78.It was widely agreed by our witnesses that the governance arrangements set out in the draft Bill would create a structure capable of meeting the demands of Restoration and Renewal. The written evidence submitted by the Crick Centre said that the proposed structures are largely in line with best practice for Non-Departmental Public Body/parent department governance frameworks, as overseen by the Cabinet Office. Furthermore, the Crick Centre said the draft Bill proposed a governance structure that would depoliticise R&R and that creating “a set of independent institutions is the best delivery option.” Stephen Dance of the Infrastructure and Projects Authority agreed: “It has a sponsor that can be an intelligent client, and a delivery organisation that can be a proper technical competent delivery organisation. The issue will be in the way that it is executed.”
79.We believe that the basic structure of governance proposed by the draft Bill is the correct one. We do not recommend any fundamental changes to the structures or bodies that will be responsible for Restoration and Renewal. We do, however, explore the detail of how the bodies will interact with one another and how the draft Bill could be finessed to maximise the potential of Restoration and Renewal.
80.The membership of the Sponsor Body is set out in Schedule 1 of the draft Bill. The body must be composed of no fewer than seven members and no more than 13. The shadow Sponsor Body currently comprises 12 members (including the Chair)—seven parliamentary members and five external members. The draft Bill states that the body must include:
Paragraph 2(1) of Schedule 1 to the draft Bill requires that “a person may be appointed as the chair only if the person has been selected for appointment by the House Commissions on merit on the basis of fair and open competition.”
81.It is not clear from the draft Bill whether the members of the shadow Sponsor Body, who were appointed in July 2018, will automatically become members of the statutory Sponsor Body following Royal Assent, or whether a further public appointments process is required. Sir David Natzler and Ed Ollard argued that it should be made clear that the public appointments process by which the Chair of the shadow Sponsor Body was appointed qualified as “fair and open competition” for the purposes of the draft Bill. The Leader of the House of Commons, the Rt Hon Andrea Leadsom MP, told us that re–running the public appointments process would allow for the Body to be re-shaped to ensure that all its members had the necessary skills for the tasks at hand:
It is intended that once the body is set up in statute, its members in shadow will reapply for their posts should they wish to do that. That was important because it is still very early days; it may be decided that different skills and experience are necessary. It gives a useful opportunity to look again at the make-up of the Sponsor Body when the Bill gets Royal Assent.
82.The Chair of the shadow Sponsor Body, Liz Peace, disagreed:
it would be a singularly unwise thing to do to decide to run a public competition at [the point of Royal Assent] to reappoint everybody. We have all been appointed by public competition—it was a very thorough, very exhaustive public competition—and it might be unwise to [run a further appointment process], because you might lose the necessary continuity.
83.Ms Peace described to us the current composition of the shadow Sponsor Body:
We have a strong representation of Members from both the Commons and the Lords on the board of the Sponsor Body. There is also myself. I am a broad generalist with a lot of experience in different areas. I am not a constructor or a programme manager, but I have worked with those people. I have also worked with Governments and local authorities. I have a broad experience of project and stakeholder management. Then we have four very specific experts—one is a programme management expert, one a heritage expert, one a finance expert and one an expert in broader stakeholder communications. I think the way in which our board has been set up is excellent.
84.The Leader of the House argued that business continuity was necessary for the success of the project. She and Liz Peace were both of the view that the Restoration and Renewal project needed to be progressed “urgently”, and the shadow nature of the current Sponsor Body prevented it from getting on with the job. Mrs Leadsom told us:
I think the limitations of the shadow Sponsor Body are that they do not have a clear direction. That is why I really want to get on with the Bill; it is quite difficult for them to make real progress until it is set up in statute. It is quite difficult to hire the people they want for the Delivery Authority until it is set up in statute. To a certain extent, they are able to do preparatory work but not to get on with the meat of the project.
85.We recommend the Bill be amended to make it clear that the external members of the shadow Sponsor Body appointed in July 2018 should be appointed to the statutory Sponsor Body under a streamlined process of public appointment. We make this recommendation for the following reasons. First, there is a grave risk that the members of the shadow Sponsor Body may be disinclined to repeat the full and lengthy public appointments process, leading to the loss of both corporate memory and talent. Second, a further appointment process will inevitably lead to some delay we believe the project can ill afford. Third, the benefit to running another public competition, that the balance of expertise on the Sponsor Body could be reconsidered, is one that will be achieved more straightforwardly, and without any of the downsides, through the reappointment process. Finally, we believe the shadow Sponsor Body needs to be allowed to make headway with this urgent project, making it clear that members of the Body will remain in post after Royal Assent will give them the authority and the focus required.
