Examination of Witnesses (Questions 80-99)|
WEDNESDAY 30 OCTOBER 2002
80. And he agreed that it was good advice?
(Mr Cook) He agreed that it was a contingent liability.
81. That it was good advice?
(Mr Cook) I presume so. The implication of that must
be that, yes.
82. But the decision to place those contingent
liabilities in the private sector rather than the public sector
(Mr Lynch) The contingent liability is with the Government.
The Government owns the contingent liability.
83. The decision to classify these liabilities
as private sector liabilities was made by you when you decided
that because of the way these people had been appointed and who
they happened to be, therefore this was not a public sector entity.
(Mr Lynch) Can I clarify one thing? I have been advised
that it is not people's employment that determines which sector
they are in; sorry, I misled you. Householders are part of the
private sector, so if you had appointed the consultants as householders
that would have been private sector.
84. Sorry to interrupt here. Had the 11 of them
been directors of the London Underground would that have meant
they were then public sector?
(Mr Lynch) If they were there in their capacity as
directors of London Underground, yes, they would.
85. I am really doubtful about this. This cannot
be right. I just want to ask you to have a little think about
this. It surely cannot be the case that an outfit is defined as
to whether it is public or private by the background of the people
appointed to its board. What has happened to the articles of association
for this outfit? Surely they define its status?
(Mr Lynch) The articles of association determine the
make-up of the membership and the make-up of the board. The articles
of association shall say that 11 out of 12 members of the board
shall come from the private sector. If that is what it says in
the articles of association the people on the board will be there
in their own personal capacity, or perhaps a private sector organisation
such as the Campaign against Accidents on the Railway.
86. But this is important, is it not, because
it shows that there is a step back behind the decision as to who
to appoint. The decision as to who to appoint is driven by the
definition put down in the articles of association. It is not
(Mr Lynch) No.
87.as you implied in your answer to Mr
(Mr Lynch) Did I? Sorry; I did not mean to imply that.
It is not an accident.
88. So had the articles said that no more than
four must be appointed from London Underground and a further three
from the Department of Transport itself and so on, that would
have made it a public sector organisation?
(Mr Lynch) We would have had to examine that case
and determine whether the majority was from the private or public
89. You have made this ruling on the evidence.
Is there a comparable example you can give us where you have done
(Mr Lynch) We make classification decisions all the
90. Give me a comparable example.
(Mr Lynch) Welsh Water is another example whereby
most of the members of that board come from the private sector.
91. It is not where they come from that counts.
(Mr Lynch) Most represent the private sector. I am
not quite sure what you mean.
92. They are appointed as being in the private
(Mr Lynch) In their personal capacity, for example,
as a representative of a charity, these people would be from the
private sector. If they were appointed to the board as a director
of London Underground, that would be from the public sector.
93. Just for the sake of the argument, and I
hope my colleagues will not take offence at this, supposing the
Secretary of State happened to appoint 11 former Labour Members
of Parliament. Would you still say this was a private sector organisation?
(Mr Lynch) If they were appointed in their personal
capacity, yes, that would be private sector.
94. Eleven former Labour Members of Parliament
would be private sector? No relationship with the Secretary of
State or the Government?
(Mr Cook) I think, Mr Chairman, you are moving us
into the realms of hypothesis. Our job is to make classification
decisions about practical options presented, whether it is by
ministers or the private sector, for organisations. I think that
it is quite wrong to draw inferences about what this entity is
like and the nature of its control by hypothetical examples which
may not exactly take place, because you may come to the wrong
conclusions based on different ways in which you interpret those
95. But there must be principles that underpin
(Mr Cook) There are principles and what we deal with
is actual cases that are presented
96. This is not hypothetical, Mr Cook. The nature
of the railway authority has changed in the last two years. It
is not hypothetical.
(Mr Cook) No, but I do not believe it is appropriate
for us to give you answers as to hypothetical mixes of board members
for situations that would not actually in practice be presented.
97. Are we not being misled a little here? Is
not the answer really what is in the articles? Who was then selected?
We have been taken down a winding lane often into the realms of
mystery here that I really would rather have avoided. It seems
to me it is the articles. They are there; they are matter of fact.
What relationship is it to that? Is that what you took account
of, or did you go and investigate the background of these people?
What did you actually do?
(Mr Lynch) The articles, of course, the articles.
98. Perhaps we should stick with the articles.
(Mr Cook) If people that were appointed were in contradiction
to the articles that would lead us to question the very basis
of an intent, so discussing the appointment of people who are
inconsistent with the articles is moving us into the realms of
hypothesis where I do not think we could give you answers that
could be helpful.
99. I want to talk to you about productivity
but just before I do that there is an interesting section in your
annual report where you talk about modernising the ONS. I just
want to read you part of paragraph 53: "The implementation
of the re-engineering projects (REPs) will ensure that existing
activities are migrated to the new information management environment.
Each REP will help bring the IM infrastructure to life and extend
it as necessary to meet the needs of ONS. . . . the Neighbourhood
Statistics programme . . . is a pathfinder for the infrastructure
and will be a key enabler . . . in driving forward the creation
of the infrastructure." I could not find a translation of
that anywhere in the report. Can you tell me what it means?
(Mr Cook) What we are doing is creating a common information
management environment for the Office for National Statistics.