Catering services in the House of Commons

UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE    To be published as HC 560-iii

House of Commons

Oral Evidence

Taken Before the

Administration Select Committee

Catering Services in the House of Commons  

Monday 29 November 2010

MRS SUE HARRISON

Evidence heard in  Public Questions  100-175

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the  Administration Select Committee

on  Monday 29 November 2010

Members present:

Sir Alan Haselhurst (Chair)

Rosie Cooper

Mr Mark Francois

Nigel Mills

Tessa Munt

Sarah Newton

Bob Russell

Angela Smith

Mr John Spellar

Mr Shailesh Vara

Mr Dave Watts

Mike Weatherley

________________

Examination of Witnesses

Witnesses:  Mrs Sue Harrison, Director of Catering and Retail Services, House of Commons, gave evidence.

Q100 Chair: Good afternoon Mrs Harrison. I apologise for keeping you waiting slightly as we were preparing for this. Thank you for the paper that you have submitted, and, indeed, for your second appearance before this Committee. Is there anything you would like to say, or any points you would like to pick out before you submit yourself to our questions?

Sue Harrison: Mr Chairman, just by way of introduction, I would just like to say that we do very much welcome this review and I think it is very pertinent to hold such a review at this time for two main reasons. First, as we are all aware, the drive for savings is incumbent on us, as it is on the whole of the public sector. Secondly, it is 15 years since we last had a major review that looked at the scope and nature of our business and the premises that we have to deliver it. In those last 15 years we have actually coped with an 80% increase in the total usage of the facilities and at the same time there have been changes to the sitting patterns of the House. It is quite understandable that from time to time it is necessary to review what we are doing and to make sure that looking forward we make the best use of the facilities that we have, and the best use of the public money, to realign where we can to actually cater for the needs of the present and the next few years. In that context, I very much hope to work with your Committee to make the best of the facilities and the resources we have at our disposal.

Q101 Chair: Thank you very much. If I may start with a couple of questions, do you feel that sufficient attention has been given to revenue raising, and how could we best exploit the assets we have got to raise revenue as opposed to the feeling that it is simply a matter of cutting in a negative sense?

Sue Harrison: I think that it is probably true to say that in the past we have not given as much focus to income generation as is now the mood of the House. I think the key reason for that is obviously that, in order to increase our revenue, we need to extend the market. As long as we are looking at extending the market among those with internal Parliamentary Passholders, it is then nevertheless a constrained market. In the present day, to extend facilities beyond that to the general public does bring in to play the very serious security issues that I know are of concern to the Serjeant at Arms and the people that advise the House on security matters. It is incontrovertible that there will be a tension between making the maximum use of our facilities and generating additional income from members of the general public, while maintaining the security of the premises. Naturally all of us who work here are very interested to ensure that we are working in a safe environment.

Q102 Chair: Having said that, do you think there is substantial scope for improving our income?

Sue Harrison: I certainly think there is considerable scope for improving the income and that the conversation about the extent to which we do that and the trade off vis -à-vis security and what we could do is very much one worth having.

Q103 Chair: You have been here a fair number of years now so you know us very well. Is there anything which you are inclined to bang your head against the wall about and say, "Why on earth haven’t they agreed to do such and such?" Is there something that you feel, above all else, we should be thinking about that has not just happened over the last few years?

Sue Harrison: I think that one of the key things that I would point to there is the sale of the House of Commons souvenirs. We have asked in the past whether it is possible to sell souvenirs outside the confines of the Parliamentary estate and on each occasion that we have asked that question we have been told no. Yet when I look around at Buckingham Palace, even 10 Downing Street, they are now selling their souvenirs to the general public and I think that there is considerable scope there. We know from the level of interest we get from the general public just writing into us that there is such scope. It is a strong brand and if the House wants to make more income, which I believe it does, that is certainly an area that I would focus on.

Secondly, a lot of people who visit the House, whether that be for private events or for tours, would be highly delighted to be afforded the opportunity to have a meal of some sort here and would be prepared to pay for the privilege. Likewise, the people who book to come on tours at the moment can make use of the Jubilee Cafe, but it is what is says, it's a cafe; they cannot get a full lunch or a good-quality full afternoon tea that would bring some income to the House.

All private functions have to be sponsored and attended by an MP. What that means is that at the times when politicians are not in London, which by and large is a Thursday evening, Fridays and weekends, the market for our functions is really restricted to those 40 or so London and south-east based MPs, because if MPs are not here, they do not wish to sponsor functions. Yet again, however, we know from general demand that there is a lot of interest just in this place as being a fantastic venue for an organisation to have their event.

Q104 Tessa Munt: Thank you for your figures, they are interesting. I just wanted to ask you why you had chosen October to December 2009 to give us a picture and why there is no strict comparison between perhaps that period in 2008 or onward, or comparing spring, summer and autumn?

Sue Harrison: The reason that we took only one period is that our systems do not lend themselves to doing this work very easily.

Tessa Munt: Sorry, they don’t lend themselves to-

Sue Harrison: They don’t lend themselves to extracting these sort of figures retrospectively very easily. It was a pragmatic decision to take October to December last year. Since April of this year, we had the impact of the general election, and we have not really had normal patterns of trading since then. We looked back at October to December last year and we are now compiling the same information for October to December this current year so that after Christmas we should then be able to have a two-year comparison. I think going back to 2008 is so long ago I doubt whether it would be of huge relevance now that we are in a new Parliament that is already establishing some very different patterns of trading.

Q105 Tessa Munt: Surely that is exactly the point isn’t it, because one would need to be able to compare specific areas across two or three years in exactly that light, showing how Members behaved differently in a different Parliament, but in the long run we are still here and there are 600 and however many of us there are.

Sue Harrison: Yes.

Tessa Munt: It would be useful for me to be able to compare across the year, across the seasons. I accept absolutely that perhaps in April you would have had nothing doing, but we can explain that. It is useful and I would have liked to have had a little more information.

Sue Harrison: Right.

Q106 Tessa Munt: We might have covered this before but I just want to clarify: there is no land cost attached to this?

Sue Harrison: No, there is not. The cost of the space that is given over to catering and retail services is not charged out to us.