86.Schedule 1 of the draft Bill provides:
87.The Leader of the House told us that this provision sought to avoid the phenomenon of the ‘cliff edge’ where members of the Body were all appointed and left an organisation at the same time once their terms in office were complete, taking their collective corporate memory with them. Sir John Armitt suggested that the length of the Restoration and Renewal project meant that service for a maximum of nine years, renewed every three years, was a suitable approach and in line with the “existing corporate governance guidance.” Liz Peace agreed, and suggested this apply to both the Sponsor Body and the Delivery Authority.
88.We recommend that members of both the Sponsor Body and the Delivery Authority be appointed for three-year terms, with the potential to renew the appointments. Given the length of the Restoration and Renewal project we recommend that members serve for no more than nine years in total, in line with corporate governance guidance. We recommend that when the Sponsor Body comes into being, it should consider how best to stagger the length of the appointments in order to avoid the situation where several members leave simultaneously, resulting in a serious loss of continuity.
89.The draft Bill does not provide a process by which the parliamentary members of the Sponsor Body are to be appointed. Sir David Natzler and Ed Ollard expressed concern at this omission. The Crick Centre disapproved of the idea that the so-called ‘usual channels’ would be adopted:
we contend that selecting parliamentarian members of the Sponsor Board through the ‘usual channels’ is not a good start in terms of the expectations and principles of good governance. The introduction of elections (either in the House as a whole, or in party groups) for such persons would align not only with the Wright reforms, but also with the Leader of the House’s proposals for reforming the House of Commons Commission.
90.Sir John Armitt added some weight to this argument saying that “the politician, whoever that might be on the Sponsor Board, needs to be chosen from their peers”. The Leader of the House of Commons said that she would welcome the appointments being made by elections within both Houses, but noted that the “issue here is more one of the individual having the will and knowledge to do it.”
91.The parliamentary members of the Sponsor Body may well become the public face of Restoration and Renewal. It would benefit the credibility of Restoration and Renewal if the parliamentary members of the Sponsor Body were chosen by their peers. We recommend that they be appointed by means of elections in each House.
92.In oral evidence, Professor Matthew Flinders said: “The Sponsor Board is very narrow. The chair cannot do everything.” Dr Henrik Schoenefeldt, Senior Lecturer in Sustainable Architecture at the University of Kent, who is leading a research project into the historic technology of the Palace of Westminster, argued in his written evidence that the Sponsor Body itself could not be equipped with sufficient expertise to make informed choices on every aspect of the programme. It would benefit from the support of advisory groups, providing the specialist knowledge and skills required to effectively direct and assess the work of the Delivery Authority.
93.Giving evidence to the House of Commons Finance Committee in October 2018, Tom Healey of the Restoration and Renewal Programme said that staff of the Sponsor Body would increase to between 30 and 40 people and that this would enable the employment of people with expert skills. In addition, they would be able to call on external expertise:
First, the sponsor body will have to employ some people who understand things like planning, architecture, engineering and so on. So there will be a small technical team. We might have to have some flexibility for those people. The other thing we will do is appoint what is called a programme representative, which is effectively an external consultant, who sits with the delivery authority, but reports back to the sponsor body to provide them with assurance about what the delivery authority is doing. That will be procured as a service from a big company.
94.Clause 9 of the draft Bill allows the Leader of the House of Commons, after consultation with the Leader of the House of Lords, to lay regulations to abolish the Sponsor Board. We consider the political implications of this provision below, but the limited role of the Leader in the House of Lords in this process was queried by Sir David Natzler and Ed Ollard. They suggested that the consent of the Leader of the House of Lords should be required before any regulations were laid, and there should be a statutory duty to consult the House Commissions and corporate officers because “the regulations will potentially affect staff of one or both Houses who may transfer back from the Sponsor Body to Parliament.”
95.We recommend the draft Bill be amended to require that the Leader of the House of Commons obtain the consent of the Leader of the House of Lords before laying draft regulations that abolish the Sponsor Body. There does not appear to us to be any reason why this power should lie solely with the Leader of the Commons. Restoration and Renewal concerns both Houses of Parliament equally and the Bill governing the project should reflect that.
96.We note that Clause 12(4) of the draft Bill allows the Leader of the House of Commons to lay regulations to bring the Bill into force less than six months after Royal Assent. There is no provision requiring the consent of the Leader of the House of Lords to this. We recommend the clause be amended to require the Leader of the House of Commons to obtain the consent of the Leader of the House of Lords before laying such regulations.
97.It is inevitable that there will be demand for political accountability for Restoration and Renewal. Professor Flinders said that as a political project, the media and public would look for a political figurehead:
In good times, that person will become an ambassador for the project. In bad times, they will become the lightning rod. At the moment, in the governance that is being set up, that person will be the chair of the Sponsor Board.
