Finances of the House of Commons

Greg Knight Excerpts

Tuesday 11th November 2014 Commons Chamber

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

I beg to move,

That this House notes the First Report of the Finance and Services Committee, HC 757, and the draft medium-term financial plan for the House of Commons as set out in the Appendix to the Report; and endorses the intention of the Finance and Services Committee to recommend to the House of Commons Commission a House of Commons: Administration Estimate for 2015-16 in line with the financial remit set by the House of Commons Commission.

I am very grateful to the Backbench Business Committee for giving me this opportunity again to present the financial plan for the House of Commons. This is the third occasion on which the Finance and Services Committee has sought such a debate. It provides an opportunity for Members to have their say on the House’s finances and the services provided for them.

In my judgment, these debates have increased transparency. They have allowed Members to question the finances and the services that come from them. They have enabled not only questions to be asked but amendments to be made to the plans. All of that has led to a greater ownership by Members of the plans. During this Parliament, the Finance and Services Committee has been working to improve governance, including promoting better oversight of the Members estimate by Member bodies and a new Standing Order on motions with financial consequences for the House, as well as its reports and these debates.

[Sir Greg Knight (East Yorkshire) (Con)]

We should all strive to save money, but will my right hon. Friend nevertheless point out in his speech that some economies available to business are not available to the running of this place? In particular, will he refer the House to paragraph 26 on page 10?

[John Thurso]

My right hon. Friend makes a very important point, one that informed the very beginning of our first debate. Above all else, our job as a Parliament is to scrutinise Government, to legislate and to work for our constituents. The application of resource must be for that purpose. The savings we make, or the efficiency with which we undertake that operation, come as a consequence; they do not drive the way in which we seek to do our business. The overall point my right hon. Friend makes is absolutely taken and I will allude to it at various points during my remarks. I pay tribute to the fact that he has raised the point now and to his excellent contribution to the Committee.

I thank the director of finance and the other House staff for their positive engagement with the Committee, and for all their work and assistance in helping us to prepare the report and our advice to the Commission on the estimate. The finance team, led by the finance director, has undertaken very considerable improvements, including to the accounting system, management accounts, budgeting processes, management accounts and procurement systems. All are helping us to be more efficient and to get better outcomes both in terms of the costs of services and, importantly, what they deliver for us.

May I also use this moment to pay tribute to all the staff who serve us throughout the House service in all areas? I truly think, having now engaged with them for the best part of four years, that had I had such a staff in private life, I would have considered it a privilege to have had them working with me. I think they can be proud of everything that they do for us and we should be very grateful for it.

The Commission is required, under the House of Commons (Administration) Act 1978, to lay an estimate each year seeking the House’s approval to fund administration services. These include the maintenance of the estate, security, the Clerks and the Library staff who advise us, and all the other staff who look after us so well: Hansard; the printing of papers and reports; education, visitor and outreach services; and IT systems. The role of the Finance and Services Committee is to work with the management of the House to prepare a draft estimate for the Commission to consider in December.

The Committee also monitors—this is a new task we have taken on recently—the Members estimate, which funds the Treasury contribution to the parliamentary contributory pension fund, Short money and Members’ ICT equipment. However, the role of the Finance and Services Committee does not extend to the Independent Parliamentary Standards Authority or Members’ pay and allowances, which are dealt with separately.

I am pleased to report that the savings target, which we set in 2010, has been achieved—although there are one or two loose ends currently being tidied up in the savings programme. The House is not bound by the Government’s spending plans. As I said to my right hon. Friend the Member for East Yorkshire (Sir Greg Knight), it is absolutely correct that we have the appropriate resource to undertake our work of scrutiny of Government and as legislators. None the less, it is important that we do so while taking account of the world we live in. The Commission therefore decided, before the 2010 election, that the House needed to reflect what was going on in the wider public sector and to ensure best value for the taxpayer. The Commission committed itself to a reduction in the administration estimate of at least 17% in real terms between 2010-11 and 2014-15. That meant setting a budget of £210 million for 2014-15 compared to a baseline of £231 million for 2010-11.

