Administration and expenditure of the Chancellor's departments, 2008-09 - Treasury Contents

Examination of Witnesses (Questions 520 - 539)



  Q520  John Thurso: What discussions have you had with the Crown Estate regarding seabed leasing for renewable energy offshore?

  Sarah McCarthy Fry: We manage the Crown Estate at arms length, as I am sure you are aware. The Crown Estate does keep the Treasury informed regularly—

  Q521  John Thurso: But have you had any discussions with them on that subject?

  Sarah McCarthy Fry: We have not had discussions. There has been some correspondence around it but mainly it is within their remit. It is their remit to deliver best value for the taxpayer.

  Q522  John Thurso: So the Treasury has not discussed licensing of renewable energy seabed leases with the Crown Estate?

  Sarah McCarthy Fry: That is for the Crown Estate to manage. They have to deliver within their remit to us.

  Q523  John Thurso: Have you had any discussions with DECC regarding the Crown Estate's role in licensing of offshore?

  Sarah McCarthy Fry: I personally have not. I am not aware if any officials have but I can certainly find out.

  Q524  John Thurso: And what discussions have you had with the Secretary of State for Scotland, bearing in mind that there are two Secretaries of State who have the power to direct, namely, the Chancellor and the Secretary of State for Scotland? Have you had any discussions on this matter with him?

  Sarah McCarthy Fry: I personally have not had discussions with the Secretary of State for Scotland but I am sure that the Chief Executive of the Crown Estate has.

  Q525  John Thurso: I am sure he has too but I am more interested in whether you have.

  Sarah McCarthy Fry: I personally have not, no.

  Q526  John Thurso: In fact, I know he has had discussions but I am more interested in whether the Treasury has. The Government's White Paper requires there to be 33 gigawatts of offshore energy, mostly through offshore wind but some through tidal energy, by a date into the 2020s. That is equivalent to half the installed capacity of the United Kingdom's generation of energy. Do you not find it extraordinary that as the department that is charged with oversight of the Crown Estate, who are the people who are going to license this, you have had no discussions with them on how they are going to license Britain's energy future?

  Sarah McCarthy Fry: As I said, the Crown Estate are managed at arm's length and we know that they are trying to build their board so that they have the expertise on there to be able to deliver to the Treasury their remit, to manage the Estate to deliver a return, which is an agreed return, but also to do it in a sustainable manner.

  Q527  John Thurso: The reason I ask these questions is that I was given to understand in informal discussions with DECC that they had tried to see the Crown Estate and had a very unsatisfactory brush-off on the grounds that they report to you and not to them, so I was just interested to know whether you had actually had any discussions and it would seem that perhaps there have not been any.

  Sarah McCarthy Fry: As I say, I personally have not but I will find out whether officials have.[9]

  Q528  John Thurso: Do you intend in the future to keep a closer eye on what they are doing?

  Sarah McCarthy Fry: I think this is an area that it is important to keep track of, particularly as they are responsible for the offshore areas, and I think it is something that will get a greater focus.

  Chairman: Let us turn to National Savings.

  Q529  Mr Brady: Can I ask what NS&I's top priority for the future should be? Is it there to provide value for its customers or to support government macroeconomic policy?

  Sarah McCarthy Fry: The sole aim of NS&I is to reduce cost to the taxpayer of Government borrowing now and in the future, and they do that through the sale of savings and investment products to the retail market.

  Q530  Mr Brady: So it is not there for its customers; it is there for Government macroeconomic policy?

  Sarah McCarthy Fry: That is the purpose of it, and, obviously, if they can help their consumers and their customers—they do not set out to be the absolute best buy, so in that sense they are not setting out to attract the customers. Their aim is to reduce the cost to the taxpayer of Government borrowing.

  Q531  Mr Brady: And was it right for NS&I to stop discretionary marketing during the flight to safety?

  Sarah McCarthy Fry: Yes, I believe it was. We had targets that they had to meet. They had over-achieved those targets and it was felt right that then that should cease.

  Q532  Mr Brady: And did they ask for Treasury approval before making that decision?

  Sarah McCarthy Fry: Yes, I believe so.

  Q533  Mr Brady: What consideration was given to the possibility of going further and stopping taking deposits at that point?

  Sarah McCarthy Fry: I am not aware that that was considered.

  Q534  Mr Brady: How are you monitoring NS&I's performance now that they have suspended the value-add indicator?

  Sarah McCarthy Fry: As I say, they have already over-achieved against their target, so now it is just a question of monitoring to ensure that they fit within the market place as they had intended, not to be right at the top.

  Q535  Mr Brady: There is no other performance indicator expected of them?

  Sarah McCarthy Fry: Not to my knowledge.

  Q536  Mr Brady: Can you look into that?

  Sarah McCarthy Fry: I will get back to you on that.[10]

  Mr Brady: Thank you.

  Q537  Peter Viggers: The Government announced in the Budget of 2007 that public sector accounts would be prepared in accordance with International Financial Reporting Standards, IFRS, with effect from 2008-09, but there was some slippage and the reason for the slippage was given to us as "uncertainties around the impact of the introduction of IFRS on public sector net debt". There has been further slippage. The Department of Health and the Ministry of Defence have negotiated exemption from trigger points and we have been critical of that and said that the adoption of International Financial Reporting Standards will fail if the Treasury does not assert its authority and aid departments in meeting the agreed milestones. How high a priority for you is the implementation by government departments of IFRS?

  Sarah McCarthy Fry: I think it is important that we move to International Financial Reporting Standards; it is a priority for us, and we have made steady progress against the 32 trigger points. I believe that Louise Tulett advised the Committee that 41 out of 43 departments have now met the deadline for the September accounts to be in to the NAO. We are taking stock of the progress against that and we are moving forward, and it is a priority that we move towards the standards.

  Q538  Peter Viggers: The two non-compliant departments presumably being Health and Defence?

  Sarah McCarthy Fry: I am not where which the two are but we are working closely with them.

  Q539  Peter Viggers: When the Government does become fully compliant more PFI deals will have to be put onto the balance sheet. What estimate have you made of the impact on the Government's net debt figure?

  Sarah McCarthy Fry: A lot of PFI deals, of course, already are on the balance sheet and I think the newer ones coming on are on there. I do not have a figure but I can certainly write to the Committee.

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