Q151 Mr Bacon: It is not in the Report but it is the opinion of the National Audit Office.
Mr Rowlands: No, I recollect that in 2000 the National Audit Office looked at LUL's public sector comparator and the methodology and said it was satisfied with it. What it warned at the time was that London Underground should not rely exclusively on the public sector comparator, that any evaluation was much more subtle than that and other factors needed to be taken into account. London Underground indeed did heed that advice. In reaching its evaluation it looked at quite a number of factors and it did not rely solely or exclusively on the public sector comparator.
Q152 Mr Bacon: Can you now answer my question?
Mr Rowlands: I thought I had answered your question.
Q153 Mr Bacon: No. My question was do you agree with the NAO that the public sector comparator is pseudo scientific mumbo jumbo?
Mr Rowlands: No, I do not agree with them, and they did not say that.
Mr Bacon: They have said that but we will pass on.
Mr Williams: Not this particular one, just in general.
Q154 Mr Bacon: In general, the National Audit Office has said that.
Mr Rowlands: Sorry, I misunderstood.
Q155 Mr Bacon: The uncertainty surrounding this project is, as you have acknowledged, so tremendous that what I do not understand is how you could work out a public sector comparator with any chance of it being meaningful?
Mr Rowlands: It was worked out by London Underground with its own management through a whole series of workshops, basically asking a very simple question: "Ifwe were doing this for ourselves how would we go about it? What do we think it would cost? What are the risks inherent in it?" In very simple terms that is how they approached it.
Q156 Mr Bacon: You are the accounting officer responsible for how public money is spent in your area in your Department. When you took a look at all this, given the uncertainties and the lack of ability to say whether this represented value for money, which we have heard Sir John attest to, did you decide you needed to seek direction from ministers to authorise spending of this money?
Mr Rowlands: I was not the accounting officer at the time but the then accounting officer did not decide to seek a direction because on the basis of the evaluation undertaken by London Underground, which is freely available to the Department, by comparison with the public sector comparator, including a bond financed public sector comparator, this was value for money.
Q157 Mr Bacon: This was considered value for money?
Mr Rowlands: Yes.
Q158 Mr Bacon: Even though Sir John now says in this Report that it is not possible to say whether the whole thing represents value for money or not?
Mr Rowlands: (a) the accounting officer at the time did not have this Report in front of her when such decisions were reached because (b) it was on the basis of the evaluation that London Underground had carried out against the public sector comparator. These three contracts stood up in value for money terms.
Q159 Mr Bacon: We may pursue this discussion at a later date.
Mr Rowlands: I suspect we will.
Q160 Mr Curry: Patience Wheatcroft, who writes on financial matters for The Times - and not as far as I know a rabidly left wing journalist-when she read the Audit Office Report she wrote the following: "To paraphrase the carefully crafted prose of Sir John Bourn this looks like a potentially very expensive scheme that may not deliver very much in the way of benefits to travellers but is certainly a bonanza for the private sector. For everyone from consultants and lawyers to engineers and construction companies, the Tube has turned into a gravy train. Gordon Brown is the driver. The Chancellor has determined that Ken Livingstone would not have his way and finance the much needed revamp of the Underground through a bond issue. As far as the Chancellor was concerned it was PPP or nothing and eventually he fought London's Mayor throughout the courts to get his way. Mr Brown's devotion to the PPP was not wasted on those who might put it into practice. They saw a desperate customer coming and as the NAO relates pitched their charges accordingly." If one picked a scale of zero meaning she is absolutely all over the place and ten just about spot on, where would you put that comment?
Mr Rowlands: One.