Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 240-259)



  240. This has resulted in a cost to the taxpayer of £2.6 million, and the fact is you failed to inform your Board of certain key matters which have resulted in this cost. You are now telling this Committee that you cannot remember what happened. I wonder if you have taken advice before you came here this afternoon.
  (Mr Hall) No, I have not.

  241. You have taken no advice of any kind? You just happen to have a poor memory.
  (Mr Hall) No, I do not happen to have a poor memory. You are asking me some details of something which happened in whatever year it was four years after I had finished at the Corporation. I think it reasonable for me to say that having not got the files and the information, not got the staff resources to go with it, and having been out of office for four years, it can be difficult to answer your questions as fully as I would like.

  242. I think it is convenient you have forgotten some matters, which seem to be of crucial importance but seem to remember other matters. Can I quickly move on to another point. It seems to me that this was a flagship project of the Government, and I seem to remember leading politicians—who we must not stray into, must we, Chairman—making this into a flagship enterprise. I also heard Sir Richard mention ministers and again we probably ought not to spend too much time on that either. Did you feel that you had powerful friends and that you would ultimately be judged by the results rather than the modus operandi?
  (Mr Hall) I think the Corporation believed it had a duty and responsibility to the people of Teesside. Its fundamental aim and its prime responsibility was to regenerate that area.

  243. Some people say you cannot make an omelette without breaking eggs, and maybe you felt if you broke some bones you could bring about regeneration while the rules came second to the objective. Is that how you felt?
  (Mr Hall) I do not think the rules came second to the objective, but I would remind you at the time the Corporation came into existence we were bordering on 25 per cent unemployment and we had not had any private sector investment in the area for more than 10 years. So the crucial aim of the Corporation was to create a situation where that regeneration could take place. It is apparent in terms of the Report today, but I hope I have stressed for the period of time of the Corporation we felt we were acting in a proper manner.

  244. You have not established that to anybody's mind, except possibly your own, it seems to me. Can I turn to Sir Richard. The Department's defence is that the balance was struck between on the one hand the achievement of objectives—and clearly this was a very high profile Government objective, without talking about politics at all—and the modus operandi on the other. At the end of the day, a judgment was made and the balance came down in favour of not taking too firm action because they were delivering allegedly regeneration. Is that correct?
  (Sir Richard Mottram) They were not delivering "allegedly regeneration", they were delivering regeneration. The position of the Department was not, "We will turn a blind eye to breaches of the rules because they are delivering regeneration", the issue we focused on earlier was the question of confidence in 1996 and at that point there was certainly a trade-off in people's minds between, "Do we make a big thing of where we are or do we work it out together", and the view was we should work it out together.

  245. Is it not true that a judgment was made that this Corporation had powerful friends, was delivering regeneration as defined by the Government, and to have brought some of these facts out into the open and to have taken disciplinary action, which was clearly warranted, would have cut across the general thrust of the objectives which the Government had set itself? Is that not the case? A blind eye was closed because they were delivering high profile Government objectives?
  (Sir Richard Mottram) No blind eye was closed.

Mr Gardiner

  246. It did not need to be!
  (Sir Richard Mottram) And no blind eye was left open. I do not want to be accused of being flippant again. I do not think that is the case, no. The case was, there was a serious discussion going on between the Department, through the Government Office, and the Corporation about these matters. The Department took them very seriously, the Government Office took them very seriously, I am not implying the Corporation did not take them very seriously. What was clear was, this was a flagship corporation which had done a very good regeneration job in very difficult circumstances. So to that extent, yes, the Government was sympathetic to what it was trying to do.

Jon Trickett

  247. I did not make notes but I think the record will indicate that earlier you said a balance had been struck between the achievement of objectives on the one hand and the breaking of eggs to make the omelette on the other.
  (Sir Richard Mottram) I think it was in relation to 1996 that we were talking; the question of confidence.

  248. I remember 1996 very well. I wonder if you can give us an assurance that such a balance will not be struck again, that if the rules are hampering the Government's objectives, that the rules themselves ought to be reviewed, preferably with the help of the auditors, rather than simply ignored?
  (Sir Richard Mottram) The balance which was being struck, which I was referring to earlier, was, did we want to, in a sense, change the governance arrangements or did we want to ensure that the governance arrangements remained in place, that the people doing the job remained in place but they were behaving properly. We chose the second of those. We did not ever condone the breaking of rules in order to achieve a regeneration objective.


  249. You are the accounting officer and you have to take responsibility, give me a feel for how these things work. How much do these discussions actually get beyond the local Government Office and get anywhere near the Permanent Secretary's office?
  (Sir Richard Mottram) The way in which this would work is that inside the Department there was a thing which here was called the Regeneration Directorate, and effectively that still exists with a different label now. If there were to be sensitive matters of this kind now in relation to Regional Development Agencies, as the accounting officer of the Department I would expect these issues to be drawn to my attention.

Mr Rendel

  250. Mr Hall, can I start with one or two questions to you. I have been told that when he was the minister, Richard Caborn made a visit to the Teesside Development Corporation, can you confirm that?
  (Mr Hall) Yes, he did.

  251. Was it also true on that visit he instructed you not to proceed with any further deals apart from routine matters?
  (Mr Hall) I do not recall that.

  252. Did he write to you afterwards?
  (Mr Hall) To me?

  253. To the Corporation. I do not know if he wrote personally to you but to the Corporation.
  (Mr Hall) Again, I am not aware that he did. I simply do not know, is the answer.

  254. Do you think you would have remembered if he had written to you to say you should not carry on with any further deals apart from routine matters?
  (Mr Hall) I can only repeat what I have said. My expectation is that I would have remembered but I have to give you the frank and honest answer that I just do not know. It is certainly the case from our point of view that we, so far as I am aware and believe, were spelling out quite clearly what we were trying to do to wind up the Development Corporation.

  255. I will cut you off there if I may because I would rather go on to ask Sir Richard the same question. Are you aware of any letter sent by Richard Caborn after a visit to Teesside Development Corporation, Sir Richard?
  (Sir Richard Mottram) I am not but I can probably establish it.

  Mr Rendel: I think, Chairman, if I may, I would like to have a note on that to see whether such a letter did exist and, if so, whether we can see it to see exactly what it did tell Mr Hall. I have some reason to believe it told Mr Hall that he should not continue making deals without referring everything back to the Department. If that is true, I think that is very significant.

  Chairman: Yes, please, Sir Richard.[5]

  256. Can I go on to the firm of solicitors, Mr Hall, which you say you employed to tell you what you could or could not shred. What is the name of the firm?
  (Mr Hall) It used to be called Richardson, Boyle, Blackmore.

  257. Does it still exist; you say "it used to be"?
  (Mr Hall) It does not exist now.

  258. Did it ever have any other clients apart from TDC?
  (Mr Hall) I believe it did but by far and away its major client was the Corporation.

  259. So it was set up and got the job of advising you what you should or should not shred and then it disappeared again?
  (Mr Hall) Yes.[6]

5   Ev 32, Appendix 1. Back

6   Note by witness: I believe I misheard this question and for that I apologise. As a matter of record Richardson, Boyle & Blackmore acted for the Corporation from the early 1990s until the Corporation's wind up in 1998. I understand they subsequently acted in a limited capacity for the Commission for New Towns, the Corporation's successor body. Ref footnote to Q 212. Back

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