98.Describing the advantage to the 2012 Olympic Games of having political figureheads involved with the project, Sir John Armitt told the Committee that the Sponsor Body would succeed if all members of the body spoke with one voice and took collective responsibility:
if the Sponsor Board is working effectively, then the chair of the Sponsor Board will have a relationship with whoever is a political member of that board, where they are working hand in glove. And in fact, either of them could go out and speak to the media, knowing that essentially they are going to be giving and saying the same messages. With respect to Members present, it will perhaps require that politician to act more in a way—how shall I say?—in which they recognise their responsibilities within that Sponsor Board, rather than their particular position as a politician and a Member of Parliament for x, y or z.
99.The Leader of the House of Commons agreed that there will be a requirement for political figureheads to take their place at the forefront of the project. Much of the evidence we heard referenced the vital role played by Dame Tessa Jowell in ensuring the success of the 2012 Olympic Games,and generally the importance of politicians leading from the front in resolving problems which face projects of national significance, such as R&R and the Olympics.
100.It became apparent over the course of our inquiry that political leadership for R&R would have to be provided by the parliamentary members of the Sponsor Body. As part of this role they should be accountable to Parliament. The Crick Centre noted Tom Healey’s remarks that oral questions in Parliament about the project would most probably be answered by members of the Estimates Commission and instead proposed that it would be more authoritative and credible if such questions were answered by a member of each House drawn from the membership of the Sponsor Body. The Comptroller & Auditor General, Sir Amyas Morse, also wanted a clear differentiation between the roles of the Sponsor Body and the Estimates Commission:
I really would stick to the idea that you want one body that is doing the detailed management of issues and reporting back to Parliament on it, and another that is at one remove, advised by the Treasury and talking about whether the thing overall looks like it is under control.
101.The Crick Centre proposed amendments to the draft Bill to create a statutory responsibility for parliamentary members of each House to answer parliamentary questions. Tom Healey said that he did not believe this was something that needed to be on the face of the Bill. The Leader of the House concurred, adding that it would be for the Sponsor Body to determine procedures for dealing with parliamentary questions. Ed Ollard suggested that the arrangements could be formalised by another mechanism:
Possibly it is something that could be in the parliamentary relationship agreement between Parliament and the Sponsor Body as to how accountability to Parliament will be expressed in different circumstances, but it would be a matter initially for the Sponsor Body to decide whether it would be appropriate for one of its parliamentary members to be a spokesman for each House. In principle, it sounds like a very sensible idea [ … ].
102.We believe that the magnitude of Restoration and Renewal will require political figureheads to speak on behalf of the Sponsor Body, be held to account for the progress of the works and, vitally, provide leadership in making the case for the vision of a restored and renewed Parliament. The political figureheads will, inevitably, be drawn from the parliamentary members of the Sponsor Body and it is essential that they are able to fulfil this task.
103.We recommend that parliamentary members of the Sponsor Body should be responsible for answering parliamentary questions. We do not believe it will be necessary to write this requirement onto the face of the Bill. Instead, we believe that the Parliamentary Relationship Agreement should specify how the Sponsor Body will address the issue of answering parliamentary questions.
104.It may be useful to those designing the governance of Restoration and Renewal to act on the lessons of history which emerge from construction of the Palace of Westminster. Professor Flinders noted that Charles Barry was subjected to over 100 committee appearances during the original build.
105.The Crick Centre made the case that there should be a streamlined mechanism within both houses for scrutinising the works and holding the Sponsor Body and Delivery Authority to account:
The Bill specifies that the Sponsor Body and Delivery Authority must submit their annual accounts to the Comptroller and Auditor General (C&AG), as required of most public bodies. It is not clear whether this means that the Public Accounts Committee will be scrutinising the project, and if other select committees, in either House, will seek to hold inquiries into the issue (raising the danger of the 100+ select committee inquiries to which Charles Barry was subjected). [ … ] Allocating primary oversight responsibilities to one committee in each House may prevent the Delivery Authority going MAD (i.e. multiple accountabilities disorder)
Matthew Flinders provided suggestions of which committees should take on responsibility for scrutinising R&R: the Public Accounts Committee, Public Administration and Constitutional Affairs Committee, and the Lords Constitution Committee.
106.Our witnesses from within the House were, however, doubtful about the extent to which the accountability process could be streamlined. The Leader of the House of Commons agreed that it was “critical” that the Sponsor Body and Delivery Authority “should not be accountable to too many select committees”, but said that the entitlement to scrutinise the works should not be prescribed as this would build resentment. The Crick Centre suggested that the committee arrangements should be written onto the face of the Bill but Ed Ollard said he did not think that this would be particularly advantageous as, if people really wanted to scrutinise the work of the Sponsor Body or the programme, they would do so.
