Q41 Mr Touhig: I think it would be helpful. He was a new Secretary of State, he had been there for four days, signing off this huge project, one of the early PFIs, which had gone pear-shaped. It would be rather interesting to us to know exactly what you told someone who had just been in the job four days. Sir Brian, what do you think of the NAO?
Sir Brian Bender: This is a leading question, Mr Touhig. I think they do a difficult but effective job.
Q42 Mr Touhig: You value what they do?
Sir Brian Bender: Yes.
Q43 Mr Touhig: And they are really worth listening to?
Sir Brian Bender: Yes.
Q44 Mr Touhig: If you turn to page 39, Appendix One, paragraph 2, it says, "In 2000,"-this is the NAO-"we commenced a study into the value for money of the PFI deal. However, as our work progressed we became aware of the project's instability". That was in 2000, so you did not take any notice of them.
Sir Brian Bender: We were monitoring it and being closely involved with it. We obviously had been in discussion with the NAO about the balance sheet treatment of it, so again it is not as though we were just ignoring this. The question is whether at this point in time there was anything else we should have done in order to correct matters. Most of my comments about hindsight would relate to the time and place in the contract rather than what happened subsequently.
Q45MrTouhig: But the NAO warned you that there was project instability in the year 2000 and no action was taken. Mr Byers was then Secretary of State. Was he told?
Mr Dawes: It is obviously a statement of fact here that atthis period there were considerable difficulties in the way that the project was progressing and we even had an adjudication about the interpretation of one of the output specifications, which was, as I say, at the centre of the difficulty of the close control labs. It was a period of quite considerable difficulty, so I am not surprised that the NAO drew this conclusion. As I say again, we were working our way through those issues at the time. We were using our own engineering advice and supplying Laser with the engineering advice to overcome that, and what we have now is a design concept which was picked up by the contractors and developed.
Q46 Mr Touhig: Could you perhaps provide us with a note and comment on, when the NAO advised you in 2000 that there was instability in the project, exactly what you did and did you tell the Secretary of State at the time?3
Sir Brian Bender: Okay.
Q47 Mr Touhig: Did you tell the Treasury? This was one of the early PFIs. A new Government had come in and they were really pushing the success of PFIs.
Mr Dawes: I think we would have to look at the record. There certainly was communication with the Treasury but-
Q48 Chairman: Mr Touhig, you can always ask the Treasury. They are sitting on your left. Ask them.
MsDiggle:Wehavebeen tryingtowork out whether we did know, and I am afraid we cannot tell you either, but we can find out if you wish us to.
Sir Brian Bender: We will cover all this in a note including whether we agreed it with the Treasury.4
Q49 Mr Touhig: In my experience of the Treasury there are some things known only to God and the Treasury and some things known only to the Treasury, and I am sure that they would have been rather interested in this very early PFI and its success. It just seems to me, Sir Brian and the team, that there were red warning lights issued all along the line, even before the contract was signed, and it just seems very worrying, following on from the Chairman's original question, that you were taking on a company here, Laser, which were put together to provide this facility. I have a school in my constituency, a Welsh language medium school provided through a PFI project. It does not require the same kind of specifications and detail that you required and at the quality that you required in these labs and it just seems tome that you have ignored the red lights. Just one other final point, because my time up, is that I noted when we were over there yesterday that they have got 50 acres of land reduced to 25. Was it intended that Laser would then market or sell or benefit from the other 25 acres?
Mr Dawes: The acreage that we have is split into three parts. There is our own freehold on which the new facility is built, there is land which is under the management of Royal Parks, and there is also Crown Estate land, so there are restrictions on what can bed one apart from onour own freehold. As you saw yesterday-
Q50 Mr Touhig: Was that a development opportunity which would have fallen to Laser? If you look at paragraph 2.14 in the Report, it says, "The opportunity to develop surplus land encouraged the bidders to look beyond the design . . . ", which would seem to suggest that they were somewhat focused on what they might have made from selling or developing this land?
Mr Dawes: The development opportunity was again part of our freehold which we vacated and sold and there is now a housing development on there.
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4 Ev 14