In December 2013, the Commission agreed an administration estimate for 2014-15 of £201.3 million. However, because of transfers between votes—most notably the merger of the House staff pension scheme into the civil service scheme and other exceptional factors—some adjustments are required to compare that figure with the target of £210 million. However, allowing for all of those factors—details are in the Committee's report—the estimate laid for 2014-15 is some £2 million below the target set in 2010. Part of that is due to a change of culture that has taken place within management and staff, and the fact that we now recognise that resource, once allocated, does not belong to a department and where not required can be returned rather than being spent to preserve the budget. I commend them for that change.

The Commission also decided that savings should be achieved, through detailed analysis of services and how they were delivered, to arrive at something better—not simply cheaper. For example, changes have been introduced in the way in which Select Committee evidence is submitted, processed and published. Less Select Committee evidence is being physically printed. That has not only reduced printing costs, but has allowed a reorganisation of staff in the Committee Office that has provided increased resources for priority areas within the Select Committee work stream.

Members will also be aware that the system for providing them with written answers has recently changed. In the past, written answers were walked across Whitehall in multiple copies—sometimes 500 to 600 answers a day in the Commons alone—and Members mostly received their answers only the following day when they were published in Hansard. They are now delivered electronically. Not only do Members receive their written answers by e-mail as soon as the answer is submitted by a Government Department, but the House will be saving nearly £800,000 every year in printing and related costs.

[Sir Greg Knight]

The changes to written questions are a vast improvement. In many cases under the old system, the press received the answer before the Member.

[John Thurso]

I concur with my right hon. Friend. It is a saving that has made life better for us, which is our objective.

Major savings have been made through reducing the amount of printing undertaken. For example, some lightly used publications are now only available online and most Committees have agreed to distribute papers electronically. The House is aiming for a “digital first” approach, and the Committee expects this to be a source of further financial savings in the coming years.

As someone who spent his professional life in the hospitality industry before entering this place, it gives me particular pleasure to report that significant progress has been made in the past few years in reducing the net cost of catering. My right hon. Friend referred earlier to paragraph 26, which relates to catering, and I fully accept that because of the hours we work and the way we need to be serviced, it is not possible to make the same profit as if we were a fully operational food and beverage operation, but that should not stop us seeking to be as effective as possible in the delivery of the service.

In 2009-10, at the end of the last Parliament, the net cost of catering and retail services was £5.7 million. In the current financial year, at an equivalent point in the electoral cycle, it is forecast to be £2.7 million. That exceeds the target set of reducing the net cost to under £3 million by 2015. I particularly compliment my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst), the Chairman of the Administration Committee, and his Committee on all the work they have done in this area. The savings have been achieved by good old-fashioned sound management of costs and by benchmarking, and it has been achieved at a time when the House has moved to being a living wage employer and has got rid of zero-hours contracts. The staff and the unions, as well as the management, should be applauded for their help in that.

I never expected to see it in my lifetime, but we are now making great progress in working together with the other place. Under a joint procurement process, procurement for the House of Lords, the House of Commons and Parliamentary Information and Communications Technology is all operated by one dedicated service that must produce savings for all three.

The report also considers the prospects for the next four years. In June, the Commission agreed that forward plans for up to 2018-19 should be based on an assumption that the budget for core activities is flat in real terms—that, taking account of Government pay policy and the target for consumer prices inflation, the expenditure envelope for the administration estimate is assumed to increase by 1% in 2015-16 and by 2% thereafter. I stress that this is a working assumption, not a target; actual budgets will be set annually, and clearly it will be for our successor Parliament to decide what it wishes to do, but this establishes a good working base from which the management can proceed.

Even on that relatively generous assumption, it is projected that further savings will be required in 2016-17, 2017-18 and 2018-19. The House service will continue to look for opportunities to make further efficiencies and ensure value for money in the delivery of services through a continuous improvement process that focuses on making services more effective by improving their quality, increasing productivity, cutting costs—or, in the best of all worlds, all three. That most often takes the form of process reviews that engage staff in a continuous review of their work and harness their own creativity to solve problems. There are numerous examples of this, but the goal is to make small savings in time and effort, while maintaining or improving services.