107.Sir Amyas Morse agreed that it would not be necessary to legislate for the nature of the relationship between the Sponsor Body and Parliament and argued that the Sponsor Body should take a proactive approach to determine how the relationship operated:
What I would want to hear from the Sponsor Body is what commitment they will give to Parliament about how they are going to keep them informed. It is the job of the Sponsor Body to do that, really, is it not? [ … ] If there was to be anything in legislation, it should be no more than an obligation on their part. Then they need to be flexible about how they communicate, because it may be that what they first think of is not going to work very well. They need to be effective in keeping Parliament advised of what is happening.
108.Sir John Armitt told us that as Chair of the Olympic Delivery Authority he was a regular visitor to Parliament to brief interested parties to help avoid “uninformed rows”. He described a proactive approach to engagement and, unlike Barry, was not subject to multiple committee appearances. Sir John also cautioned that there are limits to what can be achieved by committee scrutiny and that Parliamentary committees are not the mechanism by which problems are solved when things start to go wrong:
It’s nice for Parliament to think that it is getting a grip on cost, but in fact it’s not. The reality is that what is happening out there is what is happening out there, and the people responsible and accountable for delivery are accountable for delivery and the cost of it. We have got the current issues and difficulties with Crossrail, but Parliament is not going to get a grip on Crossrail.
109.We do not consider that the draft Bill should be amended to specify committees which will examine the work of the Sponsor Body and Delivery Authority. While there is a risk that Restoration and Renewal could be subject to excessive scrutiny which duplicates and confuses rather than holds to account, we do not think it proper that parliamentary scrutiny of the process should be limited by primary legislation. We believe that the division of responsibility between the Sponsor Body and the Delivery Authority should help to reduce the impact of this demand–whilst the Sponsor Body is accounting to Parliament the Delivery Authority can get on with the task in hand.
110.We believe that the Commons and Lords should take it upon themselves to clarify how the scrutiny process will work. As it stands there could be as many as eight different committees in the Commons alone that may feel they have grounds to scrutinise Restoration and Renewal and there is no reason why Parliament should not design committee scrutiny to maximise its effectiveness.
111.We recommend, therefore, that both Houses consider amending their Standing Orders to specify which committees should primarily be tasked with scrutinising the progress of the parliamentary buildings works and the associated use of public funds. It will be for each House to determine which committees assume these responsibilities, but we note that the Public Accounts Committee has the right to scrutinise any value for money reports on R&R produced by the National Audit Office. We suggest further that the Public Administration and Constitutional Affairs Committee in the House of Commons, and the Constitution Committee of the Lords, are given explicit responsibility for scrutiny of the R&R programme.
112.Paragraph 10(3) of Schedule 1 to the draft Bill establishes that the Chair of the Sponsor Body may be suspended and, ultimately, removed by the Commissions of both Houses. In addition, Clause 9(1) of the draft Bill provides for the abolition of the Sponsor Body by the Leader of the House of Commons, after consultation with the Leader of the House of Lords. This power would be enacted by regulation with affirmative procedure. A memorandum prepared by the Cabinet Office noted that powers to dissolve the Sponsor Body and transfer functions can be exercised at the end of the Parliamentary works “or prior to that, if it is considered that the Body has ceased to be effective”.
113.The Crick Centre’s evidence raised concerns about the chain of accountability for the project:
It is worth the committee looking at the draft legislation through the ‘clear line of sight’ lens: is it possible to clearly see who is responsible for what and how they will be held to account? At the moment questions remain about whether a ‘clear line of sight’ exists, and opportunities exist to inject a little more clarity and precision. As the history of arm’s-length bodies and the well-known ‘quango problem’ has demonstrated for centuries, there will always be some blurred boundaries, areas of overlap and potential opportunities for ‘blame games’ to emerge.
114.Liz Peace partially addressed the ‘clear line of sight’ question in relation to the ultimate accountabilities of the Chair and Sponsor Board:
[ … ] one of the questions that I always ask and will keep asking is, “Who am I accountable to and who can sack me?” because it is always quite useful to know who your immediate boss is. I think that the Bill now actually clarifies how that will work, and frankly there has got to be some ultimate authority. In the event that we fail to perform, the Commissions of the two Houses would have a role.
115.When we suggested to Sir David Natzler that the draft Bill would make the Chair of the Sponsor Body directly accountable to the Commissions of both Houses, Sir David said that this may be the appearance in theory but not in practice:
I think it is a backstop that the Commissions have this reserve power, but that does not mean day to day, or indeed week to week, accountability. It means ultimately, in the case of failure, there is a mechanism, and we discussed this with the Government going through the Bill. They wanted a mechanism—I do see why—in the event of gross failure by the chair of the Sponsor Body.
