Examination of Witnesses (Questions 227
- 239)
WEDNESDAY 3 MARCH 2010
SARAH MCCARTHY-FRY
MP, MS PAULA
DIGGLE AND
MR JOHN
HENDERSON
Q227 Chairman: Minister, can I apologise
to you on behalf of the Sub-Committee for keeping you waiting
but there were some issues we needed to explore in some detail
with the Chief Executive. Can you begin by identifying yourself
and your colleagues formally, please?
Sarah McCarthy-Fry: I am Sarah
McCarthy-Fry and I am the Exchequer Secretary to the Treasury.
Ms Diggle: I am Paula Diggle;
I am the Treasury Officer of Accounts.
Mr Henderson: I am John Henderson,
Deputy Director of the Scotland Office.
Q228 Chairman: Thank you very much
for helping us this afternoon. Could we start perhaps with the
Crown Estate Commissioners' objectives? How do these objectives
include wider public policy objectives, or is your role simply
to set and agree a financial target with them?
Sarah McCarthy-Fry: The remit
of the Crown Estate is set in the Act, as I am sure you know,
which is to maintain and enhance its value in the return obtained
for it with due regard to the requirements of good management.
Obviously the Crown Estate have set themselves parameters, or
they have set themselves a view in that they recognise that to
be good management, not just in pure commercial terms but in the
same way as an Accounting Officer does. I believe that they want
to be recognised as a decent landlord, a good employer, a reliant
market counterpart and a good steward of the assets that they
manage. So in the sense of within their remit that is the way
they see good management and their role. Maybe Paula could elaborate
on the annual meeting, twice a year.
Q229 Chairman: I just want to be
clear from the Government's perspective how you satisfy yourself
that there is the right balance between revenue generation and
the wider public interest. What is the Treasury's position on
the wider public interest?
Sarah McCarthy-Fry: The Treasury's
position is in effect with the good management side of it; that
they seek to be a good employer, they seek to be a good landlord,
which is in their programme and in their statement and in their
annual report, and that is how we monitor that.
Q230 Chairman: So you are not specifically
interested in how they might meet wider public policy objectives
of the Government?
Sarah McCarthy-Fry: I do not believe
it is in their remit.
Q231 Chairman: No, your remit is
what I am trying to get at; we have heard about their remit. What
I am trying to get at is, do you have any interest in ensuring
that the Commissioners, and the balance that you strike with them
in setting the targets and so on, also have regard to your wider
public policy objectives?
Sarah McCarthy-Fry: As far as
we can, within the statutory remit that the Crown Estate has.
I cannot direct them to put the public policy interests before
the revenue generation.
Q232 Chairman: You have powers of
direction though?
Sarah McCarthy-Fry: I do have
powers of direction; we do have powers of direction, but they
have to be reasonable.
Q233 Chairman: How often do you meet
the Commissioners?
Sarah McCarthy-Fry: Personally
I have not met the Commissioners yet; I have not yet been in post
for a year. That is not to say that they do not have interaction
with ministers in Government.
Q234 Chairman: No, but you are the
minister responsible. I know you are recently in post but normally
you would meet the Commissioners how often?
Sarah McCarthy-Fry: I am not sure
how often other ministers have met. I do intend to meet them.
I would have thought an annual basis would have been right. Obviously
officials meet with them on a regular basis.
Q235 Chairman: How often do you have
meetings with them?
Ms Diggle: I see them very frequently—as
the need arises really, as issues crop up, anything novel or contentious
or just significant to the business of the Crown Estate. So I
would see them several times a month.
Q236 Chairman: How often then would
you refer things up to your Minister?
Ms Diggle: Not very often because
there is not usually a problem.
Chairman: "There is not usually
a problem"; I see.
Q237 Mr Love: You will probably be
aware, Minister, that in a previous session we discussed in some
detail the current proposal of the Crown Estate to sell off a
substantial portion of its residential estate, round about, as
we understand it, 1,500 properties. Following on from the questions
that the Chairman has asked, is there any role for the Treasury
or for ministers in giving a green light to such a proposal and
what role will you play if they do decide at the end of the consultation
period to sell off these properties?
Sarah McCarthy-Fry: I would expect
the Treasury to be consulted, of course, on this. Obviously I
am familiar with this issue; it has been raised with me by a number
of MPs who have concerns about their constituents. I would want
to discuss this with the Commissioners after they have done the
consultation to ensure that they have taken this on board. Whether
I would then be able to issue a direction if I thought that they
were not going in the right direction and I thought that they
were doing something that was contrary, as I said it comes back
to whether it would be considered reasonable and whether they
were acting outside their remit. They have a statutory duty to
maintain and enhance the value of their estate and the income
it generates and they keep their asset portfolio continually under
review. I am as concerned as anybody about the status of tenants
if the proposal were to go ahead, and I would want to ensure that
the safeguards I believe that the Crown Estates are prepared to
be put in place would be put in place if they were to go down
that route. As I understand it, it is still a consultation at
this stage.
Q238 Mr Love: It is Government stated
policy to address the particularly acute shortage that we have
in London of affordable accommodation. This proposal, if it goes
ahead, is likely to see, at best, a reduction over time in the
amount of affordable accommodation available in London. How important
would be that Government priority and the balance of judgments
that you make in relation to this particular proposal?
Sarah McCarthy-Fry: First of all,
I do not think it necessarily means even if it were sold that
there would be a shortage of affordable accommodation; that would
depend on to whom it was sold. So there is a long way to go yet
before that would come into play, and then we would have to balance
that public policy objective against the remit that the Crown
Estate has. If it got to the position that you talk about, it
looked as if there was going to be a significant loss of affordable
housing, if they were prepared only to sell to a private landlord—which
I understand is not the case—then I could really understand
the concerns that some of the tenants have, and it is a concern
I would take up with the Commissioners. Whether it would be considered
reasonable to direct them not to do it, I would have to consult
on that.
Q239 Mr Love: Ms Diggle, you indicated
earlier that you have regular meetings with the Crown Estate.
To what extent would you go into detail on a proposal of this
nature? To what extent would you report back to other Treasury
officials or to ministers in relation to that?
Ms Diggle: I would certainly want
to go into the idea of selling in quite some detail. I would want
to satisfy myself on behalf of the Treasury that if the sale should
go forward—let me stress that—it is in the wider public
interest in the way we have been talking about earlier. We would
want to be confident that the sale is not in any way going to
deprive tenants of their proper rights. Mr Bright has explained
to you that he is intent on preserving tenants' rights in quite
a generous way, actually over and beyond what the law requires.
If I thought that none of that was going to happen I would certainly
want to tell the Minister and want to consider intervening. It
does not seem that that is going to happen.
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