Q107 Tessa Munt: Why is that?

Sue Harrison: I couldn’t honestly answer you the reason why other than to say it never has been done and other Departments of the House are similarly not charged an allocation for their premises costs.

Q108 Mr Vara: Mrs Harrison, when Sir Alan asked earlier on about considering outside revenue coming in, in addition to what we have at the moment, you said that security considerations had been a factor why that had not been given much thought. At present we have thousands of people who come to the Houses of Parliament every day and given that the House prides itself on trying to boast about the increased number of people who come here, whether it be children or visitors, has any consideration actually been given to what the security costs would be if it were decided that, for example, an evening function were to be held for a 100 people in a function room such as the Jubilee Room? I accept that going to the inner sanctum of the Houses of Parliament may have more security implications but the impression I get at the moment is that there is the blanket phrase, "Oh, because of security considerations", and then you don’t go any further. I also recognise that it is easier to make cuts than to actually think out of the box and say, "Let’s see how money can be made". Would I be right in saying that there has been no consideration given to planning a scenario of, for example, an event for 100 people?

Sue Harrison: I think it would be very fair to say that no scenario planning has taken place. In terms of the additional cost of security, if we are looking at bringing in external events at a time when the House is not busy, so there are not large numbers of visitors being processed through the security access points, then I would have expected there to be little or no additional cost to that. We do indeed have a problem at the moment of simply trying to process the number of visitors through the Visitor Centre at peak times, particularly on a Tuesday and Wednesday, if you speak to the people who are responsible: the Visitor Assistants and indeed the Serjeant at Arms. I am thinking about making use of our facilities at the off-peak times. Typically, in my experience, services for the House-this is not restricted just to catering-are either busy or they are quiet and that is very closely linked to the actual business activity in the Chamber and in the Committees.

Q109 Mr Vara: If I may come back on that. You have just dismissed using the facilities during peak periods because there is a difficulty in the flow of people coming here, yet may I suggest that perhaps consideration should be given to easing the inflow of people, because we might then be able to raise additional funds to the tune of thousands of pounds. For example, on Saturdays, thousands of people visit the Chamber in both places as visiting tourists. So it seems eminently sensible to me that perhaps if someone wanted to use the Jubilee Room there would be no additional cost, or minimal cost, in people coming through the security clearance. So if they have had their security clearance then it would simply be a question of-I don’t know, I am not a security expert-some more security for the Jubilee Room and then the catering costs. I am concerned that there are blanket prohibitions on thinking of revenue and income, and I have heard it twice so far: when Sir Alan asked the question, the blanket phrase used in response was "security considerations" or words to that effect. When I pressed you, you again said, "Well, during peak periods we can't get enough people in". Instead of thinking of why you can't, I respectfully suggest that we perhaps consider how we can go about doing it.

Sue Harrison: May I just apologise if I have given the wrong impression? When I point to security, I am not using that as a reason not to do things. I am actually saying there is a school of thought amongst the House that security is a very serious consideration. It is not my personal stance to say that security is something that will prevent us from doing something. What I am saying is that it is something that needs to be discussed and I welcome that opportunity. The backing of this Committee gives me far greater rationale to go to my colleagues elsewhere in the House Service and open those conversations and say that this Committee very much wants us to be looking at ways of extending the use of the facilities for the general public, whether it be at peak or off-peak times.

Mr Vara: Please be under no illusion, this Committee fully recognises security considerations. All I and my colleagues are asking is that the proposal ought to be looked into nevertheless.

Chair: If I may just follow that up. In a different context this Committee was considering further access from the public for a particular type of event and we were then inquiring about whether the fee to be charged took full account of security costs and there was no immediate answer, it had to be researched. It did suggest that the security costs were possibly higher than had originally been envisaged when provisional charge figures had been put forward. I mustn’t prejudge the findings of the Committee in any way, but it would seem helpful if you, desirous of exploiting some of the facilities, had got a clear message from security as to what their costs would be if, for example, you catered in X, Y and Z facilities at particular times, so that we have a clear picture of what would be involved. Otherwise we are in danger of saying, "Yes, go ahead we want to maximise the facilities", and then suddenly finding that the security costs are looking ludicrously high.

Q110 Nigel Mills: Mrs Harrison, under the recent price rises there is a quote in here that the increased revenue has been £80,000 over two months.

Sue Harrison: It was primarily over one month. The cafeteria price increases came on-stream at the beginning of September but the rest of the price increases were only effective in October, and then the House was in recess for the constituency recess. It was a little bit over one month; it is probably between one and two months.

Q111 Nigel Mills: What you were hoping they would achieve was effectively £1.2 million a year, which is £100,000 a month. Some of those months you won't be sitting so you need to be getting more than £100,000 quite comfortably in the full sitting months.

Sue Harrison: You are absolutely right.

Nigel Mills: Are you thinking you are quite a long way off achieving that? Is it setting off alarm bells?

Sue Harrison: I will be in a far better position to answer you once I have had the results for November. I have only had that one month’s set of results so far.

Q112 Nigel Mills: Do you sense that people have traded down? You can get into the horrible situation where people move from your high-margin items to your low-margin items and you might see a little increase in revenue whereas actually your contribution falls. Is that trend there?

Sue Harrison: I think as I said to this Committee when I appeared in September, we are in uncharted waters in terms of imposing such a large price increase. I fully anticipated that some consumers would not continue with their previous purchase patterns. We have certainly seen in the cafeterias a downturn in the number of people buying confectionary items: crisps, Kit Kats, those sorts of things. We haven’t seen a downturn in the number of people using the facilities and the average spend has significantly increased since the price increase. I think it is very early days to be trying to predict what the final outcome will be.

Q113 Nigel Mills: On the summary of contribution by area, the gross margin of sales value less food costs varies wildly between what I would instinctively think would be comparable outlets. I look at Portcullis House compared to Terrace Cafeteria/Member’s Tea Room, you’ve got effectively a gross margin of 26% in the Terrace Cafeteria, 41% in Portcullis House; yet in 1 Parliament Street you get a gross margin of effectively 50%. Is that something that you monitor on a regular basis? Have you got targets for these? I think we had one of you chefs in here and he said he knew what his gross profit target was and he tried to work towards it. I can't instinctively think why they are so different.

