Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 20 - 39)

WEDNESDAY 16 JANUARY 2002

SIR RICHARD MOTTRAM KCB, SIR MICHAEL PEAT KCVO AND MR IAN MCEWEN

  20. May I refer you to page 23 and paragraph 3.2 and the guidance on who can travel? It does not spell out what is meant by staff of the Royal Household. Are you satisfied that the guidance is clear enough to ensure that such accompanying persons are justified by the nature of the visit?
  (Sir Richard Mottram) Yes, Chairman.

  21. Do you want to say a bit more about that?
  (Sir Richard Mottram) We have visibility of the guidelines which the Household apply and if there is any doubt about whether it would be appropriate, they consult us. I do not know of cases where we have felt that what was being done was not appropriate. Some examples are given in the report of people who are not strictly speaking covered, but I would not myself have difficulty with the notion that if there were an artist involved in some journey they should travel in this way.

  22. Do you think there is further scope to reduce costs to the grant-in-aid by defining more clearly which individuals are eligible to have their travel costs met by the grant-in-aid?
  (Sir Michael Peat) No, not really because as the NAO said in their report, this is purely a technical documentation point. It has been understood for years what staff means in this context and we have all understood it, and DTLR have understood it. All that has not happened is that no-one actually wrote it down in the relevant guidance. It is a very simple minor documentation point which is being referred to here.

  23. Last question, just so the Ministry of Defence does not feel neglected. Now that we have agreed that the royal use of 32 Squadron is secondary to its military use can you tell us anything about how its size and configuration might change?
  (Mr McEwen) It has been confirmed that the current size and configuration are appropriate for the military tasks it has to do, so there are no plans to change that in the near future. The current aircraft are not intended to go out of service until well into the next decade.

  24. I must put it to you this way. We all know that the Royal Yacht was supposed to be an ambulance ship, but in fact it was the Royal Yacht. Now you are telling us that 32 Squadron is a military squadron. Are you saying that the military use really is its dominant use and that the Queen would be turned off a plane just because some general wanted to fly to Bosnia or something? Are you telling us that would actually happen in real life?
  (Mr McEwen) The military requirement is the squadron's basic raison d'être. If there is an operational need for the planes, then clearly that would take precedence. The point is, however, that what we are talking about is that the configuration of the squadron is based on the need which would apply in a crisis. Most of the time we are not in a crisis, so the squadron is not required for all those operational needs that would occur then. On that basis the Royal Household use the planes, Ministers use the planes and senior military officers and officials in the Mod and other departments can also use the planes.

  25. Sir Michael, you might be asked whether the Royal Family should use scheduled flights more often. Following 11 September has there been any more emphasis on the safety of using 32 Squadron rather than scheduled flights?
  (Sir Michael Peat) Yes, there have been concerns about using scheduled flights and the security advice we get on that is not really within our remit. The Queen was originally going to go to Australia and New Zealand by scheduled flight for the Commonwealth Heads of Government meeting. In fact the whole meeting was cancelled as it happened, but before that happened our advice was that she should not travel on a scheduled flight. I cannot say personally how long we will receive advice along those lines.

Jon Trickett

  26. Can you just explain to me about 32 Squadron? How many aircraft and what manpower?
  (Mr McEwen) As the report indicates, there are two BAe 146 aircraft and these are four-engined jets taking about 21 passengers plus their luggage. There are five 125 aircraft which can take about seven passengers. The total size of the squadron, if I recall correctly, is 57 people.

  27. You said it was configured for military purposes. What did that particular phrase mean? It sounded like a phrase you had practised a few times in front of the mirror before you came here.
  (Mr McEwen) No; merely the number and type of aircraft, the two 146s and the five 125s.

  28. Are you able to indicate the proportion of use for military purposes and for non-military purposes, Royals and politicians and so on? Do you have an idea?
  (Mr McEwen) The purpose of the squadron is to meet the operational needs of a crisis. What we are saying is that in the event of the scenarios which the Department has defined to meet its commitments and tasks, in the event of a crisis you would need all of those aircraft for operational purposes. In normal peace time we do not. If we take the last full year, the Royal Household used the squadron for about eight per cent of its flying time, Ministers used it for about 16 per cent of the flying time, training took up about 19 per cent of the total flying time and 56 per cent of the flying time was taken up by general military use.

  29. As far as changing accounting which has been used for re-charging the squadron to the Household is concerned, is that something which is now uniform across all non-military uses? Is it the same pounds per mile or however it is calculated?
  (Mr McEwen) Yes, the variable charges are now the same for all those who are charged.