116.Although the power to initiate abolition of the Sponsor Body lies with the Leader of the House of Commons, Andrea Leadsom argued that effective power will remain with Parliament: “Ultimately, in all cases, it comes back to a resolution of the House. [ … ] It is not a power that the Leader of the House of Commons has unilaterally.”
117.The draft Bill does not specify how the Sponsor Body should interact with Parliament. We were told that there is already a memorandum of understanding between the shadow Sponsor Body and Parliament. In due course, this would be replaced by a Parliamentary Relationship Agreement (PRA), although this is not required by the legislation as drafted. Sir David Natzler and Ed Ollard told us that the centrality of the PRA to the success of R&R meant it would be “helpful” if it was placed on a statutory footing. Ed Ollard told us that the PRA will evolve with the development of the project, not be signed at the outset of the project and then preserved in aspic for the duration. He gave the interaction between the PRA and the development of the Outline Business Case (OBC) for R&R as an example:
In the period up to the delivery of the OBC, for example, which I have described as a period in which there will be a more collaborative working together on the requirements, the vision and the overall outcomes of the project, there will be a certain set of requirements as to how the two bodies interact. After the OBC has been approved, there will need to be a re-basing of that relationship. The Sponsor Body, at that stage, will essentially be there to deliver the OBC within a slightly different framework of relationships with the Houses. The key thing is that there is a clearly articulated set of responsibilities of both parties.
118.Sir David Natzler said it may be possible to draw parallels between the PRA and agreements that Parliament has with organisations such as IPSA and the Metropolitan Police, but the success of the PRA will depend on the relationships between Parliament and the Sponsor Body. He stressed the importance of the PRA being able to accommodate unexpected events and he provided an outline of the practical aspects of R&R that the PRA might include:
It will cover not only responsibilities, issues about insurance and, as Ed said, the handover of the building once it all finished—it is terribly important to know when it happens and on what terms—but things like staff, because currently we have some parliamentary staff who are working for the shadow Sponsor Body and will be working in the shadow phase for the delivery authority. They may transfer on TUPE. It is all those things.
119.Following their oral evidence session with us, Sir David and Mr Ollard wrote suggesting that the need for the PRA to contain clarity over the responsibility for the “site” was of such importance it should be mandated by the Bill:
We acknowledge that primary legislation is not the place to specify when the building passes to the Sponsor Body and Delivery Authority, but it is our view that the legislation should ensure that there is a mechanism for clearly determining when a building or part of a building, ceases to be the responsibility of the Corporate Officers or any other Parliamentary body.
120.The relationship between Parliament as a corporate entity on the one hand and the Sponsor Body and Delivery Authority on the other will be key to the success of the Restoration and Renewal project. We recommend that the Bill mandate the development of a Parliamentary Relationship Agreement to provide clarity for all parties. We further recommend that the Bill specify that the Parliamentary Relationship Agreement set out the date when legal responsibility for the Palace of Westminster and any other area covered by Restoration and Renewal pass between the corporate officers of the Houses of Parliament and those responsible for delivery of the programme.
121.Paragraph 18 of Schedule 1 allows the Leader of the House of Commons to make a scheme for the transfer of “relevant property, rights and liabilities from the House of Commons Commission to the Sponsor Body.” Sir David Natzler and Ed Ollard noted that the draft Bill did not contain an equivalent provision for the House of Lords and asked for this to be added. Sir David and Mr Ollard also suggested that paragraph 18 should refer to the corporate officer of the House of Commons, presumably together with the Leader of the House of Commons, as a person with the power to ‘make a scheme’, as property, rights and liabilities other than under contracts of employment are vested in him.
122.The draft Bill should be reviewed to ensure that provisions aimed at allowing for the smooth transfer of responsibility between the House Commissions and the Sponsor Body apply to the House of Lords as well as the House of Commons. The power to make plans for such a transfer should be shared by the Leaders of the two Houses and their respective corporate officers to ensure any scheme is clear and effective.
123.The significance of leadership and accountability being provided by the parliamentary members of the Sponsor Body is brought into even sharper relief when considered in the light of the Government’s approach to R&R. The Crick Centre highlighted the lack of government involvement in the R&R process and identified this as a potential risk that the Delivery Authority and Sponsor Body may have to address:
The fact that there is no responsible minister for this project has not received the attention it deserves. The ‘audit and annual accounts’ approach to parliamentary scrutiny is historically founded on the basis that a responsible minister will be in place and can be called to Parliament to account for the decisions, actions or failures of a public body. While it is a parliamentary project, it will rely on Government (and particularly Treasury) cooperation. The Delivery Authority’s constitutional status as a parliamentary and not governmental body therefore deserves a little more consideration.
