Parliamentary Works Sponsor Body: Annual Report

Lord Deighton Excerpts

Tuesday 16th November 2021 Grand Committee

[Lord Deighton (Con)]

My Lords, I welcome this opportunity to review the status of this marathon project. We are here looking at the resilience of this building, but for those of us who have been involved in this for any period of time it is testing the resilience of some of us. The noble Lord, Lord Carter, and I not only are members of the sponsor body but were members of its preceding body, the Joint Committee. It is worth spending a minute or two reminding ourselves of where that combined group ended up, which was with a very clear recommendation back in 2016 that the Palace of Westminster was in urgent and immediate need of restoration and renewal and that the best way to do that was quickly and with a full decant of both Houses.

I want to go back to that, not because anybody was unclear about the conclusion it reached but to share with the Committee the process we went through to get there, which was to explore every single way to try to get it done more cheaply and with far less disruption. I suppose, like every good scientific process, we unfortunately had to disprove all the other options and were left with the full decant as the only truly viable option which would produce the best value for money for the taxpayer. That recommendation was endorsed by the House of Commons in a vote in 2018, which slightly surprised me. I had thought it would probably reach a slightly more hedged recommendation; in fact, it reinforced absolutely the full decant—the “Let’s just get on with it” approach to this project.

Subsequently, we set up the sponsor body and the delivery authority, which are charged with building the capacity to carry out the project. The first, principal output from this work will be the outline business case next year, to which the noble Lord, Lord Best, referred. Until then, it seems there is a lot of sparring going on. We have resisted coming up with a budget or timetable in any detail because we have never really done the work. One of my approaches throughout this project has been to say, let us just get the work done thoroughly and then determine where we are on the three key variables which drive every project: scope, cost and schedule. The interplay between those three things is what you trade off, squeeze and prioritise to drive your eventual project.

In examining the change of approach that the House of Commons has adopted, I have asked myself what has changed. This place has not suddenly become more resilient; it is still falling down. I can think of only two things that have changed. One is that we have a different composition in the House of Commons, so maybe its current composition would vote differently from the previous one. The only other thing that has changed is that the public finances are in a much more difficult state post the Covid crisis, so our keenness to find a solution which does not suffer from what I would call sticker shock is even greater than it was before we had the stresses on public finance, which came with all the pandemic measures.

If I can step back for a little, it is always useful in these processes to remind ourselves what we broadly agree on. I think we broadly agree that the Palace of Westminster should be preserved, and that the historical approach to doing so—what we might describe as managed decline—runs out of time at some point, and that we have reached that point. Something therefore has to be done. We do not need to keep going over that argument; we are going to renew this building so that it is a good working building for Parliament going forward. Those are the arguments that I think have been settled.

There are a couple of other things where it seems strong agreement is always reached when we talk about what we should accomplish in this project. The first is improved access, both physically for those with a disability and broadly speaking for the population at large, in what I would describe as a “spirit of democracy” point of view. Finally, that the project should be carried out in a way to maximise the benefits right around the UK, by ensuring small businesses get involved and that apprenticeships are all part of it. There are many other models of big projects accomplishing that which will be quite useful for us to copy, so I am relatively confident that once we get going, we will be able to do that.

I will also say a little about the initial set-up stage of the sponsor body and, particularly, the delivery authority. It is really hard setting up a company from scratch to take on what is probably the most difficult building restoration in the history of the planet. In my experience, when we had to do that for the Olympic Games the first year or two was really difficult: you have to hire everybody while you do not really know how to work with each other. You are never quite sure whether you have the right people in the right jobs.

It was very different in the heyday of aviation, for example, when we were trying to build a third runway at Heathrow, because we had a very strong organisation at Heathrow Airport that knew how to do that sort of thing. It was a much easier process. I score us very satisfactorily on the initial set-up stages; it is going fine given the degree of challenge and given what people have had to accomplish during the Covid period.

What are the key challenges? They really all boil down to value for money or cost. What does value for money mean for this project? It is a useful concept when you have two or three different ways of getting an agreed objective accomplished if you can assess them and decide which represents best value for money, but this project is just something that we have decided to do. Personally, I do not think of value for money; I think, “What is the most efficient way to deliver your chosen scope?” Again, my experience tells me that what tends to add up to the biggest cost overruns and inefficiencies is always a lack of clarity about what you are trying to accomplish and your inability to make decisions. That drags the project out for much too long, and you are left carrying the cost of the overhead of massive project apparatus while you figure out what it was you really wanted to do.

If the question is, “How do you deliver efficiently your chosen scope?”, then your chosen scope becomes incredibly important. We do not have that much room to play with here, because virtually every initial estimate tells you that something like three-quarters of the cost is in the core engineering, which is an inescapable part of the budget. You are left with a very small part of the budget to satisfy everybody’s desires about what the end product should look like. That is like squeezing a very large person into a very tight corset. As the noble Lord, Lord Best, put it, there will always be too little money chasing too many requirements. It is okay to divide our requirements into essential and highly desirable, but one man or woman’s essential is frankly not necessarily another person’s. What things are essential or desirable in heating, cooling or security are all difficult to define in a crisp way within a scope.

I have a comment on the decant challenges. This applies particularly to the proposal that the House of Lords decants into the QEII Centre, which is the more advanced of the projects. The challenge again that we will meet there is that most of the candidates for decant locations essentially require us to set up a building that has long-term capability. In the case of the QEII, you are restoring something that is completely and utterly run down—yet we are using it only for a temporary period. Either the structure or the communication needs to be handled in a way that at least satisfactorily reflects this, or it is going to look quite expensive.

It is also an appropriate time for us in this House to all be sensitive about the world looking closely at what are deemed to be our requirements for a temporary location, particularly if it is seen to be extremely expensive. All that will come very much under scrutiny. To the extent that there are any plans to reform this House or the other, whether in size or practices, at some point those reforms should be made consistent with whatever our accommodation plan is, otherwise there is a strong risk of building something for this age that will not work for the next age.

I repeat my concern about what I described as sticker shock. Whenever the budget number is announced, no matter how low or high it is—even if it is impossibly low—it would still be greeted with shock and awe at what a ridiculously expensive project it is. There is no magic way of handling this, other than to have done your work well and made sure that it is well evidenced. You must make sure that your engagement with Parliament and the public more generally is open, clear and consistent, and when you say you are going to do something, you must actually do it and deliver. You also must demonstrate that you have worked every possible angle to reduce cost and that your definition of scope is acceptable by anybody’s standards.

I have one final warning based on my own experience. When you are confronted by this problem of a large potential budget and a complicated scope, the easy compromise is to agree in the short term an unrealistic budget. That may get you through the short term but inevitably precipitates a crisis later. The cost of that is far more serious than taking the heat of getting that scope and cost right from the very beginning and adhering to them.