  30. To somebody who is not an accountant but who as a councillor has been interested from time to time in creative accountancy by a government which was not too keen on those things, this does look slightly like creative accountancy, does it not, since the cost of maintaining the squadron consists both of variable and fixed costs? It is presumably true to say that this change in accounting mechanisms has not resulted in a saving to the taxpayer overall; in fact our brief says that there has been a saving to the taxpayer. Presumably it means that there has been an increase in the cost to the taxpayer of the Ministry of Defence and a reduction in cost to the taxpayer of the Royal Household. Is that correct?
  (Mr McEwen) No. The way the system worked under the system of fixed and variable charges was that the fixed charges for the Royal Household were worked out on the basis of the planned flying hours by the Royal Household. Those fixed charges then form part of the money which the MoD transferred to the DTLR, which then formed part of the transfer to the grant-in-aid and was then repaid to us by the Royal Household. So there was no net effect, positive or negative, as far as the Ministry of Defence was concerned, it was just a way of making visible the full material costs to the Royal Household. Now that we are charging variable costs, we do not have that circulation of money for the fixed charge.

  31. I would guess that the accounts will show a change to the net cost to the Ministry. There is no other way it can have been accounted for and it could be represented as a soft-shoe shuffle, but since your argument is that this is now a homogeneous treatment and all departments are treated just the same I dare say it is arguable that fixed costs should not be charged. The other argument might be though, if you are wanting to argue the Ministry of Defence's case rather than the Household's case, that actually what should have happened is the true cost, that is fixed plus variable, should have been charged to all users. It so happens that a method of accounting has been chosen which is favourable to the net cost to the Household. Would you agree with that?
  (Sir Michael Peat) We are only 8 per cent users of the service, so it would be slightly odd if the charging regime was determined with just 8 per cent of the users in mind. As the NAO say quite clearly in their report, there is a saving to the taxpayer as a result of just charging the variable rate to the Household because previously the Household were buying their air services outside the public sector. We were buying them from charter firms and therefore the money was going outside the public sector to charter firms. We were paying more to charter firms than the variable rate we might have paid to the Ministry of Defence. I agree with the National Audit Office when they say that there is a saving to the taxpayer as a result of the Household just being charged variable rates.

  32. No doubt that is because the private sector are required, necessarily, to charge both fixed and variable costs. That is a road I do not wish to go down. I do think that there is clear evidence that somebody has applied decent management techniques and as a result savings have been produced; there is no doubt in my mind that this report does demonstrate that. May I move on to the definition of private use of transport? I am curious to understand whether, for example, the Royal Family going to Balmoral would be regarded as private travel or whether it would be regarded as something which was chargeable to the public purse.
  (Sir Michael Peat) Going to Balmoral is categorised as residence to residence travel and not as private. That is because the Queen travels as Head of State, she is accompanied by quite a number of official staff and she continues to undertake official work and duties whether she is at Balmoral or at Buckingham Palace. When it is actually private the Queen pays herself.

  33. Whenever she is moving from one residence to another, or the family, it is appropriate not to regard it as private in your view.
  (Sir Michael Peat) No, not the family.

  34. Those people who are nominated.
  (Sir Michael Peat) Yes. It is only really Balmoral because the Queen goes by car to the other residences.

  35. Often I have come across people who have gone on business somewhere but managed to secure some private enjoyment while they are there carrying out business. I am sure that will not be unfamiliar to you observing the private sector. I am just wondering what happens in such circumstances. Is the full cost charged to the public purse or is some balance struck or how is that done were that ever to happen?
  (Sir Michael Peat) The Chairman asked the question earlier and our very clear ruling guideline on it is that business and private should not be mixed and if it is a visit overseas someone is doing for an official purpose at the request of the Foreign Office or an official engagement in this country, that is what it should be and private pleasure or private business, for those members of the Royal Family who have private businesses—and most do not, should not come into it.

  36. Can you give us an assurance that there has been no occasion upon which any member of the Royal Family has received assistance with travel and used part of the visit for business purposes, in other words for income generation, as we know some members of the Royal Family are involved in private business?
  (Sir Michael Peat) Very few members of the Royal Family are involved in private business; the Queen certainly is not, nor the Duke of Edinburgh, Queen Mother, etcetera. The only member of the Royal Family who undertakes official engagements who is involved in private business is Prince Edward. He actually did not use 32 Squadron at all last year as it happens but did undertake two or three visits at the request of the Royal Visits Committee. Yes, I can give you every assurance that it does not happen.

  37. It has never happened.
  (Sir Michael Peat) As far as I am aware it has never happened.

  38. You can use the past tense as well as the present.
  (Sir Michael Peat) Yes. We have only been responsible for four years, as you know.

Mr Williams

  39. Sir Michael, I believe this is likely to be your last visit, is it not? You are moving on.
  (Sir Michael Peat) Yes, I am afraid so.


 
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