Examination of Witnesses (Questions 180-199)|
MOTTRAM KCB AND
MONDAY 4 MARCH 2002
180. As it says in 2.10, that would have required
you to slow down your regeneration activities.
(Mr Hall) Yes.
181. Sir Richard, the Chief Executive, as he
has just said, the Director of Finance and Price Waterhouse all
came to the conclusion that these anticipated grants were allowed,
did you not have a discussion with the Treasury in which it was
made clear there was a distinction between monies which had been
voted by Parliament and monies which had not been voted by Parliament?
(Sir Richard Mottram) Not that I am aware of, Chairman,
but I can obviously go away and check that.
182. In your own mind, in the mind of your Department,
was it okay to anticipate monies?
(Sir Richard Mottram) I think it was, yes.
183. Including monies which had not been voted
(Sir Richard Mottram) My guess is, and I can certainly
look at this again, Chairman, as the first sentence of paragraph
2.10 says, "The Department told us that it had interpreted
Treasury guidance as permitting such anticipation of grant."
I agree there is an ambiguity there, but the question is whether
the Department fully understood the distinction between a sort
of 45 per cent level and a 100 per cent level, or indeed a two
year level, and I am not sure it did, but I will go back and double-check.
184. You mention two years, it refers in paragraph
2.9 to ". . . a further £19 million and £20 million
respectively of grants not due until two years later, which Parliament
had not voted."
(Sir Richard Mottram) Yes, exactly.
185. You were aware of those monies, presumably?
(Sir Richard Mottram) The Department was, yes.
186. Was the Treasury aware of them?
(Sir Richard Mottram) Yes, absolutely, because those
187. Presumably the Treasury was aware they
had not been voted?
(Sir Richard Mottram) The amounts were obviously derived
from the forward forecasting of the provision for the Corporation.
188. So the Department was aware they had not
been voted by Parliament and the Treasury was aware they had not
been voted by Parliament?
(Sir Richard Mottram) I think they must have been,
(Mr Glicksman) I think that depends whether we had
seen the accounts of the Corporation. I am not sure we had.
190. Would there not have been a need for an
196. Do you want to explain a bit more?
(Mr Glicksman) We had a hybrid system in operation
in those days. This was in the days before resource accounts.
We had controls on a cash basis and Parliament voted a grant in
aid to the organisation on a cash basis. But the Treasury required
bodies such as all non-departmental public bodies to produce their
accounts on an accruals basis, which was different from the way
Parliament voted the money. Accruals accounts require organisations
to take account of certain types of transactions which are going
to happen in the following yearcreditors, debtors, provisions
and so on. So the Treasury put out guidance on how to take into
account things which are going to happen in the next financial
year. The bit of guidance I was reading from was, how do you take
account of the fact you are going to have grant in the next financial
Mr Bacon: I was happy with Sir Richard's previous
answer, that he should have done it and he did not.
Chairman: We will take that answer off your
197. Sir Richard, in paragraph 5.8 it says that
the Department were aware of the Corporation's approach to business
affairs. In 5.9 it goes on to enumerate a number of things the
Department was aware of, specifically, "The Corporation entered
into agreements without the necessary departmental and Treasury
approval, and had deferred payments to creditors. It was also
aware that the Corporation was agreeing the terms of deals with,
and making moral commitments to, developers, contractors and other
parties without approaching the Department for approval first".
On page 45 there is a list of the Board members, there is Mr Ian
Mathieson, the Chairman of the audit. Did anyone in the Department
draw these concerns to the attention of Mr Mathieson?
(Sir Richard Mottram) I do not know. I will have to
look at that.
198. The Corporation Chairman told us that the
Department did not share concerns about the Corporation's financial
management with the Board. I take it Mr Mathieson was not told?
(Sir Richard Mottram) There could be
199. The Chairman was not told.
(Sir Richard Mottram) Could it not be the distinction
between the Board and the Chairman and the Chairman of the Audit
Committee. Each year Price Waterhouse were producing three documents
dealing with the audited accounts, they were auditing the accounts
and they were signed off, as Mr Hall explained.
2 Ev 32, Appendix 1. Back