In setting the financial remit, the Commission agreed that some new activities could be undertaken without necessarily having to be financed from within the existing budget. The two main areas are, first, scrutiny and related functions—the Committee received a bid from Chamber and Committee Services regarding Select Committees that we were minded to advise the Commission to accept—and, secondly, the resource consequences of major building refurbishment.

The Commission is keen to deliver a resolution of the House passed in 2007 that there should be dedicated space for education visitors. Construction has now started on a new education centre in Victoria Tower gardens that will accommodate 100,000 children a year, as opposed to the 45,000 we can currently accommodate. In addition, the facility will reduce pinch points, such as the Portcullis House entrance, and release the Macmillan room for other uses. It is due to open, we hope, in 2015.

Following the Wright Committee report at the end of the last Parliament, Select Committees have been one of the success stories of the Parliament, and the Liaison Committee is keen that this success be built on. As I just mentioned, the Finance and Services Committee is recommending a modest increase of £900,000 in the resources available to Select Committees, either in the form of additional staff or by providing additional budget. The Committee is also due to consider a bid from the Library that would enable it to provide more research support.

Members will be aware that the two Houses need to decide how the backlog of work required on this building is to be tackled—a project known as the restoration and renewal programme for the Palace of Westminster. R and R will be a major infrastructure programme that will not start in earnest until after 2020—well beyond the time frame of the budgets we are considering today. An independent options appraisal has been commissioned and is due to be published shortly after the election. Current thinking is that the two Houses might be asked to take a decision on their preferred option in spring 2016.

In the meantime, other buildings we occupy, including 1 Canon Row, the Norman Shaw buildings and 1 Parliament street, require significant refurbishment. This work will not only tackle the day-to-day problems that many colleagues have encountered—leaking toilets, rodents and other problems—but optimise the accommodation we occupy outside the Palace and complete that work before R and R begins. I warn hon. Members, therefore, that in the next Parliament many colleagues and staff will need to move offices as work on the various buildings proceeds. Office moves by House staff to facilitate this process and to co-locate Committee and Library staff have already begun.

Although much of the refurbishment work is capital spending, it can result in quite large accounting changes, largely because heritage and security issues mean that the value of refurbishment is not fully reflected in an increase in the book value of the buildings and that therefore a charge needs to be made. The Commission’s remit does not require the substantial notional charges or other resource consequences of the building work, such as decant space, to be met from within the core budget.

--- Later in debate ---

[Sir Alan Haselhurst]

Yes, absolutely. It was purely for budgeting purposes that the two were linked.

We faced a number of obstacles. For instance, there had been a 10% across-the-board hike in prices before our Committee and, indeed, the Finance and Services Committee, had taken office, and that had an initially bad effect on footfall.

[Sir Greg Knight]

Does my right hon. Friend agree that some of the problems arose from the fact that decisions were made by the House of Commons Commission when it was under full complement? Does he hope, as I certainly do, that in the next Parliament the Commission will not make any potentially difficult or controversial decisions until it has a full complement of members and Back Benchers on both sides of the House are represented on it?

[Sir Alan Haselhurst]

I certainly agree that that would be desirable. We have tried to anticipate circumstances in which the last price review will outlive the current Parliament, so that there will be some cover while the time is taken to reconstitute Committees which may be subject to the deliberations of the Governance Committee and which may consequently take a different form.

The Independent Parliamentary Standards Authority introduced a subsistence allowance of £15, which I think has had a malign effect on the propensity of Members to use the facilities of the House. Some told their electorates beforehand that they would not claim it, while others simply do not feel comfortable about claiming it while they are away from home on parliamentary business. That has, to an extent, reduced the uptake of facilities, especially in the Members’ Dining Room. I found IPSA’s rule that the allowance would be available only if the House’s business continued beyond 7.30 pm very difficult to understand, but IPSA has stuck to it firmly, despite all my efforts to persuade it otherwise. It seems to me that whether the House sits until 7.29 or 7.31, the fact remains that many Members who are distant from their homes will have to eat away from home. Many Members now do not eat on the estate, which has had several bad effects.