Sue Harrison: At gross profit level we have a target for every single venue. The figures that you have in front of you are by building or group of area, because it also includes the staff costs. The reason that Portcullis House is very different at gross profit level from the Terrace Cafeteria and the Member’s Tea Room is the business mix. Portcullis House has got included in its portfolio of services the Debate, which is a self-service restaurant and is one of the more highly subsidised areas, and on the other side of the coin, it has got the Dispatch Box coffee bar which makes a net contribution, so it is making a much, much higher GP, than is normal in the business.

Q114 Nigel Mills: I was quoting food cost percentages. I was doing effectively sales less direct costs of food. That shouldn’t include any staff costs should it?

Sue Harrison: In the figures before you now we have grouped together all of the services that are, for example, in Portcullis House. The food gross profit target in the Debate self-service restaurant is a lower percentage gross profit target than it is in the Adjournment, which in turn is lower that it is in the first floor committee and meeting rooms, which in turn is lower than it is in the Dispatch Box. When you amalgamate those into the total for Portcullis House, the average for that area is on a very different sales mix basis compared with when you look at the Member’s Tea Room and the Terrace Cafeteria.

Q115 Nigel Mills: There is so much grouped in there we can't make any sense of it; that’s probably the outcome. I looked at those and wondered whether that was just huge difference in wastage, but is there a better answer in there somewhere?

Sue Harrison: It is largely to do with the pricing policy. The pricing policy in the cafeterias is set in line with other organisations that provide staff restaurants in the work place. They will typically work to a lower margin than, for example, the coffee bars that are provided in such an environment or a table-service restaurant, which we have now benchmarked against the high street, less 25%.

Q116 Nigel Mills: That was where I was struggling. I was looking at 1 Parliament Street compared with Portcullis House and thinking Portcullis House has the coffee shop, which should have a lower feed cost percentage overall. I was kind of getting the reverse answer to what I was expecting. Are you happy with these food and beverage cost percentages?

Sue Harrison: The figures that you have got cover the whole of last year and of course, until January last year, in 1 Parliament Street as well as the cafeteria there was also the banqueting business in the Astor Suite and the Bellamy’s Club Room, and there was the bar as well. Those will have affected the gross profit margin in that building. Each building has got a different sales mix to it and that affects the combined gross profit level. At management level we have got a gross profit target for every single trading venue. The chefs in each venue would be working to those margins. If you take somewhere like Portcullis House, the chef is encouraged to not just look at achieving the target in one area, because what we want to do is to make sure that if there is food left over in one of the areas that is catered for out of that kitchen, that it is used up somewhere else in the premises.

Q117 Nigel Mills: Lastly, I am a little concerned that you said you have to go back and historically interrogate the system to find out what your usage numbers were on things. Is that not something that you monitor on a monthly basis? I thought a computer would just spill that report out every month so you knew what was happening.

Sue Harrison: We have the usage figures on a daily basis, but to get the level of detail that shows us the pattern of trading by day of the week and by time of the day was where we had to go back and interrogate the system.

Q118 Nigel Mills: Your system doesn’t run that as a report at a press of a button or under automation?

Sue Harrison: No, no.

Q119 Nigel Mills: Someone has to go and add up?

Sue Harrison: It doesn’t at the moment. The system that we have now is about to be replaced early in the new year with an updated version.

Q120 Nigel Mills: That is not a management report you ask to see every month or every quarter then, "What's my usage been by outlet, by day of the week, by time period?", so you can try and match resource to demand.

Sue Harrison: No, it is not.

Nigel Mills: That’s a bit surprising.

Q121 Rosie Cooper: I used to work in Littlewoods, and knowing what you were doing by the day, by range, by whatever was normal 20 or 30 years ago. I can't understand how you can forecast what you need, how many people you need to work, how many use the facilities. This just seems to me like a complete fuddle. It is like sticking a pin in-how do you know? Is that why these numbers are so bad and why the costs are so awry from what we would expect? How do you know what to order? How do you know what you are catering for? Frankly, I am lost for words to describe what I would call the management behind this situation. Seriously.

Sue Harrison: We do look at figures on a daily basis. The chefs look at their ordering on a daily basis. They have menu cycles, they have records of how many were sold the last time that particular menu was running and they will look at that from a historical basis. They wouldn’t get it all from the point of sales systems. For example, the chefs need to know by food ingredient what they are purchasing, the point of sales system is going to give them so much data that it would actually be very difficult for them to drill down. They have other systems that they use to get that information.

Q122 Rosie Cooper: What kind of system is that? A book? A pen? An abacus?

Sue Harrison: No, there is a computerised purchasing and stock control system, which shows them by food and beverage commodity what the consumption has been. They marry that up against the actual sales figures for the day, the number of items that they have sold, and they keep their own logs on that.

Q123 Rosie Cooper: How long does that take them using this process?

Sue Harrison: I honestly couldn’t give you an answer to that.

Rosie Cooper: That might be a cost that is in there somewhere. It sounds manic to me.

Chair: This is a very difficult place to manage in the sense of the hours we keep and the erratic way in which we keep them.

Rosie Cooper: Funnily enough, there are things like airports; there are things like railway stations.

Tessa Munt: Centre Parcs, where I have worked; you have 13 to 15 restaurants in a very small area and every chef knows exactly the cost of his space, the cost of his commodities and the food GP and he is tested on them on a daily or a weekly basis.

Rosie Cooper: Either you are doing the job or you’re not doing it.

Q124 Chair: I think we have got a point. Mrs Harrison, do you want to comment on that?

Sue Harrison: No.

Q125 Mr Watts: Will the new computer system allow you to have that level of information? I am a bit worried that if you haven’t got it, and you’re going to get a new system, whether that new system will provide the information that you will need.

Sue Harrison: The new system that is going in is the replacement of the electronic point of sale system. That is where we drill down to get these usage statistics that you have here. They record our sales that go through the tills on a half-hourly basis. So yes, we will be able to get those reports on an ongoing basis. What we have not yet got is a stock control system that is entirely interfaced with the point of sales system, and that is in a project that we are working on with our IT colleagues, looking at the next phase of replacement. The stock control system that we have now was originally purchased approximately 15 years ago, albeit it has been though upgrades since then. We won't complete the full cycle of control until we have actually got two systems that can be interfaced with each other.

