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

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Administration Committee

Catering Services in the House of Commons

Monday 6 December 2010

MR DUNCAN ACKERY and MR RUPERT ELLWOOD

Evidence heard in Public Questions 176-213

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the Administration Committee

on Monday 6 December 2010

Members present:

Sir Alan Haselhurst (Chair)

Rosie Cooper

Mr Mark Francois

Mr Kevan Jones

Dr Phillip Lee

Nigel Mills

Tessa Munt

Sarah Newton

Bob Russell

Mr John Spellar

Mike Weatherley

________________

Examination of Witness

Witness: Mr Duncan Ackery, Consultant, EP Evolution, gave evidence.

Q176 Chair: I notice you were born in Australia. We won’t hold that against you while the Ashes are going on. We’re modest as always about that.

Duncan Ackery: That is magnanimous of you. I’m afraid I pass the Tebbit test.

Q177 Chair: Would you care to say anything by way of introduction? We have a little blurb about your background, experience and so on but you are welcome to add to it.

Duncan Ackery: As you rightly said, I was born in Sydney. I opened my first restaurant when I was 23 or 24. It was a concession restaurant in a museum in Sydney. I went on and did some other things and built up a business but what was interesting was that the core of that business was in the government or semigovernment sector. Of that business, two of the leases had to be approved by the Government, so they were in the equivalent of a royal park or museum, so I understood from an early age the world of providing catering within an environment where catering is not necessarily the key purpose of the organisation or the location of that unit.

I moved to the UK when I was about 30. I then tried to escape catering but couldn’t quite; I’m afraid it runs deep in my DNA. I found myself back in the world, did some stuff for the Corporation of London and then for the first time in my life took a job and took the position of director of Tate Enterprises and ran the catering company but was also on the board of the Enterprises company that covered publishing and retail at the Tate. I came in before Tate Modern opened, rode that wave and built them a really interesting catering business. I think it’s regarded as one of the best inhouse operations around the UK. People have their own view and I’m happy to share people’s views on that but we can perhaps go on and talk about what made that successful. Primarily, the key thing that made that successful was that everybody knew what it was we were trying to achieve, from Nick Serota to the board of trustees to my management team and that’s what helped make a success of that business. I’ve then gone on and worked for some big hotel companies, run Searcys, a very well-regarded, old, established London restaurant firm and now I try my best to not do corporate jobs and to do as much for myself as I possibly can. I’ve just done a joint venture with the V&A museum and we’ve opened a small retail bookshop and wine bar in South Kensington outside the museum. They are on a mission to try and stretch their brand and, of course, earn more money for themselves so I’ve partnered with them in that business. What may be interesting for the Committee in terms of my background is that I understand running catering in environments where catering is not the key business of what you’re doing. I also understand about how you go about ensuring that the catering is underpinning the purpose of the work that’s going on in that environment and hopefully enhancing the work that’s going on, so whether it’s in a museum or an art gallery or whatever. Does that give you a good enough snapshot?

Q178 Chair: Yes, thank you. One of the difficulties we face here is the everincreasing security consideration: as soon as we welcome the public, who put us here, into our midst, that raises issues of security that perhaps limit what we can do to take money off them, as it were, through our banqueting facilities and so on. Have you experience of that situation where you have to balance the security aspect while at the same time wanting to increase revenue?

Duncan Ackery: Yes, in two ways. One has been about the securing of the environment, particularly in terms of providing entertainment in key galleries with works of art on the wall that are worth extraordinary amounts of money. It’s not just about those works of art but about ensuring the integrity of the building. Then of course just managing the logistics of welcoming 2,000 people into a high-security building for an event that is going to start at that time and strangely enough is being televised, and you have to serve the main course by the time that the live feed goes for the lottery draw or you will have failed. So yes, I have done a bit of that.

Q179 Mr Jones: In terms of branding, we have a small gift shop down the stairs. Have you had a chance to look at it?

Duncan Ackery: I haven’t.

Mr Jones: Clearly the V&A and the art galleries have got brands and they use the V&A brand to sell various goods with. Firstly, how could we expand that operation? Secondly, how do you do it by protecting the brand and not becoming too tacky, if you know what I mean, which is obviously a thing that the V&A and others want to do? Thirdly, have you any experience of using the internet to generate income from those types of brand of goods? What is your experience of how successful that’s been?