I cannot be certain whether that led to the vote to change the House’s Tuesday sitting hours, although a significant number of Members voted for the change. I have counted them out, as it were. There is a pattern which suggests that if they were no longer deemed by IPSA to qualify for help from the taxpayer for the maintenance of another dwelling close to Westminster, they would prefer to leave earlier rather than returning to, in some instances, fairly distant parts of London late at night. That has led to a disappearance of Members and a weakening of the collegiate nature of the House which I remember from the past.

The Administration Committee has tried to come up with an offer featuring the widest possible variety and appeal in order to sustain demand. However, if Members, staff and other passholders are not using our facilities for whatever reason, the Committee’s policy is to let others do so, on the strict understanding that that does not interfere with the prime purpose of the business of the House. We have encouraged third-party commercial hire; we have introduced room-hire fees, not uncontroversially; and tomorrow and the next day, members of the public will be allowed to book lunch in the Members’ Dining Room for the first time. Once that had been advertised, it was a sell-out. We shall await the subsequent report, and then consider whether the same might be done during parliamentary recesses.

The figures that my right hon. Friend the Member for Caithness, Sutherland and Easter Ross and I have given are not recognised by the media. We are constantly told that the catering and retail deficit is what it was at the start of the current Parliament, rather than what it has become since we have been introducing our new policies. Sometimes it has been rounded up to more than £6 million, and on one occasion the deficit carried by the House of Lords was included in our figures. A continual wish to denigrate does not help us to give credit to all the people who have worked so hard to be responsible, for the reasons that my right hon. Friend explained.

The media suggest that this is all about 650 Members of Parliament advantaging themselves. However, there are 13,000 passholders on the estate, many of whom earn much less than Members of Parliament, and the catering service is aimed at everyone who has legitimate cause to be here. As I have said, the deficit has been halved. I hope that that will be recognised, and that we will make continuous efforts to achieve further savings and improvements. I pay tribute to the director of catering services, Richard Tapner-Evans, and to the whole of his team for the way in which they have responded to change while maintaining, in my view, very high quality and the reputation of the House’s catering.

On the retail side, I think that we have seen nothing short of a revolution. When I was first elected to this House, the only branded products that were available were whisky and cigarettes. For many of us, to give a bottle of whisky on every occasion when we were asked to contribute a prize was too expensive, and even in those days we did not really think of giving cigarettes. Now we have a fine and expanding range of quality gifts and souvenirs. Across the House revenue is up 11% in the July-September quarter compared with the equivalent period last year. The new Jubilee shop opened on schedule in July. The whole area around it has been refurbished, and sales are strong. The only niggle I have is that signage to the facility should be sufficiently prominent, and we have engaged in a lively debate with English Heritage about the nature of the signage we can have to attract the eye, and I hope we are winning on that one.

The Houses of Parliament shop on the corner of Bridge street now trades on Saturdays. It is unbelievable that it did not trade on Saturdays before. It now has more engaging window displays. Clearly that outlet is directed more to tourists and general visitors to London, and, frankly, how anyone ever thought tourists were coming to London specifically to hunt down a biography of Stanley Baldwin or Ramsay MacDonald is beyond me. The gifts and souvenirs that are in there now have made all the difference in the world to the trade that is done there. In August of this year alone sales were around 40% higher than in August last year.

The Members’ shop on the Terrace has seen an increase in the value of transactions as more product lines are introduced, some of which are exclusive to that shop. The summer fair in July in Westminster Hall built on the success of last year’s Christmas fair, and the Christmas fair itself will be repeated on 2 December upcoming, with 60 new product lines available.