Q126 Mr Watts: A similar question that I asked last time. Will that new system have a cost centre base that will allow you to distribute the central costs to each of the different outlets that you have got? Will it give you a proportion of those?

Sue Harrison: That’s unlikely to be done on the point of sales system but again that is part of the bigger strategy that we are working with the IT people on. They are currently researching the market to find out what products there are available that would meet all of our requirements.

Rosie Cooper: Why don’t you just nip to Centre Parcs and have done with it?

Chair: Order, order.

Rosie Cooper: Sorry, Mr Chairman.

Q127 Mr Watts: I have got your structure in front of me. Would it be possible to have some details of the salary bands that the people have got because it seems to me-this might be unfair-to be a bloated managerial system and quite an expensive one. The figures don’t help me to understand the levels of pay and the level of seniority posts that you have there. Could you provide the Committee with a breakdown of what those boundaries mean?

Sue Harrison: Yes, of course I can.

Q128 Mr Watts: When was the last time that you reviewed the management structure to see that it was as efficient and effective as it could be?

Sue Harrison : The last time we reviewed the management structure and reduced the number of people working at management grades was about six weeks ago. We have taken every opportunity that we can in recent years-every time that somebody moves on within the organisation-to review. Part of the way in which we have achieved the savings in the catering subsidy over the last eight years has been by constantly reviewing and downsizing the more senior management structure so that we delegate more of those management functions down to the individual chefs and the restaurant managers.

Mr Watts: But you can provide those figures?

Sue Harrison: Yes, not a problem.

Q129 Rosie Cooper: I just wondered whether the Prime Minister’s view about salaries would actually apply to the top end of this and just how it would compare outside. I know it is a difficult and complex business but there are equally difficult businesses. To find that there are people here who earn more than the Prime Minister to run this, at a loss, in this befuddled manner that means we can't extract the information that we need, I just think is really difficult.

Sue Harrison: The only thing that I would say to that is that I don’t think there is anybody in the Catering and Retail Service that is earning more than the Prime Minister.

Rosie Cooper: Okay, good.

Sue Harrison: I am the only member of the Senior House of Commons Service. I have two Band As, one of whom is the Executive Chef, and one is Robert Gibbs, my Operations Manager. That is my sole senior management resource in House terms, and I have to say that, for delivering the business as we do across almost 30 trading venues, from 7.30 in the morning until whatever time at night the House rises, my Executive Chef, Mr Gibbs and I are working extremely long hours just to cover that business. I think one of the points that I would make is that we have got just about enough management resource to manage the day-to-day business, but if we move into a phase where we are exploring ways of generating new income, then I would say that we will probably need some assistance with that, because it would jeopardise the day-to-day business if I were to pull my Executive Chef or my Operations Manager away from delivering those day-to-day services.

Q130 Bob Russell: Earlier in our discussion on another matter, John Spellar asked what is the purpose of the House of Commons for its Members and, indeed, staff? And I agree with that, because if we start or continue down the dumbing-down route, which is what’s happened over the last year or so, then I have concerns, and I hadn’t realised-and I apologise- on page 6, that the main souvenir shop was under threat. Now, that may be a small thing in the grand scheme of things, but I think it’s indicative, Sir Alan, of how facilities and services for Members and their staff are being diluted to a point that we might as well just have a kiosk, rather than services for Members, and do away with catering and just have a few dispensers of hot drinks and put coins in. I may be being a bit facetious, but the general point I’m making is that this is the Houses of Parliament, the House of Commons, where Members of Parliament come to represent their constituents, and their staff and other staff members of the House, and I just feel that we are being driven collectively, by whoever is driving us, to a situation which is not necessarily going to be helpful.

I just make that observation and put one question to Mrs Harrison: under paragraph 5, you say, "The House of Lords operates its own Catering and Retail Service. Whilst there is considerable management and co-operation between the two services, particularly in areas such as procurement and IT, there is no legal or formal link between the two services, and the services are separately funded by each House". Are you aware of any moves in the other place to treat those unelected Members differently from the elected Members in this place?

Sue Harrison: I’m not sure this entirely answers your question, Mr Russell, but I am aware of Members of the House of Lords who would very much like to have wider access to the House of Commons catering facilities. Certainly, in my many years here, there has been very little engagement at the formal political level between, for example, this Committee and its counterpart Committee in the Lords to explore how there might be greater sharing, not only of the services, but cross-funding of those services.

Q131 Bob Russell: The point I’m getting at is whether the elected House, its Members and its staff, are under cost-reducing measures that are not happening at the other end of the building?

Sue Harrison: To the best of my knowledge, we are probably further down the track in the Commons than they are in the Lords.

Q132 Bob Russell: That’s a very diplomatic answer. Okay, thank you. Can I just ask one supplementary to that? What is meant by "cooperation in areas such as procurement"? Is that procurement of foodstuffs and drinks?

Sue Harrison: Yes.

Q133 Bob Russell: So, we are already trying to get a reduced price, because of the purchasing power of the two Houses.

Sue Harrison: Food costs, beverage costs; we are increasingly going out to joint procurement with our colleagues in the House of Lords. One of the reasons that the IT procurement is being taken more slowly is because, for example, the EPOS contract that has just been awarded is to get both Houses onto the same platform, so that we will then be able to share the same IT, and PICT will then only have one EPOS solution to have to support on its network. So, once we are onto common IT systems, then there can be an awful lot more sharing of data and information across the two bodies.

Q134 Bob Russell: Just take one vegetable commodity: is there one person buying potatoes for the entire Parliamentary estate, or are there two, three or four people buying potatoes for the Parliamentary estate?

Sue Harrison: The contracts are let jointly with the House of Lords in that instance, and what we would generally do is, when we award the contract, we will set up a framework with two or three suppliers so that, over the lifetime of the contract, you’re having ongoing competition, because one of the issues with food is that the commodity price changes very frequently. Once that framework is set up, the chefs will be ordering online. They simply say how many cabbages they need; that then is centralised on the system by one purchasing office for the Commons that then places that with the company that has the best price for cabbages for that week, to use your example.