124.Limiting political interference which could derail R&R was highlighted by the Leader of the House as a central reason for restricting government input and responsibility:
The reason we focused very much on this being a parliamentary project—not led by Government and not prone to Government interference—is because by the time the whole project is finished and we are back in the Palace of Westminster, we could be in the 2030s. It was therefore vital to minimise the possibility of political interference that could stall it, add huge expense or make it go off at a tangent.
125.Sir John Armitt made the case that the Government should have a formal role in the accountability and governance structures of the project. Sir John said that the ultimate paymaster would usually have ultimate authority:
To my mind—and I accept that this is different from the Bill—if the Government are paying for the project, the Government should control it. [ … ] the Government are paying and they have the responsibility to the electorate for ensuring that they have not overspent.
126.We asked Sir John whether there should be “a terms of agreement with Government regarding the budgetary requirements and expected outcomes”. He thought that it “would be sensible”. Stephen Dance, however, observed that responsibility for spending rests with Parliament:
We should be clear that this is not a Government project, but a parliamentary project. [ … ] There is a spending process that is set out in the Bill, but it is not controlled by Government. It is controlled ultimately by Parliament and the Estimates Commission. That would be my understanding of it. The way in which those decisions and the controls are taken will be a matter for the Sponsor Body to decide.
127.The Estimates Commission, along with the Treasury, will only have a very limited capacity to comment on and / or reject the estimate provided by the Delivery Authority. As Tom Healey explained:
The Sponsor Body gives the estimate to the Estimates Commission. The Estimates Commission has to consult the Treasury, and it can publish any observations it likes on the estimate, but unless the scale of the estimate suggests that the programme is at high risk of going overall over budget over its whole lifetime, it cannot do anything other than lay it.
128.The Leader of the House observed that each House would be able to reject the estimates laid before it if dissatisfied with the expenditure. Ms Leadsom emphasised that although the Treasury will have no control over the process, its commentary on the estimates laid before each House would be available to parliamentarians.
129.Parliament has determined that the Treasury should be subordinate to Parliament in shaping Restoration and Renewal and in accepting or rejecting the costs of the project. The governance of the programme will require partnership led by the Sponsor Body on behalf of Parliament. In order to underpin the hierarchy of decision making and to provide clarity to those delivering the project we recommend that the Sponsor Body be required to draft a terms of agreement with the Government which would firmly establish what the project will deliver for the taxpayers’ money being provided by the Treasury. However, we do not consider that this on its own will provide sufficient political buy-in from the Treasury over the course of this long project. We therefore propose that the Bill be amended to provide that a Treasury Minister should be an additional member of the Sponsor Body.
130.Clause 5(1) of the draft Bill requires the Sponsor Board and the Delivery Authority to enter into a Programme Delivery Agreement (PDA) which will include a statement of the Sponsor Body’s strategic objectives, the mechanism by which the Sponsor Body will review the Delivery Authority’s activities, and the circumstances in which the Sponsor Body may intervene in relation to the Delivery Authority’s performance of its duties where it considers that the Delivery Authority is not performing those duties effectively and efficiently. The draft Bill provides for any dispute over the review or intervention in the Delivery Authority’s activities to be resolved by the House Commissions.
131.Describing how the PDA is being developed and how it will evolve, Liz Peace told us:
The first point to make is that this will not be a static document, because the relationship between us and the Delivery Authority will change as the project progresses. At the moment, we are both effectively in shadow form and we are in the project definition stage. The PDA as currently drafted—it is not finalised yet, but work is being done on it—actually sets out what we are able to demand from the people in the programme delivery body, in order to sort out our project definition. As we move through to being substantive and setting out—not necessarily in stone—more clearly precisely what we want, it will be more about how the delivery body actually delivers that to us. Finally, when we have got to the point of having the fixed programme and the contract, it will be a much more hard contractual relationship.
132.In oral evidence, Stephen Dance set out what the basic elements of the Programme Delivery Agreement would look like and, significantly, he highlighted the fact that it should limit the capacity for changes to the agreed plans and set out procedures for when the plans do have to alter:
Clearly, it needs to set out a number of things for the project. The key ones I would pick out are, first, being clear on delegation—who is responsible for what decisions and how that is managed. The second thing is the process for change control, because despite having said very clearly, “Don’t change your mind,” there will be changes that need to be made through the process during construction, so what is the process of dealing with that and setting that out? The third thing is the treatment of information management and ensuring that the sponsor organisation and those who want and need scrutiny of the project get access to real-time, timely information in a way that enables them to understand the way in which the project is proceeding without getting in its way. The fourth thing is—it is a difficult word—incentives: to set out the basis on which the delivery organisation is properly incentivised to innovate, drive down cost, drive up quality and achieve the value-for-money goals that we have discussed.