Duncan Ackery: Can I answer those questions in reverse? I’m not going to comment on the internet. I don’t pretend to be an expert on that area and I think it would be a mistake for me to comment on that.

Q180 Mr Jones: Do the V&A use the internet?

Duncan Ackery: Yes, absolutely. I have been involved in online businesses but I’m not going to pretend that it’s really my thing. In terms of tackiness, it’s down to integrity of product. That is all it is. If the product has integrity and if you sell it in a well thought-through and considered environment, I do not believe that you in any way belittle or undermine the brand that you’re seeking to enhance. To me, it comes down to appropriate selection of product, whatever that product is, whether it is books or memorabilia or clothing or whatever. It is about integrity of product.

Q181 Mr Jones: Could you explain for example the V&A? The trustees of the V&A must have conservative views, I would think, a bit like this place, in terms of what is appropriate. What is the process that you would go through in terms of ensuring you protect that integrity but you also get something that is commercially viable in terms of what people want to buy?

Duncan Ackery: The way that organisations like the Tate or the V&A organise that is via an enterprises company, so that all commercial activity is undertaken by an enterprises company that is basically an adjunct to the core business. So you have the board of trustees in the core business here and you have the enterprises company sitting at the side. The enterprises company is then made responsible for creation and selection of that product and empowered to do it. Do they make mistakes along the way and perhaps put the wrong product in front of customers? Yes of course, they would admit that, but the thing is that you have to have the right people running those businesses, people who feel passionately about the brands they are engaged with. Whether it is rolling out a piece of fabric that you’re selling in a shop in Japan or the books you are publishing around the activity that is going or whether it’s a t-shirt, to me it just comes back to that point about quality. I haven’t been to your gift shop here but-

Q182 Mr Jones: It’s tacky in parts.

Duncan Ackery: There’s certainly enough in the history of this fantastic environment that you could create a set of products that would not be tacky and that could really enhance the visitor experience and in turn underpin that experience. I don’t think I’ve answered the first bit of your question.

Q183 Mr Jones: In terms of commercialisation, how did the V&A for example start in terms of organising?

Duncan Ackery: That goes back to that thing about the enterprises company. It’s about empowerment and then about creating the appropriate, in their case, board structure. For example, when I was at the Tate sitting on our board, there were people like Helen Alexander, who is the head of the CBI and-because we’re involved in retail-we had the exchief exec of John Lewis partnership. We had some high-profile people on that board who felt passionately about the products that we were creating and they were very, very tough on us if they felt that we were doing anything that was impinging on the brand.

Retail product is in a way a little simpler. It is easier to apply good taste to that than perhaps it is for retail catering, which is a more difficult thing. What we achieved there took a long time; it was not quick-the debate about the strategy of catering when I first came into that business was constantly hijacked by the debate about quality. It’s what I call the carrot cake moment. You would be sitting somewhere where you had done your work about how you wanted to plan what you wanted to do with the business for the next one, two or however many years and someone would stick up their hand and say, "I had a poor piece of carrot cake in your cafe last week." There is only one way to deal with those complaints and they are only valid, from my point of view, if they are made immediately. Otherwise, what can you do about it as an operator? You can’t do anything about it unless people immediately say that so you can address the issue. It was about putting mechanisms in place where you could review the product, you could certainly complain about the product or say it was great, and there are appropriate ways to do that, and you could review the business strategy. You would do those things at particular times so that they had a chance to breathe and take shape. It took time, but I believe it was time well spent.

Q184 Sarah Newton: Thank you for sharing your considerable expertise. I am sure I speak on behalf of us all. We are very grateful. You could probably charge thousands of pounds an hour for this advice so thank you very much indeed.

Duncan Ackery: Well, if you’ve got any clients you would like to share with me.

Q185 Sarah Newton: It is very public spirited of you. I very much agree with you about the enterprises company model and I can see how that would work really well for us in terms of retailing and extending the brand beyond the House. However, given that, unlike your previous experience where you were setting up a catering offer within a museum environment and that we have already got an inhouse operation, to what extent do you feel that the same model of outsourcing the catering-so having a strategy inviting different people to come in and it being more arm’s length from the organisation-would be an appropriate model and what would the challenges be when you have got an existing way of doing things to make that transition?