Chair: I think if I could just add to the points raised by Mr Russell, in that the Clerk’s note to us says that the present subsidy in the House of Lords is £1.5 million in 2009/10; it’s expected to reduce to £1.14 million over the next three years. I do know there are price rises intended in the House of Lords, but I don’t know more than those outlined figures.

Bob Russell: In terms of the economies in Mrs Harrison’s breakdown, there are considerably more non-elected Lords than there are elected Members of Parliament.

Chair: Yes, but any moves towards getting integration of procurement, for example, would, of course, have to be agreed.

Bob Russell: Yes.

Q135 Tessa Munt: I’m going to take you to Annex D. I just want to clarify one or two things, which I couldn’t understand when I was going through this earlier. You’ve got unallocated staff costs of nearly £1 million. What? How?

Sue Harrison: Those are the central management and admin posts that are not directly working in these specific areas. So, take, for example, someone like myself or my Executive Chef; rather than trying to allocate a proportion of our time to each business area-

Tessa Munt: So, those are your senior managers?

Sue Harrison: Senior managers, central managers. The purchasing, stores, goods-receiving staff, the linen room, staff who are away on maternity leave, long-term sick-those sorts of unallocated costs. That way, we actually leave the managers who are responsible for each of these areas to control the costs that they themselves are able to influence and control.

Q136 Tessa Munt: Absolutely fine; I think that’s commendable but, again, I think, from what you’re saying, they’re not able to do that, because they don’t have the computer system to allow them to look at a week’s business or a month’s business.

Sue Harrison: They do have the systems, but they are not fully integrated. It is not as easy for them as it might be.

Tessa Munt: But it will be.

Sue Harrison: And, as I hope, in future, it will be, indeed.

Q137 Tessa Munt: I haven’t quite got a grip-I think it was your question-about whether the new system that you’re purchasing will allow them to do that.

Sue Harrison: It will allow them to drill down into their sales. It is an EPOS solution, so it doesn’t have the stock control system on it. The next phase of the IT strategy is to look at whether or not the EPOS system can cope with the complexities of our stock requirements. We’ve found that, to get your best in breed for the EPOS information and data, to be able to drill down into that, classically those systems have not been strong on the inventory and stock control side. A hotel will usually run it through a PMS system; we obviously don’t have a PMS here, so trying to get everything onto an EPOS solution and everything just drilled through that, we’ve found, in the past, hasn’t met our full requirements on the stock and cost control. So, we’ve had a best in breed on the stock and cost control, which does the purchasing as well; the challenge is getting them to actually interface with each other, so that you’re not having to do manual reconciliations.

Q138 Tessa Munt: I’m making an assumption that the Executive Chefs or the Head Chefs in each of the catering outlets will actually be able to put together one of these within a year for their own particular area and say, "This is what I’m making and this is what I’m costing". Is that your vision?

Sue Harrison: I’m not sure that we’d ask them to put that together themselves.

Tessa Munt: No, but they should be able to pull the P&L account for their area, effectively, and be able to compare and say, "Look, last month, I spent this on uniform costs. This month, I’ve spent this. Why?"

Sue Harrison: I think you’ll find that the chefs are very well able and very well versed on being able to identify what their food cost has been for their area. They are less conversant with the full P&L for their area. They look at the food costs; they look separately at the staff costs. The manager will be looking across the piece at food and beverage, the gross profits, the staff costs and the incidental costs. But that is an area where our systems are not as integrated as we would like them to be, and we know that that is an area that we are focusing on with our colleagues in IT for improvement to take us on to that next step that you are describing.

Q139 Tessa Munt: Can I just question you: late-night travel of £173,384; if the House is sitting for 39 weeks, or perhaps 165 days, that certainly comes out at over £1,000 per sitting day, which I find extraordinary, and I don’t understand why that would be. I just don’t see how one could spend £1,000?

Sue Harrison: It’s not just per sitting day, because, quite frequently when the House is not sitting, there are functions that carry on, and the staff who work after 11pm are similarly entitled to a taxi home after that. So, that is across all of our business.

Q140 Tessa Munt: Having had some time in hotels, if your staff are scheduled to work a particular shift, one might take account of the fact that, on the whole, I think, the Tube works till midnight and that one might be able to use it, and there are night buses and stuff, I appreciate that, probably, there may be people who live in Surrey or Hertfordshire or wherever, but it seems peculiar that one should still be paying such a vast amount of money.

Sue Harrison: I appreciate your point, but the House policy is that all staff who work after 11pm are entitled to a taxi home.

Q141 Tessa Munt: Can I just ask you, then: how much food is wasted and what happens to it?

Sue Harrison: The food wastage is included in the cost of food, so that we don’t actually give a separate credit for that on the line here to make the individual chefs responsible for it in their own areas. It is reported on a monthly basis, and food wastage runs at about 3%.

Q142 Tessa Munt: What happens to the food that is wasted?

Sue Harrison: The food that is wasted is thrown away. If it is fit for consumption, then we will reutilise it in one of our other areas.

Q143 Tessa Munt: Okay. If sandwiches go out of date?

Sue Harrison: If the sandwiches are out of date, then they are thrown away. We have in the past attempted to give them to charity, but charity will not take them from us.

Q144 Tessa Munt: One last question: staff meals, 226-where do the staff eat?

Sue Harrison: The staff eat in the self-service cafeteria venues, and that is in virtually every one of the self-service venues. By and large, they eat either before 12 noon or after 2pm.

Q145 Tessa Munt: How do you cost those?

Sue Harrison: It goes through the till, so what they have taken goes through the till, and then the finance staff will reduce that from selling price to cost price, and total it into the ledgers.

Q146 Tessa Munt: My observation would be that, looking at that staff meals figure, even looking at the Terrace Cafeteria, which I took to be fairly ordinary, nice, that’s still 36%. That amount of money is still 36% of the sales in the Terrace Cafeteria, which is a very high level of spending. I just think it’s quite a lot of money, isn’t it?

Sue Harrison: It is indeed a lot of money. It works out at a little under £1,000 per employee per annum.