133.Liz Peace noted that any major changes to the R&R proposals could present difficulties for the programme and Delivery Authority:
We [the Sponsor Body] will set the scope of the project, and once we have done that, I believe we have to stick to that, barring some irrepressible need for a particular change. We have to be very clear about what we are doing, how long it is going to take, and what it is actually going to cost.
The reason big projects go wrong is because people allow the scope to creep. Then the whole change process is one in which the contractors end up doing more than they thought they were going to do, and then there is a big argument about who pays for it.
134.Becky Clark told us that the system of governance should be structured to anticipate and facilitate changes to the plan in an organised fashion:
Successful and timely delivery of any major project means that changes can occur only at certain points. When the Sponsor Body considers change gateways needs to be built in from day one. If you do not have these things, you are just not giving your professional contractors the best chance of actually doing what you want.
135.In this context, Sir David Natzler and Ed Ollard expressed concern that the Sponsor Body’s responsibility for specifying “strategic” objectives and making “strategic” decisions was a potential source of conflict with the Delivery Authority:
We are concerned that the word “strategic” is insufficiently precise and meaningful to identify those matters that are properly the concern of the Sponsor Body, and that the Sponsor Body and Delivery Authority may become mired in litigation on the proper division of responsibilities between them. This might take the form of allegations that the Sponsor Body is improperly involving itself in decisions which are operational rather than strategic, or conversely allegations that strategic decisions are being improperly taken by the Delivery Authority. This would be a drain on resources, and has the potential to delay the works. The Bill should if possible be clearer about the nature of the objectives and decisions that are the responsibility of the Sponsor Body.
136.Two of the main purposes of the Programme Delivery Agreement are to set out the strategic objectives of the Sponsor Body and, as Stephen Dance explained to us, to clarify which body is responsible for specific decisions. If difficulties arise between the Sponsor Body and the Delivery Authority, the key question will be the legal status of the PDA. It would be helpful for the Government to clarify how such difficulties are dealt with in relation to the other projects to which the proposed governance structure applies.
137.Schedule 2 of the draft Bill would provide for the Sponsor Body to appoint up to two Non-Executive Directors (NED) of the Delivery Authority, but these may not be members of the Sponsor Body. Becky Clark questioned why this provision had been included in the Bill. Ms Clark described how an overlap in membership had been a point of failure in the restoration of an historic cathedral:
There was commonality between what was effectively the sponsor board and the delivery agency; there were too many people on both, and it was a disaster. There were vested interests, which you cannot separate. People find it very difficult to separate in their brain their roles—they did, at least, in this project. I see that the chair of the Delivery Authority cannot be a member of either House, but I would encourage you to consider whether anyone from either House or the other list should be on the Delivery Authority. That clear line of governance separation and accountability is proven to be a real trip wire.
138.The right of the Sponsor Body to appoint members to the board of the Delivery Authority was seen as being a contentious aspect of the governance arrangements by Sir John Armitt:
If I was the chair of the Delivery Authority, having been appointed to that—presumably the chair would be appointed by the Sponsor Body—I then might take a bit of a dim view of being told that the Sponsor Body was now going to tell me who my other board colleagues were going to be. I would want to have either the final say or an equal say, if you like, as to who was going to join me, because I have got to chair this board and the Delivery Authority, and therefore they should be people who I am comfortable with and who, ideally, I’ve selected, and not people who have been imposed on me by the Sponsor Body.
139.The degree of scrutiny we have applied to the relationship that will exist between the Sponsor Body and Parliament should not detract from the importance of the relationship that will exist between the Sponsor Body and the Delivery Authority. It will, for the most part, be the interaction of these two organisations that will determine the timely and efficient progress of Restoration and Renewal.
140.The Sponsor Body will be tasked with holding the Delivery Authority to account, but it will also be a buffer between Parliament and the people undertaking the work. Sir David Natzler noted that one of the reasons that Sir Charles Barry, the deliverer of building works in the 19th century, had to appear before over one hundred parliamentary committees was because he did not have a Sponsor Body.
141.We do not expect the Programme Delivery Agreement to be set in stone and much like the agreement between the Sponsor Body and Parliament, it will have to evolve through many iterations to reflect the progress and challenges of the project at any given time. It is essential, however, that it sets out how revisions to the proposals should be implemented if Parliament and the Sponsor Body agree that changes are necessary. Major alterations should not be introduced outside a set process to determine how changes can be incorporated in to the plan and how the impact on the project’s budget and timetable will be accounted for.
