Select Committee on Defence Minutes of Evidence


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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