Q147 Tessa Munt: And everybody gets a free meal when –

Sue Harrison: Yes, they do.

Q148 Angela Smith: I was just looking at the combined dining room usage figures, which surprised me somewhat, because the suggestion is, with these figures, that across the different days of the week-Monday, Tuesday, Wednesday and Thursday-an average of only 60% to 65% of the usage is occupied on those days, whereas I’ve experienced difficulties on more than one occasion in actually getting a table in any of those venues. It’s been a real problem. So, I wondered whether one of the explanations for this is perhaps a high number of cancellations at the last minute for the use of these venues.

Sue Harrison: I think that the key explanation of that is that this is an average for a Monday over the period measured, and an average for a Tuesday, and so on. And what we experience in all of the dining rooms is very significant peaks and troughs, so there is a range: there are days on which they are fully booked, and there are days on which it’s very quiet. That might be across Tuesdays over a period.

Q149 Angela Smith: I must have an extraordinary capacity, then, to get the fully booked periods, because it’s a real problem. Is part of the problem that you have a booking system which is, frankly, extremely inefficient, because you have three different telephone numbers for three venues, and you’re in one and there’s no suggestion that there may be capacity at another? Would it not be more efficient to have one booking system which gave a Member, wanting to take a table, information about what’s available in any one venue?

Sue Harrison: I’m sorry to keep referring back to the IT programme of work that we have, but one of the workstreams on that is looking at that very thing, at finding a computerised dining room booking system that would then allow us to centralise how we take those bookings and would, precisely as you suggest, allow us to proactively suggest when another dining room has got spare capacity.

Q150 Angela Smith: I know you give averages here, but it would be really useful to know the numbers of occasions on which any one of these venues are fully booked in any one month, because if there are a significant number of days when there are empty tables in these venues, then why is it we still apply the rule whereby Members can have no more than three guests at a table? Isn’t that a waste of capacity?

Sue Harrison: Certainly, as far as the use of the rooms, when there is spare capacity, we are in the business of wanting to maximise the number of people that go in there, but the rules as they stand were set and agreed by a previous Administration Committee. Likewise, if you wish us to be able to exercise more discretion over that, we would be very happy to do that. Indeed, on an informal basis, I do that when Members call me direct.

Q151 Angela Smith: Occasionally, yes, but if a Member wants to book a few weeks in advance, it’s very difficult for you to be flexible around that rule.

Sue Harrison: Yes. It’s very difficult for the staff or a Member who wants to book considerably in advance of the event, because we won’t know what the business is going to be like, and it’s certainly my experience that a lot of Members book very much at the last minute, or even don’t book and walk in, so there is a potential tension between relaxing the rules about how many guests a Member may take, or extending access to other potential users: what happens when the business of the House becomes, suddenly and at short notice, very busy, and Members then who have to be here and want to entertain cannot get a table? Those are the sorts of issues that we have to consider.

Q152 Mr Vara: Briefly, you’ll be aware, Mrs Harrison, that Buckingham Palace has been giving thought to selling souvenirs online.

Sue Harrison: Yes.

Mr Vara: I was wondering whether you’d had any consideration or feedback from any people here, or any thoughts about possibly extending that to the House of Commons.

Sue Harrison: Indeed; we have been asked by the Finances and Services Committee through the Board of Management to put forward income generation ideas, and looking at extending souvenirs into internet sales is one of the suggestions we’ve put forward. It requires the House, first of all, to decide its strategy about whether or not it will permit souvenirs to be sold outside of the Parliamentary estate.

Q153 Mr Vara: But before it can decide, it would be helpful to know whether it’s worth deciding in the first place. So, has there been any thought given to possible revenue generation earning?

Sue Harrison: No. It is a little bit of a chicken-and-egg situation. I’ve had some informal discussions with Buckingham Palace, so I’m aware of the work that they’re doing. At the moment, they’re ahead of us on that, so we’re sitting and just keying into the work that they’re doing.

Q154 Rosie Cooper: Mrs Harrison, can I take you back to the combined dining room usage? It is not quite as silly a question as I have no doubt it will sound: how did you count the occupied and unoccupied? In other words, what I’m asking is, if a table is set for four, and two people are sat at it, does that mean that immediately your count will mean that there’s a 50% non-usage of that table?

Sue Harrison: No, we actually set the capacity on the average normal numbers of covers that would be served at which all the tables would be fully booked. So, for example, if you take the Strangers’ Dining Room, we set the capacity level at either 65 or 70, off the top of my head, and that is, by and large, the number of covers that we will serve at which all the tables are booked. So, that then plays into exactly what you’re saying: if there are two people on a table that could, in theory, accommodate four, then that wouldn’t show up as unoccupied. And that’s why, on occasions, when we look at the Strangers’ Dining Room, it will show, on an individual lunch or dinner, that it has served more than 100% capacity, because it’s actually had a greater density of seating, or they may have done relays as well.

Q155 Rosie Cooper: How did you arrive at that 65: pure counting or an averaging or ranging?

Sue Harrison: It was primarily in discussion with the staff who work in that dining room, who are very well aware of how many covers on average they will reach before they have no more tables left. So, not done scientifically; it was done directly discussing it with the staff who are managing those rooms.

Q156 Chair: Mrs Harrison, you mentioned at one point that you thought that confectionary sales were falling off. Anecdotally, I’m hearing that people are finding it now cheaper to go across the road for items of that kind. Does that suggest that we’d be chasing after a loss-leader or that we need to re-benchmark some items like that?

Sue Harrison: Certainly, in my experience, it is cheaper if you go to Tesco’s to buy your Kit Kat or your packet of crisps or those sorts of things; however, there’s an inconvenience involved if you have to go outside of the Parliamentary estate to buy that. There will always be some people who buy it at the supermarket and bring it in, and the supermarkets, by and large, sell the multipacks and so on. We have benchmarked our prices in the cafeterias against the prices, including for confectionary, that are sold in Government Departments and the devolved Assemblies, So, we are confident the prices that we are now selling at are in line with other staff restaurant venues that have a comparable workforce. It is not unusual that you pay more for it in an in-house staff restaurant than you do at a supermarket, and Tesco’s and the others do have a greater buying power than the House of Commons.

