Examination of Witnesses (Questions 1-19)
OFFICE OF
GOVERNMENT COMMERCE
& DEPARTMENT FOR
ENVIRONMENT, FOOD
AND RURAL
AFFAIRS
18 JUNE 2007
Q1 Chairman: Good afternoon. Welcome
to the Public Accounts Committee, where today we are looking at
the Comptroller and Auditor General's Report, Building for
the Future: Sustainable Construction and Refurbishment on the
Government Estate. We welcome to the Committee for the first
time Peter Fanning, the Acting Chief Executive at the Office of
Government Commerce. Is it right that this is your first time?
Peter Fanning: Yes.
Q2 Chairman: What a pleasure you
have in store.
Helen Ghosh has been here before. It is lovely
to see her again. She is the Accounting Officer at the Department
for Environment, Food and Rural Affairs. We are looking at the
important subject of how committed the Government are to making
their own buildings environmentally sustainable. It is not a very
good Report really, is it Mrs Ghosh? If you look, for example,
at paragraph 2.22 on page 17, you will see a damning statement
for a National Audit Office Report. It states that: "Our
results, set out above, demonstrate a serious and widespread failure
on the part of Departments and Agencies to achieve key targets
set out in the Common Minimum Standards".
What can you say to that?
Helen Ghosh: We think that it
is an excellent Report and accurate in its analysis of the situation
as it was in 2005-06. We will be welcoming and agreeing with its
recommendations. It makes clear that we have now put in place
a number of actions that should make things much better for the
future. In June 2006, the statement of the key set of outcome
targets—the sustainable operations for the Government's
targets announced by the Prime Minister—gave us what we
have to achieve. That is acknowledged in the Report.
The Government's response to the sustainable
procurement task force in its action plan explains the roles.
There is now a much clearer role for Peter and the Office of Government
Commerce team and for Departments. There is clearer governance
through the Energy and the Environment Committee and various Committees
that were set up under Gus O'Donnell's leadership, and the Sustainable
Development Commission has a very clear watchdog role. We think
that we can now exert much better traction across the Government.
Q3 Chairman: Well, we get very frustrated
because we are told constantly, "We are very grateful for
this Report. It is an excellent Report and everything has now
been set right." But after all the Report is dated April
2007, which is not so long ago. Let us look, for instance, at
page 11. It states that only: "35%... new build projects
have carried out, or plan to carry out, BREEAM assessments...
only 18%... major refurbishment projects have carried out, or
plan to carry out, BREEAM assessments or equivalent." Of
those that have carried it out, let us look at figure 7 on page
13. It is dealt with under paragraph 2.4 on page 12. We can see
that: "only 9% of projects... met the required" ratings.
That is appalling.
All the projects grouped at the left-hand side
of figure 7 under the line show that even the ones for which there
has been an assessment are simply not meeting your targets. It
is supposed to be a matter of key public policy. We are all supposed
to be terribly concerned about carbon emissions. They are your
own buildings, and you are falling woefully short of your own
targets, let alone anybody else's.
Helen Ghosh: Three things quickly:
the incentives that Accounting Officers and Departments now have
with clear outcome targets will make a significant difference
to performance. Secondly, inevitably, there is a big lead time
on some of this. Many of the buildings that you were sampling
last year will have been commissioned long before. Peter will
be able to say something about that. The political focus and dynamic
behind improving our performance in Government, signalled by the
Prime Minister's targets, will make a step change in what we do.
I agree that what we have done at the moment
is set up the infrastructure. It sounds like jam tomorrow, but
we have everything there to deliver the jam tomorrow.
Q4 Chairman: Yes, but you were not
ordered by Ministers to provide jam tomorrow. You were asked to
build sustainably—not next year, not the year after, but
now. Why are you defying Ministers, Mrs Ghosh? You are defying
Ministers, or else you are totally inefficient.
Helen Ghosh: Before I hand over
to Peter to talk about the lag time, the other thing brought out
by the Report is that there are a large number of excellent—
Q5 Chairman: No. I asked you a question.
I want to know why you are not meeting targets. Paragraph 2.10
states that: "the requirement for departments to carry out
BREEAM assessments (along with other environmental standards)
was introduced" not this or next year, but "in 2002".
You have not carried out that requirement, have you? Why are you
defying Ministers?
Helen Ghosh: The matter involves
a number of Departments and their Accounting Officers; I am not
answering for all Departments. I have not defied Ministers.
Q6 Chairman: So you are doing all
right, but the others are rubbish?
Helen Ghosh: No; the Report makes
it very clear that people in a number of Departments are—
Q7 Chairman: Not according to the
figures contained in the Report to which you have agreed.
Helen Ghosh: But a number of significant
buildings are achieving the standards that are going through the
process.
Q8 Chairman: I am sorry; only 9%
of projects met the required ratings.
Peter Fanning: May I say something?
Chairman: Yes, you may.
Peter Fanning: We in the OGC are
very keen on standards.
Q9 Chairman: If you are very keen,
why are you not doing anything about it?
Peter Fanning: We are, and I shall
perhaps explain that in a moment. I shall first make a point about
the BREEAM standard. It is a good standard, but it does not work
in every situation.
Q10 Chairman: Ah, it is the fault
of the standard, so why did you accept it, and why did you not
have a lighter-weight alternative? You are in charge, and you
could have done it.