Duncan Ackery: I will take that in a few chunks if I can. I’ve done all those things along the way. I’ve been the outsource person, I’ve been the inhouse person and I’ve done joint models. I’m a bit of a champion of inhouse. Given my background, I suppose that is not surprising. I’ve helped organisations like Sadler’s Wells and the National Theatre either go over to an inhouse model or enhance an inhouse model, although I fully see the benefit of outsourcing. There are a number of things that will make inhouse work. Your business needs to be of a certain size. You need to be generating a certain amount of income and the reason why you do is because you have to take the same management approach as a high street business would. You have to pay people the same amount of money as they would receive in the high street. It depends on the pension arrangements and all the rest of it, I understand that, but broadly you have to take that approach because ultimately your customers, or in this case the Members of the House or the staff who are working here, know what’s going on in the high street and they expect that quality to be delivered to them and rightly so in an environment like this. So I am a fan of the inhouse model if the business is large enough to sustain that.

How big is that business? Well, it depends. How long is a piece of string? It might take a bit longer to get a clear answer about that. I think it also works when you have what I’d describe as vertical buyin. Everyone knows what you’re doing, so if you go to that venue and on a Tuesday afternoon it is only selling scones and tea, that is all it is doing, then when the complaint letter comes in and says, "Why couldn’t I get a lamb casserole?", it is very easy. You say, "Because that is not what we do. We decided that we are going to do scones and tea in this environment at that time." Everybody knows––the management know, you know––who are responsible, the other people here would know and then it comes down to quality. Was it good enough? Inhouse is good when you can define it in that way. The problem arises if you say, "Well, actually, we can’t quite define it well enough." For whatever reasons, we find ourselves in a situation where it is quite hard to get what I would describe as vertical buyin. Let me tell you one thing: you can’t outsource that problem because you go and outsource it and then how does your poor outsource provider, who isn’t even integrated into your organisation as well as your inhouse people, possibly survive? All that will happen is that people will see it as an opportunity to perhaps beat them up more. They will think it is their problem, that they are not doing a good enough job. It all comes down to definition and that applies equally to inhouse or an outsourced model. What I do think could be of interest is how you could bring some things together. Perhaps you could work with an outsource company to take advantage of purchasing. Perhaps you could be using their supply chain so that you are providing regional products that are more reflective of what the high street is providing, because there is this huge move towards providing local, sustainable food, which we should be doing. Maybe that’s around back-of-house support, so that your financial reporting is up to scratch so that you can look at any bits of your business and unpick it and then make a decision about it.

Q186 Nigel Mills: How would you say this place, as an attractive venue, would compete with some of the others that you have been involved in? If we are wandering into banqueting or weddings and trying to compete with the Tate or wherever, do you think this should be more attractive and a premium to them?

Duncan Ackery: We had a rule at Tate, we didn’t do private events. We certainly didn’t do weddings. I wouldn’t do weddings, personally. Flippancy aside, excuse me, it’s a word-class venue. Everyone around the world comes to London, where do they come? They stand on that corner and they take a photograph of Big Ben and they take a photograph of one of the most handsome buildings in the UK. Ultimately, it is a fantastic venue. The issue there is how you sell it. It is about how you set up a structure to effectively sell it. The people who are doing that job have to be empowered to sell it. Sure, you set the parameters around which they have to work. They know when clients can and can’t come in; they take control of the diary. Yes, of course they have to do all that, but my experience of running big event businesses in organisations is that it has to be absolutely crystal clear who’s selling it, what the parameters are, what they can and can’t sell. If that’s all nice and neat and if, at the end of that, you have the opportunity for a viable business, I would say it is worth considering, for sure. I can’t imagine why clients wouldn’t be interested in coming to entertain here. I am absolutely confident they would. Once again though, it may be best to work with a partner or a few partners on that. Out there in London are some of the world’s best events companies. They are world class and they would be delighted to work with you on bringing what they do to an environment like this.

Q187 Dr Lee: Is there any idea how much the V&A made? What sort of turnover increase did we see with this V&A brand?

Duncan Ackery: Sorry, are you talking about the V&A project?

Dr Lee: Yes.

Duncan Ackery: It’s only been going three weeks that one.

Q188 Dr Lee: In which case, are there projections or expectations on the basis of other similar organisations? I’m trying to get a handle on how much we are talking about.

Duncan Ackery: The catering business at the Tate, when I left, we were doing £13 million. In our best year, we covenanted back £1.7 million. In an average year, we were doing between £1.3 million and £1.5 million back on about that turnover. We weren’t paying rent and other people who work in my sector would say, "You could have made a lot more money than that." We could have. We could have bought cheaper chicken. We could have bought poorer quality vegetables. We made a decision about how we were going to run that business and we were happy with the returns we got from it. That was a sizeable operation. It was also underpinning the ethos of the organisation by giving a great customer experience, a great visitor experience.

