Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 60 - 79)

WEDNESDAY 16 JANUARY 2002

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

  60. Perhaps we could ask the Ministry of Defence who presumably are the people who set the costs.
  (Mr McEwen) These are indeed the variable costs.

  61. So you are not charging anything above the variable costs.
  (Mr McEwen) No.

  62. Even if you could do so.
  (Mr McEwen) We have accepted the recommendation which the NAO made which is that the charging of variable costs made sense in terms of the wider value to the taxpayer. It is the case that these aircraft are there for military purposes. They are not fully required for military purposes in normal peacetime, therefore if they were not being used by the Royal Household among others, they could be under-utilised.

  63. May I ask Sir John whether he has considered the possibility that he might be able to get back more from the taxpayer, not by charging perhaps a full cost inclusive of all the fixed costs, because we accept that they are going to be met otherwise, but by charging something which is still below the market rate, but perhaps above the variable cost?
  (Sir John Bourn) Absolutely. If the Ministry of Defence looked at themselves as running an airline business, of course they would charge what the market would bear and I would see no problem about that. My concern was that at least the variable cost should be recouped. I would have no objection whatever if they did a deal with each Minister and the Royal Family to charge what the market would bear.

  64. It is not just Ministers and the Royal Family, is it, because that is just money circulating within the public sector? What we are really interested in here is the money which is reimbursable from the private sector. If the private sector could be charged a bit more and still feel it was worthwhile using the spare capacity of the squadron, then clearly that is an advantage to the taxpayers. It looks as though, thanks to Mr Williams' efforts, we have identified at least one way in which the squadron could actually get a greater reimbursement than it is getting now.
  (Mr McEwen) We hire out the planes in effect only to Ministers, in other words other government departments, or to the Royal Household. We hire the planes out to the lead customer and it is then up to them how much they seek to recoup from members of the private sector on board.

  65. What we are really saying is that Sir Michael could actually be charging more than you are charging him. He could be oncharging more to the private sector and that would be money coming back to the Royal Household in effect and thus reducing the need for grant-in-aid.
  (Sir Richard Mottram) Yes.
  (Mr McEwen) Yes.
  (Sir Michael Peat) It is purely hypothetical. It never happens.

  66. You have charged the private sector something. You have re-charged the private sector when you have had press flying on the planes. You have re-charged the private sector what I now understand is at the rate you were charged by the Ministry of Defence and you could have charged them at a higher rate.
  (Sir Michael Peat) No, we have never re-charged anyone other than journalists.

  67. Yes, journalists.
  (Sir Michael Peat) But they are on aircraft chartered by and large from BA. They are the large aircraft, the large overseas charters where the journalists come on the big state visits we discussed earlier. The journalists very rarely go on 32 Squadron aircraft because there is no room and they are not used for the big state visits on which the journalists go.

  68. You say very rarely. So the amount of money we are concerned about is probably small but there is something in that.
  (Sir Michael Peat) We are probably talking about tens of pounds not hundreds of pounds. It comes back to Mr Gibb's point.

  69. You are saying on the charter flights you could not charge a higher charge than you are being charged.
  (Sir Michael Peat) We do not charge anyone for charter flights.

  70. The press. Or are the press paying directly to the charter company?
  (Sir Michael Peat) We charge to the press; absolutely. This is where we charter big aircraft from British Airways and we charge the press and we charge them as much as we can. We have raised hundreds of thousands of pounds from them which comes into the grant-in-aid. It is nothing to do with 32 Squadron, it is on the BA big overseas charters.
  (Sir Richard Mottram) I was having a conversation on this with Mr McEwen. Basically this issue arises in relation to ministerial use of these aeroplanes where the Ministers are taking journalists with them. The question then would be what they should be charging the journalists. Should they charge the variable cost or should they charge them something at or marginally below the market price and then the taxpayer might get more money.

  71. You are saying that at present the Ministers are oncharging the press only the variable cost.
  (Sir Richard Mottram) The answer is that I do not know, but we can go and find out. The Ministry of Defence are charging out the planes to the customers. How the customers are then oncharging I do not actually know. We can find out.
  (Sir Michael Peat) We charge on the basis of airline tickets. We relate it to airline tickets because that is all the press will accept.

  72. Even when the press are using the squadron flights.
  (Sir Michael Peat) We do not take the press on the squadron planes.

  73. Never? You said sometimes a moment ago but now you are saying never.
  (Sir Michael Peat) I cannot think of any instance. I do not think we have ever done it. I cannot think of an instance when it would ever have happened because there is never any room.
  (Sir Richard Mottram) We are really talking about the question of ministerial use and we shall try to find out.

  74. It would be interesting if we could perhaps have a note afterwards on that point.
  (Sir Richard Mottram) Yes, we shall find out.[2]

  75. Have there been any occasions on which Members of Parliament or Ministers have travelled with the Royal Family?
  (Sir Michael Peat) Ministers generally travel on overseas visits. That is part of it. I was asked earlier about the numbers and I forgot to mention that yes, generally a Foreign Office Minister and some members of his or her department will be on the aircraft.

  76. On the squadron aircraft?
  (Sir Michael Peat) No. This is a big overseas visit again, the chartered aircraft.

  77. So Ministers and Members of Parliament, as far as you know, never travel on the squadron aircraft with members of the Royal Family.
  (Sir Michael Peat) I could not say "never", but not generally. Possibly when the Queen went to Rome last year, but I cannot say. No, not generally.

  78. It is an interesting question whether, if so, they would have to declare that in the Members' Register of Interests and if so whether they do.
  (Sir Richard Mottram) No, because it is not a benefit to them.
  (Sir Michael Peat) There is no cost involved.

  Mr Rendel: It depends what they do when they are out there.

Chairman

  79. They are only Ministers, not Members of Parliament.
  (Sir Michael Peat) Yes, they are going to support the Queen's state visit.


2   Note by the Cabinet Office: The guiding principles covering all aspects of ministerial travel, including the use of non-scheduled special flights is set out in the note from the Prime Minister Travel by Ministers (Cabinet Office, July 2001). These guidelines do not cover the issue of on-charging, and there is no specific central guidance to departments on this subject. In practice, members of the media most frequently accompany the ministerial party on those trips undertaken by the Prime Minister and Ministers at the Foreign and Commonwealth Office. The Prime Minister's Office and the Foreign and Commonwealth Office operate a policy of charging members of the media at the rate equivalent to the standard scheduled economy class fare (or standard scheduled business class fare, if appropriate) charged by a commercial airline for the route in question. British Airways is generally used as the marker airline for setting the charge. Instances where members of the media accompany ministers from other government departments on special flights are less frequent. The Treasury's policy is to charge members of the media on the basis of an evenly apportioned share of the cost to the department of the overall cost of the special flight. Ministers in the Ministry of Defence and the Department for International Development do, on occasion, invite members of the media to accompany them on special flights when there is available capacity on the plane and it is considered advantageous to have a media presence, and do not charge. Other departments have no record of members of the media accompanying their ministers on special flights, and have no specific charging policy in place. The Cabinet Office intends to circulate a guidance note to departments. A copy will be sent to the Committee. Back


 
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