In the matter of encaustic tiles, I owe the House an apology—[Interruption]—and not least my right hon. Friend the Member for East Yorkshire (Sir Greg Knight). I was asked by him about encaustic tiles and the possibility of selling the ones that have been retrieved, and I am afraid I gave a very inaccurate answer on that occasion. I am glad to say that that has been triumphantly overcome, however, in that the tiles that have come out whole and satisfactorily have been marketed. They are in a splendid box with a certificate of authenticity signed by me and my opposite number in the other place, Lord Sewel. We have already sold about 100 of them, with, I hope, more to go.

Finally on the retail side, I would like to compliment Diana Christou, who was appointed as director of retail. She has brought great experience and imagination to her work and she and her whole team are to be complimented on what has been achieved.

Our other experimental activity is the introduction of filming within the Palace. This is seen by many as a remarkable location and we tested the water with the film “Suffragette”, which, of course, did have a distinct connection with this place. On the basis of that experience, we are continuing to consider other filming proposals on a case-by-case basis, but we do see great possibilities.

On tours and visitors and bringing more people into the Palace, which has an impact on the bottom line, I can tell the House that since 1 April we have welcomed 127,000 paying visitors to the Houses of Parliament, 84,000 of them over the summer recess. The House was awarded the accolade of best guided tour at the group leisure awards 2014 and a certificate of excellence from TripAdvisor.

In the Association of Leading Visitor Attractions annual benchmarking exercise the House came fourth out of 80 attractions for overall level of enjoyment. Also rated as excellent were staff helpfulness and friendliness and the guided tour and audio guide.

Commercial tours have expanded in range and availability. An extra hour has been added to the length of the commercial tour day. Audio guided tours have been introduced, including a family tour. The art and architecture tours continue to be popular and will be expanded in 2015. The tactile tours for blind and visually impaired visitors are also popular and are offered once a month.

In the light of the popularity of guided and audio tours of the rest of the Palace, it may be worth visiting sooner rather than later the issue of charging for tours of the Elizabeth Tower and Big Ben. That issue was highlighted in the House a couple of years ago, and recently 254 e-mail requests were received within the first five minutes of opening for bookings for visits to the Elizabeth Tower, meaning that places were filled within the first two minutes. Expectation from the public has shot up, and it is an expectation we are now having the greatest difficulty in meeting.

Work also continues to establish a logical visitor route, or to make the one we have comprehensible. That is coded language for saying we do the thing the wrong way round. No other tour brings the visitor in at the exit, walks them through to the start and then walks them back again. This is adding to the congestion of the Palace, which was never designed for that number of visitors. The situation at the pinch-points becomes exaggerated, of course, with those numbers going through. This is totally inefficient and unreasonable, and we must consider how we can provide the best possible experience for visitors.

I am grateful to the House for listening to this very concentrated description of what the Administration Committee has been trying to do in its contribution to the overall savings programme. Our overall rationale has been that the Palace of Westminster is a working building—the heart of our democracy—but that it also happens to be an iconic architectural masterpiece. Referring back to something my right hon. Friend the Member for Caithness, Sutherland and Easter Ross said, with the restoration and renewal project to be faced up to in the next Parliament, it is crucial that we save this building. We will be criticised very strongly if we fail to ensure that this symbol of our Parliament and our democracy is maintained to the highest level, to see through another 100 or 150 years.

I have the honour of chairing the Administration Committee, and I want to thank in passing all those who help us most closely in our work. We are a working building and also a visitor attraction and we consider them to be complementary roles. We have been determined in all we have sought to do to preserve the essential purpose of this place, while promoting access to the public, who take great pride in this building and what it means. I have seen the emotion of many people who have come here for the first time in their lives, sometimes in their elderly years, and it is clearly a great experience for them. I do not regard it as in any way cheapening this Palace for it to be more welcoming to visitors, and I know Mr Speaker is anxious that we should make sure that that welcome is warm, while, of course, guarding our security. These are difficult issues to reconcile at times, but the Committee has the interests of this Parliament and this Palace at the very forefront of its considerations, while at the same time trying to ensure that we are responsible in governing its finances and the facilities it contains.