142.It is important, however, not to regard the Programme Delivery Agreement as the blueprint which will provide a mechanism to resolve any problems that arise over the course of the project. The document will only succeed if there is a strong and effective working relationship between the Sponsor Body and Delivery Authority. The nature of the individual relationships and communication between the two bodies will be central to the programme of works running smoothly on a day–to–day basis. We therefore recognise that the draft Bill’s provision which allows appointments by the Sponsor Body to the board of the Delivery Authority is a pragmatic way of building a bridge between the two organisations to enhance communication. In itself, we do not believe that this provision will compromise the independence of the Delivery Authority, but we recommend that all appointments to the board of the Delivery Authority should be made with the input and consent of the Delivery Authority’s Chair.
143.Clause 10 provides that the Sponsor Body may dissolve the Delivery Authority, but only after completion of the Parliamentary building works, and with the consent of the House Commissions. Sir David Natzler and Ed Ollard suggested that the Bill be amended to require the Sponsor Body to exercise its power to dissolve the Delivery Authority once the works have been completed as “there may be a risk that the Delivery Authority is continued in being for some reason which is plainly not the intention of Parliament.” Sir David and Mr Ollard also suggested that the corporate officers of the House be consulted before the Delivery Authority is dissolved.
144.We are neutral as to whether the Bill should constrain the Sponsor Body to use its power to dissolve the Delivery Authority after the completion of the Parliamentary building works. As there is no obvious downside to this amendment we are unsure of the reason why the power was made discretionary in the first place. We therefore suggest this clause is reviewed to establish how best to cast the power to dissolve the Delivery Authority.
145.Clause 8 of the draft Bill provides details on the funding of the Sponsor Body and the Delivery Authority. It has been drawn to our attention, by Sir David Natzler and Ed Ollard, that the wording of the provision on the funding of the Delivery Authority may have unintended consequences:
[ … ]“payments to the Delivery Authority” may be construed as payments under contracts for works or services, which would bring public procurement legislation into play. We suggest replacing “payments to” with “funding for”, to make it clear that these are not payments under any kind of contract.
146.We recommend that the drafting in clause 8(4) of the draft Bill be amended. Rather than referring to “payments to the Delivery Authority” from the Sponsor Board it should read “funding for the Delivery Authority”. This is to avoid bringing public procurement legislation into play which would be undesirable.
147.Schedule 1 to the Bill provides that the Sponsor Body’s accounting officer “is to have, in relation to the Sponsor Body’s accounts and finance, the responsibilities that are from time to time specified by the Sponsor Body.” Sir David Natzler and Ed Ollard told us that this approach was “less than ideal”. They suggested the National Audit Office be consulted as to how this might be amended. Sir Amyas Morse, the Comptroller and Auditor General of the National Audit Office did not express any concerns to us over this provision. Given the very close scrutiny the accounts of the Sponsor Body will be under, together with the legal requirements all accounting officers are under, we believe this provision simply gives the opportunity for the Sponsor Body to require more of its accounting officer, rather than offering an opportunity for the Sponsor Body to act improperly.
148.It became abundantly clear from the evidence we took that the success of the project will rely upon its leaders forming productive and cooperative professional relationships. No governance structure can ensure the smooth delivery of R&R if the senior figures in charge of the programme of works fail to work to the best interest of the project. As Sir John Armitt, said:
Governance is fine on paper, but it depends on relationships and personalities. The key at the end of the day is going to be building those relationships.
149.The approach taken by the guardians of the 2012 Olympic Games serves as a helpful illustration of how a positive working culture can shape the success of a project of national significance. We are concerned that all those involved in the delivery of Restoration and Renewal should recognise that a culture of transparency and open communication will be central to the success of project.
72 DPB 003, para 7
73 DPB 003, para 3
75 Draft Parliamentary Buildings (Restoration and Renewal) Bill, October 2018, Cm
76 The Chair of the shadow Sponsor Body was appointed on 1 August 2018
77 Sch.1(2)(1) draft Bill
83 Q204 and Q30
84 Schedule 1, paragraph 6 of the draft Bill
89 DPB 003, para 15
93 DPB 001, pp 2 and 5
94 Finance Committee, Oral evidence: , HC 1615, October 2018, q 48
101 Ibid, para 12
107 DPB 003, paras 10–11
115 Cabinet Office, , October 2018, para 6
126 DPB 003, para 13
133 Clause 5(1) draft Bill
134 Clause 5(4)
139 Clause 2(2)(a)
140 Clause 2(2)(b)
145 Clause 10(a) and (b)
147 Clause 8(4) of the draft Bill
149 Paragraph 24 (5)
Published: 21 March 2019