Q189 Dr Lee: And you did that by pricing against who?

Duncan Ackery: Benchmarking? Against similar organisations on the high street. I think when you’re looking at benchmarking, there are a number of things to bear in mind. Perhaps the Tate is not a bad organisation or model to look at but there are certain elements of what you do that are so unique that you can’t really benchmark it. What your benchmark for that sort of activity should be is around quality and provision of service and meeting benchmarks within provision of service. Where things are like for like-if you are doing an espresso bar-you should be able to benchmark it just like that. It’s easy. You go out into the marketplace, you see what they’re doing and you look at the prices and the quality. That is what we did. We had independent people who would come in and benchmark us-mystery shopping. It is what people in our industry do. Someone turns up. It’s all on a mobile phone. You don’t know what they’re doing; you’re taking the order and they’re saying, "Person has got a dirty uniform." That sort of stuff is very, very useful. Perhaps that is harder to implement in this environment, although I am not absolutely sure it would be that hard. It is preplanned; they are coming in two months’ time; we can do the security clearance; someone can accompany them. Is it that hard? That sort of benchmarking is critical, so it is price point, product, what is on offer, how does that sit with what is out there on the high street?

Q190 Dr Lee: And what about your judgment of the power of the brand-this is a difficult one to answer, I guess. If the V&A has a powerful brand, I would suggest that this has got a stronger brand than the V&A, certainly globally.

Duncan Ackery: Yes, you’re right.

Q191 Dr Lee: So presumably you would think that this would be a good business idea, to put out branded, quality goods?

Duncan Ackery: I do. It comes down to something we talked about earlier. It is about quality of product. If we’re talking about retail catering to people who are visiting the House, about events provision or about the provision of a gift shop or whatever name you want to give that shop, you have to be proud about it. You have got to be able to come back to this committee room and you have to sit there and think, "You know what, it’s great. What we’re doing is great. The product is great, tastes good, looks good. People are buying it." That comes back to it being benchmarked against people’s retail experience elsewhere. You cannot divorce the two. Audience take their experience with them wherever they go.

Q192 Bob Russell: I am very impressed with what you have said and also your CV. However, this is a place of work. There may be 650 MPs but there are probably about 10,000 people who are not MPs, many of them low-paid. While we are looking at the grandiose plans to bring in corporate hospitality, what about the low-paid staff who do need to be fed and watered?

Duncan Ackery: It is arguably the most important bit of what you do. What I would say in respect to that, and I’m not sure exactly how you manage that currently so I can’t say, but you need to find ways to provide food for them in a really cost-effective way. So whether it is their own environment-for example, at the Tate we ran the staff cafe and as an enterprises company, we knew it cost us about £100,000 a year. It lost money but the trustees understood that. We recorded it in our accounts as such. It was a loss-making part of our business and we subsidised that offer and rightly so, because the people who were going there were people who were at the lower end of the pay spectrum. I do not believe those things are mutually exclusive. It is about good planning and understanding what it is you are providing, where, for who and at what price point and then, particularly with staff, having a way to engage them via a staff committee. They will come back and tell you what they think of the service. You work with them. Make them equally responsible in the provision of that service in terms of its improvements and enhancements.

Q193 Bob Russell: I am grateful for that response because I sense there is a danger that we might go down the Premiership football road where the prawn sandwich brigade were more important than the ordinary fans. Here the ordinary fans are the low-paid staff.

Duncan Ackery: I absolutely agree with you. You cannot disenfranchise people. It is a place of work and you need to be mindful of that. I will repeat what I said, I don’t think it is mutually exclusive and if it’s done thoughtfully, they can underpin each other.

Q194 Mr Jones: You said earlier about the Tate that you didn’t pay rent, which obviously we don’t here. In your costings, did you include heating and lighting?

Duncan Ackery: The answer is yes, although not in every single area. We were certainly independently metered on things like gas, which we were a huge user of. What we did was, for example in Tate Modern, was we had some pretty sophisticated building management systems that could tell you who was using how much energy and the like. The answer is broadly yes; some of it would have been done according to percentage formulas, some of it very specifically.

Q195 Mr Jones: But the important point: in those profits that you just told us about, energy costs were actually part of-

Duncan Ackery: Every single cost of running the business was part of it.

