Examination of Witnesses (Questions 140-159)|
MOTTRAM KCB AND
MONDAY 4 MARCH 2002
140. Somebody did tell you, "You must not
(Mr Hall) From the Corporation's point of view, if
it had been statedand it is not my understanding that it
was statedyou should not do something, you do not do it.
It is straightforward. So the issue there surely would have been
in terms of audit there would have been very, very severe qualifications
in the audit report and in the management letters of the audit
saying, "That stops, that stops, that stops because you are
breaching that guidance."
141. Who signed those accounts?
(Mr Hall) PW.
142. No, that is the auditor. Who signed the
(Mr Hall) I did, the Chairman did.
143. Yet you are surprised you were receiving
fully audited accounts.
(Mr Hall) The implication of that statement is that
it was simply the accounts of the Corporation. They were sent
in their draft form to the Department, they were approved by the
Department, and they were signed off by the Department.
144. Sir Richard, paragraph 2.10 says, "The
Department told us that it had interpreted Treasury guidance as
permitting such anticipation of grant." This is the anticipation
for future years. Why was that your interpretation?
(Sir Richard Mottram) It was quite clear from the
then guidance that you could anticipate monies which had already
been voted by Parliament. The rule was, roughly speaking, if you
knew at the end of the financial year, or if you knew by the time
you signed off the accounts in relation to the end of the previous
financial year, that you could confidently rely on that money,
you could take it into account in the accounts. That was the guidance
at the time. What I think is clear from this is that the Department
was sanctioning a practice which went beyond anything consistent
with the then guidance, so the Department was sanctioning more
sums being taken into account than was appropriate in relation
to the then guidance. The point is, anticipation was not ruled
out, the rate at which eventually this process was going on was
not really consistent with the guidance.
145. So why did the Department make that interpretation
(Sir Richard Mottram) I think it got it wrong, to
146. Who got it wrong? The same people you have
(Sir Richard Mottram) I suppose so, yes.
147. Paragraph 2.21says, "The Government
Office [of the North East] was concerned that the Corporation's
lack of cash would be reported in the media . . .". Was that
the main concern of the Government Office of the North East, how
these things were perceived in the media?
(Sir Richard Mottram) I am not sure it was not, but
the point was this was a classic confidence issue. If it was implied
that the Corporation could not settle its debts, then, as we know
in relation to other contexts, that can rapidly erode confidence.
That is the point.
148. Would you give a similar answer to Case
A on page 20 where it talks about this £8.4 million project
of the University of Durham Stockton Campus? The Department's
original view was, "The regeneration benefits had not been
substantiated and the quantifiable outputs delivered poor value
for money; the educational need had not been clearly demonstrated;
the Corporation was heavily committed . . .", it then says,
"The Department reversed its decision in the light of the
potential effect that any loss of confidence in the Corporation
would have on other projects . . .". Is that a good way of
spending £7.4 million of public money? On a project which
is not regarded as value for money, ie a complete waste of public
money? It was spent solely because you wanted to maintain the
confidence this Teesside Corporation had in the area.
(Sir Richard Mottram) I think there is a difference
between something having no value and being poor value for money,
if I can draw that distinction. As the Report clearly states,
yes, the Department did take that view because of the issue of
149. It does seem a rather expensive sum of
money to spend on confidence.
(Sir Richard Mottram) As I say, it no doubt had value,
but it did not have enough.
150. Mr Hall, Case D on page 21, the Tall Ships
Centre. It says, "The Government Office took the view that
the Corporation had divided the scheme into smaller elements,
to bring them below the threshold for Departmental approval, and
expressed concern to the Board that the Department's rules had
been circumvented in this way." Is that correct?
(Mr Hall) That the Corporation did split the scheme
deliberately on that basis?
151. It did?
(Mr Hall) Is that the question?
152. I am asking, is it correct what it says
in the Report?
(Mr Hall) I am not convinced it is correct but I am
obviously not privy to the papers.
153. Why was this scheme divided up?
(Mr Hall) I believe there were two different elements
to a scheme. That was the reason in fiscal terms why the scheme
was broken down. But I am talking without access to papers six
or eight years later.
154. How come the NAO has these details. Why
have they written this?
(Mr Hall) I am not querying what the NAO is saying.
It says hereI am sorry.
Chairman: Do you want to think about that answer?
You can come back later on. Go on to your next question, Mr Gibb.
155. It is a bit difficult without answers.
Page 23, why was no approval sought with the Department about
this gift to the University of Durham Stockton Campus? It says
in the Report, "We found no evidence that the Department
either knew about, or approved, this gift."
(Mr Hall) I have not got a full answer to that again
given the circumstances I am in.
156. What circumstances are you in? Why can
you not answer these questions?
(Mr Hall) Basically, it is four years after I finished
work. Obviously I have not got the papers and the files or the
support staff that I had four years ago. So I am trying, as I
did with the NAO, to give the best answers I can in relation to
the points which are raised.
157. So you cannot remember is your answer.
That was also the answer to the previous question, you cannot
remember. Case D then. Why was this property sold at such an under-value,
£1 million instead of £2.7 million? Is it the same answer?
(Mr Hall) No, it is not the same answer. The situation
which arises in relation to Case D is quite simply that a valuer
made a decision in March 1998, and you have a DV valuation some
four years later. The fundamental point from my point of view,
as I said earlier in this hearing, is that the Corporation obtained
valuation certificates and it achieved on a competing basis the
valuation certificate for the sale of that land at £1 million.
158. Can I ask you about Case B then, Middlesbrough
Football Club. Did you instruct the surveyors to value the site
as contaminated and unreclaimed notwithstanding the fact it had
been decontaminated and reclaimed?
(Mr Hall) Yes.
159. Why did you do that?
(Mr Hall) Because that goes back, as I tried to explain
before, to the situation which I do not have all the detail of,
when we entered into a leasehold arrangement with the Football
Club in around 1995, I think, and it was implicit for whatever
reason in that negotiation that we would go back to a freehold
arrangement with the Football Club, therefore you are looking
at a situation on its original basis as opposed to when the reclamation
had been done. Part of the rationale for that statement is, if
you look at it this way, the stadium is being built, the inherent
value in the site is coming from the stadium, in other words you
are building in your own value, so you have to go back to before
it was built.