Q11 Chairman: When we had the old Scottish Office in Dover House they had a lean, mean staff there, perhaps 30, 40, 50 people. They served ministers perfectly adequately, did they not, in central London while the bulk of the Scottish Office staff were up in Edinburgh?
Mr Gieve: I think it was slightly more than that. It is certainly true that the bulk of the Scottish Office was in Scotland, but London is the capital of England and Britain and we are in charge of England and Wales, so the equivalent to the Scottish Office being in Edinburgh is our being in London.
Q12 Chairman: It would be quite interesting to have a note from you, if I may, because you cannot answer us in any detail now, on just how many staff do need to service ministers and supporting staff of those senior civil servants or need to talk to people here in Parliament.
Mr Gieve: Okay.1
Q13 Chairman: Thank you very much. What decision are you going to take on the remaining freehold properties which you are going to get rid of now?
Mr Gieve: First of all, in the short-term at any rate, we have to find accommodation over and above 2 Marsham Street and keeping some of our freeholds is one option to do that. However, we are also considering whether we can sell them and find better value for money, either by renting in central London or elsewhere. In due course I expect to dispose of our freeholds.
Q14 Chairman: At the time a bidder offered to take these properties off you, did he not?
Mr Gieve: Yes.
Q15 Chairman: Since then the market has gone down, so you have lost out, have you not?
Mr Gieve: No.
Q16 Chairman: It would perhaps have been a lot better if you had sold at the time when the bidder made you a reasonable offer.
Mr Gieve: No, I do not think so. The price we were offered by AGP was around £35 million. At the time we thought the properties were worth over £50 million and by financial close we thought they were worth £68 million. That was the basis for that.
Q17 Chairman: What are they worth now?
Mr Gieve: We have not had valuations since then, so far as I am aware, but I still think the price would be above the price we were offered. Obviously we took that risk. At the time we had to make the decision, there was quite a clear gap between our valuation and the valuation we were being offered.
Q18 Chairman: Do you think a refinancing gain is likely on this deal?
Mr Gieve: It is diYcult to say. There is some subordinated debt, so in principle you could see some refinancing. There may be a chance to refinance some of the bond finance, although we got a good deal on that.
Q19 Chairman: This was quite unique and I think it is what the Committee would be interested in. You actually paid for this share of the refinancing gain, did you not?
Mr Gieve: Yes.
Q20 Chairman: How much did you pay for it?
Mr Gieve: I am told it was £2 million.