Mr Jones: Apart from rent?

Duncan Ackery: Yes, other than security provision and rent.

Q196 Mr Jones: Can I ask you a follow-up question in terms of cost effectiveness of supplies? You talk about quality of food.

Duncan Ackery: Purchasing.

Mr Jones: It’s right to get the quality right. How did you go around in terms of not only ensuring you get the quality right but also you then get it at a competitive price?

Duncan Ackery: We had friends in the industry and we would talk to them. That was one way and you certainly had a sense of who the decent suppliers were. You would make the most of them. But we did beauty pageants really. Every year, we would tender out bits of our business, so for example, butchery, fruit and vegetable, fish, whatever it was, we would review our purchasing once a year; we would bring in other suppliers; we would benchmark and so on. We had other friends out there in the industry and we would share our invoices with them: "What were you paying for Scottish salmon today?". We did that regularly and pretty closely.

Q197 Mr Jones: Who took the ultimate decision in terms of suppliers? Was it the chef or was it yourself in terms of running the organisation?

Duncan Ackery: In terms of the individual product purchase was by the chef but in terms of the supplier of that product, ultimately it was my responsibility to say, "We will go with this one and not with that one." There is an absolute difference between buying a commodity product, of which that is one, and buying a bespoke product, such as a nice piece of Scottish salmon. I go back to the comment I made about the chicken. You can buy nice, frozen Brazilian chicken and it’s cheap or you can buy nice Norfolk free-range chicken and it tastes a hell of a lot better. What we often did was within our certain classifications, we may have two people we would purchase from. One of whom where we were buying the more commodity-driven product within that sector and one where we are perhaps buying the smarter lines, so that when we are thinking about our staff cafe, we know that we’re buying a can of coke as cheaply as we possibly can, and yet we are buying a nice bit of halibut when we feel we should be.

Q198 Dr Lee: You outlined that at the Tate there is a subsidy for the staff canteen. Living in the world in which we’re all having to live at the moment with regards to how apparently we’re all here on subsidised champagne, according to the media, it strikes me that this might be an opportunity for you to confirm that it’s acceptable within a public building, such as the Tate, that the total catering can be presented––the total cost or any profits––but at the same time it is indicating that there is subsidy going on in certain parts of that service. At the moment, we feel somewhat under pressure, and certainly the authorities seemingly are, to try to reduce any subsidy. In fact what you’re saying is, as part of the whole entity, there has to be subsidy in some areas and that we make our profits elsewhere. Do you think that it would be acceptable to put that forward? For the House of Commons to say, "The Members’ Dining Room, the Pugin Room and the staff canteens don’t make any money, but we make money out of conferencing and various other outlets. Is that an acceptable way to go?

Duncan Ackery: Yes, absolutely, as long as that’s underpinned by transparency. As long as you know how much it’s costing you to run those individual services and you can take a decision annually or whenever it might be. You can review it and take your position accordingly.

Q199 Chair: Thank you very much indeed. We appreciate your coming to see us. Look at the souvenir stall on the way out and if you have any after-thoughts, let us know.

Duncan Ackery: Christmas is coming. Cheers.

Examination of Witness

Witness: Mr Rupert Ellwood, International Growth Manager, Waitrose, gave evidence.

Q200 Chair: Mr Ellwood, we have a summary of your experience. Is there anything that you would like to add by way of introduction?

Rupert Ellwood: I suppose the first thing I should say is that any comments I make are my own personal comments and not the comments of my current employer. That’s probably the best thing to say. As you have probably read, I was in the House of Lords for eight very happy years. I started as assistant banqueting manager and left as the deputy head of catering. It was a very happy time. My experience outside that is very relevant for this Committee because I went from there to the Natural History Museum, where we had similar experiences to the Tate. We had two sides of the business and one was the events business.

The Natural History Museum has one of the strongest corporate events businesses in London and that was all driven towards raising money for the museum. We were very straight about that. Then we had the public catering side, so I was also responsible for that. For that, we had a contract. We ran the events business using partners, caterers and events teams. Then we had a public catering offer, which we had a contract on. I did quite a lot of work on that offer, trying to focus it more around the audience that was coming to the museum and that was very key.

