129. May I take you to page 11 of the Report and paragraph 1.16. It says, "MOD's staffing requirements are likely to change over time . . . it requires Modus to undertake an annual review of the use of accommodation. If MOD gives up complete floors, Modus is allowed to rent out whole floors of Main Building to others, subject to MOD's veto on who its co-tenants might be". Does that mean that each year Modus would look at what accommodation you were using, say that floor is empty, and then can they only lease that out to another organisation for one year?
(Sir Kevin Tebbit) No, they can lease that out indefinitely. The point here is that we have come down from about 13,500 people in London in the early 1990s to the figure we have now of about half of that. I do not regard the figure we are intending to come down to, 4,300 Head Office staff, as a fixed figure. This is going to continue to move and we shall need to sustain value for money throughout and bear down on Head Office costs. Hence the clause in the contract, which says firstly that we need to monitor very carefully just how much space people need and secondly as and when we can release chunks of space so we should do so, will reduce the cost we pay, less than the £55 million a year, and provide opportunities for somebody else to come in who will pay Modus. We would insist on security vetting to make sure that the people who came in were essentially Government Departments; that is what it will boil down to. That is why we have that flexibility into the contract. Each year this has to be looked at. If it is decided that there is ability to release a floor or a particular defined area, then that can be done on an indefinite basis. We would not have any concerns as to whether it was five, 10 or 15 years or whatever was commercially advantageous. It is designed to continue to give us the flexibility to drive down our numbers in Head Office.9
130. Of course numbers may need to rise because of circumstances. We had the situation at GCHQ where numbers were trimmed back and now are beginning to rise a little.
(Sir Kevin Tebbit) It is not impossible, but I would hope we did not have to do that in Head Office. The whole way of networking information, the whole way in which IT is going, should enable us to put a cap on that. We do now have this third building. I should have said at one point that a further argument which has emerged in its favour is essentially a security argument. After 11 September, the idea that we might need to be somewhere else, not necessarily just in two buildings next door to each other, is a consideration. It is not an overriding consideration, but it is another factor which has occurred to us. The third building is quite useful for other purposes too.
131. You have just answered my final question relating to paragraph 10 on page 3. You rejected locating Head Office either elsewhere in London or on a greenfield site. I was going to ask whether that decision would have been the same post 11 September?
(Sir Kevin Tebbit) The fact that we do have that third building has been reinforced as a benefit since then.
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9 Note by witness: This means that Modus would be paid indirectly by the new tenant. In practice, under the contract, the new tenant would pay a rent to MOD who would in turn pay Modus.