Q157 Rosie Cooper: I suppose you’ve answered this in some way, but to go on from that, even if you can’t give us full-month figures, are you seeing a loss in revenue compared with-

Sue Harrison: No. The revenue has increased and the gross profit that is being banked has increased.

Q158 Rosie Cooper: By the same amount as your increase?

Sue Harrison: Because the price increase was not a flat percentage across all items, it’s very difficult to say what the overall price increase in percentage terms would have been, if you follow what I’m saying; it does depend on the sales mix.

Q159 Mr Spellar: Regarding the comparison with supermarkets being cheaper, it’s not as though you’re going to Surrey Quays and into some vast hypermarket; this is a local convenience store, which I suspect is slightly dearer than the main supermarkets, and yet the staff are finding it cheaper-in the case of sandwiches, considerably cheaper-than shopping here, and gradually word will spread and that will change. Their buying patterns will change.

Sue Harrison: There is one particular issue with sandwiches that I’m aware of, and that’s that if you buy the sandwiches in the supermarket, they are zero-rated for VAT. Because we are selling them through a restaurant service, they are rated at 17.5% standard rate VAT.

Bob Russell: 20% soon.

Sue Harrison: 20% soon, indeed. It is a point that I raised. I think early last year there was a case with Revenue and Customs officials, where the caterers successfully argued that sandwiches purchased in an in-house restaurant and taken away from that should be zero-rated, and I have asked our Finance people to re-challenge the Revenue authorities on that, but the answer that was given last year was that it was still standard-rated.

Mr Spellar: That’s something we need to follow up as to whether there is scope there.

Sue Harrison: Absolutely.

Q160 Mr Spellar: Could you also clarify on the staff meals that that’s actually part of their terms and conditions? Would I be right?

Sue Harrison: Yes, it is.

Q161 Mr Spellar: Therefore, if there was a variation to that, effectively, we’d have to buy that out.

Sue Harrison: It would be something that would be part of the pay negotiations with the trade unions representing the staff. Whether or not it would be bought out would depend on the outcome of that negotiation.

Q162 Mr Spellar: Then can I clarify, following on from Bob Russell’s point, what do you actually see as the purpose of this building?

Sue Harrison: The purpose of this building?

Mr Spellar: I don’t mean this particular room, I mean the Commons.

Sue Harrison: If I can put that in the context of the Catering and Retail Service, is that what you’re meaning?

Mr Spellar: I want to hear how you would interpret it.

Sue Harrison: I think that the primary role of the Catering and Retail Service is to provide the meals and the refreshments that those people who are working in this building require. And whilst we are all very keen to look at ways in which we can reduce the subsidy-and we should rightfully be looking at that-we must remember that the primary purpose is to provide those essential meals to the people who are working here some very long hours, and that’s Members and staff.

Q163 Mr Spellar: Therefore, following on from that, how have you estimated the fact that there may well be a loss? You may want to take some steps to reduce that, but there is a need to maintain particularly the viability of this as a Parliament, and a Parliament which, by definition, as we’ve even seen today, has variable hours and variable activities, and therefore we may have to pay a subsidy as long as we’re going to provide this service? The danger is that we’ll cut further, we’ll still have to pay the subsidy, the service will get worse, and you get to the alternative in some Parliaments where, effectively, you then do not have any food provision, certainly in the evening.

Sue Harrison: I think that is always an extremely difficult balancing act. It’s a matter of judgment, not just for this Committee, but also for us as managers, and for the House of Commons Commission at a strategic level. In terms of the savings proposals and the income generation ideas that we have been asked for, I was asked to put forward a package and, in very broad terms, I was asked the question: what might our catering service look like if we wanted to halve the amount of subsidy? It has been done on that basis. That is why I’ve described the options that have been put forward as ideas. We don’t believe they are the only ideas; we think that there is more scope for more income generation, and the more income generation we have, the less of the cutbacks we need to make. But they are all issues that affect everybody who works in this place, and everybody will have a view. There has to be a very full discussion about all those options, and alternative and different options, before any changes are made to the catering services.

Q164 Mr Spellar: Was the remit to you from the House of Commons Commission, "Make this cut, come what may"?

Sue Harrison: No.

Mr Spellar: Or was it to say that it is desirable to reduce the subsidy; are there ways of other income generation or cost-cutting by which we could do this, consistent with, as you rightly identified, needing to maintain this building, and also, bluntly, to make sure that the lives of Members of Parliament are actually tolerable and their conditions are not being severely undermined, as we’ve seen in a number of other areas?

Sue Harrison: It’s very much the latter and, as I say, it was very much phrased as, "What would it look like if we were to desire to reduce the subsidy by 50%?"

Q165 Mr Watts: It’s clear that you don’t have a management system to know how each individual product has been affected by the price increases. I take that onboard; we said about the sandwiches, for example. But if you’ve looked at the like before the increase, and you would expect it to have a bigger profit, because your prices are increased, has it increased in proportion to the increase that’s taken place, or has there been a drop-off in trade as a consequence of it?

Sue Harrison: As I said a little while ago, I’ve only had one month’s results since we’ve put in the price increases across the board, so it’s very, very early days. I haven’t seen a fall-off in numbers of people who we are serving. Certainly, in the cafeterias, I have seen a fall-off in the number of, as I say, confectionary sales-the items that people will buy when they don’t feel money is quite as tight. Now, to what extent that is absolutely to do with the price increase and to what extent it’s to do with the general economy-and people are being a little bit more careful with their money -it’s difficult to define how much is caused by which of those factors. But yes, in the cafeterias, there has been some falling-off. In the dining rooms and in banqueting we have not seen any fall-off in the trade since prices went up.

Q166 Mr Watts: I’ll try a different way: if there hasn’t been a drop-off in the number of people, and you could have looked to see what you would have expected to raise from increased costs for the months that it’s gone up, has it gone up in line with expectation?

Sue Harrison: I don’t think I can give you a simple answer to that.

Q167 Nigel Mills: Interestingly, you said you’d done an exercise to look at what would happen if you tried to halve the subsidy. If I said to you, "What’s causing this level of subsidy? Is it the fact we sell things at too low a price or is it the fact we’re not efficient in how we manage the resource or we’ve got too much back-office overhead or, actually, our staff costs are way out of line with turnover?"-aside from it being all four-which one of those do you really think is the one that’s really giving us this level of subsidy?