From there I went to Vinopolis, where I have been for the last three years. I am sure you will know Vinopolis, but it is a 75,000 square feet site just in London Bridge right opposite Borough Market. It’s a small plc with 500 shareholders. It’s a vanity plc so it’s not listed on a stock exchange but shareholders are important to understand in the context of how that business is run, and we had various different sides to that business, including a very strong events business-probably about 60% of the profit was generated through corporate events-and a wine tasting attraction. It is different from the Natural History Museum in that the wine tasting was a commercial business as opposed to a heritage business that was supported by grant-in-aid, so there was no funding for that. It was a profit-making business. We also had a restaurant business, so we had a micro brewery pub, an à la carte restaurant, a cocktail bar and a wine bar. Plus we also had two retail spaces on long-term leases, so it was a very wide variety of businesses. I’ve just moved from there to Waitrose, which I think is less relevant to this Committee. That is my experience.

Q201 Chair: You heard some of the exchanges with the previous witness. To save us asking you all those same questions again, are there any observations you would make where either you might have a different point of view or you would wish to supplement some of the answers that we had before?

Rupert Ellwood: Knowing this place relatively well and understanding how commercial contracts and enterprises run, there is a lot to be said for working around the audience and understanding the different people who work within the building. We had a staff canteen at the Natural History Museum. We did that through the contract. It lost money in the contract but that was part of the deal we had with the contract. The food was very affordable and it was important for us to offer that. I think that is important. Then we had a very strong events business. We had the right partners. We were prepared to do events that were not necessarily in keeping with what the Natural History Museum’s core values were. For example, I did a rock concert, in Central Hall for 1,000 people with The Strokes, all around the dinosaur. That was not exactly part of the Natural History Museum’s core objectives but the National History Museum needs to raise money to fund its business and to keep itself open. So we did that event. We covered our risk. We did a proper risk assessment. We made sure that all the parties involved in the museum were on board. The stakeholders were aware and the event went extremely well. There were no problems and it raised a lot of money for the museum.

Parliament can do some of these things without it having a negative impact on the building. I have often thought about Westminster Hall, which is probably one of the finest venues in London for events. I always said if I could get my hands on that, I could sell it every night. That is probably an exaggeration but I do think that there are a number of events-it currently can only be used for state occasions-that could be done in there. It’s a solid building. The Natural History Museum is the same; it has terracotta tiles, it has a very solid mosaic floor. There was very little damage you could do and there are opportunities and spaces within Parliament that could be used for more commercial events. Duncan made a very good point: the Natural History Museum used to close at six o’clock. At six o’clock, we were allowed to come in and start setting up but not a minute before. That was the rule. All our operators worked to those criteria. As long as you’re clear about those things, you can deliver that kind of event.

Q202 Chair: Based on your experience in this building, do you believe it would make sense for us to have an integrated management structure for all our catering outlets?

Rupert Ellwood: Do you mean between the Lords and the Commons?

Chair: Yes.

Rupert Ellwood: It is a really difficult question to answer. What I felt when I was here was there was a big difference between the House of Lords and the House of Commons in the audience. It comes back to understanding what people want. The demands of the Members are different to the Lords and that might make it difficult to bring the two sides together. There are some very good points made around the purchasing and how that could be done jointly because buying power is important and so there are certainly shared services in IT that could be developed. There is definitely an opportunity for more joined-up thinking and perhaps even around events as well, where both Houses could be used for particular events, particularly outside of the sitting of Parliament when things could happen at the weekend that could be using both sides of the estate. That might make it more attractive in terms of commercial expertise. There are some fairly big differences between the two Houses. It is difficult because I haven’t been here for 10 years so I don’t know how that works now, but when I was here, we ran a slightly different operation in the Lords to the Commons because our Members had different needs. They had different requirements, so the difference in management worked. That would be my take.

Q203 Bob Russell: The security issues in respect of the Houses of Parliament are greater now than they were 10 years ago, which does put a constraint on it. I have fond memories of the staff canteen in the House of Lords when it was by far the best eatery on the entire estate. It was modernised out of existence. It was a nice 1960s time warp that actually supplied wholesome food that the hon. Member for Colchester quite enjoyed. Can I just ask why was that modernised out of existence?

Rupert Ellwood: The breakfast particularly. I think, at the time, we needed more dining facilities in the Lords, and the Lords staff restaurant was just too small to cope with the numbers of people we had coming through.

Bob : It was always full though.

Rupert Ellwood: That is the point––it was too full. People were often not able to get in there so we had to create something that could accommodate more people.