Peter Fanning: We could have done.
Q11 Chairman: If the standard is
no good, how come you are failing to meet it? What is the point
of having standards that you do not meet?
Peter Fanning: It is a perfectly
good standard, but it does not apply—
Q12 Chairman: So why did you criticise
it a moment ago?
Peter Fanning: I did not criticise
it; I made the observation that it does not apply well in all
circumstances. Page 17 of the Report points out that there are
certain situations in which the standard may not apply in practice,
so the Accounting Officer has to make a practical decision, for
which he must also account to the Committee. For example, the
air accidents investigation branch, which is part of the Department
for Transport, was simply unable to locate itself close to a railway
station. Consequently, I understand it suffered a six-point reduction
in its BREEAM standard.
Pursuing standards is desirable, and OGC does
so with vigour. However, Accounting Officers have to make their
own judgments in the circumstances in which they find themselves.
If we are not careful, there could be perverse consequences.
There is another example in the Report. It does
not relate to a standard, but what could have been a standard.
Eland House was leading-edge when it was built, and it had a combined
heat and power system. It has since been discovered that such
a system is not always the best option.
The Report also mentions Nottingham Prison.
Q13 Chairman: Of course, you can
always aduce individual requirements, but we must look at your
overall record of meeting your own targets. You are reorganising
the OGC, which obviously has a pretty hopeless record on these
matters. Will your management make a difference?
Peter Fanning: We are making a
substantial difference. The NAO and the Chief Secretary to the
Treasury launched the high-performing property plan for the entire
Government estate in the spring. That resulted in an implementation
timetable, which we published in March. We have conducted stock-takes
with Departments every six months. By the end of March 2008, we
will have a comprehensive view of the basic information on the
entire estate. Within 18 months, we should be able to measure
every holding on the estate against sustainability criteria.
Q14 Chairman: The process started
in 2002. Will you be able to do something by, say, 2009?
Peter Fanning: Certainly.
Q15 Chairman: The answer to that
question is yes, is it?
Peter Fanning: Yes.
Q16 Mr Touhig: Every time I attend
one of these sittings, I come away with two distinct impressions.
First, no one is held responsible when projects fail to meet their
objectives. Secondly, and perhaps more importantly, senior civil
servants have a complete aversion to undertaking lessons-learned
exercises. The Chairman's brief states that: "sustainable
buildings can deliver tangible benefits but these need to be managed",
so why is paragraph 4.3 on page 25 of the Report introduced with
the phrase: "the benefits of sustainable buildings are generally
not measured or quantified"?
Helen Ghosh: Senior civil
servants—in this case, Accounting Officers—are held
to account. This Committee obviously has a role to play in that
accountability. They will be held even more strongly to account
in future, because of the kinds of commitments to which we are
all now signed up and which are in our personal performance agreements,
following the sustainable operations targets that the Prime Minister
set last year. There is strong political interest and high commitment
from both the Prime Minister and the Chancellor in that area.
Very close interest is also being taken by Gus O'Donnell and others.
We will be tracked through our systems.
The activities of the Sustainable Development
Commission do not make me feel that no one is holding me to account.
For example, I much regret the fact that DEFRA was not among the
stars in the report that the SDC did last year on our operations,
although that related to a different set of targets. It received
lots of public scrutiny, and I have now implemented a one-planet
DEFRA programme. It intends to put the situation right extremely
rapidly, because I expect close scrutiny.
The NAO Report cites—Peter may wish to
comment on this—a number of ways in which we are increasingly
testing what the benefits realisation cases are. For example,
it contains an excellent table showing benefits realisation in
relation to a broad range of sustainable outcomes, whether health,
well-being, carbon and so on.
Q17 Mr Touhig: But you have agreed
the Report. I am sorry to cut in, but, as you know, our time is
limited.
Helen Ghosh: We have agreed the
Report.
Q18 Mr Touhig: Paragraph 4.3 states:
"Post-occupancy evaluation of construction and refurbishment
projects is a well recognised and powerful tool for bringing about
improvements in building design and operation. However, our case
examples indicated that Departments often do not conduct such
evaluations." So they do not bother with any lessons learned.
Helen Ghosh: As I said, I agree
with the Report's findings. Our structures, accountabilities and
outcome targets—this will be in our response to the Committee—will
set a far more stringent and effective accountability system.
We need to use the gateway review system, for example, more stringently
to ensure that we get benefits.
Peter Fanning: Yes, indeed.
Q19 Mr Touhig: The Report also says
that Departments are: "missing opportunities to assess whether
the buildings have been built in accordance with their specification,
are functioning as well as they might, and are meeting Departments'
expectations." That is pretty basic stuff. If you buy something,
you have to test whether it works, but you don't do so.
Helen Ghosh: Indeed. Another key
theme of the Report is about improving capability, where the OGC
has a key role to play.
Peter Fanning: Yes, perhaps I
may explain that. We know quite a lot about 4% of the estate:
370 properties out of the 9,000 holdings that we have. The knowledge
that we have gained on that benchmarking study will be rolled
out to the entire estate, so that within 18 months, we should
be able to supply a comprehensive analysis of the sustainability
performance of every single holding in the estate to anyone who
asks for one.
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