properties,
is account being taken of the need to engage the end-user in understanding
how to take the benefit of putting in any energy efficient measures,
equipment or insulation? It is a classic example that you put
it in and people get the benefit in heating and open the windows!
Mr Olney: I very much take the
point and it is absolutely vital, as we learnt from Kinloss, that
we engage with the people who have to use that estate, as opposed
to us who maintain it, because it is their use of it which contributes
to the energy bill as much as the way we maintain it. We work
very closely with the RAF energy unit and the various energy advisers
in the other TLBs.
Q123 Linda Gilroy: Turning to listed
properties which, again, is an area that the NAO report was critical
on, saying that you did not know the condition of 77% of the listed
buildings. Is that still the situation?
Vice Admiral Laurence: That was
a historical point, and I think our knowledge of the condition
of the listed estate is much better than that. I have to say I
cannot remember what the—
Q124 Linda Gilroy: Can you let us
have a note of that? I assume you would not consider that to be
acceptable.
Vice Admiral Laurence: If those
figures were still true I would be very disappointed. I think
it is much better than that.
Mr Olney: The knowledge of the
buildings at risk, which I think is where the criticism really
arose, was we have some 15% now of those buildings at risk where
we are uncertain of the condition by the end of this month, and
our target is to have zero percentage in unknown condition by
March 2008.
Q125 Linda Gilroy: I think you did
have a target to know what condition all of the listed buildings
were in, or 85% of them, by March 2007. It would be useful to
know if that has been achieved as well.
Vice Admiral Laurence: We will
clarify that and come back to you.
Q126 Mr Hamilton: Can I ask a question
in relation to that? I take it that applies across the board to
Scotland, Wales and Northern Ireland, because that is English
Heritage we are talking about here. If you are going to give us
the figures could you also give the figures for the other nations?
Vice Admiral Laurence: We will.
Chairman: The reason I said, at the beginning,
that I had the impression the Ministry of Defence was actually
improving in its sustainable approach to land was that in my own
constituency, and I can be forgiven for this, the management of
the training areas around the Fleet pond has been transformed
in the last couple of years. You have clearly been listening to
the local environmental groups that have been very exercised about
it. I would like to thank you for that. Unless there are any further
questions?
Q127 Mr Jenkins: I am thinking about
the Housing Prime Contract, and I noticed in 2005-06 the cost
went from £100 million to £120 million because they
negotiated the £20 million with you due to people being in
the houses when they maintain them. I am wondering: how do I know
we are getting value for money in this contract? Would I be justified
in taking this and comparing it with a local authority with the
same number of units and judging like for like, insofar as I know
what the schedule of works are? How do you monitor the fact that
you are not being "ripped off" on this contract?
Mr Olney: There are a number of
ways. Firstly, of course, the MHS won it in competition, so we
have an element of competition to ensure value for money because
they had to compete along with a number of other companies.
Q128 Chairman: You would say the
same about Annington Homes, of course?
Mr Olney: The second point is,
you are absolutely right, we do have an audit and assurance regime
which looks at the work that MHS have done on a sample basis.
With our staff we look at industry norms and comparisons to see
whether it is reasonable for those sums to have been expended,
and we have a performance recovery system should that not be the
case. So we do have an audit and assurance regime.
Mr Clark: If I could just add
to that, the estate performance measurement system, which is covered
quite extensively in the NAO report, will also eventually capture
all the data on the Housing Prime Contract, which will allow us
to monitor the movement from the base condition, which is being
assessed this year, to the new condition, the target condition,
set out in the contract. We are doing that across all Prime Contracts,
including the five regional Prime Contracts, and eventually across
the whole of the MoD estate.
Q129 Mr Jenkins: As you refurbish
your estate I can expect the cost of maintenance to be negotiated,
by year six and year seven, £20 million under the £100
million rather than £20 million over it, can I?
Mr Olney: There is certainly an
incentive on the contractor to reduce the cost of maintaining
the estate and an incentive on ourselves.
Mr Clark: Perhaps I can add, Mr
Jenkins, that we also have a value-for-money target as one of
our key targets to achieve 30% value for money across all Prime
Contracts by 2011. Again, the Housing Prime is part of that.
Mr Martindale: To reassure the
Committee, Mr Jenkins, we also have open-book accounting on all
our major contracts, so you can look at what costs the contractor
is incurring in maintaining it to ensure they are not—I
think you used the phrase earlier—"ripping us off",
in the sense that we can have access to what they are paying to
the subcontractors. So we make sure that we have access to their
accounts, effectively, to reassure the Committee and ourselves,
more importantly, that we are getting value for money.
Q130 Chairman: Thank you all very
much indeed. I wish more of the people we question could come
before us within two weeks of coming into their job, because it
seems to have been an extremely valuable session. Thank you very
much indeed.
Vice Admiral Laurence: Thank you.
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