Q204 Bob Russell: The point I’m making is that a successful eatery was done away with but it provided food at a lower cost than elsewhere on the estate for low-income people. You will have gathered from my question to the previous witness that this is where I am coming from. Don’t get me wrong, I’m all in favour of the corporate hospitality out of hours, so to speak, in order to subsidise the outlets with wholesome food at lower costs for our underpaid employees.

Rupert Ellwood: It’s difficult because I’m not sure I understand the pricing structure of the current restaurant. I can’t even remember the name. Clearly, the costs of developing that site are not reflected in the prices that are being charged. I don’t believe it works on a financial model that we would work in industry where we would make an investment, we would work out a payback and therefore that’s reflected in the prices that you charge. I’m not sure there's a direct link between the development of that site and the prices that are being charged. I think it’s more that there probably had to be an increase in prices due to margins that are required to be made to make it more profitable.

Q205 Bob Russell: My final question is that blank page is the all the rage. What would you put down on a blank page as to how we could square the circle of lower prices for our staff but yet create a greater income in order that there is no greater subsidy?

Rupert Ellwood: The development of the commercial opportunities that are there; I think there has to be an agreement within the House that there would be a let-up of the rules surrounding commercial activity. Retail is obviously one big opportunity. As Duncan says, you could create a retail business that could actually enhance Parliament in a major way. It is integral to the brand and could be developed in that way. I think that is one of the areas. We had a very successful events business in the House of Lords. We did that because we were always talking about what facilities we had and what opportunities we had. One of my jobs was, when new peers came in, to take them around our facilities. It was a sales job. I was selling them what we had to offer. It was important that Members knew that we had these facilities available. That’s to do with the staff internally, so they are aware that you can offer these facilities but it probably has to go a step further and look at some of the spaces that are currently not utilised for events.

Q206 Mr Jones: Can I just ask about the issue of branding, in terms of how you get the balance right? How did you do it, for example, in the Natural History Museum in terms of the history of the actual building and the actual institution? How did you keep the integrity of the brand and not get to the point that you are doing anything and everything just to get money in?

Rupert Ellwood: It is about selecting quality products that match the surroundings. In the Lords, we talked about doing tshirts and flat caps, baseball caps. It’s probably a no-no. I don’t know. There are obvious things that you don’t sell that are going to denigrate the brand. There are things, like the whiskies and the champagnes, that are quality products and people love. We worked out that our little shop in the House of Lords used to do more per square foot than M&S in Marble Arch at Christmas time. There is a good demonstration of what you can achieve with such a small space. Now that I’m a retailer I can say this: if you take the ranking of those products, let’s say the top five products, and you look at what they achieve and see where they fit in the quality levels, then you have got something that you could then create into a new business.

Q207 Mr Jones: I agree with you. The Lords shop is a lot better than the one we’ve got. If you look at the quality of the two gifts offers, they are better in the Lords. Do you not think that is an area where, for example, there could be more co-operation between the two?

Rupert Ellwood: Yes. It’s about finding the right buyer who understands the core values of what the Houses of Parliament is and then translates that into whatever they buy, and, providing they commercially work, and you can sell them at a good margin, then absolutely. I would agree with that.

Sarah Newton: I’m reassured to hear from both our speakers that as a result of having more successful commercial aspects to what you were doing, you were able to offer really high-quality subsidised catering for staff. Something that we really appreciate from both of you today, is that rather than perhaps the approach that we’ve been asked to take by the Commission, which is constantly to increase the subsidy and reduce the costs, what we are doing here is realising a big opportunity to raise income, which then can increase the subsidy to staff, who-I hope none of us are paying people less than they should be paid but I accept that there are a lot of people here on low incomes-can have a high-quality catering service without having to be constantly cutting. That’s a really good message from both of you, that’s really helped us.

Q208 Nigel Mills: When you left the House of Lords and went into private industry, did you look back and think, "We had some great conditions there" or is that not quite how it is? It seems to get presented that way.

Rupert Ellwood: I think long summer recesses were definitely a bonus. I didn’t get paid anywhere near what I would have got paid in the outside world commercially but that was a choice I made. I think the conditions were good, people were well looked after and perhaps pay wasn’t up there with other commercial operations outside.

Q209 Nigel Mills: Was that for all grades or was that managerial?

