Examination of Witness (Questions 200-213)
MR RUPERT ELLWOOD
6 DECEMBER 2010
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.
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