Sue Harrison: I think it is a combination of a number of those factors. Historically, the prices have been low. We’ve now realigned those, so, moving forward, that should be resolved. The difficulty is that we have, in many areas, businesses for which there is only peak demand or a sizeable level of demand for 50% of the week. A lot of the cost is built into the Members’ services, and that’s the nature of the Members’ attendance at Parliament, where, typically, Monday lunchtime is quieter. Members will be using the services very heavily on a Monday evening, all day Tuesday, through to a Wednesday lunchtime; Wednesday evening is then quiet, and all day Thursday tends to be a bit quieter, but certainly after lunch on a Thursday, the business is very, very quiet.

The other side of that is that, as long as we have got regulations that only certain people can use the facilities, that is preventing us backfilling the spare capacity at times when Members are not here. But as we see on a Friday, even at times when we do allow all passholders to use those Members’ services, there’s not enough demand from the internal market to fill all the capacity that we have available. I think that’s because the very trend of Parliament-and I’ve looked at reports that go back to the 1960s that say this very thing-is that the greatest influence on the demand for the catering services is the business of the House. If the House is busy, if it has a lot of well-attended Chamber debates taking place, a lot of Committees sitting, it’s not just that then all the Members are here and using the services; their staff are here also. There’s a buzz around the place, and so we have this phenomenon that there’s huge peaks of business and then troughs.

Q168 Nigel Mills: The reason why I asked is that I look at this and I worry the answer will always be, "We need to sell more retail and we need to do more banqueting and we need to chop away at the rest", whereas, actually, I look at the fact that 7 Millbank, 1 Parliament Street, the Terrace cafeteria and Members’ Tea Room, and Moncrieff’s don’t even turn over enough to cover their staff costs.

What I’m thinking, actually, is that, if we got the structure right, we could actually look sensibly at the viability of all the current uses we have for places; otherwise, what we’re going to do is we’re going to try and get enough subsidy out of banqueting and retail to perpetuate something, and you’ll never achieve that, because once you max banqueting out, we’ll come back the next time and say, "Actually, we’re still not right; we might as well just shut that outlet" or something, and actually we need to not merge banqueting and all the other things in one and try and look at the net; we should actually be saying, "Banqueting here, catering for our own people here". Are we prepared to put that level of subsidy into what we’re doing?

Sue Harrison: Going back to your earlier point, Mr Mills, the other cost that is high here are the staff costs, and certainly in my experience, the rates of pay in some cases are slightly above the external market, but it’s all the other conditions that they have: the annual leave, the pension, the sickness allowance. Catering, as an industry, does not normally offer all its staff those terms and conditions.

Q169 Nigel Mills: So, heaven forbid, when you made your recommendations on halving the subsidy, did you say, "We’ll need a wholesale review of staff terms and conditions"? Not that I’m advocating that necessarily.

Sue Harrison: We are certainly having some very difficult conversations with the staff trade unions, and they are just as aware of the issues as we are and, understandably, we don’t necessarily agree.

Q170 Tessa Munt: To a certain degree, some of my questions have just been asked by Nigel, but I just wanted to check my understanding again: you separate out uniforms, laundry and linen, and your cleaning costs, and I had made the assumption that you had one contract for your uniforms, your laundry and your linen. Is that not correct?

Sue Harrison: The "uniforms" is for the purchase of uniforms.

Q171 Tessa Munt: You buy uniforms – do you not rent them?

Sue Harrison: No, it is actually more cost-effective for us to purchase them. We have done that exercise. Unlike many other organisations, we have a very low level of staff turnover, so it makes it more cost-effective for us to actually purchase those uniforms ourselves than it does to rent them.

Q172 Tessa Munt: So, do you have a laundry on-site?

Sue Harrison: No, the laundry is contracted out, and so the uniforms go away to be laundered, as does the table linen, and that is a contract that is let jointly with the House of Lords.

Q173 Tessa Munt: Okay. So, can I ask you something else, then? From the experience I have in hotels and other leisure industries, it would be normal for the restaurant staff to clean the restaurant down and to hoover it before they left in the evening, and to do that after lunch, and it would be normal for the chefs to clean down their areas and make sure they were swept up, and the KP to sort out the back areas. Now, you have here just over half a million pounds for cleaning costs. Is that deep-cleaning?

Sue Harrison: No, that is for the overnight cleaning of our catering premises, so it’s both the front of house and in the kitchens. The chefs will clean down their work surfaces, but the contract cleaners then come in and will do a full hygienic clean in the kitchens, and they also will do the hoovering of the floor in the front-of-house areas and cleaning down those areas. In the savings proposals that we have put forward through the Management Board, you may have noted that there is, included in the savings there, a suggestion that we can take into our catering staff some of those light cleaning duties that, at the moment, are being done by the contractor.

Tessa Munt: That would be the industry standard, and has been for 30-40 years, maybe longer, I suppose.

Sue Harrison: Indeed.

Q174 Tessa Munt: Just one other thing: what do you mean by "admin costs and professional fees"?

Sue Harrison: The administration costs-

Tessa Munt: Sorry; you may have written this in and I’ve missed it.

Sue Harrison: The administration costs, the £68,000 that you’re looking at, that is primarily printing and stationery, photocopiers, toner cartridges and so on-the consumables for printing all of our menus, and general stationery.

Q175 Tessa Munt: Thank you. And the professional fees?

Sue Harrison: The professional fees, which is the one below it, those are for external consultants for our hygiene auditors, for our supply chain management, for a benchmarking service that we subscribe to, and stocktaking fees. Those are the four key things that we purchase on that.

Tessa Munt: Stocktaking fees? Is that not worked out by your food and beverage manager?

Sue Harrison: We do it ourselves, but we have an external firm that comes in and verifies the beverage stocktaking.

Chair: Can we conclude on that point, colleagues? Mrs Harrison, thank you very much indeed. There may be queries we will have for you subsequently, and some of the detail needs to be further explored. Thank you very much indeed.

Sue Harrison: Thank you.