Rupert Ellwood: No, I think probably managerial level, from memory. I always look back on it with great memories. It was a very good grounding for me in terms of learning how to operate, essentially as a commercial person in a noncommercial environment and going to somewhere like the Natural History Museum where effectively that is what you’re doing. You’re a money maker in an environment where you have keepers of palaeontology who don’t care about commercial environment at all, but you have got to persuade those people that what you are doing is supporting them. I think that’s what I got from working here, a real understanding of how to be commercial at the same time, how to respect the integrity of what’s going on.

Q210 Nigel Mills: When you were at Vinopolis, how did you handle the fact that your micro brewery might be busy one day and your wine tasting later that evening and the cafe bar the next day? Were your staff flexible in moving where the work went?

Rupert Ellwood: Yes. I think that’s one of the great things about having a business where you have a diversity of operations––you can pull people. Certainly, Duncan would tell you more about that in terms of events, where they were doing their own events catering at the Tate and you could pull people from one part of the business to another; you service events. There are always ways of moving staff around. We used to do that all the time. I think we ran a very aggressive P&L at Vinopolis. We made very good margins but that was a lot to do with the fact that our staff costs were well under control and we were probably slightly underresourced, looking back on it, but it worked extremely well and you always had to move people around and be aware and react to situations. That is a lot to do with the attitude of the staff as well. If the staff are prepared mentally that they will go from one restaurant to another and they can fit in straightaway and start operating, then it works.

Q211 Tessa Munt: I wondered what you felt your experience of Waitrose might bring to something here. My perception of Waitrose is of its quality: even when it goes into motorway services, it still offers quality. It manages to lift itself above the grot of what was. It also, to me, has a co-operative view about how it looks after its staff, and I just wondered whether there are themes and ideas that one might pull across from Waitrose in the way that it deals with different types of products in different places, maintains its quality and still cares for its staff?

Rupert Ellwood: We buy good quality produce and consequently, it’s a little bit more expensive because we buy good quality produce. That’s the first thing. It’s all about service. If you go into a Waitrose store, you ask somebody for a product, they’ll take you to the product and then ask you what else you need, so service is a very, very important part. If you take Welcome Break, which you mentioned, that is a franchise in fact. Interestingly, the people that work in the Welcome Break are partners of Waitrose. We took the decision to do that because we felt that was the best way to protect our service levels and brand. I’m very new to this but I was very attracted to the fact that it is a coownership business and we all share in the profits. Therefore, we all have a responsibility to manage those profits. I think it does change your attitude in the way you deal with things. You don’t waste things because you know that that’s your profit being wasted. I think those are very good fundamental values. Obviously the care and concern for the welfare of staff and the benefits they get are very important. It is a very happy place. In the short time, I’ve been there, I can tell you that.

Q212 Tessa Munt: Do you think that sort of co-operative and partnership model might work here?

Rupert Ellwood: I think you’ve got elements of that. Certainly when I was in the House of Lords, I felt that there were some very similar values around that: the care and concern for staff and how people were treated. I don’t know what it’s like now. I haven’t been here for 10 years but I certainly felt that there were some similar values. Whether you could create a partnership model, it’s an interesting idea. I think the problem is you have the vote that has to support certain core activities and you have loss-making functions that you have to deliver. I remember serving one coffee in the Bishop’s Bar at three o’clock in the morning because it was an all-night sitting. In the commercial world, we would have just shut that down. We wouldn’t have done it. One has to understand that Parliament operates in a very different way. Those things, as we talked about, should be treated separately because they are loss-making services. I don’t quite know how you could translate the partnership because it is all about generating profit for the partners, so as you are making losses in certain areas, that might be difficult.

Q213 Tessa Munt: It might be quite an interesting way of dealing with things like the waste problem that we have heard about it in the last couple of weeks, which got me going and in fact ensuring that people understand where their interest is in serving good quality stuff to people but making sure that we look after the staff and making sure that we don’t give enormous portions when people want a little one or whatever. It might introduce another element of care.

Rupert Ellwood: I think certainly incentivising staff with rewards is good and it doesn’t have to be financial. There can be many rewards that you can offer to staff and that does keep their interest in. I would agree with that, definitely. Certainly in the commercial world, in Vinopolis with events, my events salespeople were heavily bonused. They achieved their bonuses. That was part of what they needed to drive them. That’s not exclusively about money, but I think you’re right. To have some benefits, to reward people for good service, whether that’s customer service or managing profitability, I think that those are partnership values but they are also very commercial values actually.

Chair: Thank you very much indeed. We appreciate you sparing the time to share your expertise with us.